<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 13, 1995
REGISTRATION NO. 33-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
CROWN CORK & SEAL COMPANY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PENNSYLVANIA 3411 23-1526444
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTIONOF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR 9300 ASHTON ROAD
ORGANIZATION) PHILADELPHIA, PA 19136
(215) 698-5100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
RICHARD L. KRZYZANOWSKI, ESQ.
CROWN CORK & SEAL COMPANY, INC.
9300 ASHTON ROAD
PHILADELPHIA, PA 19136
(215) 698-5208
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
COPIES TO:
THOMAS A. RALPH, ESQ.
WILLIAM G. LAWLOR, ESQ.
DECHERT PRICE & RHOADS
4000 BELL ATLANTIC TOWER, 1717 ARCH STREET
PHILADELPHIA, PA 19103-2793
(215) 994-4000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon
commencement of the Offer referred to herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE OFFERING PRICE(2) REGISTRATION FEE(3)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $5.00 par value
(including associated Rights)(4)............ 120,000,000 Not Applicable $3,680,378,352 $1,269,095.98
- ----------------------------------------------------------------
Crown Acquisition Preferred Stock............ 50,000,000
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents (a) the maximum number of shares of Common Stock, par value
$5.00 per share ("Crown Common Stock") and shares of Preferred Stock, par
value equal to the Average Market Closing Price (as defined herein)
("Crown Acquisition Preferred Stock"), to be issued upon consummation of
the offer (the "Offer") for shares of Common Stock, par value FF 10 per
share ("CarnaudMetalbox Shares"), of CarnaudMetalbox as described herein
and (b) the number of shares of Crown Common Stock which may be issuable
upon or in connection with the conversion of Crown Acquisition Preferred
Stock in accordance with its terms. Also being registered are such
indeterminate number of additional shares of Crown Common Stock issuable
upon or in connection with the conversion of Crown Acquisition Preferred
Stock as a consequence of adjustment to the Conversion Price (as defined
herein). No additional consideration will be received for the shares
issued upon such conversion.
(2) Pursuant to Rule 457(f)(1) of the Securities Act of 1933, as amended (the
"Securities Act"), and solely for the purpose of calculating the
registration fee, the proposed maximum aggregate offering price is
computed on the basis of a maximum of 88,068,398 CarnaudMetalbox Shares
outstanding on the closing date of the Offer, valued at $41.79 (the
average of the high and low prices of CarnaudMetalbox Shares on the Paris
Stock Exchange on November 6, 1995, as translated on such date from French
francs to United States dollars at the Noon Buying Rate (as defined
herein) on such date of 4.901).
(3) In accordance with Rule 0-11 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), a filing fee of $779,987.05 was paid to the
Commission on August 4, 1995, when the preliminary Proxy
Statement/Prospectus contained in this Registration Statement was filed
for review under the Exchange Act. Pursuant to Rule 457(b) of the
Securities Act and Rule 0-11 of the Exchange Act, the fee paid upon filing
of the preliminary Proxy Statement/Prospectus has been credited against
the registration fee payable in connection with this Registration
Statement. Therefore, the registration fee payable upon the filing of this
Registration Statement is $489,108.93.
(4) Includes associated Rights (the "Rights") to purchase Crown Common Stock.
Until the occurrence of certain prescribed events, none of which has
occurred, the Rights are not exercisable, are evidenced by the
certificates representing Crown Common Stock, and will be transferred
along with and only with Crown Common Stock.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
CROWN CORK & SEAL COMPANY, INC.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER AND CAPTION LOCATION IN PROXY STATEMENT/PROSPECTUS
-------------------------------- -------------------------------------------
<S> <C>
1.Forepart of Registration
Statement and Outside Front
Cover Page of Prospectus...... Outside Front Cover Page, Cross-Reference
Sheet, Outside Front Cover of Proxy
Statement/ Prospectus
2.Inside Front and Outside Back
Cover Pages of Prospectus..... Available Information, Incorporation of
Certain Documents by Reference, Table of
Contents
3.Risk Factors, Ratio of Earnings
to Fixed Charges and Other
Information................... Summary; Summary Historical and Unaudited
Pro Forma Financial Information;
Comparative Per Share Data; Comparative
Market Price Data; The CarnaudMetalbox
Proposals; The Offer
4.Terms of the Transaction........ Summary; The CarnaudMetalbox Proposals; The
Offer, The Exchange Offer Agreement;
Description of Crown Stock; Comparison of
Shareholder Rights
5.Pro Forma Financial
Information................... Unaudited Pro Forma Consolidated Condensed
Financial Statements
6.Material Contacts with the
Company Being Acquired........ Summary; The CarnaudMetalbox Proposals; The
Offer; The Exchange Offer Agreement; The
Shareholders Agreement
7.Additional Information Required
for Reoffering by Persons and
Parties Deemed to be
Underwritters................. Not Applicable
8.Interests of Named Experts and
Counsel....................... Legal Opinions
9.Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities................... Not Applicable
10.Information with Respect to S-3
Registrants................... Available Information; Incorporation of
Certain Documents by Reference; Summary
Historical and Unaudited Pro Forma
Financial Information; Crown Cork & Seal
Company, Inc.
11.Incorporation of Certain
Information by Reference...... Incorporation of Certain Documents by
Reference
12.Information With Respect to S-2
or S-3 Registrants............ Not Applicable
13.Incorporation of Certain
Information by Reference...... Not Applicable
14.Information With Respect to
Registrants Other Than S-2 or
S-3 Registrants............... Not Applicable
15.Information With Respect to S-3
Companies..................... Not Applicable
16.Information With Respect to S-2
or
S-3 Companies................. Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER AND CAPTION LOCATION IN PROXY STATEMENT/PROSPECTUS
-------------------------------- -------------------------------------------
<S> <C>
17.Information With Respect to
Companies Other Than S-2 or S-
3 Companies................... Summary; Summary Historical and Unaudited
Pro Forma Financial Information;
Comparative Per Share Data; Comparative
Market Price Data; The CarnaudMetalbox
Proposals; CarnaudMetalbox; The Offer;
CarnaudMetalbox Financial Statements
18.Information if Proxies, Consents
or Authorizations Are to be
Solicited..................... Outside Front Cover of Proxy
Statement/Prospectus; Available
Information; Incorporation of Certain
Documents by Reference; The Summary; The
Meeting; The CarnaudMetalbox Proposals;
Other Proposals to be Considered at the
Meeting; CarnaudMetalbox; The Offer
19.Information if Proxies, Consents
or Authorizations Are not to
be Solicited, or in an
Exchange Offer................ Incorporation of Certain Documents by
Reference; The Summary; The Meeting; The
CarnaudMetalbox Proposals; Other
Proposals to be Considered at the
Meeting; CarnaudMetalbox; The Offer
</TABLE>
<PAGE>
[LETTERHEAD OF CROWN CORK & SEAL COMPANY, INC. APPEARS HERE]
November 13, 1995
Dear Shareholder:
You are cordially invited to attend a Special Meeting of shareholders of
Crown Cork & Seal Company, Inc. to be held at Crown's offices located at 9300
Ashton Road, Philadelphia, Pennsylvania 19136, on December 19, 1995 at 10:00
a.m. All shareholders of record as of October 23, 1995 are entitled to vote at
the Special Meeting. I urge you to be present in person or be represented by
proxy at this important meeting at which shareholders will be asked to approve
a major transaction involving the acquisition of CarnaudMetalbox, a European
packaging concern, by Crown and certain related transactions, as well as to
adopt certain amendments to Crown's Articles of Incorporation.
Over the last five years, your Company has grown to be one of the major
packaging companies in the world. Crown's major markets, however, are still
predominately in North America, and we have been considering how to balance
Crown's operations further to better serve global marketers of a broad range
of consumer products. CarnaudMetalbox is predominately a European-based
packaging company and therefore represents an excellent fit with our expansion
strategy. The proposed transaction will provide Crown with greater diversity,
not only geographically, but also with respect to the product range offered to
our customers, and will lessen Crown's future dependence on any one product
line.
We are asking you to support the combination of these two companies into one
in order to create the premier global packaging company.
The attached Proxy Statement/Prospectus discusses in detail the proposed
acquisition of CarnaudMetalbox and the other proposed actions. Your Board of
Directors believes that the terms of the proposed acquisition of
CarnaudMetalbox are fair to, and in the best interests of, the shareholders of
Crown. Additional information concerning the proposed acquisition of
CarnaudMetalbox and the other transactions associated with such acquisition,
including the Shareholders Agreement Crown proposes to enter into with the
major shareholder of CarnaudMetalbox following the acquisition, are contained
in the accompanying Proxy Statement/Prospectus. I urge you to read this
document carefully. Shareholders who have questions about the Special Meeting
can call D.F. King & Co., Inc., Crown's proxy solicitation agent, toll free at
(800) 431-9633 or collect at (212) 269-5550.
Your Board of Directors unanimously recommends that you vote in favor of all
of the proposals to be considered at the Special Meeting.
It is important that your shares be represented at the Special Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND
MAIL THE ENCLOSED PROXY CARD PROMPTLY IN THE RETURN ENVELOPE PROVIDED SO THAT
YOUR VOTE MAY BE RECORDED. If you attend the Special Meeting, you may vote in
person even if you have previously returned your proxy card.
Very truly yours,
/s/ William J. Avery
William J. Avery
Chairman of the Board, President and
Chief Executive Officer
<PAGE>
[LETTERHEAD OF CROWN CORK & SEAL COMPANY, INC. APPEARS HERE]
NOTICE
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 19, 1995
A Special Meeting of shareholders of Crown Cork & Seal Company, Inc.
("Crown") will be held on December 19, 1995, at Crown's offices at 9300 Ashton
Road, Philadelphia, Pennsylvania 19136 at 10:00 a.m., Philadelphia time. The
Special Meeting will be conducted:
(1) To consider and act upon the following three related proposals (the
"CarnaudMetalbox Proposals") described in the attached Proxy
Statement/Prospectus:
(a) Approval of the transactions contemplated by the Exchange Offer
Agreement, dated as of May 22, 1995 (as amended, the "Exchange Offer
Agreement"), between Crown and Compagnie Generale d'Industrie et de
Participations, a societe anonyme organized under the laws of the
Republic of France ("CGIP"), including Crown's proposed acquisition of
CarnaudMetalbox, a societe anonyme organized under the laws of the
Republic of France ("CarnaudMetalbox"), through an offer to be made for
all of the outstanding shares of CarnaudMetalbox and the execution of a
Shareholders Agreement between Crown and CGIP upon the closing of the
offer;
(b) Approval of the issuance of shares of Crown's common stock
("Crown Common Stock") and shares of a new series of convertible
preferred stock of Crown having the terms set forth in the Exchange
Offer Agreement (as such terms may be modified or amended by Crown's
Board of Directors in accordance with the Exchange Offer Agreement,
"Crown Acquisition Preferred Stock" and, together with Crown Common
Stock, "Crown Stock") in connection with the proposed acquisition of
CarnaudMetalbox, and the issuance of shares of Crown Common Stock upon
conversion of Crown Acquisition Preferred Stock; and
(c) Approval of the adoption of an amendment to Crown's Articles of
Incorporation (i) to authorize, solely in connection with the proposed
acquisition of CarnaudMetalbox, 50,000,000 shares of Crown Acquisition
Preferred Stock, (ii) to authorize 380,000,000 additional shares of
Crown Common Stock in connection with the proposed acquisition of
CarnaudMetalbox and for other general corporate purposes and (iii) to
render inapplicable to Crown Subchapter E of Chapter 25 of the
Pennsylvania Business Corporation Law of 1988, as amended.
THE EFFECTIVENESS OF EACH OF THE CARNAUDMETALBOX PROPOSALS IS CONDITIONED
UPON THE APPROVAL OF ALL OF THE CARNAUDMETALBOX PROPOSALS. ACCORDINGLY, THE
FAILURE OF CROWN SHAREHOLDERS TO APPROVE ANY ONE OR MORE OF THE
CARNAUDMETALBOX PROPOSALS WILL RESULT IN THE INEFFECTIVENESS OF ALL OF THE
CARNAUDMETALBOX PROPOSALS.
IN ADDITION, THE EFFECTIVENESS OF EACH OF THE CARNAUDMETALBOX PROPOSALS
IS CONDITIONED UPON THE COMPLETION BY CROWN OF THE EXCHANGE OF CROWN STOCK
FOR, OR PURCHASE OF, THE CARNAUDMETALBOX SHARES TENDERED PURSUANT TO THE
OFFER TO BE MADE FOR CARNAUDMETALBOX SHARES (AS SUCH OFFER MAY BE AMENDED
OR MODIFIED BY CROWN'S BOARD OF DIRECTORS) AS DESCRIBED IN THE PROXY
STATEMENT/PROSPECTUS. THE EFFECTIVENESS OF THE CARNAUDMETALBOX PROPOSALS IS
NOT CONDITIONED ON THE APPROVAL OF THE ARTICLES MODERNIZATION PROPOSAL OR
THE ADDITIONAL PREFERRED STOCK PROPOSAL (EACH AS DEFINED BELOW).
<PAGE>
(2) To consider and act upon a separate proposal unrelated to the
proposed acquisition of CarnaudMetalbox (the "Articles Modernization
Proposal"), also described in the Proxy Statement/Prospectus, to approve
the adoption of an amendment to Crown's Articles of Incorporation to remove
a superfluous provision which provides that shareholder approval is
specifically not required in connection with the authorization of secured
bond indebtedness of not more than $5,500,000 of Crown.
(3) To consider and act upon a separate proposal unrelated to the
proposed acquisition of CarnaudMetalbox (the "Additional Preferred Stock
Proposal"), also described in the Proxy Statement/Prospectus, to approve
the adoption of an amendment to Crown's Articles of Incorporation to
authorize 30,000,000 additional shares of preferred stock of Crown, which
may be issued at any time or from time to time, in one or more classes or
series of a class with voting rights and such designations, preferences,
limitations and special rights as are, subject to the terms of Crown's
Articles of Incorporation as so amended, determined by the Board of
Directors of Crown; provided, however, that such shares will rank on a
parity with or junior to Crown Acquisition Preferred Stock in respect of
dividend and liquidation rights and provided further that any such shares
will not be entitled to more than one vote per share when voting as a class
with holders of Crown Common Stock.
THE EFFECTIVENESS OF EACH OF THE ARTICLES MODERNIZATION PROPOSAL AND THE
ADDITIONAL PREFERRED STOCK PROPOSAL IS NOT CONDITIONED ON THE APPROVAL OF
ANY OTHER PROPOSAL, INCLUDING THE CARNAUDMETALBOX PROPOSALS.
The close of business on October 23, 1995 has been fixed as the record date
for determining the shareholders entitled to notice of, and to vote at, the
Special Meeting and any adjournments or postponements thereof.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
CARNAUDMETALBOX PROPOSALS, THE ARTICLES MODERNIZATION PROPOSAL AND THE
ADDITIONAL PREFERRED STOCK PROPOSAL.
Please sign, date and mail the enclosed proxy in the envelope provided for
that purpose, whether or not you expect to be present at the Special Meeting.
If you attend the Special Meeting, you may revoke your proxy and vote your
shares in person. Your vote is important.
By order of the Board of Directors,
/s/ Richard L. Krzyzanowski
Richard L. Krzyzanowski
Executive Vice President,
Secretary & General Counsel
November 13, 1995
<PAGE>
CROWN CORK & SEAL COMPANY, INC.
PROXY STATEMENT/PROSPECTUS
--------------
This Proxy Statement/Prospectus is being furnished by Crown Cork & Seal
Company, Inc. ("Crown") to the holders of common stock, par value $5.00 per
share ("Crown Common Stock"), of Crown in connection with the solicitation by
the Board of Directors of Crown of proxies for use at a Special Meeting of
shareholders of Crown to be held on December 19, 1995 at 10 a.m., Philadelphia
time, at the offices of Crown at 9300 Ashton Road, Philadelphia, PA 19136
(including any adjournment or postponement thereof, the "Special Meeting").
The Special Meeting relates to, among other things, the transactions
contemplated by the Exchange Offer Agreement, dated as of May 22, 1995 (as
amended, the "Exchange Offer Agreement"), a copy of which is attached to this
Proxy Statement/Prospectus as Annex A, between Crown and Compagnie Generale
d'Industrie et de Participations, a societe anonyme organized under the laws
of the Republic of France ("CGIP"). Pursuant to the Exchange Offer Agreement,
Crown proposes to acquire CarnaudMetalbox, a societe anonyme organized under
the laws of the Republic of France ("CarnaudMetalbox"), through an offer for
outstanding shares of common stock, par value FF 10 per share (the
"CarnaudMetalbox Shares"), of CarnaudMetalbox, and to enter into a
Shareholders Agreement between Crown and CGIP (the "Shareholders Agreement").
On October 31, 1995, CGIP beneficially owned, directly or indirectly,
approximately 30.4% of the outstanding CarnaudMetalbox Shares.
At the Special Meeting, shareholders of Crown will have the opportunity to
consider and act upon the following three proposals related to the proposed
acquisition of CarnaudMetalbox (the "CarnaudMetalbox Transaction"): (1) the
approval of the transactions contemplated by the Exchange Offer Agreement,
including the proposed CarnaudMetalbox Transaction and the execution of the
Shareholders Agreement; (2) the approval of the issuance of shares of Crown
Common Stock and a new series of convertible preferred stock of Crown having
the terms set forth in the Exchange Offer Agreement (as such terms may be
modified or amended by Crown's Board of Directors in accordance with the
Exchange Offer Agreement, "Crown Acquisition Preferred Stock" and, together
with Crown Common Stock, "Crown Stock") in connection with the proposed
CarnaudMetalbox Transaction, and the issuance of shares of Crown Common Stock
upon conversion of Crown Acquisition Preferred Stock; and (3) the approval of
the adoption of an amendment to Crown's Articles of Incorporation (a) to
authorize, solely in connection with the proposed CarnaudMetalbox Transaction,
50,000,000 shares of Crown Acquisition Preferred Stock, (b) to authorize
380,000,000 additional shares of Crown Common Stock in connection with the
proposed CarnaudMetalbox Transaction and for other general corporate purposes
and (c) to render Subchapter E ("Subchapter E") of Chapter 25 of the
Pennsylvania Business Corporation Law of 1988, as amended (the "PBCL"),
inapplicable to Crown.
Under certain circumstances, Crown may increase the Exchange Ratio or
otherwise materially change the Offer Consideration (as such terms are defined
below) relating to the offer for CarnaudMetalbox Shares described herein
without resoliciting shareholder approval after the Special Meeting. See "THE
CARNAUDMETALBOX PROPOSALS--Description of the CarnaudMetalbox Proposals--
Possible Modifications to the Offer Consideration."
At the Special Meeting, shareholders of Crown will also have the opportunity
to consider and act upon two separate proposals unrelated to the proposed
CarnaudMetalbox Transaction: (1) the approval of the adoption of an amendment
to Crown's Articles of Incorporation to remove a superfluous provision which
provides that shareholder approval is specifically not required in connection
with the authorization of secured bond indebtedness of Crown of not more than
$5,500,000; and (2) the approval of the adoption of an amendment to Crown's
Articles of Incorporation to authorize 30,000,000 additional shares of
preferred stock of Crown, which may be issued at any time or from time to
time, in one or more classes or series of a class with voting rights and such
designations, preferences, limitations and special rights as are, subject to
the terms of the Articles of Incorporation of Crown as so amended, determined
by the Board of Directors of Crown; provided, however, that such shares will
rank on a parity with or junior to Crown Acquisition Preferred Stock in
respect of dividend and liquidation rights and provided further that any such
shares will not be entitled to more than one vote per share when voting as a
class with holders of Crown Common Stock.
--------------
THE OFFER DESCRIBED HEREIN BY CROWN FOR THE CARNAUDMETALBOX SHARES HAS NOT YET
COMMENCED. SUCH OFFER WILL NOT COMMENCE UNTIL THE FILING BY CROWN OF CERTAIN
DOCUMENTS WITH THE FRENCH COMMISSION DES OPERATIONS DE BOURSE AND THE FRENCH
CONSEIL DES BOURSES DE VALEURS. CROWN CURRENTLY INTENDS TO MAKE SUCH FILING
AFTER THE SPECIAL MEETING OF SHAREHOLDERS OF CROWN, ALTHOUGH CROWN RESERVES THE
RIGHT TO MAKE SUCH FILING AND COMMENCE THE OFFER PRIOR TO SUCH MEETING.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
--------------
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS NOVEMBER 13, 1995.
<PAGE>
This Proxy Statement/Prospectus, as it may be amended or supplemented, also
constitutes the prospectus of Crown with respect to offers and sales by Crown
in the United States and to U.S. persons (as such terms are defined in
Regulation S under the Securities Act of 1933, as amended (the "Securities
Act")), and reoffers and resales from time to time into the United States and
to U.S. persons, of shares of Crown Common Stock and Crown Acquisition
Preferred Stock issued in connection with the offer for CarnaudMetalbox Shares
described herein to the extent that such offers, sales, reoffers and resales
are not exempt from registration under the Securities Act. As more fully
described herein, subject to the terms and conditions set forth in the
Exchange Offer Agreement, Crown has agreed to make an offer to exchange for
each CarnaudMetalbox Share, at the election of the holder, either (1) 1.065
Units ("Units"), each Unit consisting of (x) .75 shares of Crown Common Stock
and (y) .25 shares of Crown Acquisition Preferred Stock, with cash (in French
francs) being paid in lieu of any fractional share interest, or (2) FF 225 in
cash (the "Cash Election Price"). The Units of Crown Stock (together with cash
in lieu of fractional share interests) and the Cash Election Price to be
offered to holders of CarnaudMetalbox Shares are referred to herein
collectively as the "Offer Consideration." The ratio of 1.065 Units for each
CarnaudMetalbox Share (the "Exchange Ratio") is subject to adjustment under
the terms of the Exchange Offer Agreement. See "SUMMARY--The Offer--Exchange
Ratio and Market Value of Crown Common Stock." This Proxy
Statement/Prospectus, as it may be amended or supplemented, will also
constitute the Offer to Purchase with respect to the cash portion of the offer
for CarnaudMetalbox Shares described herein.
This Proxy Statement/Prospectus, the accompanying Notice of Special Meeting
and the proxy card enclosed herewith are first being sent to shareholders of
Crown on or about November 13, 1995.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION
WITH RESPECT TO THE MATTERS DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS OTHER
THAN THE INFORMATION OR REPRESENTATIONS CONTAINED OR INCORPORATED BY REFERENCE
HEREIN. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY CROWN. THIS PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY SECURITIES IN ANY JURISDICTION IN WHICH OR TO ANY PERSON TO
WHOM IT WOULD BE UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. THE OFFER
REFERRED TO HEREIN IS NOT BEING MADE BY MEANS OF THIS PROXY
STATEMENT/PROSPECTUS IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER BY
MEANS OF THIS PROXY STATEMENT/PROSPECTUS OR ACCEPTANCE THEREOF WOULD NOT BE IN
COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. HOWEVER, CROWN MAY, IN ITS SOLE
DISCRETION, TAKE SUCH ACTION AS IT MAY DEEM NECESSARY TO MAKE THE OFFER IN ANY
SUCH JURISDICTION AND EXTEND THE OFFER BY MEANS OF THIS PROXY
STATEMENT/PROSPECTUS TO HOLDERS OF SHARES OF CARNAUDMETALBOX IN SUCH
JURISDICTION. IN THE UNITED STATES, IN THOSE JURISDICTIONS WHOSE SECURITIES OR
BLUE SKY LAWS REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE
OFFER IS BEING MADE ON BEHALF OF CROWN BY CS FIRST BOSTON CORPORATION OR ONE
OR MORE REGISTERED BROKERS OR DEALERS WHICH ARE LICENSED UNDER THE LAWS OF
SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR
ANY EXCHANGE OR SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF CROWN SINCE THE
DATE HEREOF OR THAT THE INFORMATION IN THIS PROXY STATEMENT/PROSPECTUS OR IN
THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATES HEREOF OR THEREOF.
----------------
THIS PROSPECTUS HAS NOT RECEIVED THE VISA OF THE FRENCH COMMISSION DES
OPERATIONS DE BOURSE. ACCORDINGLY, THIS PROXY STATEMENT/PROSPECTUS MAY NOT BE
USED TO MAKE OFFERS OR SALES IN FRANCE IN CONNECTION WITH THE OFFER DESCRIBED
HEREIN.
----------------
IN CONNECTION WITH THE OFFER DESCRIBED HEREIN, APPLICATION HAS BEEN MADE FOR
CROWN AND CERTAIN OF ITS ADVISORS (OR THEIR AFFILIATES) TO ENGAGE IN
TRANSACTIONS FOR THEIR OWN ACCOUNT OR FOR THE ACCOUNTS OF OTHERS IN
CARNAUDMETALBOX SHARES OR OPTIONS ON SUCH SHARES PURSUANT TO REQUESTED
EXEMPTIONS FROM RULES 10B-6, 10B-7 AND 10B-13 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED. SEE "THE OFFER--GENERAL."
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION.................................................... iv
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.......................... v
DOLLAR PRESENTATION AND EXCHANGE RATES................................... vi
SUMMARY.................................................................. 1
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL INFORMATION......... 21
Crown Cork & Seal Company, Inc........................................... 21
CarnaudMetalbox.......................................................... 25
Summary Unaudited Pro Forma Consolidated Condensed Financial Data........ 26
COMPARATIVE PER SHARE DATA............................................... 28
COMPARATIVE MARKET PRICE DATA............................................ 30
THE MEETING.............................................................. 32
Date, Time and Place of the Meeting...................................... 32
Matters To Be Considered at the Meeting.................................. 32
Record Date.............................................................. 32
Required Vote............................................................ 32
Voting at the Meeting.................................................... 33
THE CARNAUDMETALBOX PROPOSALS............................................ 34
Description of the CarnaudMetalbox Proposals............................. 34
Background of the CarnaudMetalbox Transaction............................ 41
Recommendation of Crown's Board of Directors; Reasons for the
CarnaudMetalbox Transaction............................................. 42
Opinion of Crown's Financial Advisor..................................... 45
Conditions to Crown's Obligations to Commence and Close the Offer........ 49
Regulatory Approvals..................................................... 49
U.S. Tax Consequences to Crown Shareholders.............................. 51
Sources of Funds......................................................... 52
Accounting Treatment..................................................... 54
OTHER PROPOSALS TO BE CONSIDERED AT THE MEETING.......................... 54
Articles Modernization Proposal.......................................... 54
The Additional Preferred Stock Proposal.................................. 55
CARNAUDMETALBOX.......................................................... 56
General.................................................................. 56
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 63
Voting Securities and Principal Holders Thereof.......................... 79
Information as to Additional Crown Directors After the Offer............. 80
CROWN CORK & SEAL COMPANY, INC........................................... 82
General.................................................................. 82
Voting Securities and Principal Holders Thereof.......................... 82
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.......... 84
THE OFFER................................................................ 97
General.................................................................. 97
Conditions to the Offer.................................................. 99
Ownership of Crown Stock after the Offer................................. 100
Purpose of the Offer..................................................... 101
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Extension, Termination and Amendment..................................... 102
Cash in Lieu of Fractional Shares of Crown Common Stock and Crown
Acquisition Preferred Stock............................................. 102
Tender Procedures........................................................ 103
Exchange and Payment of Offer Consideration.............................. 104
Rights of Tendering Shareholders to Cancel Acceptance of Offer........... 105
Listing of Crown Common Stock and Crown Acquisition Preferred Stock...... 105
Effect of Offer on Market for CarnaudMetalbox Shares..................... 106
Fees and Expenses........................................................ 107
Interests of Certain Persons in the Offer................................ 109
Certain Tax Consequences of the Offer.................................... 110
Certain Tax Consequences of the Offer to CarnaudMetalbox and to Crown.... 116
Operation of CarnaudMetalbox After the Offer............................. 116
Regulations Affecting Security Holders................................... 116
Other Matters Related to the Offer....................................... 117
THE EXCHANGE OFFER AGREEMENT............................................. 118
The Exchange Offer....................................................... 118
Agreement to Tender...................................................... 119
CarnaudMetalbox Stock Options............................................ 120
Warranties............................................................... 121
Certain Covenants........................................................ 121
No Solicitation.......................................................... 123
Conditions; Waiver....................................................... 124
Termination; Amendment................................................... 126
Fees and Expenses; Other................................................. 128
THE SHAREHOLDERS AGREEMENT............................................... 129
General.................................................................. 129
Restriction of Certain Actions by CGIP................................... 131
Board Representation..................................................... 132
Voting................................................................... 134
Dividend Policy.......................................................... 134
Debt Rating.............................................................. 135
Transfer Restrictions on Crown Common Stock and Crown Acquisition
Preferred Stock......................................................... 135
Registration Rights...................................................... 136
Restrictions on Certain Actions By Crown................................. 136
DESCRIPTION OF CROWN STOCK............................................... 137
Crown Common Stock....................................................... 137
Rights Plan.............................................................. 138
Crown Acquisition Preferred Stock........................................ 140
Additional Preferred Stock............................................... 152
COMPARISON OF SHAREHOLDER RIGHTS......................................... 153
Form, Holding and Transfer of Shares..................................... 153
Voting Rights............................................................ 154
Preemptive Rights........................................................ 155
Amendment of Charter Documents........................................... 155
Amendment and Repeal of Bylaws........................................... 156
Management of the Corporation............................................ 156
Classification of Directors.............................................. 157
Removal of Directors..................................................... 157
Actions Requiring a Shareholder Meeting or Vote.......................... 157
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Action Without a Meeting................................................. 158
Right to Call Meetings of Shareholders................................... 158
Class Voting............................................................. 159
Special Treatment of Holders of Shares of Same Class or Series........... 159
Cumulative Voting........................................................ 160
Dividends and Distributions.............................................. 160
Shareholder Rights Plan.................................................. 161
Director Liability and Indemnification................................... 161
Rights of Dissenting Shareholders........................................ 162
Mergers, Acquisitions and Certain Other Transactions..................... 162
Duties of Directors; Consideration of Non-Economic Factors............... 163
Limitations on Takeovers, Business Combinations and Share Accumulations.. 163
LEGAL OPINIONS........................................................... 165
EXPERTS.................................................................. 165
SHAREHOLDER PROPOSALS.................................................... 166
GLOSSARY OF SELECTED DEFINED TERMS....................................... 167
INDEX TO FINANCIAL STATEMENTS............................................ F-1
Annex A--Exchange Offer Agreement, dated as of May 22, 1995, as amended
as of November 13, 1995, between Crown Cork & Seal Company, Inc.
and Compagnie Generale d'Industrie et de Participations
(including the Shareholders Agreement)
Annex B--Articles of Amendment to Articles of Incorporation--Acquisition
Articles Amendment
Annex C--Opinion of CS First Boston Corporation
Annex D--Articles of Amendment to Articles of Incorporation--Articles
Modernization Proposal
Annex E--Articles of Amendment to Articles of Incorporation--Additional
Preferred Stock Proposal
</TABLE>
iii
<PAGE>
AVAILABLE INFORMATION
Crown is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC"). The reports, proxy statements
and other information filed by Crown with the SEC can be inspected and copied
at the public reference facilities maintained by the SEC at its principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the SEC located at 7 World Trade Center, 13th Floor, New York, New
York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can also be obtained by mail from the
Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, material filed by Crown can be
inspected at the offices of the New York Stock Exchange, Inc. (the "NYSE"), 20
Broad Street, New York, New York 10005.
Crown has filed with the SEC a Registration Statement on Form S-4 (together
with all amendments thereto, the "Registration Statement") under the
Securities Act with respect to offers and sales by Crown in the United States
and to U.S. persons, and reoffers and resales from time to time into the
United States and to U.S. persons, of shares of Crown Common Stock and Crown
Acquisition Preferred Stock issued in the offer described herein to the extent
that such offers, sales, reoffers and resales are not exempt from registration
under the Securities Act. This Proxy Statement/Prospectus does not contain all
the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the SEC.
Reference is hereby made to the Registration Statement and related exhibits
for further information with respect to Crown and the securities offered
hereby.
Crown will file with the Commission des operations de bourse, the
administrative agency of the Republic of France responsible for overseeing the
French securities markets (the "COB"), a document de reference (the "Reference
Document") and a note d'information with respect to the offer described
herein. The Reference Document will also be used with respect to the
anticipated listing of shares of Crown Common Stock and Crown Acquisition
Preferred Stock on the cote officielle (the "Official List") of the Bourse de
Paris (the "Paris Stock Exchange"). In addition, prior to commencement of such
offer, Crown will submit the terms of the offer for approval by the Conseil
des bourses des valeurs, the self-regulatory organization that has general
supervisory authority over French stock exchanges (the "CBV").
The offer document to be used in the United States or with respect to U.S.
persons in connection with the offer for CarnaudMetalbox Shares will consist
of this Proxy Statement/Prospectus (including as it may be amended or
supplemented, whether by means of incorporation by reference into the
Registration Statement or otherwise).
CarnaudMetalbox is not subject to the information requirements of the
Exchange Act and therefore does not file reports or other information with the
SEC. CarnaudMetalbox information contained in this Proxy Statement/Prospectus
has been taken from reports and other public sources, primarily the 1994
Annual Report of CarnaudMetalbox, as well as from information provided to
Crown by CGIP. Crown has no knowledge that would indicate that statements
relating to CarnaudMetalbox contained or incorporated by reference in this
Proxy Statement/Prospectus in reliance upon such information or otherwise are
inaccurate or incomplete, but Crown did not prepare such information and
statements and is not in a position to verify any such information or
statements.
Crown prepares annual reports which are distributed to its shareholders.
Crown's annual reports contain financial information examined and reported
upon, with opinions expressed, by Crown's auditors. The consolidated financial
statements of Crown included in such annual reports are presented in United
States dollars and are prepared in conformity with United States generally
accepted accounting principles. In the event any Crown Stock is listed on the
Paris Stock Exchange following the offer described herein, Crown anticipates
that it will also file with the COB a French translation of its annual reports
(or excerpts thereof) in accordance with applicable listing requirements. See
also "THE OFFER--Ownership of Crown Stock After the Offer--Reports."
iv
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Crown with the SEC (File No. 1-2227)
pursuant to the Exchange Act are hereby incorporated by reference in this
Proxy Statement/Prospectus:
(1) Crown's Annual Report on Form 10-K for the fiscal year ended December
31, 1994;
(2) Crown's Quarterly Report on Form 10-Q for the quarter ended March 31,
1995 and Crown's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995 (as amended by Crown's Report on Form 10-Q/A filed on
November 13, 1995);
(3) Crown's Current Reports on Form 8-K filed January 25, 1995 and June
16, 1995; and
(4) Crown's Registration Statements on Form 8-B filed on May 2, 1989 with
respect to Crown Common Stock, and on Form 8-A filed on August 10,
1995 with respect to Crown's common stock purchase rights (and any
amendments or reports filed for the purpose of updating such
descriptions).
All reports and other documents subsequently filed by Crown pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Proxy Statement/Prospectus and prior to the date the offers, sales, reoffers
and resales into the United States and to U.S. persons of shares of Crown
Common Stock and Crown Acquisition Preferred Stock issued in connection with
the offer described herein (to the extent such offers, sales, reoffers and
resales are not exempt from registration under the Securities Act) are
terminated or consummated are hereby incorporated by reference herein and
shall be deemed a part hereof from the respective dates of filing of such
reports and other documents. Any statement contained in a document
incorporated by reference herein shall be deemed to be modified or superseded
for all purposes of this Proxy Statement/Prospectus to the extent that a
statement contained herein, or in any other subsequently filed document that
also is incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute part of this Proxy
Statement/Prospectus.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (NOT INCLUDING
EXHIBITS THERETO, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE), ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED UPON
WRITTEN OR ORAL REQUEST DIRECTED TO: CROWN CORK & SEAL COMPANY, INC., 9300
ASHTON ROAD, PHILADELPHIA, PA 19136 (TELEPHONE NUMBER (215) 698-5208),
ATTENTION: RICHARD L. KRZYZANOWSKI, EXECUTIVE VICE PRESIDENT, SECRETARY AND
GENERAL COUNSEL. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST SHOULD BE MADE BY DECEMBER 5, 1995.
v
<PAGE>
DOLLAR PRESENTATION AND EXCHANGE RATES
Crown publishes its financial statements in U.S. dollars. In this Proxy
Statement/Prospectus currency amounts are generally expressed in U.S. dollars.
Unless otherwise stated or the context requires otherwise, references in this
Proxy Statement/Prospectus to "$" or "U.S. dollars" are to United States
dollars, and references to "FF" are to French francs. For the convenience of
the reader, this Proxy Statement/Prospectus presents certain translations of
certain U.S. dollar amounts into French franc amounts, and of certain French
franc amounts into U.S. dollar amounts, at specified rates. These translations
should not be construed as representations that the dollar amounts actually
represent such French franc amounts or could be converted into French francs
at the rate indicated or at any other rate, and vice versa. Unless otherwise
specified, such translations have been made at the noon buying rate in The
City of New York for cable transfers payable in French francs as announced by
the Federal Reserve Bank of New York for customs purposes, expressed in French
francs per one U.S. dollar or U.S. dollars per one French franc, as the
context requires (the "Noon Buying Rate"), on the dates specified herein.
The following table sets out, for the periods and dates indicated, certain
information concerning the Noon Buying Rate (expressed in French francs per
one U.S. dollar). On November 10, 1995, the Noon Buying Rate was FF 4.872 =
$1.00.
<TABLE>
<CAPTION>
CALENDAR PERIOD HIGH LOW AVERAGE(1) PERIOD END
--------------- ----- ----- ---------- ----------
<S> <C> <C> <C> <C>
Twelve Months Ended:
December 31, 1990........................... 5.790 4.962 5.433 5.100
December 31, 1991........................... 6.213 4.931 5.652 5.195
December 31, 1992........................... 5.691 4.739 5.290 5.527
December 31, 1993........................... 6.056 5.300 5.685 5.919
December 31, 1994........................... 5.979 5.112 5.511 5.345
Six Months Ended:
June 30, 1994............................... 5.979 5.408 5.689 5.436
June 30, 1995............................... 5.387 4.790 4.992 4.853
July 1, 1995-November 10, 1995................ 5.139 4.776 4.903 4.872
</TABLE>
- --------
(1) The average of the Noon Buying Rates on the last business day of each
month, or portion of the month, during the relevant period.
vi
<PAGE>
SUMMARY
The following summary contains certain information contained elsewhere in
this Proxy Statement/ Prospectus and certain additional information. Reference
is made to, and this summary is qualified in its entirety by, the more detailed
information contained or incorporated by reference in this Proxy
Statement/Prospectus and the Annexes hereto. Shareholders of Crown and
CarnaudMetalbox are urged to read this Proxy Statement/Prospectus, the Annexes
hereto and the documents incorporated herein by reference in their entirety.
For the convenience of readers, a "GLOSSARY OF SELECTED DEFINED TERMS" has been
included in this Proxy Statement/Prospectus.
THE MEETING
DATE, TIME AND PLACE OF THE MEETING
The Special Meeting of Crown is to be held on December 19, 1995, at 10:00
a.m., Philadelphia time, at Crown's offices located at 9300 Ashton Road,
Philadelphia, PA 19136.
MATTERS TO BE CONSIDERED AT THE MEETING
At the Special Meeting, shareholders of Crown will have the opportunity to
consider and act upon the following three related proposals (the
"CarnaudMetalbox Proposals"):
(1) the approval of the transactions contemplated by the Exchange Offer
Agreement, pursuant to which and subject to the terms and conditions
thereof, Crown proposes to make an offer to acquire all of the outstanding
CarnaudMetalbox Shares and to enter into the Shareholders Agreement with
CGIP;
(2) the approval of the issuance of shares of Crown Common Stock and
Crown Acquisition Preferred Stock in connection with the proposed
CarnaudMetalbox Transaction, and the issuance of shares of Crown Common
Stock upon conversion of Crown Acquisition Preferred Stock; and
(3) the approval of the adoption of an amendment (the "Acquisition
Articles Amendment") to Crown's Articles of Incorporation (a) to authorize,
solely in connection with the proposed CarnaudMetalbox Transaction,
50,000,000 shares of Crown Acquisition Preferred Stock, (b) to authorize
380,000,000 additional shares of Crown Common Stock in connection with the
proposed CarnaudMetalbox Transaction and for other general corporate
purposes and (c) to render Subchapter E of the PBCL inapplicable to Crown.
For a description of possible modifications to the terms of the proposed
CarnaudMetalbox Transaction, see "THE CARNAUDMETALBOX PROPOSALS--Description of
the CarnaudMetalbox Proposals--Possible Modifications to the Offer
Consideration."
At the Special Meeting, shareholders of Crown will also have the opportunity
to consider and act upon two separate proposals unrelated to the proposed
CarnaudMetalbox Transaction: (1) the approval of the adoption of an amendment
to Crown's Articles of Incorporation to remove a superfluous provision which
provides that shareholder approval is specifically not required in connection
with the authorization of secured bond indebtedness of not more than $5,500,000
of Crown (the "Articles Modernization Proposal"); and (2) the approval of the
adoption of an amendment to Crown's Articles of Incorporation to authorize
30,000,000 additional shares of preferred stock of Crown, which may be issued
at any time or from time to time, in one or more classes or series of a class
with voting rights and such designations, preferences, limitations and special
rights as are, subject to the terms of Crown's Articles of Incorporation as so
amended, determined by Crown's Board of Directors; provided, however, that such
shares will rank on a parity with or junior to Crown Acquisition Preferred
Stock in respect of dividend and liquidation rights and provided further that
any such shares will not be entitled to more than one vote per share when
voting as a class with holders of Crown Common Stock (the
1
<PAGE>
"Additional Preferred Stock Proposal") and will be subject to a policy to be
adopted by Crown's Board with the intention of mitigating certain "anti-
takeover" effects in certain situations.
Collectively, the foregoing proposals are referred to herein as the "Special
Meeting Proposals."
RECORD DATE
The record date for the Special Meeting is October 23, 1995 (the "Record
Date"). Only shareholders of Crown whose names appeared on the books of Crown
at the close of business on that date will be entitled to vote at the Special
Meeting. As of the close of business on that date, 90,609,422 shares of Crown
Common Stock were outstanding and entitled to vote at the Special Meeting, each
share being entitled to one vote.
REQUIRED VOTE
Under the PBCL and Crown's Articles of Incorporation, the approval of the
applicable CarnaudMetalbox Proposals, the Articles Modernization Proposal and
the Additional Preferred Stock Proposal each requires the vote of a majority of
the votes cast by all shareholders entitled to vote thereon at a meeting at
which a quorum is present. Under the PBCL and Crown's Bylaws, the presence, in
person or by proxy, of shareholders entitled to cast at least a majority in
number of all votes entitled to be cast on a matter is necessary to constitute
a quorum.
The rules of the NYSE require that the issuance of shares of Crown Common
Stock and Crown Acquisition Preferred Stock in connection with the proposed
CarnaudMetalbox Transaction, and of shares of Crown Common Stock upon
conversion of Crown Acquisition Preferred Stock, be approved by a majority of
the votes cast on the proposal, provided that the total vote cast on the
proposal represents over 50% in interest of all securities entitled to vote on
the proposal.
As of the Record Date, the directors and executive officers of Crown (and
their affiliates) beneficially owned 6,900,095 shares of Crown Common Stock
(including 5,372,215 shares of Crown Common Stock which may be deemed to be
beneficially owned by certain directors and executive officers by virtue of
their membership on an investment committee in respect of various Crown pension
plans), constituting approximately 7.615% of the outstanding Crown Common
Stock. All such directors and executive officers have indicated they intend to
vote or direct the vote of all outstanding shares of Crown Common Stock over
which they have voting power in favor of all of the Special Meeting Proposals.
For further information in respect of the ownership of Crown Common Stock,
including ownership by directors and executive officers of Crown, see "CROWN
CORK & SEAL COMPANY--Voting Securities and Principal Holders Thereof." For
information as to the effect of abstentions and broker "non-votes" on voting
results, see "THE MEETING--Required Vote."
SHAREHOLDERS OF CROWN SHOULD NOTE THAT THE EFFECTIVENESS OF THE
CARNAUDMETALBOX PROPOSALS TO BE CONSIDERED AT THE SPECIAL MEETING IS
CONDITIONED IN CERTAIN RESPECTS. SEE "THE MEETING--REQUIRED VOTE."
EFFECT OF SHAREHOLDER APPROVAL
Crown believes that shareholder approval of the transactions contemplated by
the Exchange Offer Agreement is not required by the PBCL or the applicable
rules of the NYSE, other than in respect of the CarnaudMetalbox Proposals
referred to below dealing with the issuance and authorization of Crown Stock in
connection with the CarnaudMetalbox Transaction. However, in addition to the
approval of the proposals dealing with the issuance and authorization of Crown
Stock, Crown's Board of Directors is requesting the approval of Crown's
shareholders of the proposed CarnaudMetalbox Transaction and the other
transactions contemplated by the Exchange Offer Agreement (including the
execution and delivery by Crown of the Shareholders Agreement) in light of the
significance of the proposed acquisition and such other transactions to Crown's
shareholders. In addition, Crown's Board of Directors has made approval of the
transactions contemplated by the Exchange Offer
2
<PAGE>
Agreement (in addition to the approval of the authorization and issuance of
Crown Stock in connection therewith) by Crown's shareholders a condition to the
acquisition of CarnaudMetalbox pursuant to the Exchange Offer Agreement. See
"THE OFFER--Conditions to the Offer" and "THE EXCHANGE OFFER AGREEMENT--
Conditions; Waiver." The legal effect of shareholder approval of the
transactions contemplated by the Exchange Offer Agreement will be to ratify the
transactions contemplated by the Exchange Offer Agreement as described herein
or otherwise disclosed sufficiently in advance of the Special Meeting under
applicable law, which ratification may prevent a shareholder from successfully
challenging the transactions contemplated by the Exchange Offer Agreement and
the actions of Crown's Board of Directors in connection therewith. Such
ratification would not apply, however, to any changes to the terms of the
transactions contemplated by the Exchange Offer Agreement not described herein
or otherwise disclosed sufficiently in advance of the Special Meeting under
applicable law. Crown does not intend to solicit approval of its shareholders
with respect to any revisions or amendments to the Exchange Offer Agreement or
the Shareholders Agreement which Crown makes after the Special Meeting, except
in the specific circumstances noted below in "--The CarnaudMetalbox Proposals--
Description of the CarnaudMetalbox Proposals--Possible Modifications to the
Offer Consideration."
THE CARNAUDMETALBOX PROPOSALS
DESCRIPTION OF THE CARNAUDMETALBOX PROPOSALS
The Exchange Offer Agreement
Pursuant to the Exchange Offer Agreement and subject to the terms and
conditions thereof, Crown has agreed to make an offer to be conducted as an
Offre publique d'echange a titre principal et d'achat a titre subsidiaire, or
public exchange offer with a secondary cash offer (jointly, the "Offer"), under
French law for all of the outstanding CarnaudMetalbox Shares, and CGIP has
agreed to tender pursuant to the Offer all CarnaudMetalbox Shares beneficially
owned by CGIP (or one of its subsidiaries) and to receive Units in exchange for
such shares. On October 31, 1995, CGIP beneficially owned, directly or
indirectly, approximately 30.4% of the total outstanding CarnaudMetalbox
Shares, representing approximately 44.4% of the aggregate voting power of the
outstanding CarnaudMetalbox Shares (taking into account double-voting rights
with respect to certain CarnaudMetalbox Shares owned by CGIP and certain other
shareholders of CarnaudMetalbox (which double voting rights Crown will not have
if the Offer is consummated)). Ernest-Antoine Seilliere, the Chairman and Chief
Executive Officer of CGIP, is also the Chairman of the conseil de surveillance,
the supervisory board, of CarnaudMetalbox. For a description of the Exchange
Offer Agreement, a copy of which is attached to this Proxy Statement/Prospectus
as Annex A, and the terms and conditions of CGIP's obligation to tender and not
withdraw its CarnaudMetalbox Shares in the Offer, including in the event of any
competing bid for CarnaudMetalbox Shares, see "THE EXCHANGE OFFER AGREEMENT--
Agreement to Tender" and "--Conditions; Waiver."
Possible Modifications to the Offer Consideration
As described in "THE CARNAUDMETALBOX PROPOSALS--Description of the
CarnaudMetalbox Proposals--Possible Modifications to the Offer Consideration,"
the approval of the transactions contemplated by the Exchange Offer Agreement
will constitute an approval of certain adjustments to the Exchange Ratio in
accordance with the terms of the Exchange Offer Agreement, including pursuant
to Crown's exercise of its right under the Exchange Offer Agreement to increase
the Exchange Ratio. See "--The Offer--Exchange Ratio and Market Value of Crown
Common Stock."
In addition, although Crown has no current intention of changing the Offer
Consideration, under certain circumstances (none of which is presently expected
to exist), the Offer Consideration may be modified (in certain circumstances
with CGIP's consent) from that described herein subsequent to the date of this
Proxy Statement/Prospectus in the event that Crown's Board of Directors
determines that such modifications are in the best interests of Crown. If the
Offer Consideration is changed by Crown in a manner which Crown's Board of
3
<PAGE>
Directors believes would materially adversely affect Crown's shareholders,
Crown intends to resolicit the approval of Crown shareholders, unless such
changes are disclosed to Crown shareholders prior to the Special Meeting. See
"THE OFFER--General." However, if after the Special Meeting the Offer
Consideration is so changed in response to a competing bid for CarnaudMetalbox
or as required by a regulatory authority, such as the CBV, Crown may elect not
to proceed with resolicitation if Crown receives the advice of outside counsel
that resolicitation is not required under applicable state law (which may be
based solely upon the applicable statutory provisions of Pennsylvania law in
the absence of any controlling judicial precedent); Crown Common Stock will not
be delisted from the NYSE as a result of such election; and Crown's Board of
Directors determines that, because of the associated delay, resolicitation
would jeopardize the consummation of the CarnaudMetalbox Transaction or the
benefits of the transaction to Crown's shareholders. Crown has been advised by
its counsel, Dechert Price & Rhoads, that such counsel is unaware of any
existing controlling judicial precedent in Pennsylvania with respect to the
specific facts and circumstances described in this paragraph.
Any such increase in the Offer Consideration in the manner described in the
two preceding paragraphs may have a dilutive effect on current holders of Crown
Common Stock; may, to the extent it is in the form of additional Crown equity,
have the effect of increasing CGIP's, and former CarnaudMetalbox shareholders'
aggregate, percentage ownership of Crown Common Stock following the Offer; and
may have a material impact on the unaudited pro forma consolidated condensed
financial statements contained herein. Crown has provided certain sensitivity
analyses in the notes to such unaudited pro forma consolidated condensed
financial statements discussing the effects of certain variations in the Offer
Consideration, including with respect to net income per share of Crown Common
Stock. See "UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS,"
including Note 9 thereto, and "COMPARATIVE PER SHARE DATA." Crown does not
intend to increase the Exchange Ratio above 1.183, or otherwise change the
Offer Consideration in a manner which Crown's Board of Directors believes would
materially adversely affect Crown's shareholders, unless it receives the
opinion of its financial advisor that the Offer Consideration, as so modified,
is fair to Crown from a financial point of view. The decision whether to obtain
such a fairness opinion with respect to any such changes to the Offer
Consideration will be made by Crown's Board of Directors.
For additional information regarding the possible number of shares of Crown
Stock which could be issued in the Offer and the number of shares of Crown
Stock to be authorized by the Acquisition Articles Amendment, see "--Possible
Number of Shares of Crown Stock to be issued in the Offer" and "--Amendments to
Crown's Articles of Incorporation."
Significant Shareholder
By virtue of CGIP's substantial ownership position in CarnaudMetalbox and its
agreement in the Exchange Offer Agreement to receive Units in exchange for its
CarnaudMetalbox Shares in the Offer, it is anticipated that CGIP will become
Crown's largest holder of Crown Common Stock and Crown Acquisition Preferred
Stock immediately after consummation of the Offer. Based on the total number of
outstanding shares of Crown Common Stock and outstanding CarnaudMetalbox Shares
(in each case, not including outstanding options) as of October 31, 1995, if
the Offer is consummated, CGIP's percentage ownership of (1) the issued and
outstanding Crown Common Stock immediately following the Offer, assuming no
conversion of Crown Acquisition Preferred Stock, could range from approximately
12.4% to 20.4%, (2) the issued and outstanding Crown Common Stock immediately
following the Offer, assuming conversion of Crown Acquisition Preferred Stock
(which percentage ownership corresponds to CGIP's percentage ownership of the
total voting power in the election of directors of Crown immediately following
the Offer), could range from approximately 14.4% to 25.1% and (3) the issued
and outstanding Crown Acquisition Preferred Stock immediately following the
Offer could range from approximately 30.4% to 100%. The low end of the CGIP
ownership ranges above assumes the Exchange Ratio is 0.968 and all
CarnaudMetalbox shareholders tender and elect to receive Units. The high end of
such ranges assumes the Exchange Ratio is 1.183 and CGIP is the only
CarnaudMetalbox shareholder that elects to receive Units. In certain cases, the
Exchange Ratio could exceed 1.183. See "SUMMARY--The Offer--Exchange Ratio and
Market Value of Crown Common Stock."
For additional information regarding CGIP, see "--Compagnie Generale
d'Industrie et de Participations S.A."
4
<PAGE>
The Shareholders Agreement; Strategic Committee
Crown and CGIP have agreed that, on the date the Societe des bourses
francaises, the financial institution responsible for the supervision of
trading in listed shares on French stock exchanges (the "SBF"), publishes the
avis de resultat, or closing notice, confirming the success of the Offer (the
"Closing Date"), Crown and CGIP will enter into the Shareholders Agreement,
which contains standstill, board representation and other provisions. Crown
will indicate in the Shareholders Agreement its intention to commence paying
cash dividends on Crown Common Stock if the Offer is consummated. In addition,
in the Shareholders Agreement, Crown has indicated that Crown intends to
conduct its business in a manner consistent with its maintaining an "investment
grade" rating for its long-term unsecured debt securities, and has agreed that,
under certain circumstances, any failure to maintain such rating for a period
of longer than one year will constitute a breach of the foregoing requirement
and the termination of the standstill period under the Shareholders Agreement.
For a description of the Shareholders Agreement, see "THE SHAREHOLDERS
AGREEMENT." A copy of the Shareholders Agreement is attached to this Proxy
Statement/Prospectus as part of Annex A. Crown has also agreed in the Exchange
Offer Agreement to amend its Bylaws on the Closing Date to create a strategic
committee of its directors (the "Strategic Committee"), one-half the members of
which (including its chair) will be representatives of CGIP. The Bylaws as so
amended will provide that Crown's Board will consider the vote of the Strategic
Committee with respect to those matters to be considered by the Strategic
Committee but will not be bound to follow the vote of the Strategic Committee.
CGIP has advised Crown that it will designate Mr. Seilliere to serve as
chairman of the Strategic Committee. For a description of the Exchange Offer
Agreement, see "THE EXCHANGE OFFER AGREEMENT." For information regarding CGIP's
proposed representatives on Crown's Board of Directors, see "CARNAUDMETALBOX--
Information as to Additional Crown Directors After the Offer."
Debt Rating
As of November 10, 1995, Crown's long-term unsecured debt securities were
rated Baa1 by Moody's Investors Services Inc. ("Moody's") and BBB+ by Standard
& Poor's Corp. ("S&P"). For information in respect of recent actions by such
rating agencies in placing certain Crown debt securities under review and
Crown's plans for a possible issuance of equity or equity-linked securities, if
necessary, of up to approximately $1 billion to maintain its investment grade
debt ratings, see "THE CARNAUDMETALBOX PROPOSALS--Sources of Funds." The
issuance of any such equity or equity-linked securities may, depending on the
terms of such issuance, be dilutive to Crown's shareholders. A downward
adjustment, if any, in Crown's debt ratings will also likely increase the cost
of future long-term borrowings and commercial paper issuances by Crown, and
could adversely affect the timing and other terms upon which Crown plans to
borrow funds. For information on the significance of Crown's debt ratings with
respect to CGIP's obligation to tender into the Offer and with respect to the
Shareholders Agreement, see "THE EXCHANGE OFFER AGREEMENT--Conditions; Waiver"
and "THE SHAREHOLDERS AGREEMENT--Debt Rating," respectively.
Issuance of Crown Common Stock and Crown Acquisition Preferred Stock
General. Crown proposes to issue to electing CarnaudMetalbox shareholders a
number of shares of Crown Stock sufficient to acquire all of the outstanding
shares of CarnaudMetalbox. For a description of the terms of Crown Stock, see
"DESCRIPTION OF CROWN STOCK." For a description of the ability of Crown's Board
of Directors to set the terms of Crown Acquisition Preferred Stock, see "--
Amendments to Crown's Articles of Incorporation" below. Among other things,
shares of Crown Acquisition Preferred Stock will be convertible, at the option
of the holder (and, in certain circumstances, mandatorily or at Crown's
option), subject to the terms thereof, into shares of Crown Common Stock. If
the CarnaudMetalbox Proposals are approved and the Offer is consummated, the
rights of holders of Crown Common Stock will be subject to, and may be
adversely affected by, the rights of holders of Crown Acquisition Preferred
Stock. Holders of Crown Common Stock will not be entitled to exercise
preemptive rights with respect to the issuance of shares of Crown Stock in
connection with the proposed CarnaudMetalbox Transaction or upon conversion of
Crown Acquisition Preferred Stock.
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Possible Number of Shares of Crown Stock to be Issued in the Offer. As
discussed above, Crown is proposing to issue a number of shares of Crown Common
Stock sufficient to acquire CarnaudMetalbox. Under the Exchange Offer
Agreement, based on currently available information and the assumptions
discussed below, this could result in up to 101,900,170 shares of Crown Common
Stock being issued to CarnaudMetalbox's shareholders (including up to
23,739,119 shares issued upon conversion of Crown Acquisition Preferred Stock),
assuming all holders of CarnaudMetalbox Shares elect to receive Units in the
Offer, all employee stock options contemplated by the Exchange Offer Agreement
are granted, all holders of outstanding options for CarnaudMetalbox Shares
exercise such options and the Exchange Ratio is determined to be 1.183 (subject
to certain exceptions, the maximum possible Exchange Ratio under the Exchange
Offer Agreement, as described in "--The Offer--Exchange Ratio and Market Value
of Crown Common Stock"). In such a case, former holders of CarnaudMetalbox
Shares and options could hold up to approximately 53% of the issued and
outstanding Crown Common Stock upon consummation of the Offer, which percentage
could increase under certain circumstances. See "THE CARNAUDMETALBOX
PROPOSALS--Description of the CarnaudMetalbox Proposals--Possible Modifications
to the Offer Consideration." The Acquisition Articles Amendment, if adopted,
will make an additional 380,000,000 shares of Crown Common Stock available for
issuance as described below in "--Amendments to Crown's Articles of
Incorporation--Authorization of Additional Crown Common Stock."
Amendments to Crown's Articles of Incorporation
Authorization of Crown Acquisition Preferred Stock. Crown's Board of
Directors is requesting adoption by the shareholders of Crown of the
Acquisition Articles Amendment to authorize, solely in connection with the
CarnaudMetalbox Transaction, 50,000,000 shares of Crown Acquisition Preferred
Stock. Under the proposed amendment, Crown's Board of Directors will have
authority to issue, solely in connection with the CarnaudMetalbox Transaction,
one or more classes or series of a class of such preferred stock without
further shareholder approval, except as otherwise provided under applicable law
or rules of securities exchanges or quotation systems on which shares of Crown
are at the time listed or authorized for quotation, and will have the ability
to determine all designations, relative rights, preferences and limitations of
such class or series. However, under the Exchange Offer Agreement, Crown and
CGIP have agreed that Crown Acquisition Preferred Stock will have the terms set
forth in the Exchange Offer Agreement. For a description of such terms, see
"DESCRIPTION OF CROWN STOCK--Crown Acquisition Preferred Stock." Shares of
Crown Acquisition Preferred Stock will be used solely to effect the
CarnaudMetalbox Transaction. Crown has no current intention of modifying the
terms of Crown Acquisition Preferred Stock, but it reserves the right to do so,
without further shareholder approval, subject to the terms of the Exchange
Offer Agreement. See "--Possible Modifications to the Offer Consideration"
above. If the CarnaudMetalbox Proposals are approved and the Offer is
consummated, the rights of holders of Crown Common Stock will be subject to,
and may be adversely effected by the rights of holders of Crown Acquisition
Preferred Stock.
Authorization of Additional Crown Common Stock. Crown's Board of Directors is
also requesting adoption by the shareholders of Crown of the Acquisition
Articles Amendment to increase the number of authorized shares of Crown Common
Stock from 120,000,000 to 500,000,000. The amendment, if adopted, would make an
additional 380,000,000 shares of Crown Common Stock available for issuance from
time to time for such purposes and consideration as Crown's Board of Directors
may approve, including for the proposed CarnaudMetalbox Transaction, and no
further shareholder approval will be required, except as otherwise provided
under applicable law or rules of securities exchanges or quotation systems on
which shares of Crown are at the time listed or authorized for quotation.
For a description of possible uses of additional shares of Crown Common Stock
in addition to the CarnaudMetalbox Transaction, including, without limitation,
issuance as part or all of the consideration required to be paid by Crown for
other acquisitions, issuance in public or private sales for cash as a means of
obtaining capital or retiring indebtedness, issuance pursuant to employee
benefits or other compensatory plans or stock splits and possible anti-takeover
uses, see "THE CARNAUDMETALBOX PROPOSALS--Amendment to
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Crown's Articles of Incorporation." For a description of Crown Common Stock,
see "DESCRIPTION OF CROWN STOCK--Crown Common Stock."
"Opt-Out" of Subchapter E of the PBCL. Subchapter E of the PBCL provides that
any holder of voting shares of a registered Pennsylvania corporation such as
Crown which objects to a "control transaction" will be entitled to make a
demand on the "controlling person" for payment of the fair value of the voting
shares of the corporation held by the shareholder as determined pursuant to the
PBCL, and such controlling person shall be required to pay that amount in cash
to such shareholder. A "control transaction" is defined as the acquisition by a
"controlling person." A "controlling person" is generally defined as a person
having voting power over at least 20% of the votes that all shareholders would
be entitled to cast in an election of directors.
Following the consummation of the Offer, it is possible that CGIP will become
a "controlling person" under Subchapter E. Accordingly, pursuant to the
Exchange Offer Agreement, Crown's shareholders are being requested to render
Subchapter E inapplicable to Crown. If adopted, the Acquisition Articles
Amendment will render Subchapter E inapplicable to Crown even if CGIP does not
become a "controlling person" as a result of the consummation of the Offer and
will prevent Subchapter E from applying not only to the acquisition by CGIP of
Crown Stock or other voting securities of Crown in connection with the Offer or
otherwise but also from applying to other "control transactions."
A copy of the Acquisition Articles Amendment is attached to this Proxy
Statement/Prospectus as Annex B.
BACKGROUND OF THE CARNAUDMETALBOX TRANSACTION
For several years, Crown has grown its historical core metal packaging
businesses and expanded into new product lines, such as plastic containers,
primarily through selected strategic acquisitions. As part of Crown's focus on
global packaging opportunities, Crown management recognized the need to expand
the scope of its non-U.S. operations, especially in Europe. Crown's management
identified CarnaudMetalbox as an attractive potential partner for a combination
particularly in light of the complementary fit between Crown's strong presence
in North America and CarnaudMetalbox's strong presence in Europe.
On January 27, 1995, at the prior invitation of Mr. William J. Avery,
Chairman of the Board, President and Chief Executive Officer of Crown, Mr.
Seilliere, Chairman and Chief Executive Officer of CGIP and Chairman of the
supervisory board of CarnaudMetalbox, met with Mr. Avery in Paris to discuss in
broad outline the feasibility of a possible business combination between Crown
and CarnaudMetalbox. On February 24, 1995, Mr. Seilliere contacted Mr. Avery to
express his interest in pursuing a more in-depth study of a possible
combination between Crown and CarnaudMetalbox. After additional meetings and
negotiations between representatives of Crown and CGIP over the next three
months, Crown and CGIP entered into the Exchange Offer Agreement on May 22,
1995.
RECOMMENDATION OF CROWN'S BOARD OF DIRECTORS; OPINION OF CROWN'S FINANCIAL
ADVISOR
Crown's Board of Directors believes the terms of the CarnaudMetalbox
Transaction, the Offer, the Exchange Offer Agreement and the transactions
contemplated thereby are fair to, and in the best interests of, the
shareholders of Crown and has by unanimous vote of the directors present
approved a resolution approving and recommending to Crown's shareholders for
their approval the CarnaudMetalbox Proposals. For information as to the factors
considered by the Board of Directors of Crown in approving the CarnaudMetalbox
Transaction, the Offer, the Exchange Offer Agreement and the transactions
contemplated thereby and as to Crown's reasons for the CarnaudMetalbox
Transaction, see "THE CARNAUDMETALBOX PROPOSALS--Recommendation of Crown's
Board of Directors; Reasons for the CarnaudMetalbox Transaction."
CS First Boston Corporation ("CS First Boston") has delivered to Crown's
Board of Directors written opinions to the effect that, based upon and subject
to certain matters stated therein, as of May 22, 1995 and the date of this
Proxy Statement/Prospectus, the consideration proposed to be paid by Crown
pursuant to the Offer contemplated by the Exchange Offer Agreement was fair to
Crown from a financial point of view.
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THE FULL TEXT OF CS FIRST BOSTON'S WRITTEN OPINION DATED THE DATE OF THIS
PROXY STATEMENT/PROSPECTUS, WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS
CONSIDERED AND LIMITATIONS OF THE REVIEW UNDERTAKEN IN RENDERING SUCH OPINION,
IS ATTACHED AS ANNEX C TO THIS PROXY STATEMENT/PROSPECTUS. CS FIRST BOSTON'S
OPINION IS ADDRESSED TO CROWN'S BOARD OF DIRECTORS AND ADDRESSES ONLY THE
FAIRNESS TO CROWN FROM A FINANCIAL POINT OF VIEW OF THE CONSIDERATION PROPOSED
TO BE PAID BY CROWN IN THE OFFER. SUCH OPINION NOTES THAT THE EXCHANGE RATIO IS
SUBJECT TO A COLLAR PROVIDING THAT THE EXCHANGE RATIO SHALL NOT EXCEED 1.183
UNITS NOR BE LESS THAN 0.968 UNITS. SEE "--THE OFFER--EXCHANGE RATIO AND MARKET
VALUE OF CROWN COMMON STOCK." THE CS FIRST BOSTON OPINION DOES NOT ADDRESS THE
FAIRNESS OF SUCH CONSIDERATION FROM A FINANCIAL POINT OF VIEW OR OTHERWISE TO
CARNAUDMETALBOX OR CARNAUDMETALBOX SHAREHOLDERS AND, CONSEQUENTLY, DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY CARNAUDMETALBOX SHAREHOLDER IN RESPECT OF
SUCH SHAREHOLDER'S DECISION WHETHER TO TENDER ITS CARNAUDMETALBOX SHARES IN THE
OFFER OR IN ANY OTHER RESPECT. CROWN SHAREHOLDERS ARE URGED TO READ THIS
OPINION IN ITS ENTIRETY. See "THE CARNAUDMETALBOX PROPOSALS--Opinion of Crown's
Financial Advisor."
Under certain circumstances, Crown may increase the Exchange Ratio above the
upper collar limit of 1.183 or otherwise change the Offer Consideration. See
"--The Offer--Exchange Ratio and Market Value of Crown Common Stock" and "THE
CARNAUDMETALBOX PROPOSALS--Description of the CarnaudMetalbox Proposals--
Possible Modifications to the Offer Consideration." Crown does not intend to
increase the Exchange Ratio above the upper collar limit of 1.183, or otherwise
change the Offer Consideration in a manner which Crown's Board of Directors
believes would materially adversely affect Crown's shareholders, unless it
receives the opinion of its financial advisor that the Offer Consideration, as
so modified, is fair to Crown from a financial point of view. The decision
whether to obtain such a fairness opinion with respect to any such changes to
the Offer Consideration will be made by Crown's Board of Directors.
CARNAUDMETALBOX
CarnaudMetalbox, a multinational manufacturer of metal and plastic packaging
materials and equipment with consolidated revenue of FF 24.9 billion in 1994,
was formed in 1989 as a result of the merger of Carnaud S.A. and MetalBox, a
French and British packaging company, respectively. Approximately 78% of
CarnaudMetalbox's 1994 net sales were derived from its operations in the
European Union, with France, the United Kingdom and all other European Union
member countries accounting for approximately 24%, 25% and 29%, respectively.
Approximately 12% of net sales were derived from operations in Europe outside
of the European Union and in North America, and the remaining 10% were derived
from the Asia-Pacific and Africa, Middle East and Caribbean regions.
CarnaudMetalbox's operations consist of Metal Packaging, Plastic Packaging
and Engineering and Other. Metal Packaging, which represented approximately 75%
of 1994 net sales, includes manufacture of food cans, food closures, specialty
packaging, aerosols and beverage cans. Plastic Packaging, which represented
approximately 20% of 1994 net sales, includes rigid plastic packaging for food,
household and health and beauty plastic items and flexible packaging for food
products. Engineering and Other, which represented approximately 5% of 1994 net
sales, includes sales of can manufacturing and filling lines for bottlers and
other activities.
CarnaudMetalbox's principal executive offices are located at 153 rue de
Courcelles, 75017 Paris. The telephone number is (33-1) 44-15-68-00.
For information as to the market value of CarnaudMetalbox Shares, see
"COMPARATIVE MARKET PRICE DATA--CarnaudMetalbox."
COMPAGNIE GENERALE D'INDUSTRIE ET DE PARTICIPATIONS S.A.
CGIP is a French societe anonyme that, as of October 31, 1995, held, directly
and indirectly, approximately 30.4% of the CarnaudMetalbox Shares. Because of
double voting rights attributed to certain persons who have held
CarnaudMetalbox Shares for two years or more, as of such date, CGIP held
approximately 44.4% of CarnaudMetalbox's total voting power. In addition to its
investment in CarnaudMetalbox, CGIP holds investments in companies engaged in,
among other things, computer-related services, consulting services,
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medical diagnostics, abrasive pellets, energy and real estate. CGIP's common
stock is listed on the Official List of the Paris Stock Exchange.
If the proposed CarnaudMetalbox Transaction is consummated, it is anticipated
that CGIP will become Crown's largest shareholder immediately after
consummation of the Offer, will have rights to designate up to three directors
of Crown's Board of Directors, will have substantial representation on the
Strategic Committee and will have certain other benefits and rights afforded by
the Shareholders Agreement. See "THE CARNAUDMETALBOX PROPOSALS--Description of
the CarnaudMetalbox Proposals."
TERMS OF PROPOSED SERIES OF CROWN ACQUISITION PREFERRED STOCK
Pursuant to the Exchange Offer Agreement, shares of the proposed new series
of Crown Acquisition Preferred Stock will be shares of preferred stock and,
with respect to dividend rights and rights upon liquidation, dissolution and
winding up, will rank prior to Crown Common Stock and, except as provided
below, prior to or on a parity with other Crown equity securities. A summary of
the terms of Crown Acquisition Preferred Stock as set forth in the Exchange
Offer Agreement is provided below.
Dividends. The holders of Crown Acquisition Preferred Stock will be entitled
to receive, when, as and if Crown's Board of Directors declares a dividend on
Crown Acquisition Preferred Stock out of funds legally available therefor,
cumulative preferential cash dividends from the date of initial issuance,
accruing at the per annum rate per share of 4.5% of the par value of Crown
Acquisition Preferred Stock, payable quarterly in arrears. The par value of
Crown Acquisition Preferred Stock will be equal to the average Market Closing
Price of Crown Common Stock, in U.S. dollars, for the 20 trading days prior to
the business day (the "Measurement Date") before the date (the "Filing Date")
applicable documents with the CBV committing to launch the Offer are filed (the
"Average Market Closing Price"). The "Market Closing Price" means the closing
price per share as reported by the NYSE for composite transactions.
Accordingly, the determination of the average Market Closing Price will not
take place until after the Special Meeting unless the Filing Date occurs prior
to the Special Meeting (which Crown does not currently expect to be the case).
In contrast to the adjustments called for under the Exchange Offer Agreement to
the Exchange Ratio (see "--The Offer--Exchange Ratio and Market Value of Crown
Common Stock"), the average Market Closing Price determination will not be
subject to any limitations on the minimum or maximum Market Closing Price.
Dividends will cease to accrue in respect of Crown Acquisition Preferred Stock
on the effective date of a mandatory conversion or on the date of their earlier
voluntary conversion. Accumulated unpaid dividends will not bear interest.
Voluntary Conversion. The holders of Crown Acquisition Preferred Stock will
have the right to convert their shares of Crown Acquisition Preferred Stock
into Crown Common Stock at any time following the date of issuance at the
conversion price then in effect. The conversion price will initially be 109.75%
of the par value of Crown Acquisition Preferred Stock and will be adjusted in
the case of certain events that affect Crown Common Stock. See "DESCRIPTION OF
CROWN STOCK--Crown Acquisition Preferred Stock--Right of Conversion" for a
description of such adjustments. In the event of any voluntary conversion of
Crown Acquisition Preferred Stock, the holders will not have any right to
accrued and unpaid dividends, other than those declared payable to holders of
record on or prior to the conversion date.
Mandatory Conversion. On the fourth anniversary of the date of initial
issuance of Crown Acquisition Preferred Stock (the "Latest Mandatory Conversion
Date"), each outstanding share of Crown Acquisition Preferred Stock will
convert automatically into that number of shares of Crown Common Stock for each
full share of Crown Acquisition Preferred Stock that is equal to the par value
of such Crown Acquisition Preferred Stock divided by the conversion price equal
to 109.75% of such par value, subject to adjustment upon the occurrence of
certain events affecting Crown Common Stock. See "DESCRIPTION OF CROWN STOCK--
Crown Acquisition Preferred Stock--Right of Conversion" for a description of
such adjustments.
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In addition, if at any time prior to the Latest Mandatory Conversion Date
less than 30% of the originally issued shares of Crown Acquisition Preferred
Stock are outstanding, Crown will have the right to convert the remaining Crown
Acquisition Preferred Stock into Crown Common Stock at the conversion price
then in effect.
In the event of any mandatory conversion of Crown Acquisition Preferred
Stock, all accrued and unpaid dividends in respect of such shares of Crown
Acquisition Preferred Stock will be converted into Crown Common Stock at the
applicable conversion price.
Liquidation Preference. Shares of Crown Acquisition Preferred Stock will rank
senior to Crown Common Stock upon liquidation. The liquidation preference of
each share of Crown Acquisition Preferred Stock will be an amount equal to the
sum of (1) the Average Market Closing Price of Crown Common Stock, determined
without regard to the limitations on the minimum and maximum Exchange Ratio
(see "--The Offer--Exchange Ratio and Market Value of Crown Common Stock"), and
(2) all accrued and unpaid dividends thereon.
Voting Rights. Holders of Crown Acquisition Preferred Stock will be entitled
to vote together with the holders of Crown Common Stock on all matters to be
voted upon by holders of Crown Common Stock. When voting together with holders
of Crown Common Stock on any matter, each share of Crown Acquisition Preferred
Stock will be entitled to that number of votes equal to the number of shares of
Crown Common Stock into which a share of Crown Acquisition Preferred Stock is
convertible as of the record date of the vote. Initially, shares of Crown
Acquisition Preferred Stock will be convertible into 0.91 shares of Crown
Common Stock, subject to adjustment as provided above.
Whenever dividends accrued on Crown Acquisition Preferred Stock are in
arrears and unpaid for at least six quarterly dividend periods, the holders of
Crown Acquisition Preferred Stock will be entitled to elect two additional
directors to Crown's Board of Directors until the default is cured.
Holders of Crown Acquisition Preferred Stock will also have the right to vote
separately as a class on: (1) amending, altering, or repealing any provision of
Crown's Articles of Incorporation so as to affect, in any manner adverse to the
holders of Crown Acquisition Preferred Stock, the rights, preferences,
qualifications, limitations or restrictions of Crown Acquisition Preferred
Stock; (2) creating, authorizing, or reclassifying any authorized stock of
Crown into, or increasing the authorized amount of, any class or series of
Crown's capital stock that ranks prior to Crown Acquisition Preferred Stock, or
any security convertible into shares of such a class or series; or (3) taking
any other action on which the holders of Crown Acquisition Preferred Stock are
by law entitled to vote separately as a class. Holders of Crown Acquisition
Preferred Stock will not have the right to vote separately as a class on the
creation, authorization or issuance of securities ranking junior to or on a
parity with the shares of Crown Acquisition Preferred Stock or the creation of
any indebtedness of Crown.
For additional information, including as to considerations in respect of the
value and liquidity of Crown Acquisition Preferred Stock, see "DESCRIPTION OF
CROWN STOCK--Crown Acquisition Preferred Stock."
APPRAISAL RIGHTS
Shareholders of Crown who vote against any of the CarnaudMetalbox Proposals
will not be entitled to appraisal rights under the PBCL.
CONDITIONS TO CROWN'S OBLIGATION TO COMMENCE AND CLOSE THE OFFER
Crown's obligation under the Exchange Offer Agreement to commence the Offer
is subject to certain conditions, including obtaining requisite regulatory
approvals, the adoption by Crown shareholders of the CarnaudMetalbox Proposals
and the acceptance of the shares of Crown Common Stock and Crown Acquisition
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Preferred Stock to be issued in the Offer for listing on the NYSE subject to
official notice of issuance. The obligation of Crown to close the Offer is
subject to the Minimum Condition. The "Minimum Condition" means the condition
that the number of CarnaudMetalbox Shares validly tendered into the Offer is at
least equal to a majority of the Voting Power of CarnaudMetalbox based on the
number of outstanding CarnaudMetalbox Shares on the date prior to the Filing
Date and assuming loss of all double voting rights of the CarnaudMetalbox
Shares to be acquired by Crown (or its subsidiaries). For this purpose, "Voting
Power" means the voting power in the general election of members of the
supervisory board of CarnaudMetalbox and is calculated for options to acquire
CarnaudMetalbox Shares by reference to the votes attributable to the number of
CarnaudMetalbox Shares for which such options are exercisable. See "THE OFFER--
Conditions to the Offer." In addition, if Crown commences the Offer prior to
the Special Meeting (which Crown does not currently expect to be the case), the
Offer will be conditioned on the approval by Crown's shareholders at the
Special Meeting of the CarnaudMetalbox Proposals. See "--The Offer--Exchange
Ratio and Market Value of Crown Common Stock."
Based on the foregoing, Crown currently anticipates that the Closing Date
will occur in the first quarter of 1996 if the Offer is commenced and
consummated.
REGULATORY APPROVALS
European Community. The proposed CarnaudMetalbox Transaction is subject to
the requirements of Council Regulation (EEC) No. 4064/89 ("EC Regulation
4064/89"). Crown filed a notification with the European Commission on June 23,
1995 and provided certain information to the European Commission. The European
Commission must review a notifiable proposed acquisition to determine whether
it is compatible with the common market and make such a final determination no
later than four months after the initiation of proceedings (i.e., in the case
of the proposed CarnaudMetalbox Transaction, no later than November 30, 1995).
Crown believes a European Commission decision could occur as early as November
14, 1995.
Crown believes that the proposed CarnaudMetalbox Transaction is compatible
with the common market under EC Regulation 4064/89. However, in order to
address certain competitive concerns raised by the European Commission, Crown
has proposed divesting en bloc a total of five aerosol can plants or operations
and one support operation of Crown and CarnaudMetalbox located in five European
countries. These plants and operations represent less than 1.5% of 1994 pro
forma combined net sales of Crown and CarnaudMetalbox. Crown believes such
proposed divestitures will not be material to the combined company or its
results of operations or financial position and that the European Commission
will authorize the proposed CarnaudMetalbox Transaction subject to these
proposed divestitures. Nevertheless, there can be no assurance that the
European Commission will accept Crown's divestiture proposal and determine that
the proposed CarnaudMetalbox Transaction is compatible with the common market.
Crown intends to issue a press release and include information in an Exchange
Act filing prior to the Special Meeting with respect to the decision of the
European Commission.
Other Approvals. For further information on regulatory approvals required in
connection with the Offer, see "THE CARNAUDMETALBOX PROPOSALS--Regulatory
Approvals." In addition, see "THE EXCHANGE OFFER AGREEMENT--Certain Covenants"
for a general description of Crown's obligations in the event of a regulatory
or other challenge to the Offer under the antitrust laws.
TAX CONSEQUENCES TO CROWN AND CARNAUDMETALBOX SHAREHOLDERS
No gain or loss will be recognized for U.S. federal income tax purposes by
Crown or any holder of Crown Common Stock upon the consummation of the Offer.
For a description of tax consequences to holders of
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CarnaudMetalbox Shares who tender into the Offer, see "THE OFFER--Certain Tax
Consequences of the Offer."
SOURCES OF FUNDS
Crown estimates that the maximum amount of funds required to acquire the
outstanding CarnaudMetalbox Shares on a fully diluted basis pursuant to the
Offer and to pay related fees and expenses will be approximately $2.8 billion,
assuming all holders of CarnaudMetalbox Shares (other than CGIP) were to elect
to receive the Cash Election Price and based upon the Noon Buying Rate on
November 10, 1995.
Crown plans to obtain the necessary funds principally from an acquisition
loan facility in the amount of FF 13.7 billion (or approximately $2.8 billion
based upon the Noon Buying Rate on November 10, 1995) to be provided to Crown
by a syndicate of commercial banks or other financial institutions on terms and
conditions set forth in a commitment letter dated August 25, 1995, as amended,
between Crown and Chemical Bank and Chemical Securities Inc. See "THE
CARNAUDMETALBOX PROPOSALS--Sources of Funds."
The total amount of indebtedness to be borrowed by Crown under the facility
referred to above will depend on the number of CarnaudMetalbox Shares exchanged
for cash in the Offer. It is anticipated that the indebtedness incurred by
Crown pursuant to the such facility will be repaid from funds generated
internally by Crown and its subsidiaries, through additional borrowings, net
proceeds of dispositions, possible equity offerings (as discussed below) or a
combination of two or more of such sources.
On May 23, 1995, S&P announced that it had placed Crown's BBB+ senior
unsecured debt and A-2 commercial paper ratings on Creditwatch in light of the
proposed CarnaudMetalbox Transaction and that "ratings could be lowered on
Crown if management is unable to take prompt action to strengthen the balance
sheet." At the same time, Moody's announced that it had placed Crown's Baa1
senior unsecured debt rating under "review-direction uncertain" in light of the
proposed CarnaudMetalbox Transaction. The announcements of such rating agencies
cited uncertainties associated with the number of CarnaudMetalbox shareholders
electing to receive cash versus Units in the Offer (and the resulting effect on
Crown's capital structure) in taking such actions.
It is Crown's objective to maintain its existing investment grade debt credit
ratings, and Crown continues to have discussions with such rating agencies in
this regard. Subsequent to consummation of the Offer, Crown intends to take
steps, if necessary, to achieve a capital structure which it considers to be
consistent with this ratings objective. Such steps could include an offering of
Crown Common Stock or other equity or equity-linked securities of up to
approximately $1 billion, which may occur as promptly as practicable following
consummation of the Offer. The manner of any such offering has not been
decided, and the price and other terms upon which such securities would be
offered cannot be determined at this time. Crown anticipates that the net
proceeds from any such offering would be used to reduce debt incurred in
connection with the CarnaudMetalbox Transaction. The issuance of any such
equity or equity-linked securities may, depending on the terms of such
issuance, be dilutive to Crown's shareholders.
For information on the significance of Crown's debt ratings with respect to
CGIP's obligation to tender into the Offer and with respect to the Shareholders
Agreement, see "THE EXCHANGE OFFER AGREEMENT--Conditions; Waiver" and "THE
SHAREHOLDERS AGREEMENT--Debt Rating," respectively. See "THE CARNAUDMETALBOX
PROPOSALS--Recommendation of Crown's Board of Directors; Reasons for the
CarnaudMetalbox Transaction" for additional information regarding Crown's
possible capital structure following the Offer.
12
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ACCOUNTING TREATMENT
The Offer, if consummated, will be treated as a purchase of CarnaudMetalbox
by Crown under U.S. GAAP. Under that accounting method, the identifiable net
assets and liabilities of CarnaudMetalbox would be recorded on the consolidated
financial statements of Crown at their respective fair market values at the
time of consummation of the Offer. See "THE CARNAUDMETALBOX PROPOSALS--
Accounting Treatment."
OTHER PROPOSALS TO BE CONSIDERED AT THE MEETING
THE ARTICLES MODERNIZATION PROPOSAL
General. In order to modernize Crown's Articles of Incorporation, Crown's
Board of Directors is requesting approval to remove a provision from Crown's
Articles of Incorporation which provides that shareholder approval is
specifically not required in connection with authorization of secured bond
indebtedness of Crown of not more than $5,500,000. A copy of the proposed
amendment to the Articles of Incorporation is attached to this Proxy
Statement/Prospectus as Annex D. For a discussion of this proposed amendment,
including the full text of the relevant provision, see "OTHER PROPOSALS TO BE
CONSIDERED AT THE MEETING--Articles Modernization Proposal."
Under the PBCL, the vote of shareholders is not required to authorize secured
indebtedness of Crown. Crown does not believe the existence of the provision
excluding from shareholders the right to vote to authorize secured bond
indebtedness of not more than $5,500,000 means that a shareholder vote is
required to authorize secured indebtedness of more than $5,500,000.
Accordingly, Crown believes this provision is superfluous and creates potential
ambiguity as to the circumstances in which a shareholder vote may be required.
Recommendation of Crown's Board of Directors. Crown's Board of Directors has
by unanimous vote of the directors present approved a resolution approving the
proposed Articles Modernization Proposal and recommending to Crown's
shareholders for their approval the Articles Modernization Proposal.
Appraisal Rights. Shareholders of Crown who vote against the Articles
Modernization Proposal will not be entitled to appraisal rights under the PBCL.
THE ADDITIONAL PREFERRED STOCK PROPOSAL
General. Crown's Board of Directors is requesting the shareholders of Crown
to approve the Additional Preferred Stock Proposal to amend Crown's Articles of
Incorporation as set forth in Annex E to this Proxy Statement/Prospectus. Under
the proposed amendment, Crown's Board of Directors will have authority to
issue, at any time or from time to time, up to 30,000,000 shares of one or more
classes or series of a class of preferred stock without further shareholder
approval, except as otherwise provided under applicable law or rules of
securities exchanges or quotation systems on which shares of Crown are at the
time listed or authorized for quotation. In addition, subject to the
limitations described below, the Crown Board would determine all designations,
relative rights, preferences and limitations of such class or series, including
the designation of such classes and series and the numbers of shares making up
such class or series; the dividend rights, if any; the rights upon liquidation
or distribution on the assets of Crown, if any; the conversion or exchange
rights, if any; the redemption provisions, if any; the sinking fund provisions,
if any; and the voting rights, if any; provided, however, that such shares will
rank on a parity with or junior to Crown Acquisition Preferred Stock in respect
of dividend and liquidation rights and provided further that any such shares
will not be entitled to more than one vote per share when voting as a class
with holders of Crown Common Stock.
Unlike shares of Crown Acquisition Preferred Stock, the shares of preferred
stock authorized under the Additional Preferred Stock Proposal will not be
limited to issuance in connection with the CarnaudMetalbox Transaction. With
the intention of mitigating anti-takeover effects of any possible issuance in
certain situations,
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<PAGE>
Crown's Board of Directors will, if the Additional Preferred Stock Proposal is
approved, adopt a policy providing that no future issuance of such preferred
stock will be effected without shareholder approval unless the Crown Board
(whose decision shall be conclusive) determines in good faith (1) that such
issuance is primarily for the purpose of facilitating a financing, an
acquisition or another proper corporate objective or transaction and (2) that
any anti-takeover effects of such issuance are not Crown's primary purpose for
effecting such issuance. Crown's Board of Directors will not amend or revoke
this policy without giving written notice to the holders of all outstanding
shares of Crown's voting securities. However, no such amendment or revocation
will be effective, without approval of Crown's shareholders (voting as a group)
by a majority of votes cast, to permit a subsequent issuance of such preferred
stock for the primary purpose of obstructing a takeover of Crown by any person
who has, prior to such written notice to shareholders, notified Crown's Board
of Directors of such person's desire to pursue a takeover of Crown.
For a discussion of possible uses of additional authorized preferred stock of
Crown, see "OTHER PROPOSALS TO BE CONSIDERED AT THE MEETING--The Additional
Preferred Stock Proposal."
Shareholders of Crown will not be entitled to exercise preemptive rights with
respect to issuances of the preferred stock to be authorized pursuant to the
Additional Preferred Stock Proposal.
Recommendation of Crown's Board of Directors. Crown's Board of Directors has
by unanimous vote of the directors present approved and recommended to
shareholders for their approval the Additional Preferred Stock Proposal because
Crown's Board believes the additional authorized shares will provide
flexibility for future acquisitions, corporate financings and other corporate
purposes (which is advisable in view of the complexity of modern business
financing and acquisition transactions) by permitting Crown's Board to specify
the precise characteristics of the preferred stock to be issued, depending on
market conditions and the nature of the transaction, without the delay and
expense of further shareholder action (except as otherwise required pursuant to
applicable law or rules of securities exchanges or quotation systems on which
shares of Crown are at the time listed or authorized for quotation). See "OTHER
PROPOSALS TO BE CONSIDERED AT THE MEETING--The Additional Preferred Stock
Proposal."
Appraisal Rights. Shareholders of Crown who vote against the Additional
Preferred Stock Proposal will not be entitled to appraisal rights under the
PBCL.
THE OFFER
GENERAL
This Proxy Statement/Prospectus, as it may be amended or supplemented,
constitutes the prospectus of Crown with respect to offers and sales by Crown
in the United States and to U.S. persons, and reoffers and resales from time to
time into the United States and to U.S. persons, of shares of Crown Common
Stock and Crown Acquisition Preferred Stock issued in the Offer to the extent
that such offers, sales, reoffers and resales are not exempt from registration
under the Securities Act. This Proxy Statement/Prospectus, as it may be amended
or supplemented, will also constitute the Offer to Purchase with respect to the
cash portion of the Offer.
CROWN CORK & SEAL COMPANY, INC.
Crown is a leading worldwide manufacturer of metal and plastic packaging
products. The products include metal cans for beverage, food, aerosol and other
products, plastic containers for beverage, processed food and other products,
metal crowns (also known as bottle caps), metal and plastic closures and
composite containers. Crown also manufactures filling, packaging and handling
machinery for the bottling industry.
In the United States, Crown is one of the two leading manufacturers of
beverage cans, and, including its operations in Canada and Mexico, management
believes Crown is the largest manufacturer of beverage cans in
14
<PAGE>
North America. Based on management estimates and industry sources, Crown is
also among the leading worldwide manufacturers of plastic containers, food
cans, aerosol cans, plastic and metal closures and metal crowns.
Crown was founded in 1892. The principal executive offices of Crown are
located at 9300 Ashton Road, Philadelphia, Pennsylvania 19136, and the
telephone number at such address is (215) 698-5100.
For information as to the market value of shares of Crown Common Stock, see
"COMPARATIVE MARKET PRICE DATA--Crown Cork & Seal Company, Inc."
EXCHANGE RATIO AND MARKET VALUE OF CROWN COMMON STOCK
In the Offer, shareholders of CarnaudMetalbox will be offered, at the
holder's election, for each CarnaudMetalbox Share, either (1) 1.065 Units, each
Unit consisting of (x) .75 shares of Crown Common Stock and (y) .25 shares of
Crown Acquisition Preferred Stock, with cash (in French francs) being paid in
lieu of any fractional share interest, or (2) FF 225 in cash. The Exchange
Ratio of 1.065 Units for each CarnaudMetalbox Share is subject to adjustment
based on the Average Crown Common Stock Price. The "Average Crown Common Stock
Price" means the average French Franc Crown Common Stock Price for the most
recent 20 business days on which trading of Crown Common Stock has occurred
prior to the Measurement Date. The "French Franc Crown Common Stock Price," for
any particular business day, means the product of (x) the Market Closing Price
per share of Crown Common Stock, in U.S. dollars, and (y) the Noon Buying Rate
for such business day (or, if there was no trading on such business day, the
most recent trading day on which trading of the French franc and U.S. dollar
has occurred).
Under the Exchange Offer Agreement, the initial Exchange Ratio of 1.065 will
be adjusted by multiplying the initial Exchange Ratio by a fraction, the
numerator of which is FF 211.27 and the denominator of which is the Average
Crown Common Stock Price. However, if the Average Crown Common Stock Price is
greater than or equal to FF 232.39 per share, the Exchange Ratio will be
adjusted as though the Average Crown Common Stock Price were equal to FF
232.39. If the Average Crown Common Stock Price is equal to or less than
FF 190.14, the Exchange Ratio will be adjusted as though the Average Crown
Common Stock Price were equal to FF 190.14. The foregoing provisions limit the
minimum and maximum Exchange Ratio to 0.968 and 1.183, respectively, unless
Crown increases the Exchange Ratio to prevent a possible termination of the
Exchange Offer Agreement, as discussed below. For information as to recent
prices of Crown Common Stock, see "COMPARATIVE MARKET PRICE DATA."
In accordance with the foregoing, if the Average Crown Common Stock Price is
greater than FF 232.39, CarnaudMetalbox shareholders who elect to receive Units
of Crown Stock in the Offer will receive for each CarnaudMetalbox Share a
number of Units of Crown Stock worth more than FF 225 (assuming for this
purpose that the value of both (x) one share of Crown Common Stock and (y) one
share of Crown Acquisition Preferred Stock is, as of the date of settlement for
the Offer, equal to the Average Crown Common Stock Price). For a description of
the mechanics and timing of settlement of the Offer, see "THE OFFER--Exchange
and Payment of Offer Consideration." Based on the same assumption, if the
Average Crown Common Stock Price is less than FF 190.14, CarnaudMetalbox
shareholders who elect to receive Units in the Offer will receive for each
CarnaudMetalbox Share a number of Units of Crown Stock having a value of less
than FF 225.
As noted above, the Exchange Ratio will be adjusted based on a formula
measured over the 20 trading days preceding the business day before the Filing
Date. Crown currently intends to file the necessary documents with the CBV
(thereby establishing the Filing Date) and the COB as soon as practicable
following receipt of the necessary approvals from Crown's shareholders and
satisfaction or waiver of the other conditions set forth in the Exchange Offer
Agreement; provided, however, that, subject to obtaining necessary French
regulatory approvals
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<PAGE>
(see "--Nature of the Offer" below), Crown reserves the right, subject to the
terms of the Exchange Offer Agreement, to commence the Offer prior to the
Special Meeting. Crown intends to supplement this Proxy Statement/Prospectus to
reflect the commencement of the Offer and the determination of the Exchange
Ratio and the liquidation preference for Crown Acquisition Preferred Stock
promptly following their determination, including in the event of commencement
prior to the Special Meeting. Since Crown cannot at this time predict when the
Filing Date will occur and the proportion of tendering CarnaudMetalbox
shareholders who will elect to receive Units, as opposed to cash, in the Offer,
the number of Units of Crown Stock which may ultimately be required to be
issued in the Offer is not currently determinable and, if the Filing Date
occurs after the Special Meeting, will not be determinable at the time of the
Special Meeting.
Since the Average Crown Common Stock Price is expressed in French francs,
fluctuations in the value of U.S. dollars versus French francs will affect the
Exchange Ratio. Specifically, assuming no change in the Market Closing Price of
Crown Common Stock, if the value of the U.S. dollar (as expressed by the Noon
Buying Rate) were to depreciate versus the French franc from the time of
execution of the Exchange Offer Agreement to the time period used to determine
the Average Crown Common Stock Price under the Exchange Offer Agreement, the
number of Units to be exchanged for each CarnaudMetalbox Share would increase,
although, as discussed above, the Exchange Offer Agreement does provide a
limit, subject to the exception discussed below, on the minimum and maximum
number of shares of Crown Stock to be issued in the Offer. Similarly, subject
to such assumptions and limitations, if the value of the U.S. dollar were to
appreciate versus the French franc, the number of Units would decrease.
Under the Exchange Offer Agreement, Crown has the right to terminate the
Exchange Offer Agreement (and thereby its obligation to make the Offer) on the
date immediately prior to the Filing Date if, on the preceding NYSE trading day
(the "Final Determination Date"), the Average Crown Common Stock Price
(computed with the Final Determination Date being deemed the Measurement Date)
is greater than FF 242.96. CGIP has the right to terminate the Exchange Offer
Agreement (and thereby its obligation to tender its CarnaudMetalbox Shares into
the Offer) on the date immediately prior to the Filing Date if, on the Final
Determination Date, the Average Crown Common Stock Price (computed with the
Final Determination Date being deemed the Measurement Date) is less than FF
179.58 unless Crown shall have agreed to amend the Exchange Ratio such that the
value of the number of Units exchangeable for one CarnaudMetalbox Share is, in
accordance with the Exchange Offer Agreement, not less than FF 212.50 (meaning
that the Exchange Ratio would exceed 1.183). If the Exchange Offer Agreement is
terminated by either party in the circumstances described above, the Offer will
not be commenced by Crown. See "THE EXCHANGE OFFER AGREEMENT--Termination;
Amendment."
Crown has not determined whether it would terminate the Exchange Offer
Agreement or exercise its right under the Exchange Offer Agreement to increase
the Exchange Ratio in the circumstances described above. In either event, Crown
intends to proceed with the Offer in such circumstances if Crown's Board of
Directors determines that the expected benefits of the proposed CarnaudMetalbox
Transaction for Crown are significant enough to offset the consideration to be
paid in the Offer, and Crown receives the opinion of its financial advisor that
the consideration proposed to be paid in the Offer is fair to Crown from a
financial point of view. See "THE OFFER--Recommendation of Crown's Board of
Directors; Reasons for the CarnaudMetalbox Transaction." The French Franc Crown
Common Stock Price on November 10, 1995 was FF 194.88. Assuming the Measurement
Date were November 13, 1995, the Average Crown Common Stock Price would have
been FF 174.03. In the event Crown were to exercise its right under the
Exchange Offer Agreement to increase the Exchange Ratio to prevent termination
of the Exchange Offer Agreement and again assuming the Measurement Date were
November 13, 1995, the Exchange Ratio would have been 1.221. For additional
information with respect to the effect of Crown's exercise of such right, see
"UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS." Any such
increase in the Exchange Ratio may also have the effect of increasing CGIP's,
and former CarnaudMetalbox shareholders' aggregate, percentage ownership of
Crown Common Stock following the Offer. See "THE CARNAUDMETALBOX PROPOSALS--
Description
16
<PAGE>
of the CarnaudMetalbox Proposals--Issuance of Crown Common Stock and Crown
Acquisition Preferred Stock." The approval by Crown shareholders of the
transactions contemplated by the Exchange Offer Agreement will constitute
approval of any adjustments to the Exchange Ratio in the circumstances
described above. See "THE CARNAUDMETALBOX PROPOSALS--Description of the
CarnaudMetalbox Proposals--Possible Modifications to the Offer Consideration."
On July 28, 1995, Crown announced that it had adopted a common stock purchase
Rights Agreement (the "Rights Plan"). Under the Rights Plan, the Board of
Directors of Crown declared a dividend in the form of one common stock purchase
right (each, a "Right") for each share of Crown Common Stock outstanding on
August 10, 1995 and authorized the issuance of one Right for each share of
Crown Common Stock that becomes outstanding pursuant to the Offer and for each
share of Crown Common Stock that becomes outstanding (including upon conversion
of shares of Crown Acquisition Preferred Stock) between August 10, 1995 and the
earliest to occur of the Distribution Date, the Redemption Date and the Final
Expiration Date (as such terms are defined in the Rights Plan). Accordingly, if
the Rights are then outstanding, each share of Crown Common Stock (including
shares of Crown Common Stock issued pursuant to conversion of Crown Acquisition
Preferred Stock) issued in the Offer will include one Right. For a description
of the Rights Plan, see "DESCRIPTION OF CROWN STOCK--Rights Plan."
NATURE OF THE OFFER
The Offer will be conducted as an Offre publique d'echange a titre principal
et d'achat a titre subsidiaire and is subject to regulation under French law.
Because certain holders of CarnaudMetalbox Shares reside in the United Kingdom
and the United States, the Offer may also be subject to regulation under United
Kingdom and United States law in addition to French law. Crown and
CarnaudMetalbox shareholders should consider that the Offer differs from offers
conducted solely in the United States under United States federal and state
securities laws. These differences include the fact that French law limits the
ability of bidders to make conditional offers. As a result, except as set forth
in the next sentence, once Crown has filed the applicable documents with the
CBV to commit to launch the Offer under French law, the sole condition to
Crown's obligation to close the Offer and accept for payment or exchange the
CarnaudMetalbox Shares tendered thereunder will be the Minimum Condition. See
"THE EXCHANGE OFFER AGREEMENT--Conditions; Waiver." In addition, if the Offer
is commenced prior to the Special Meeting (which Crown does not currently
expect to be the case), the Offer will be conditioned on the approval by
Crown's shareholders at the Special Meeting of the CarnaudMetalbox Proposals.
Societe Generale and Credit Suisse France S.A., an affiliate of CS First Boston
("CS France"), will be co-presenting banks with respect to the Offer. Under
French law, the co-presenting banks will guarantee Crown's payment obligations
with respect to the Offer. See "THE OFFER--General" and "--Fees and Expenses."
The terms of the Offer may vary from the terms presented in this Proxy
Statement/Prospectus. Prior to commencing the Offer, Crown must submit the
terms of the Offer to the CBV for approval and submit the note d'information,
one of the French offering documents, to the COB for approval in accordance
with French law. The CBV has the power to condition its approval of the Offer
on Crown's amending or changing the terms of the Offer, including with respect
to the Exchange Ratio, Cash Election Price, Minimum Condition or the nature or
characteristics of the Crown Common Stock or Crown Acquisition Preferred Stock.
Furthermore, subject to the terms and conditions of the Exchange Offer
Agreement (which may be amended by Crown and CGIP), Crown is permitted, and
reserves the right (although it has no current intention to do so), to amend or
modify the Offer (see "THE CARNAUDMETALBOX PROPOSALS--Description of the
CarnaudMetalbox Proposals--Possible Modifications to the Offer Consideration")
after the Special Meeting in response to future developments or market
conditions or otherwise, including changing the Exchange Ratio, the Cash
Election Price or the other terms of the Offer. Crown intends to amend or
supplement this Proxy Statement/Prospectus as soon as reasonably practicable
following any material change to the terms of the Offer. See "THE OFFER--
General."
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Under French law, CarnaudMetalbox, which is not a party to the Exchange Offer
Agreement, is required to make a public filing either in a joint note
d'information with Crown or as a separate note d'information within five
trading days after the date the COB approves Crown's note d'information with
respect to the Offer. In either case, CarnaudMetalbox will be required to
disclose the position of the CarnaudMetalbox supervisory board, as well as the
dissenting positions of members thereof should they so request, with respect to
the Offer in such document.
Subject to the terms and conditions of the Offer, Crown will accept for
purchase or exchange any CarnaudMetalbox Shares validly tendered in the Offer.
See "THE OFFER--Exchange and Payment of Offer Consideration." For information
with respect to Crown, see "CROWN CORK & SEAL COMPANY, INC." Crown reserves the
right to designate a wholly owned subsidiary of Crown to accept for purchase or
exchange CarnaudMetalbox Shares validly tendered in the Offer. Immediately
after consummation of the Offer, Crown currently intends to transfer any
CarnaudMetalbox Shares acquired by Crown pursuant to the Offer to a societe en
nom collectif ("SNC") newly formed under the laws of the Republic of France by
Crown and a wholly owned subsidiary of Crown, and to cause SNC, in connection
with the consummation of the Offer, to incur indebtedness or to assume certain
indebtedness incurred by Crown in connection with the consummation of the
Offer.
CONDITIONS TO THE OFFER
For information as to the conditions to the commencement and closing of the
Offer, including the Minimum Condition, see "THE OFFER--Conditions to the
Offer."
INTERESTS OF CERTAIN PERSONS IN THE OFFER
CGIP and certain members of CarnaudMetalbox's management have interests in
the Offer in addition to any interests they may have as shareholders of
CarnaudMetalbox generally. Following the Offer, CGIP will, under the Exchange
Offer Agreement and the Shareholders Agreement, have certain rights as to
representation on the Board of Directors of Crown and will have the right under
Crown's Bylaws to representation on the Strategic Committee. In addition,
pursuant to the Exchange Offer Agreement and subject to the terms thereof,
Crown has agreed to make offers to holders of CarnaudMetalbox's outstanding
employee stock options for CarnaudMetalbox Shares. Certain senior employees of
CarnaudMetalbox have entered into employment contracts with CarnaudMetalbox
providing for aggregate severance payments of approximately FF 88 million (or
approximately $18.1 million based on the Noon Buying Rate on November 10, 1995)
if each severance payment is triggered.
CASH IN LIEU OF FRACTIONAL SHARES OF CROWN COMMON STOCK AND CROWN ACQUISITION
PREFERRED STOCK
No fraction of a share of Crown Stock will be issued by Crown in the Offer.
In lieu thereof, each tendering CarnaudMetalbox shareholder who would otherwise
be entitled to a fractional share of Crown Common Stock or Crown Acquisition
Preferred Stock (after aggregating all fractional shares of Crown Common Stock
and Crown Acquisition Preferred Stock to be received by the holder), will
receive from Crown an amount in cash in French francs rounded to the nearest
French franc equal to the product of (1) such fraction and (2) the Average
Crown Common Stock Price.
PURPOSE OF THE OFFER
The purpose of the Offer is for Crown to acquire control of CarnaudMetalbox.
In the event the Offer is consummated, Crown will reevaluate and may change the
dividend policy of CarnaudMetalbox depending on business and market conditions,
the capital structure, earnings and cash flow of CarnaudMetalbox, the extent of
any minority shareholdings in CarnaudMetalbox and other factors. There can be
no assurance that CarnaudMetalbox will continue to pay dividends on
CarnaudMetalbox Shares following consummation of the
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Offer. In addition, if the Offer is consummated, the resulting reduction in the
number of CarnaudMetalbox Shares could adversely affect the liquidity and
market value of remaining publicly-held CarnaudMetalbox Shares. Depending on
the number of CarnaudMetalbox Shares acquired pursuant to the Offer and other
factors such as market conditions and applicable laws and regulations,
following consummation of the Offer, Crown may increase its percentage
ownership of CarnaudMetalbox Shares, including to the extent necessary to
attain the requisite ownership to effect certain shareholder actions under
French law (see "THE OFFER--Purpose of the Offer"), to consolidate
CarnaudMetalbox's tax results with the consolidated tax group of SNC for
purposes of French tax law, or possibly to effect a repurchase offer to delist
CarnaudMetalbox Shares from the Paris Stock Exchange or compulsory procedures
under French law to attain 100% ownership of the equity interests in
CarnaudMetalbox. See "THE OFFER--Purpose of the Offer" and "--Effect of Offer
on Market for CarnaudMetalbox Shares."
LISTING OF CROWN COMMON STOCK AND CROWN ACQUISITION PREFERRED STOCK
Crown Common Stock is listed on the NYSE. Crown Common Stock is not currently
listed on the Paris Stock Exchange or The International Stock Exchange of the
United Kingdom and the Republic of Ireland Limited (the "London Stock
Exchange"). There currently is no established trading market for shares of
Crown Common Stock in France or the United Kingdom, except that shares of Crown
Common Stock are currently quoted on the Stock Exchange Automated Quotation
system for international equity market securities of the London Stock Exchange
("SEAQ International") on an indicative basis only. Crown will apply to the
NYSE for approval of the listing on the NYSE of the shares of Crown Stock to be
issued in the Offer. Crown will also apply to the Paris Stock Exchange for the
listing of the shares of Crown Stock to be issued to the Offer (and the
currently issued Crown Common Stock) on the Official List of the Paris Stock
Exchange. CarnaudMetalbox shareholders should be aware that if an insufficient
number of holders of CarnaudMetalbox Shares elect Units of Crown Stock, as
opposed to cash, in the Offer, the NYSE or the Paris Stock Exchange could
delist, or decline to permit the listing of, Crown Acquisition Preferred Stock,
and the Paris Stock Exchange could delist, or decline to permit the listing of,
Crown Common Stock. In the event Crown Acquisition Preferred Stock is not so
listed, its liquidity and market price could be adversely affected.
TENDER PROCEDURES
For information in respect of procedures for tendering CarnaudMetalbox Shares
into the Offer, see "THE OFFER--Tender Procedures."
CERTAIN TAX CONSEQUENCES OF THE OFFER
Persons subject to tax in the United States will generally recognize gain or
loss for U.S. federal income tax purposes upon the exchange of CarnaudMetalbox
Shares for either cash or shares of Crown Stock. See "THE OFFER--Certain Tax
Consequences of the Offer--Income Tax Consequences to U.S. Shareholders."
Persons subject to tax in France will generally recognize gain or loss for
French income tax purposes upon the disposition of CarnaudMetalbox Shares for
cash pursuant to the Offer. The Service de la legislation fiscale, the
applicable French tax authority (the "SLF"), has ruled that, in general, the
taxation of gain realized upon the exchange of CarnaudMetalbox Shares for Crown
Stock pursuant to the Offer will be deferred until the holder disposes of the
shares of Crown Stock. See "THE OFFER--Certain Tax Consequences of the Offer--
French Income Tax Consequences to French Tax Resident Shareholders."
Persons subject to tax in the United Kingdom will generally recognize a
taxable gain for United Kingdom tax purposes upon the disposition of
CarnaudMetalbox Shares for cash pursuant to the Offer. The exchange of
CarnaudMetalbox Shares for Units of Crown Stock will generally not be subject
to tax in the United Kingdom
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<PAGE>
See "THE OFFER--Certain Tax Consequences of the Offer--United Kingdom Income
and Capital Tax Consequences to United Kingdom Shareholders."
Dividends paid with respect to Crown Stock to persons who are not subject to
tax in the United States will, in general, be subject to a U.S. withholding tax
at the rate of 30%, or such lower rate as is established by an applicable tax
treaty. See "THE OFFER--Certain Tax Consequences of the Offer--Withholding Tax
on Dividends Paid to Non-U.S. Holders."
COMPARISON OF SHAREHOLDER RIGHTS
Holders of CarnaudMetalbox Shares who exchange their shares for Units in the
Offer will become shareholders of Crown, a Pennsylvania corporation, and will
have different rights as Crown shareholders than they had as shareholders of
CarnaudMetalbox. For a comparison of certain aspects of Pennsylvania and French
law and the organizational documents of Crown and CarnaudMetalbox governing the
rights of Crown and CarnaudMetalbox shareholders, see "COMPARISON OF
SHAREHOLDER RIGHTS."
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SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL INFORMATION
CROWN CORK & SEAL COMPANY, INC.
The summary financial information presented below for the years ended
December 31, 1994, 1993, 1992, 1991 and 1990 and as of the end of each such
fiscal year is derived from the consolidated financial statements of Crown,
which have been audited by Price Waterhouse LLP, independent accountants, and
should be read in conjunction with the information and audited consolidated
financial statements (the "1994 Crown Audited Consolidated Financial
Statements") contained in Crown's Annual Report on Form 10-K for the year ended
December 31, 1994, which is incorporated by reference herein. The summary
financial data for and as of the six-month periods ended June 30, 1995 and 1994
are unaudited and, in the opinion of Crown management, include all adjustments,
consisting of only normal recurring accruals, necessary for a fair presentation
of such data. Such unaudited data should be read in conjunction with the
information and the consolidated financial statements contained in Crown's
Quarterly Report on Form 10-Q, as amended, for the six months ended June 30,
1995 (the "June 30, 1995 Crown Form 10-Q"), which is incorporated by reference
herein. Certain amounts in prior years have been reclassified to conform with
the current year's presentation. Crown prepares its financial statements in
accordance with United States generally accepted accounting principles ("U.S.
GAAP"). See "UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS"
and "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE." The summary financial
data set forth in the table below do not include the financial results of Crown
for and as of the quarter ended September 30, 1995 or thereafter. See "--Recent
Developments" below.
Crown publishes its financial statements in U.S. dollars. If the Offer is
consummated, a substantial portion of Crown's assets, liabilities, sales and
earnings will be denominated in currencies other than U.S. dollars, meaning
that Crown will have significantly increased exposure to fluctuations in the
values of foreign currencies against the U.S. dollar. These currency
fluctuations could have a material impact on Crown's results of operations.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,(1) YEAR ENDED DECEMBER 31,(1)
------------------ ------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
(IN $ MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net sales................ $2,512.5 $2,077.5 $4,452.2 $4,162.6 $3,780.7 $3,807.4 $3,072.1
-------- -------- -------- -------- -------- -------- --------
Cost of products sold... 2,085.8 1,712.6 3,699.5 3,474.0 3,197.4 3,290.7 2,641.9
Depreciation and
amortization........... 129.2 107.2 218.3 191.7 142.4 128.4 102.0
Selling and
administrative
expense................ 71.8 66.3 135.4 126.6 112.1 105.4 86.2
Provision for
restructuring(2)....... 20.2 114.6
Interest expense........ 73.5 43.7 98.8 89.8 77.4 76.6 59.9
Interest income......... (5.5) (3.0) (7.2) (10.1) (13.5) (10.0) (8.3)
Translation and exchange
adjustments............ 0.5 6.1 10.1 10.8 10.2 7.5 11.7
-------- -------- -------- -------- -------- -------- --------
Income before income
taxes, equity in
earnings of affiliates
and cumulative effect of
accounting changes...... 137.0 144.6 182.7 279.8 254.7 208.8 178.7
Income taxes............. 41.3 50.5 55.6 97.4 101.0 83.8 71.3
Equity in earnings of
affiliates, net of
minority interests...... (7.0) 4.3 3.9 (1.5) 1.7 3.1 (0.3)
-------- -------- -------- -------- -------- -------- --------
Net income before
cumulative effect of
accounting changes...... 88.7 98.4 131.0 180.9 155.4 128.1 107.1
Cumulative effect of
accounting changes(3)... (81.8)
-------- -------- -------- -------- -------- -------- --------
Net income............... $ 88.7 $ 98.4 $ 131.0 $ 99.1 $ 155.4 $ 128.1 $ 107.1
======== ======== ======== ======== ======== ======== ========
RATIO OF EARNINGS TO
FIXED CHARGES........... 2.8x(2) 4.1x 2.8x(2) 4.2x 4.3x 3.7x 3.9x
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,(1) YEAR ENDED DECEMBER 31,(1)
----------------- ---------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
(IN $ MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL POSITION
Total assets............ $5,278.0 $4,642.3 $4,781.3 $4,236.3 $3,825.1 $2,963.5 $2,596.4
Short-term debt plus
current maturities of
long-term debt......... $1,086.6 $ 822.0 $ 735.8 $ 474.8 $ 379.4 $ 184.4 $ 128.4
Long-term debt.......... $1,152.3 $ 940.0 $1,089.5 $ 891.5 $ 939.9 $ 585.0 $ 484.3
Shareholders' equity.... $1,470.3 $1,352.0 $1,365.2 $1,251.8 $1,143.6 $1,084.4 $ 950.8
PER SHARE OF COMMON
STOCK(4)
Net income before
cumulative effect of
accounting changes..... $ 0.99 $ 1.11 $ 1.47 $ 2.08 $ 1.79 $ 1.48 $ 1.24
Cumulative effect of
accounting changes(3).. $ (0.94)
-------- -------- -------- -------- -------- -------- --------
Net income.............. $ 0.99 $ 1.11 $ 1.47 $ 1.14 $ 1.79 $ 1.48 $ 1.24
======== ======== ======== ======== ======== ======== ========
Cash dividends declared
per common share(5)
Book value per common
share.................. $ 16.28 $ 15.18 $ 15.28 $ 14.09 $ 13.24 $ 12.45 $ 10.99
</TABLE>
- --------
(1) Certain reclassifications of prior years data have been made to improve
comparability. See also Note C to the 1994 Crown Audited Consolidated
Financial Statements with respect to the effect of certain acquisitions by
Crown.
(2) Reflects restructuring of certain metal packaging facilities announced in
1995 and 1994. See Note H to the 1994 Crown Audited Consolidated Financial
Statements and the June 30, 1995 Crown Form 10-Q.
(3) Reflects accounting changes related to adoption of SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other than Pensions,"
SFAS 109, "Accounting for Income Taxes," and SFAS 112, "Employers'
Accounting for Postemployment Benefits." See Note B to the 1994 Crown
Audited Consolidated Financial Statements.
(4) All data relating to Crown Common Stock prior to 1992 have been restated
for comparative purposes to reflect the three for one split of Crown Common
Stock in 1992.
(5) Crown has traditionally not paid dividends. With respect to Crown's future
dividend policy, see "THE OFFER--Ownership of Crown Stock after the Offer,"
and "THE SHAREHOLDERS AGREEMENT--Dividend Policy."
RECENT DEVELOPMENTS
On September 19, 1995, Crown announced that it expected net earnings per
share of Crown Common Stock for the fiscal year 1995 to be less than the $2.29
per share it had reported for 1994, as measured before restructuring charges
and without giving effect to the proposed CarnaudMetalbox Transaction. Crown
also announced that management expects that 1995 second half net earnings,
before any restructuring charges, are unlikely to exceed $55 million and could
be lower.
Crown said the reduced earnings outlook for the balance of 1995 is based upon
the weak second quarter 1995 results as well as management's review of
preliminary third quarter results and its assessment of future prospects. Areas
of concern include (1) a continuing inability of Crown to recover through
adequate net selling prices the higher cost of raw materials, particularly in
light of the effects of Crown's exposure to the aluminum markets, (2) weaker
than expected demand in virtually all product and geographic sectors, and (3) a
difficult beverage can comparison expected for the fourth quarter relative to
the same period in 1994 due to a higher cost base and to anticipated volume
declines, principally resulting from substantial volume generated before the
1995 beverage can price increases by Crown.
Crown noted that in its food can business, volume in the second half of 1995
is currently expected to be substantially lower than in the same period in
1994, primarily due to expectations for a late and smaller seasonal harvest.
Aerosol can volumes, which generally maintained 1994's levels through June
1995, have since declined by approximately 10%, and this reduced level is
expected to continue through year-end. While plastic unit volume in the United
States has increased substantially, the consecutive quarterly resin cost
increases forced on the industry and the absence of expected demand is
continuing to affect Crown's profitability in this area. In
22
<PAGE>
Canada, Crown's second half results have been affected by a strike at two
plants (now settled) and the same volume trends experienced in the U.S. In
addition, although Mexico's first half results were improved over last year,
the troubled economy there is resulting in profitability erosion.
On September 29, 1995, Crown announced that it was implementing the second
phase of the restructuring plan affecting its North American operations which
Crown initially outlined in March 1994. In this second phase, two aluminum
beverage can plants and one beverage end plant will be closed in order to match
manufacturing capacity with demand. An additional beverage can plant will be
off-line during 1996 to upgrade its production equipment. Crown also intends to
close two food can plants in the U.S. and combine two non-U.S. food can
operations into one location. In Crown's Plastics Division, one facility will
be closed and two others will be reorganized to improve cost effectiveness.
In connection with this second phase, Crown has incurred a restructuring
charge of $82.5 million ($54.2 million or $0.60 per share on an after-tax
basis) in the third quarter ended September 30, 1995, including relevant
employee costs and asset write-downs. See "--Third Quarter Summary Financial
Information" below. Crown has estimated that the pre-tax annual savings
resulting from these actions will be approximately $36 million after the second
phase is completed in September 1996.
The foregoing discussion of anticipated second half results, restructuring
charges and related cost savings represents Crown's best estimate, but it
necessarily makes numerous assumptions with respect to industry performance,
general business and economic conditions, raw materials and product pricing
levels, restructuring costs and other matters, many of which are outside
Crown's control. Crown's estimate and related assumptions, which are unaudited,
are not necessarily indicative of future performance, which may be
significantly more or less favorable than as set forth above. Shareholders are
cautioned not to place undue reliance on the estimate and the assumptions and
should appreciate that such information may not be necessarily updated to
reflect circumstances existing after the date hereof or to reflect the
occurrence of unanticipated events.
23
<PAGE>
THIRD QUARTER SUMMARY FINANCIAL INFORMATION
Summary unaudited financial information for Crown for the three and nine
months ended September 30, 1995 is set forth below. Although such financial
data is unaudited, it includes, in the opinion of Crown all adjustments
necessary for a fair presentation of such data. Results of operations for
interim periods are not necessarily indicative of a full year of operations.
The information below should be read in conjunction with the information and
audited consolidated financial statements contained in Crown's Annual Report on
Form 10-K for the year ended December 31, 1994 and the information and
consolidated financial statements contained in the June 30, 1995 Crown Form 10-
Q (as amended).
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- ------------------
1995 1994 1995 1994
--------- --------- -------- --------
(IN MILLIONS, EXCEPT SHARE AND PER
SHARE AMOUNTS) (UNAUDITED)
<S> <C> <C> <C> <C>
NET SALES............................. $1,427.1 $1,283.3 $3,939.6 $3,360.8
--------- --------- -------- --------
Cost of products sold............... 1,249.7 1,074.4 3,335.5 2,787.0
Depreciation and amortization....... 67.3 53.1 196.5 160.3
Selling and administrative expense.. 36.0 34.7 107.8 101.0
Provision for restructuring......... 82.5 114.6 102.7 114.6
Interest expense, net of interest
income............................. 34.8 24.8 102.8 65.5
Translation and exchange adjust-
ments.............................. (1.8) (.3) (1.3) 5.8
--------- --------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES..... (41.4) (18.0) 95.6 126.6
Income taxes........................ (23.9) (8.4) 17.4 42.1
Equity earnings, net of minority in-
terests............................ (2.4) 2.1 (9.4) 6.4
--------- --------- -------- --------
NET INCOME (LOSS)..................... $ (19.9) $ (7.5) $ 68.8 $ 90.9
========= ========= ======== ========
EARNINGS PER AVERAGE COMMON SHARE..... $ (.22) $ (.08) $ .76 $ 1.02
========= ========= ======== ========
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Average com-
mon shares
outstanding.. 90,469,197 89,115,758 90,105,240 89,028,346
Actual common
shares out-
standing.... 90,576,900 89,165,124 90,576,900 89,165,124
</TABLE>
Crown's net sales in the third quarter increased 11.2% versus the prior year
period to $1,427.1 million. Growth in sales was highest in the Plastics
Division, up 31.3% in the quarter to $315.6 million, while International
Division sales advanced 8.8% to $253.8 million. North American Division net
sales, which represent 59% of the total, increased 6.5% in the quarter,
reflecting higher selling prices in beverage cans but lower volumes in
beverage, food and aerosol cans.
Net income for the third quarter was $34.3 million or $0.38 per share, before
the restructuring charge described above in "--Recent Developments." As of the
date hereof, Crown management considers this result to be consistent with its
earnings outlook for the second half-year announced on September 19, 1995 and
referred to above. Continuing exposure to volatile raw material costs in the
aluminum and plastic resin sectors substantially reduced profitability in the
quarter. The effective tax rate in the quarter reflected proportionally greater
foreign taxable income at lower rates compared to domestic income.
For further information regarding Crown's third quarter 1995 results,
shareholders are referred to Crown's Quarterly Report on Form 10-Q for the
period ended September 30, 1995, which Crown will file with the SEC prior to
the date of the Special Meeting and which will be incorporated by reference
into the Registration Statement.
24
<PAGE>
CARNAUDMETALBOX
The summary financial information presented below for the years ended
December 31, 1994, 1993, 1992, 1991 and 1990 and as of the end of each such
fiscal year is derived from the consolidated financial statements of
CarnaudMetalbox, which have been audited by Arthur Andersen, independent
accountants for the years ended December 31, 1994, 1993 and 1992 and by Befec-
Price Waterhouse and Claude Chevallier, statutory auditors for the years ended
December 31, 1994, 1993, 1992, 1991 and 1990. The summary financial data for
and as of the six-month periods ended June 30, 1995 and 1994 are unaudited and,
in the opinion of CarnaudMetalbox's management, include all adjustments,
consisting of only normal recurring accruals, necessary for a fair presentation
of such data. CarnaudMetalbox prepares its financial statements in accordance
with French law. Certain amounts shown below have been reclassified to conform
the data to the presentation of financial information for Crown under U.S.
GAAP. All of the data set forth below is qualified by reference to and should
be read in conjunction with CarnaudMetalbox's financial statements and notes
thereto appearing elsewhere in this Proxy Statement/Prospectus and, in
addition, should be read in conjunction with "CARNAUDMETALBOX--Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing elsewhere in this Proxy Statement/Prospectus. The summary financial
data set forth in the table below do not include financial results of
CarnaudMetalbox for any period after June 30, 1995. See "--Recent Developments"
below.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,(1) YEAR ENDED DECEMBER 31,(1)
------------------ --------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- ------ ------ ------ ------ ------
(IN FF MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
NET SALES............... 12,282 12,317 24,890 24,340 24,830 25,502 24,415
Cost of products
sold(2)................ 9,583 9,481 19,315 19,035 21,353 22,007 21,144
Depreciation and amorti-
zation................. 687 681 1,355 1,294 1,189 1,186 1,062
Selling and administra-
tive expense(2)........ 1,168 1,173 2,223 2,122
Provision for restruc-
turing................. 90 86 288 306 262 389 198
Interest expense(3)..... 287 250 464 544 624 605 774
Interest income(3)...... (56) (48) (95) (146) (211) (153)
Translation and exchange
adjustments............ 10 17 14 (6) 20 5 (12)
Preference share divi-
dends and other........ (103) (159) (95) (10) (26) 31 (377)
Taxes................... 81 118 245 283 444 458 489
Equity in earnings of
affiliates............. (8) 8 (14) (16) (33) (23)
Minority Interests...... 3 200 226 97 215 155 132
-------- -------- ------ ------ ------ ------ ------
Net income.............. 540 510 950 835 976 852 1,028
======== ======== ====== ====== ====== ====== ======
Approximate U.S. GAAP
net income(4).......... 505 468 1,001 714
======== ======== ====== ======
FINANCIAL POSITION
Total assets............ 29,840 28,495 28,472 27,449 25,375 26,748 26,810
Short-term debt plus
current maturities of
long-term debt......... 2,758 1,601 1,388 1,473 1,678 1,404 1,920
Long-term debt(5)....... 5,120 5,365 4,496 4,624 3,767 5,110 5,790
Shareholders' equity.... 12,007 11,269 11,679 11,118 10,857 10,512 10,196
Approximate U.S. GAAP
shareholders' equi-
ty(4).................. 10,075 9,511 10,174 9,502
PER SHARE OF COMMON
STOCK
Net income.............. 6.4 6.2 11.6 10.3 12.1 10.6 13.0
Cash dividends declared
per common share(6).... 4.4 4.0 4.0 4.0 3.7 3.6
Book value per common
share.................. 139.9 138.0 141.9 136.8 134.2 130.1 127.6
Primary net income per
common share (U.S.
GAAP).................. 6.01 5.77 12.32 8.94
Fully diluted net income
per common share (U.S.
GAAP).................. 5.99 5.76 12.30 8.93
</TABLE>
- --------
(1) Certain reclassifications of data from prior years have been made to
facilitate comparison.
(2) Includes research and development costs. The breakdown between cost of
products sold and selling and administrative expense is not available for
1992, 1991, and 1990. Accordingly, cost of products sold for 1992, 1991 and
1990 includes selling and administrative expense.
(3) The breakdown between interest income and expense is not available for
1990.
(4) U.S. GAAP reconciliations provided only for 1995, 1994 and 1993. See Note 2
of CarnaudMetalbox's Consolidated Financial Statements.
(5) Including preference shares and perpetual notes. See Notes 12 and 14 to
CarnaudMetalbox's Consolidated Financial Statements.
(6) These figures do not reflect the tax credit (avoir fiscal) of FF 2.00, FF
2.00, FF 1.85, FF 1.80 and FF 1.80 on cash dividends for 1994, 1993, 1992,
1991 and 1990, respectively.
25
<PAGE>
RECENT DEVELOPMENTS
On November 8, 1995, CarnaudMetalbox announced that its revenues for the
third quarter of 1995 decreased 2.4% to FF 6,722 million from FF 6,888 million
for the third quarter of 1994. For the nine months ended September 30, 1995 and
September 30, 1994, CarnaudMetalbox's revenues were FF 19,004 million and FF
19,205 million, respectively. The 2.4% decrease in revenues for the third
quarter includes the effect of an overall slowdown in the European packaging
market, especially in the food sector which suffered as a result of the poor
harvest. The effect of currency fluctuations on translation of local currency
net sales into French francs reduced consolidated net sales stated in French
francs by approximately 4.2% for the third quarter.
As described under "CARNAUDMETALBOX--Management's Discussion and Analysis of
Financial Condition and Results of Operations--Results of Operations--Six
Months Ended June 30, 1995 Compared to Six Months Ended June 30, 1994,"
CarnaudMetalbox's results of operations for the six months ended June 30, 1995
were negatively impacted by the appreciation of the French franc relative to
the Italian lira, British pound and U.S. dollar, which adversely affected net
sales and operating income generated in these currencies when translated into
French francs, significant increases in raw material costs which more than
offset local currency price increases, decreases in sales of food closures and
sales of can manufacturing, filling and handling equipment. The Asia-Pacific
and Africa, Middle East and Caribbean sales declines reflected a slowdown in
demand in China and severe disruptions in Nigeria, respectively.
Weakening demand, which has become even more severe in the second half of
1995, and sharp raw material price increases, which were not sufficiently
passed through to customers, coupled with the continuing effect of the factors
described above which affected results of operations for the first half of
1995, will negatively affect operating profit during the second half of 1995.
On October 25, 1995, CarnaudMetalbox announced that it had signed an
agreement with Danisco, a Danish packaging company, for the sale of
CarnaudMetalbox's flexible packaging business in France, Spain and Portugal.
The business being sold had revenues of approximately FF 617 million in 1994.
The closing of this agreement, which remains subject to the results of an
environmental audit, is expected to occur before the end of 1995.
SUMMARY UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL DATA
The summary unaudited pro forma financial data combine the historical balance
sheets and statements of income of Crown and CarnaudMetalbox after giving
effect to the Offer. The pro forma adjustments and related assumptions are
described in the notes to the unaudited pro forma consolidated condensed
financial statements of Crown included in this Proxy Statement/Prospectus, and
shareholders of Crown and CarnaudMetalbox are urged to read such notes
carefully. Pro forma combined per share data assume either (1) that 100% of the
outstanding CarnaudMetalbox Shares are tendered into the Offer, of which 50%
(including the CarnaudMetalbox Shares owned by CGIP) are exchanged for Units
(assuming an Exchange Ratio of 1.065) and 50% for the Cash Election Price or
(2) that 51% of the outstanding CarnaudMetalbox Shares are tendered into the
Offer, CGIP elects to receive Units for its CarnaudMetalbox Shares and the
proportion of persons other than CGIP electing Units versus cash is the same as
that implied in the 100% scenario described in clause (1). The summary
unaudited pro forma consolidated condensed financial data are not necessarily
indicative of the operating results or financial position that would have
occurred had the Offer been consummated on the dates for which the Offer is
being given effect, nor are they necessarily indicative of future operating
results or financial position. As described under "SUMMARY--The Offer--Exchange
Ratio and Market Value of Crown Common Stock," the actual number of
CarnaudMetalbox Shares tendered into the Offer may be substantially less than
100% or substantially greater than 51%; the election made by holders of the
CarnaudMetalbox Shares may vary; and the Exchange Ratio is subject to
adjustment. See Notes 1, 8 and 9 to the unaudited pro forma consolidated
condensed financial statements for a description of certain effects of such
variations. Furthermore, the historical financial
26
<PAGE>
statements for CarnaudMetalbox, prepared in accordance with French law and
presented in French francs, have, for purposes of preparing these pro forma
consolidated condensed financial statements, been conformed to comply with U.S.
GAAP and, in accordance with SFAS No. 52, have been translated to U.S. dollars
at an assumed exchange rate equal to FF 5.511/$1.00 (the average Noon Buying
Rate on the last business day of each month for the year ended December 31,
1994 (the "1994 Average Noon Buying Rate")) and FF 4.992/$1.00 (the average
Noon Buying Rate on the last business day of each month for the six months
ended June 30, 1995 (the "1995 Average Six Month Noon Buying Rate")) for income
statement data for the year ended December 31, 1994 and the six months ended
June 30, 1995, respectively, and FF 4.853/$1.00 (the Noon Buying Rate on June
30, 1995 (the "June 1995 Noon Buying Rate")) for the balance sheet at June 30,
1995. The Noon Buying Rate as of November 10, 1995 was FF 4.872/$1.00. The use
of exchange rates different from those prescribed by SFAS 52 and used in the
unaudited pro forma consolidated condensed financial statements could have a
material impact on the information presented therein. See "UNAUDITED PRO FORMA
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS." See also Note 2 of
CarnaudMetalbox's consolidated financial statements included elsewhere in this
Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1994
------------------------- -------------------------
UNAUDITED (IN $ MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
CarnaudMetalbox Shares
acquired in Offer........ 51% 100% 51% 100%
------------ ------------ ------------ ------------
INCOME STATEMENT DATA:
Net sales................. $ 4,973 $ 4,973 $ 8,968 $ 8,968
Net income................ $ 121 $ 99 $ 185 $ 132
Net income available for
common stock............. $ 113 $ 88 $ 169 $ 110
Earnings per share of
common stock............. $ 0.98 $ 0.71 $ 1.47 $ 0.89
BALANCE SHEET DATA, AT
JUNE 30, 1995:
Total assets.............. $ 11,568 $ 13,031
Long-term debt, excluding
current maturities....... $ 2,789 $ 4,182
Book value per common
share.................... $ 24.75 $ 27.05
</TABLE>
FOR A DISCUSSION OF THE PRO FORMA ADJUSTMENTS AND RELATED ASSUMPTIONS WITH
RESPECT TO THE OFFER AND MORE COMPLETE PRO FORMA FINANCIAL DATA, SEE "UNAUDITED
PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS." THE FOREGOING SUMMARY
UNAUDITED FINANCIAL DATA DO NOT REFLECT FINANCIAL RESULTS OF CROWN OR
CARNAUDMETALBOX AFTER JUNE 30, 1995. SEE "--CROWN CORK & SEAL COMPANY, INC.--
RECENT DEVELOPMENTS" AND "--CARNAUDMETALBOX--RECENT DEVELOPMENTS."
27
<PAGE>
COMPARATIVE PER SHARE DATA
The following table sets forth historical per share data for Crown and
CarnaudMetalbox, pro forma data for Crown giving effect to the proposed
CarnaudMetalbox Transaction under the purchase method of accounting, and
equivalent pro forma per share data for CarnaudMetalbox. The information
presented should be read in conjunction with the historical financial
information and related notes thereto of Crown incorporated by reference into
this Proxy Statement/Prospectus, the historical financial statements of
CarnaudMetalbox and related notes thereto, the unaudited pro forma
consolidated condensed financial statements and related notes thereto, and the
selected historical financial data including the notes thereto, each appearing
elsewhere in this Proxy Statement/Prospectus. Comparative pro forma data have
been included for comparative purposes only and do not purport to be
indicative of (1) the results of operations or financial position which
actually would have been obtained if the acquisition had been completed at the
beginning of the period or as of the date indicated or (2) the results of
operations or financial position which may be obtained in the future.
<TABLE>
<CAPTION>
AT OR FOR AT OR FOR
SIX MONTHS ENDED JUNE 30, 1995 YEAR ENDED DECEMBER 31, 1994
--------------------------------------- ---------------------------------------
51% 100% 51% 100%
HISTORICAL PRO FORMA(1) PRO FORMA(1) HISTORICAL PRO FORMA(1) PRO FORMA(1)
----------- ------------- ------------- ----------- ------------- -------------
CROWN CMB CROWN CMB CROWN CMB CROWN CMB CROWN CMB CROWN CMB
----- ----- ------------- ------------- ----- ----- ------------- -------------
$ FF $ $ $ $ $ FF $ $ $ $
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net income per common
share(2)............... 0.99 6.4 0.98 1.04 0.71 0.76 1.47 11.6 1.47 1.57 0.89 0.95
Book value per common
share.................. 16.28 139.9 24.75 26.36 27.05 28.81 15.28 141.9 23.97 25.53 26.55 28.28
Cash dividends declared
per common share(3).... 4.4 4.0
</TABLE>
The following table sets forth the ranges of effects of different Exchange
Ratios (as a result of adjustments to the Exchange Ratio based on the Average
Crown Common Stock Price) on pro forma net income per share of Crown Common
Stock and equivalent pro forma net income per share of CarnaudMetalbox for the
periods indicated.
<TABLE>
<CAPTION>
51% SHARES TENDERED
36% UNITS/15% CASH
----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Average Crown
Common Stock
Price (in
French
Francs) (4).... 169.02 179.58(/5/) 190.14 211.27 232.39 242.96(/6/) 253.52
Exchange Ratio.. 1.257 1.183 1.183 1.065 0.968 0.968 0.968
FOR THE SIX MONTHS
ENDED
JUNE 30, 1995
Pro forma net
income per
share of Crown
Common Stock... $0.95 $0.97 $0.95 $0.98 $0.99 $0.97 $0.96
CarnaudMetalbox
equivalent pro
forma net in-
come per
share (10)..... $1.19 $1.15 $1.12 $1.04 $0.96 $0.94 $0.93
FOR THE YEAR
ENDED
DECEMBER 31,
1994
Pro forma net
income per
share of Crown
Common Stock... $1.43 $1.45 $1.44 $1.47 $1.51 $1.50 $1.49
CarnaudMetalbox
equivalent pro
forma net in-
come per
share (10)..... $1.80 $1.72 $1.70 $1.57 $1.46 $1.45 $1.44
<CAPTION>
100% SHARES TENDERED
50% UNITS/50% CASH
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Average Crown
Common Stock
Price (in
French
Francs) (4).... 169.02 179.58(/7/) 190.14 211.27 232.39 242.96(/8/) 253.52
Exchange Ratio.. 1.257 1.183 1.183 1.065 0.968 0.968 0.968
FOR THE SIX MONTHS
ENDED
JUNE 30, 1995
Pro forma net
income per
share of Crown
Common Stock... $0.69 $0.70 $0.68 $0.71(/9/) $0.71 $0.69 $0.68
CarnaudMetalbox
equivalent pro
forma net in-
come per
share (10)..... $0.87 $0.83 $0.80 $0.76 $0.69 $0.67 $0.66
FOR THE YEAR
ENDED
DECEMBER 31,
1994
Pro forma net
income per
share of Crown
Common Stock... $0.86 $0.88 $0.87 $0.89(/9/) $0.92 $0.90 $0.89
CarnaudMetalbox
equivalent pro
forma net in-
come per
share (10)..... $1.08 $1.04 $1.03 $0.95 $0.89 $0.87 $0.86
</TABLE>
28
<PAGE>
- --------
(1) CarnaudMetalbox equivalent per share amounts are calculated by multiplying
Crown Common Stock pro forma per share amounts by an assumed Exchange
Ratio of 1.065 shares of Crown Common Stock for each CarnaudMetalbox
Share. Holders of CarnaudMetalbox Shares that do not elect to receive cash
will actually have the right to receive a number of Units equal to the
Exchange Ratio, each Unit consisting of (x) .75 shares of Crown Common
Stock and (y) .25 shares of Crown Acquisition Preferred Stock. For a
discussion of the determination of the Exchange Ratio, see "SUMMARY--The
Offer--Exchange Ratio and Market Value of Crown Common Stock." For a
discussion of the pro forma adjustments and related assumptions with
respect to the Offer and more complete pro forma financial data, see
"UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS."
(2) Crown Common Stock equivalents do not reduce primary earnings per share by
more than 3% and have been excluded from the net income per common share
calculation. Crown has determined that Crown Acquisition Preferred Stock
is not a Crown Common Stock equivalent and is not assumed to be converted
for purposes of computing net income per common share.
(3) As to certain dividend information, see "COMPARATIVE MARKET PRICE DATA,"
Note (1). With respect to Crown's future dividend policy, see "THE OFFER--
Ownership of Crown Stock after the Offer" and "THE SHAREHOLDERS
AGREEMENT--Dividend Policy."
(4) The Average Crown Common Stock Price used to adjust the Exchange Ratio
will vary in response to fluctuations in the Market Closing Price per
share of Crown Common Stock and the Noon Buying Rate. However, under the
Exchange Offer Agreement, there are certain limitations affecting the
minimum and maximum Exchange Ratio.
(5) If the Average Crown Common Stock Price is less than FF 179.58, CGIP can
terminate the Exchange Offer Agreement unless Crown has increased the
Exchange Ratio as described in "SUMMARY--The Offer--Exchange Ratio and
Market Value of Crown Common Stock." In such event, assuming 51% of the
CarnaudMetalbox Shares are tendered in the Offer, for each decrease of FF
5 below FF 179.58 in the Average Crown Common Stock Price, pro forma
consolidated net income per share of Crown Common Stock would decrease by
$0.01 for the six months ended June 30, 1995 and $0.01 for the year ended
December 31, 1994.
(6) If the Average Crown Common Stock Price is more than FF 242.96, Crown can
terminate the Exchange Offer Agreement as described in "SUMMARY--The
Offer--Exchange Ratio and Market Value of Crown Common Stock." If Crown
elects not to terminate the Exchange Offer Agreement, assuming 51% of the
CarnaudMetalbox Shares are tendered in the Offer, for each increase of FF
5 above FF 242.96 in the Average Crown Common Stock Price, pro forma
consolidated net income per share of Crown Common Stock would decrease by
$0.01 for the six months ended June 30, 1995 and $0.01 for the year ended
December 31, 1994.
(7) If the Average Crown Common Stock Price is less than FF 179.58, CGIP can
terminate the Exchange Offer Agreement unless Crown has increased the
Exchange Ratio as described in "SUMMARY--The Offer--Exchange Ratio and
Market Value of Crown Common Stock." In such event, assuming 100% of the
CarnaudMetalbox Shares are tendered in the Offer, for each decrease of FF
5 below FF 179.58 in the Average Crown Common Stock Price, pro forma
consolidated net income per share of Crown Common Stock would decrease by
$.01 for the six months ended June 30, 1995 and $.01 for the year ended
December 31, 1994.
(8) If the Average Crown Common Stock Price is more than FF 242.96, Crown can
terminate the Exchange Offer Agreement as described in "SUMMARY--The
Offer--Exchange Ratio and Market Value of Crown Common Stock." If Crown
elects not to so terminate the Exchange Offer Agreement, assuming 100% of
the CarnaudMetalbox Shares are tendered in the Offer, for each increase of
FF 5 above FF 242.96 in the Average Crown Common Stock Price, pro forma
consolidated net income per share of Crown Common Stock would decrease by
$.01 for the six months ended June 30, 1995 and $.01, for the year ended
December 31, 1994.
(9) Although Crown has no current intention of changing the Offer
Consideration (see "THE CARNAUDMETALBOX PROPOSALS--Description of the
CarnaudMetalbox Proposals-- Possible Modifications to the Offer
Consideration"), for each FF 5 by which the Cash Election Price is
increased (and assuming an associated increase in the Exchange Ratio of
0.023, and that Crown acquires 100% of the CarnaudMetalbox Shares), pro
forma net income per share of Crown Common Stock would decrease by $.06
and $.03 for the year ended December 31, 1994 and the six months ended
June 30, 1995, respectively.
(10) CarnaudMetalbox equivalent pro forma per share amounts are calculated by
multiplying Crown Common Stock pro forma per share amounts by the
applicable assumed Exchange Ratio.
29
<PAGE>
COMPARATIVE MARKET PRICE DATA
Shares of Crown Common Stock are listed on the NYSE under the symbol "CCK."
Shares of Crown Common Stock are not currently listed on the Paris Stock
Exchange or the London Stock Exchange, and there currently is no established
trading market for shares of Crown Common Stock in France or the United
Kingdom, except that shares of Crown Common Stock are currently quoted on SEAQ
International on an indicative basis only. CarnaudMetalbox Shares are listed
on the Paris Stock Exchange and the London Stock Exchange and are quoted on
SEAQ International. There is no established trading market for CarnaudMetalbox
Shares in the United States. For further information in respect of the listing
and quotation of Crown Stock, including as to the Paris Stock Exchange
following the Offer, see "THE OFFER--Listing of Crown Common Stock and Crown
Acquisition Preferred Stock." The following tables reflect the range of
reported high and low sale prices, based upon published financial sources, of
shares of Crown Common Stock on the NYSE and CarnaudMetalbox Shares on the
Paris Stock Exchange, and dividends paid, for the periods indicated, on the
CarnaudMetalbox Shares. Crown has not paid dividends on Crown Common Stock
during the periods set forth below (see Note (1) below). Except as otherwise
provided, amounts have been translated into French francs, in the case of
Crown, and U.S. dollars, in the case of CarnaudMetalbox, using the Noon Buying
Rate on the specific dates that shares of Crown Common Stock and
CarnaudMetalbox Shares traded at a high or low price and on dates dividends
were paid.
CROWN CORK & SEAL COMPANY, INC.
<TABLE>
<CAPTION>
STOCK PRICE RANGE DIVIDENDS PAID (1)
--------------------------------------------- -------------------
HIGH LOW HIGH LOW
----------------- ----------- ---------- (IN U.S. (IN FRENCH
(IN U.S. DOLLARS) (IN FRENCH FRANCS)(2) DOLLARS) FRANCS)
<S> <C> <C> <C> <C> <C> <C>
1993First Quarter........ 40.88 35.00 226.70 191.63 -- --
Second Quarter........ 40.00 36.00 226.00 197.35 -- --
Third Quarter......... 38.13 33.25 218.57 193.35 -- --
Fourth Quarter........ 41.88 35.25 247.86 200.57 -- --
1994First Quarter........ 41.88 36.63 248.24 212.53 -- --
Second Quarter........ 39.75 33.75 233.29 193.32 -- --
Third Quarter......... 39.50 33.50 208.90 181.17 -- --
Fourth Quarter........ 40.88 35.88 217.29 193.65 -- --
1995First Quarter........ 45.00 37.75 222.48 201.75(3) -- --
Second Quarter........ 50.25 40.50 243.56 194.64 -- --
Third Quarter......... 50.63 36.00 244.87 182.05 -- --
Fourth Quarter........ 40.00 33.50 194.88194.88 163.21 -- --
(through November 10,
1995)
</TABLE>
CARNAUDMETALBOX
<TABLE>
<CAPTION>
STOCK PRICE RANGE DIVIDENDS PAID (4)
----------------------------------------- ----------------------
HIGH LOW HIGH LOW
--------- --------- --------------------- (IN U.S. (IN FRENCH
(IN FRENCH FRANCS) (IN U.S. DOLLARS)(5) DOLLARS)(6) FRANCS)
<S> <C> <C> <C> <C> <C> <C>
1993First Quarter....... 239.40 178.50 43.21 32.19 -- --
Second Quarter....... 232.00 189.50 42.79 34.78 0.73 4.00
Third Quarter........ 235.80 192.60 38.94 34.37 -- --
Fourth Quarter....... 210.00 174.30 35.95 29.86 -- --
1994First Quarter....... 213.20 180.00 36.15 31.51 -- --
Second Quarter....... 191.70 158.50 32.66 29.13 0.72 4.00
Third Quarter........ 184.00 162.70 34.07 30.23 -- --
Fourth Quarter....... 196.60 167.50 36.98 31.58 -- --
1995First Quarter....... 188.50 165.10 35.53 32.00 -- --
Second Quarter....... 219.60 169.50 42.97 34.73 0.89 4.40
Third Quarter........ 219.80 197.00 45.07 40.16 -- --
Fourth Quarter....... 215.00 198.70 43.99 40.71 -- --
(through November
10, 1995)
</TABLE>
30
<PAGE>
- --------
(1) Crown has traditionally not paid dividends. However, Crown intends, if the
Offer is consummated, to pay cash dividends on an annualized basis of $.80
per share of Crown Common Stock in 1995 ($.20 per quarter) and $1.00 per
share in 1996 ($.25 per quarter), starting with the calendar quarter in
which the Closing Date occurs. See "THE SHAREHOLDERS AGREEMENT--Dividend
Policy." There can be no assurance that such dividends will be paid. See
"DESCRIPTION OF CROWN STOCK--Crown Common Stock." Crown currently
anticipates that the Closing Date will occur in the first quarter of 1996
if the Offer is commenced and consummated (in which case the 1995 dividends
described above would not be paid).
(2) Translation based on the Noon Buying Rate in effect on the date that Crown
Common Stock traded at a high or low. The absolute French franc high and
low sale prices of Crown Common Stock are as follows:
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
(IN FRENCH FRANCS)
<S> <C> <C>
1993First Quarter...................................... 228.88 191.63
Second Quarter...................................... 227.04 195.44
Third Quarter....................................... 226.73 190.34
Fourth Quarter...................................... 247.86 200.57
1994First Quarter...................................... 248.24 212.53
Second Quarter...................................... 233.93 193.32
Third Quarter....................................... 208.90 179.29
Fourth Quarter...................................... 217.29 185.31
1995First Quarter...................................... 229.08 197.13
Second Quarter...................................... 249.62 194.64
Third Quarter....................................... 244.87 177.81
Fourth Quarter...................................... 195.09 163.21
(through November 10, 1995)
</TABLE>
(3) Low occurred on January 2, 1995. The translated amount is based on the Noon
Buying Rate in effect on December 30, 1994.
(4) Represents cash dividends paid to holders of CarnaudMetalbox Shares
determined without regard to the avoir fiscal tax credit accompanying cash
dividends, which is taxable to the recipient of the dividend and which may
be claimed as a tax credit by the recipient against such recipient's tax
liability. See "THE OFFER--Certain Tax Consequences of the Offer."
(5) Translation based on the Noon Buying Rate on the date that CarnaudMetalbox
Shares traded at a high or low.
(6) Translation based on the Noon Buying Rate on the date of payment of such
dividends.
31
<PAGE>
The transactions contemplated by the Exchange Offer Agreement were announced
publicly by the parties thereto following the close of business on May 22,
1995. On such date, the last sale prices of CarnaudMetalbox Shares and of
shares of Crown Common Stock were FF 189.70 and $41.75 per share, respectively
(or $37.15 and FF 213.18, respectively, based on the Noon Buying Rate on such
date). As of that date, the equivalent per share price of a CarnaudMetalbox
Share was $44.46 (assuming an Exchange Ratio of 1.065 and that a share of
Crown Common Stock is equal in value to a share of Crown Acquisition Preferred
Stock). On May 19, 1995, the business day preceding public announcement of
such transactions, the last sale prices of CarnaudMetalbox Shares and shares
of Crown Common Stock were FF 186.60 and $41.50 per share, respectively (or
$36.55 and FF 211.90, respectively, based on the Noon Buying Rate on such
date). As of that date, the equivalent per share price of a CarnaudMetalbox
Share was $44.20 (subject to such same assumptions). On November 10, 1995, the
last sale prices of CarnaudMetalbox Shares and shares of Crown Common Stock
were FF 213.5 and $40.00 per share, respectively (or $43.82 and FF 194.88,
respectively, based on the Noon Buying Rate in effect on such date). As of
that date, the equivalent per share price of a CarnaudMetalbox Share was
$42.60 (subject to such same assumptions). If the Measurement Date were
November 13, 1995, the Exchange Ratio would have been 1.183, unless Crown were
to exercise its right under the Exchange Offer Agreement to increase the
Exchange Ratio to prevent termination of the Exchange Offer Agreement, in
which case the Exchange Ratio would have been 1.221.
THE MEETING
DATE, TIME AND PLACE OF THE MEETING
The Special Meeting of shareholders of Crown is to be held on December 19,
1995, at 10:00 a.m., Philadelphia time, at Crown's offices located at 9300
Ashton Road, Philadelphia, PA 19136.
MATTERS TO BE CONSIDERED AT THE MEETING
At the Special Meeting, shareholders of Crown will have the opportunity to
consider and act upon (1) the CarnaudMetalbox Proposals, (2) the Articles
Modernization Proposal and the Additional Preferred Stock Proposal (each of
which is unrelated to the CarnaudMetalbox Proposals) and (3) any other matters
that are properly brought before the Special Meeting.
THE BOARD OF DIRECTORS OF CROWN HAS APPROVED THE CARNAUDMETALBOX PROPOSALS
AND EACH OF THE ARTICLES MODERNIZATION PROPOSAL AND THE ADDITIONAL PREFERRED
STOCK PROPOSAL AND RECOMMENDS THAT CROWN SHAREHOLDERS VOTE FOR APPROVAL OF
EACH OF THE CARNAUDMETALBOX PROPOSALS, THE ARTICLES MODERNIZATION PROPOSAL AND
THE ADDITIONAL PREFERRED STOCK PROPOSAL.
RECORD DATE
The Record Date for the Special Meeting is October 23, 1995. Only
shareholders of Crown whose names appeared on the books of Crown at the close
of business on that date will be entitled to vote at the Special Meeting. As
of the close of business on the Record Date, 90,609,422 shares of Crown Common
Stock were outstanding and entitled to vote at the Special Meeting, each share
being entitled to one vote.
REQUIRED VOTE
Under the PBCL and Crown's Articles of Incorporation, the approval of the
applicable CarnaudMetalbox Proposals, the Articles Modernization Proposal and
the Additional Preferred Stock Proposal each requires the vote of a majority
of the votes cast by all shareholders entitled to vote thereon at a meeting at
which a quorum is present. Under the PBCL and Crown's Bylaws, the presence, in
person or by proxy, of shareholders entitled to cast at least a majority in
number of all votes entitled to be cast on a matter is necessary to constitute
a quorum.
The rules of the NYSE require that the issuance of shares of Crown Common
Stock and Crown Acquisition Preferred Stock in connection with the proposed
CarnaudMetalbox Transaction, and of shares of Crown Common
32
<PAGE>
Stock upon conversion of Crown Acquisition Preferred Stock, be approved by a
majority of the votes cast on the proposal, provided that the total vote cast
on the proposal represents over 50% in interest of all securities entitled to
vote on the proposal.
Under SEC rules, boxes are provided on the proxy card enclosed with this
Proxy Statement/Prospectus for shareholders to mark if they wish to vote
"for," "against," or "abstain" on one or more of the proposals to be
considered at the Special Meeting. Abstentions will be counted in determining
whether a quorum has been reached at the Special Meeting but will not be
counted in determining the number of votes cast in connection with the
proposals to be considered at the Special Meeting. Like abstentions, broker-
dealer "non-votes" on "non-routine" matters are not counted in calculating the
number of votes cast on the proposals to be considered at the Special Meeting
but are counted for quorum purposes. The NYSE has advised Crown that the
matters to be considered at the Special Meeting are "non-routine" matters,
which means that brokers who have received no voting instructions from their
customers do not have the discretion to vote on such matters.
If a quorum is not obtained, or if fewer shares of Crown Common Stock are
voted in favor of the proposals to be considered at the Special Meeting than
the number required for approval, it is expected that the Special Meeting will
be postponed or adjourned for the purpose of allowing additional time for
obtaining proxies or votes. At any subsequent reconvening of the Special
Meeting, all proxies will be voted in the same manner as such proxies would
have been voted at the original convening of the meeting (except for any
proxies which have theretofore been effectively revoked or withdrawn),
notwithstanding that they may have been effectively voted on the same or any
other matter at the original convening of the meeting.
As of the Record Date, the directors and executive officers of Crown (and
their affiliates) beneficially owned 6,900,095 shares of Crown Common Stock
(including 5,372,215 shares of Crown Common Stock which may be deemed to be
beneficially owned by certain directors and executive officers by virtue of
their membership on an investment committee in respect of various Crown
pension plans), constituting approximately 7.615% of the outstanding Crown
Common Stock. All such directors and executive officers have indicated they
intend to vote or direct the vote of all outstanding shares of Crown Common
Stock over which they have voting power in favor of all of the Special Meeting
Proposals. For further information in respect of the ownership of Crown Common
Stock, including ownership by directors and executive officers of Crown, see
"CROWN CORK & SEAL COMPANY--Voting Securities and Principal Holders Thereof."
SHAREHOLDERS SHOULD NOTE THAT THE EFFECTIVENESS OF EACH OF THE
CARNAUDMETALBOX PROPOSALS IS CONDITIONED UPON APPROVAL OF ALL OF THE
CARNAUDMETALBOX PROPOSALS. ACCORDINGLY, FAILURE OF THE SHAREHOLDERS TO APPROVE
ANY ONE OF THE CARNAUDMETALBOX PROPOSALS WILL RESULT IN THE INEFFECTIVENESS OF
ALL OF THE CARNAUDMETALBOX PROPOSALS.
THE EFFECTIVENESS OF EACH OF THE ADDITIONAL PREFERRED STOCK PROPOSAL AND THE
ARTICLES MODERNIZATION PROPOSAL IS NOT CONDITIONED UPON APPROVAL OF ANY OTHER
PROPOSAL, INCLUDING ANY OF THE CARNAUDMETALBOX PROPOSALS. IN ADDITION, THE
EFFECTIVENESS OF THE CARNAUDMETALBOX PROPOSALS IS NOT CONDITIONED UPON
APPROVAL OF THE ADDITIONAL PREFERRED STOCK PROPOSAL OR THE ARTICLES
MODERNIZATION PROPOSAL.
THE EFFECTIVENESS OF EACH OF THE CARNAUDMETALBOX PROPOSALS IS CONDITIONED
UPON THE COMPLETION BY CROWN OF THE EXCHANGE OF CROWN STOCK FOR, OR PURCHASE
OF, THE CARNAUDMETALBOX SHARES TENDERED PURSUANT TO THE OFFER DISCUSSED BELOW
(AS SUCH OFFER MAY BE MODIFIED OR AMENDED). CROWN DOES NOT CURRENTLY INTEND TO
PROCEED WITH SUCH OFFER IF THE CARNAUDMETALBOX PROPOSALS ARE NOT APPROVED.
VOTING AT THE MEETING
A form of proxy is enclosed with copies of this Proxy Statement/Prospectus
being sent to shareholders of Crown. EACH PROXY SUBMITTED WILL BE VOTED AS
DIRECTED, BUT IF NO SPECIFIC INSTRUCTIONS ARE GIVEN WITH RESPECT TO THE
MATTERS TO BE VOTED UPON, THE SHARES REPRESENTED BY EACH SIGNED PROXY WILL BE
VOTED FOR APPROVAL OF EACH OF THE CARNAUDMETALBOX PROPOSALS, THE ARTICLES
MODERNIZATION PROPOSAL AND THE ADDITIONAL PREFERRED STOCK PROPOSAL.
33
<PAGE>
Three officers of Crown have been designated as the proxies to vote shares at
the Special Meeting in accordance with the instructions on the proxy card
enclosed with this Proxy Statement/Prospectus. The management of Crown knows
of no matters which are to be presented for consideration at the Special
Meeting other than those specifically described in the Notice of Special
Meeting, but if other matters are properly presented, including, among other
things, a motion to adjourn or postpone the Special Meeting to another time or
place for the purpose of soliciting additional proxies or otherwise, it is the
intention of the persons designated as proxies to vote on them in accordance
with their judgment; provided, however, that no proxy which is voted against
any of the CarnaudMetalbox Proposals will be voted in favor of such
adjournment or postponement. The grant of a proxy will also confer
discretionary authority on the persons named in the proxy to vote on matters
incidental to the conduct of the Special Meeting.
Each shareholder has the right to revoke a proxy at any time before it is
voted. A proxy may be revoked by filing with the Secretary of Crown a written
revocation before the proxy is voted or by submitting to Crown before the
taking of the vote a duly executed proxy bearing a later date or by voting the
shares subject to such proxy by written ballot at the Special Meeting. Any
shareholder may attend the Special Meeting and vote in person whether or not a
proxy was previously submitted. All written notices of revocation and other
communications with respect to revocation of proxies should be addressed to:
Crown Cork & Seal Company, Inc., 9300 Ashton Road, Philadelphia, PA 19136,
Attention: Corporate Secretary. Attendance at the Special Meeting will not in
and of itself constitute a revocation of a proxy.
The cost of soliciting the proxies to which this Proxy Statement/Prospectus
relates will be borne by Crown. In addition to the use of the mails, proxies
may be solicited in person or by telephone, telegram or otherwise by officers
and regular employees of Crown who will not be specifically compensated
therefor. Crown has engaged D.F. King & Co., Inc. ("King") to assist in the
solicitation of proxies for a fee of $9,000 plus reimbursement for out-of-
pocket expenses and certain additional fees for services rendered by King in
connection with such solicitation. Crown will also reimburse brokerage firms,
fiduciaries and other custodians who forward soliciting material to the
beneficial owners of shares of Crown Common Stock for their reasonable out-of-
pocket expenses incurred in forwarding such material.
CROWN SHAREHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES WITH THEIR PROXY
CARDS.
THE CARNAUDMETALBOX PROPOSALS
DESCRIPTION OF THE CARNAUDMETALBOX PROPOSALS
The Exchange Offer Agreement
Pursuant to the Exchange Offer Agreement and subject to the terms and
conditions thereof, Crown has agreed to make the Offer for all of the
outstanding CarnaudMetalbox Shares, and CGIP has agreed to tender pursuant to
the Offer all CarnaudMetalbox Shares beneficially owned by CGIP (or one of its
subsidiaries) and has agreed to elect to receive Units of Crown Stock in
exchange for such shares. CGIP beneficially owned, directly or indirectly, at
the time of execution of the Exchange Offer Agreement and as of October 31,
1995, 26,188,956 CarnaudMetalbox Shares, representing approximately 30.4% of
the total outstanding CarnaudMetalbox Shares and approximately 44.4% of the
aggregate voting power of the outstanding CarnaudMetalbox Shares (taking into
account double voting rights with respect to certain CarnaudMetalbox Shares
owned by CGIP and certain other shareholders of CarnaudMetalbox (which double
voting rights Crown will not have if the Offer is consummated)) as of October
31, 1995.
34
<PAGE>
Pursuant to the Offer, and subject to the terms and conditions thereof,
shareholders of CarnaudMetalbox will be offered for each CarnaudMetalbox Share,
at the election of the holder, either (1) 1.065 Units, each consisting of (x)
.75 shares of Crown Common Stock and (y) .25 shares of Crown Acquisition
Preferred Stock, with cash (in French francs) being paid in lieu of any
fractional share interest, or (2) FF 225 in cash. The Exchange Ratio will be
adjusted based on the Average Crown Common Stock Price, subject to certain
limitations and exceptions. For a discussion of the adjustments to the Exchange
Ratio which may occur under the Exchange Offer Agreement, including such
limitations and exceptions, see "SUMMARY--The Offer--Exchange Ratio and Market
Value of Crown Common Stock."
For information as to certain conditions to the Offer (including in respect
of CGIP's obligation to tender and not withdraw its CarnaudMetalbox Shares in
the Offer in the event of a competing bid for CarnaudMetalbox Shares), the
purpose of the Offer, the ownership of Crown Stock following consummation of
the Offer and the operation of CarnaudMetalbox following consummation of the
Offer, see "THE EXCHANGE OFFER AGREEMENT--Agreement to Tender" and "--
Conditions; Waiver" and "THE OFFER--Conditions to the Offer," "--Extension,
Termination and Amendment," "--Purpose of the Offer," "--Ownership of Crown
Stock after the Offer" and "--Operation of CarnaudMetalbox After the Offer."
For information in respect of adjustments to the Exchange Ratio, see "SUMMARY--
The Offer--Exchange Ratio and Market Value of Crown Common Stock."
Effect of Shareholder Approval
Crown believes that shareholder approval of the transactions contemplated by
the Exchange Offer Agreement is not required by the PBCL or the applicable
rules of the NYSE, other than in respect of the CarnaudMetalbox Proposals
referred to below dealing with the issuance and authorization of Crown Stock in
connection with the CarnaudMetalbox Transaction. However, in addition to the
approval of the proposals dealing with the issuance and authorization of Crown
Stock, Crown's Board of Directors is requesting the approval of Crown's
shareholders of the proposed CarnaudMetalbox Transaction and the other
transactions contemplated by the Exchange Offer Agreement (including the
execution and delivery by Crown of the Shareholders Agreement) in light of the
significance of the proposed acquisition and such other transactions to Crown's
shareholders. In addition, Crown's Board of Directors has made approval of the
transactions contemplated by the Exchange Offer Agreement by Crown's
shareholders (in addition to the approval of the authorization and issuance of
Crown Stock in connection therewith) a condition to the acquisition of
CarnaudMetalbox pursuant to the Exchange Offer Agreement. See "THE OFFER--
Conditions to the Offer" and "THE EXCHANGE OFFER AGREEMENT--Conditions;
Waiver." The legal effect of shareholder approval of the transactions
contemplated by the Exchange Offer Agreement will be to ratify the transactions
contemplated by the Exchange Offer Agreement as described herein or otherwise
disclosed sufficiently in advance of the Special Meeting under applicable law,
which ratification may prevent a shareholder from successfully challenging the
transactions contemplated by the Exchange Offer Agreement and the actions of
Crown's Board of Directors in connection therewith. Such ratification would not
apply, however, to any changes to the terms of the transactions contemplated by
the Exchange Offer Agreement not described herein or otherwise disclosed
sufficiently in advance of the Special Meeting under applicable law. Crown does
not intend to solicit approval of its shareholders with respect to any
revisions or amendments to the Exchange Offer Agreement or the Shareholders
Agreement which Crown makes after the Special Meeting, except in the specific
circumstances noted below in "--Possible Modifications to the Offer
Consideration."
Possible Modifications to the Offer Consideration
The approval of the transactions contemplated by the Exchange Offer Agreement
will constitute an approval of the adjustments to the Exchange Ratio which may
occur in accordance with the terms of the Exchange Offer Agreement, including
pursuant to Crown's exercise of certain rights under the Exchange Offer
Agreement to increase the Exchange Ratio. See "SUMMARY--The Offer--Exchange
Ratio and Market Value of Crown Common Stock."
In addition, although Crown has no current intention of changing the Offer
Consideration, under certain circumstances (none of which is presently expected
to exist), the Offer Consideration may be modified (in certain circumstances
with CGIP's consent) from that described herein subsequent to the date of this
Proxy Statement/Prospectus in the event that Crown's Board of Directors
determines that such modifications are in the best interests of Crown. If the
Offer Consideration is changed by Crown in a manner which Crown's Board of
35
<PAGE>
Directors believes would materially adversely affect Crown's shareholders,
Crown intends to resolicit the approval of Crown shareholders, unless such
changes are disclosed to Crown shareholders prior to the Special Meeting. See
"THE OFFER--General." However, if after the Special Meeting the Offer
Consideration is so changed in response to a competing bid for CarnaudMetalbox
or as required by a regulatory authority, such as the CBV, Crown may elect not
to proceed with resolicitation if Crown receives the advice of outside counsel
that resolicitation is not required under applicable state law (which may be
based solely upon the applicable statutory provisions of Pennsylvania law in
the absence of any controlling judicial precedent); Crown Common Stock will
not be delisted from the NYSE as a result of such election; and Crown's Board
of Directors determines that, because of the associated delay, resolicitation
would jeopardize the consummation of the CarnaudMetalbox Transaction or the
benefits of the transaction to Crown's shareholders. Crown has been advised by
its counsel, Dechert Price & Rhoads, that such counsel is unaware of any
existing controlling judicial precedent in Pennsylvania with respect to the
specific facts and circumstances described in this paragraph.
Any such increase in the Offer Consideration in the manner described in the
two preceding paragraphs may have a dilutive effect on current holders of
Crown Common Stock; may, to the extent it is in the form of additional Crown
equity, have the effect of increasing CGIP's, and former CarnaudMetalbox
shareholders' aggregate, percentage ownership of Crown Common Stock following
the Offer; and may have a material impact on the unaudited pro forma
consolidated condensed financial statements contained herein. Crown has
provided certain sensitivity analyses in the notes to such unaudited pro forma
consolidated condensed financial statements discussing the effects of certain
variations in the Offer Consideration, including with respect to net income
per share of Crown Common Stock. See "UNAUDITED PRO FORMA CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS," including Note 9 thereto, and "COMPARATIVE
PER SHARE DATA." Crown does not intend to increase the Exchange Ratio above
1.183, or otherwise change the Offer Consideration in a manner which Crown's
Board of Directors believes would materially adversely affect Crown's
shareholders unless it receives the opinion of its financial advisor that the
Offer Consideration, as so modified, is fair to Crown from a financial point
of view. The decision whether to obtain such a fairness opinion with respect
to any such changes to the Offer Consideration will be made by Crown's Board
of Directors.
Significant Shareholder
By virtue of CGIP's substantial ownership position in CarnaudMetalbox and
its agreement in the Exchange Offer Agreement to receive Units in exchange for
its CarnaudMetalbox Shares in the Offer, it is anticipated that CGIP will
become Crown's largest holder of Crown Common Stock and Crown Acquisition
Preferred Stock immediately after consummation of the Offer. Based on the
total number of outstanding shares of Crown Common Stock and outstanding
CarnaudMetalbox Shares (in each case, not including outstanding options) as of
October 31, 1995, if the Offer is consummated, CGIP's percentage ownership of
(1) the issued and outstanding Crown Common Stock immediately following the
Offer, assuming no conversion of Crown Acquisition Preferred Stock, could
range from approximately 12.4% to 20.4%, (2) the issued and outstanding Crown
Common Stock immediately following the Offer, assuming conversion of Crown
Acquisition Preferred Stock (which percentage ownership corresponds to CGIP's
percentage ownership of the total voting power in the election of directors of
Crown immediately following the Offer), could range from approximately 14.4%
to 25.1% and (3) the issued and outstanding Crown Acquisition Preferred Stock
immediately following the Offer could range from approximately 30.4% to 100%.
The low end of the CGIP ownership ranges above assumes the Exchange Ratio is
0.968 and all CarnaudMetalbox shareholders tender and elect to receive Units.
The high end of such ranges assumes the Exchange Ratio is 1.183 and CGIP is
the only CarnaudMetalbox shareholder that elects to receive Units. In certain
cases, the Exchange Ratio could exceed 1.183. See "SUMMARY--The Offer--
Exchange Ratio and Market Value of Crown Common Stock."
For additional information regarding CGIP, see "SUMMARY--Compagnie Generale
d'Industrie et de Participations S.A."
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The Shareholders Agreement; Strategic Committee
Crown and CGIP have agreed in the Exchange Offer Agreement to enter into the
Shareholders Agreement on the Closing Date. Pursuant to the Shareholders
Agreement, CGIP will agree to standstill provisions which restrict certain
actions by CGIP and will agree to vote its shares of Crown Stock on certain
matters as specified in the Shareholders Agreement. In addition, CGIP will
agree not to transfer any voting securities of Crown except in accordance with
the Shareholders Agreement and will grant Crown certain rights to purchase such
voting securities in the event CGIP elects to transfer any such voting
securities. Crown will agree to cause three persons designated by CGIP (subject
to adjustment based on the actual size of Crown's Board of Directors as of the
Closing Date and from time to time thereafter) to be appointed to Crown's Board
of Directors on the Closing Date and to be included thereafter in the slate of
nominees recommended by Crown's Board of Directors to shareholders for election
as directors at each annual meeting of shareholders of Crown. Crown will also
agree to provide CGIP with registration rights with respect to its shares of
Crown Stock and to certain provisions regarding Crown's debt rating. Crown will
also indicate its intention to declare a quarterly dividend on Crown Common
Stock commencing with the calendar quarter in which the Closing Date occurs
(which dividend will be paid to holders of record of Crown Common Stock as of a
date after the Closing Date) and its intention to pay regular cash dividends on
Crown Common Stock thereafter. Certain provisions of the Shareholders
Agreement, including those relating to the standstill and voting provisions,
CGIP's right to designate directors and the restrictions on CGIP's transfer of
securities of Crown will terminate upon the happening of certain specified
events. For a description of the Shareholders Agreement, see "THE SHAREHOLDERS
AGREEMENT."
Although Crown's Board of Directors believes certain standstill and related
provisions as well as restrictions on the ability of CGIP to dispose of Crown
Stock in the Shareholders Agreement will substantially inhibit CGIP from
controlling Crown, it is expected that CGIP will significantly influence the
business and affairs of Crown through its share ownership and its
representation on Crown's Board of Directors. Further, the restrictions
governing CGIP in the Shareholders Agreement are subject to certain terms and
conditions, including termination of the restrictions if Crown does not comply
with certain dividend and investment grade debt rating maintenance provisions.
CGIP's substantial voting power with respect to Crown's shares and the various
provisions of the Shareholders Agreement (including restrictions on the ability
of CGIP to vote for third party director nominees and takeover proposals and to
dispose of its shares) could also impede a takeover of Crown by a third party
or the ability of other shareholders of Crown or third parties to influence the
business and affairs of Crown. Any sales of substantial amounts of Crown Common
Stock or Crown Acquisition Preferred Stock by CGIP following the
CarnaudMetalbox Transaction could adversely affect the market price of Crown
Common Stock or Crown Acquisition Preferred Stock.
In addition, pursuant to the Exchange Offer Agreement, Crown has agreed to
amend its Bylaws on the Closing Date to create the Strategic Committee, which
will have the responsibility to consider changes to Crown's dividend and debt
rating policies, business combinations and other extraordinary transactions and
succession planning. One-half of the members of the Strategic Committee
(including its chair) will be representatives of CGIP. The Bylaws as so amended
will provide that Crown's Board of Directors will consider the vote of the
Strategic Committee with respect to those matters to be considered by the
Strategic Committee but will not be bound to follow the vote of the Strategic
Committee. CGIP has advised Crown that it will designate Mr. Seilliere to serve
as chairman of the strategic committee. For a description of the Exchange Offer
Agreement, see "THE EXCHANGE OFFER AGREEMENT." For information regarding CGIP's
proposed representatives on Crown's Board of Directors, see "CARNAUDMETALBOX--
Information as to Additional Crown Directors After the Offer."
Issuance of Crown Common Stock and Crown Acquisition Preferred Stock
General. Crown proposes to issue to electing CarnaudMetalbox shareholders a
number of shares of Crown Stock sufficient to acquire all of the outstanding
shares of CarnaudMetalbox. The Crown Acquisition Preferred Stock to be
authorized by Crown shareholders will have such voting and other rights,
preferences and limitations
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as may be determined by Crown's Board of Directors. However, Crown and CGIP
have agreed pursuant to the Exchange Offer Agreement that, unless Crown and
CGIP agree otherwise, the Crown Acquisition Preferred Stock to be offered to
CarnaudMetalbox shareholders will have the terms set forth in the Exchange
Offer Agreement. For a description of such terms, see "DESCRIPTION OF CROWN
STOCK--Crown Acquisition Preferred Stock." Among other things, the Exchange
Offer Agreement provides that shares of Crown Acquisition Preferred Stock will
be convertible, at the option of the holder (and, in certain circumstances,
mandatorily or at Crown's option) subject to the terms thereof, into shares of
Crown Common Stock. If the CarnaudMetalbox Proposals are approved and the
Offer is consummated, the rights of holders of Crown Common Stock will be
subject to, and may be adversely affected by, the rights of holders of Crown
Acquisition Preferred Stock. Holders of Crown Common Stock will not be
entitled to exercise preemptive rights with respect to the issuance of shares
of Crown Common Stock or Crown Acquisition Preferred Stock in connection with
the proposed CarnaudMetalbox Transaction or upon conversion of Crown
Acquisition Preferred Stock.
The proposed issuance of shares of Crown Common Stock and Crown Acquisition
Preferred Stock pursuant to the CarnaudMetalbox Transaction, and the issuance
of shares of Crown Common Stock upon conversion of Crown Acquisition Preferred
Stock, do not require the approval of Crown's shareholders under the PBCL.
However, the rules of the NYSE, on which exchange shares of Crown Common Stock
are traded, require as a prerequisite of the listing on the NYSE of the shares
of Crown Stock proposed to be issued in the CarnaudMetalbox Transaction, and
the shares of Crown Common Stock to be issued upon conversion of Crown
Acquisition Preferred Stock, the approval of the shareholders of Crown in
accordance with NYSE rules because the number of such shares to be issued is
expected to represent more than 20% of the shares of Crown Common Stock and
voting power outstanding immediately prior to such issuance.
Possible Number of Shares of Crown Stock to be Issued in the Offer. As of
the close of business on October 31, 1995, 90,609,422 shares of Crown Common
Stock were issued and outstanding, and 1,957,542 shares of Crown Common Stock
were committed for issuance pursuant to outstanding stock options. As
discussed above, Crown is proposing to issue a number of shares of Crown
Common Stock sufficient to acquire CarnaudMetalbox. Under the Exchange Offer
Agreement, based on currently available information and the assumptions
discussed below, this could result in up to 101,900,170 shares of Crown Common
Stock being issued to CarnaudMetalbox's shareholders (including up to
23,739,119 shares issued upon conversion of Crown Acquisition Preferred
Stock), assuming all holders of CarnaudMetalbox Shares elect to receive Units
in the Offer, all employee stock options contemplated by the Exchange Offer
Agreement are granted, all holders of outstanding options for CarnaudMetalbox
Shares exercise such options and the Exchange Ratio is determined to be 1.183
(subject to certain exceptions, the maximum possible Exchange Ratio under the
Exchange Offer Agreement, as described in "SUMMARY--The Offer--Exchange Ratio
and Market Value of Crown Common Stock"). In such a case, former holders of
CarnaudMetalbox Shares and options could hold up to approximately 53% of the
issued and outstanding Crown Common Stock upon consummation of the Offer,
which percentage could increase under certain circumstances. See "THE
CARNAUDMETALBOX PROPOSALS--Description of the CarnaudMetalbox Proposals--
Possible Modifications to the Offer Consideration." The Acquisition Articles
Amendment, if adopted, will make an additional 380,000,000 shares of Crown
Common Stock available for issuance, as described below in "--Amendments to
Crown's Articles of Incorporation--Authorization of Additional Crown Common
Stock."
Amendment to Crown's Articles of Incorporation
Authorization of Crown Acquisition Preferred Stock. Crown's Board of
Directors is requesting adoption by the shareholders of Crown of an amendment
to Crown's Articles of Incorporation to authorize 50,000,000 shares of Crown
Acquisition Preferred Stock in one or more classes or series of a class with
voting and other rights, preferences and limitations as may be determined by
the Board of Directors of Crown. Crown's authorized shares presently consist
solely of 120,000,000 shares of Crown Common Stock. Accordingly, the
authorization of shares of such preferred stock in connection with the
proposed CarnaudMetalbox Transaction requires an amendment to Crown's Articles
of Incorporation, and such amendment requires adoption by Crown's shareholders
under the PBCL. If the CarnaudMetalbox Proposals are approved and the Offer is
consummated,
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the rights of holders of Crown Common Stock will be subject to, and may be
adversely affected by, the rights of holders of Common Acquisition Preferred
Stock.
A copy of the Acquisition Articles Amendment is attached to this Proxy
Statement/Prospectus as Annex B. The relevant portion of the Acquisition
Articles Amendment dealing with the authorization of Crown Acquisition
Preferred Stock consists of Article THIRD, Section C of the Acquisition
Articles Amendment. If the Acquisition Articles Amendment is adopted by Crown's
shareholders, Crown's Board of Directors will have authority to issue, solely
in connection with the CarnaudMetalbox Transaction, one or more classes or
series of a class of such preferred stock without further shareholder approval,
except as otherwise provided under applicable law or rules of securities
exchanges or quotation systems on which shares of Crown are at the time listed
or authorized for quotation, and will have the ability, subject to the terms of
the Exchange Offer Agreement, to determine all designations, relative rights,
preferences and limitations of such class or series. Adoption of the
Acquisition Articles Amendment will permit Crown's Board to determine such
terms by resolution of Crown's Board which, upon filing with the applicable
state authorities, will operate as an amendment to Crown's Articles of
Incorporation.
As noted above, under the Exchange Offer Agreement, Crown and CGIP have
agreed that, unless Crown and CGIP agree otherwise, the Crown Acquisition
Preferred Stock to be offered to CarnaudMetalbox shareholders will have the
terms set forth in the Exchange Offer Agreement. Crown has no current intention
of modifying the terms of Crown Acquisition Preferred Stock, but it reserves
the right to do so, without further shareholder approval, subject to CGIP's
consent under the Exchange Offer Agreement. See "--Possible Modifications to
the Offer Consideration" above. The proposed resolution of Crown's Board of
Directors setting the terms of Crown Acquisition Preferred Stock is included as
part of Annex B to this Proxy Statement/Prospectus.
Authorization of Additional Crown Common Stock. Crown's Board of Directors is
also requesting adoption by the shareholders of Crown of the Acquisition
Articles Amendment to increase the number of authorized shares of Crown Common
Stock from 120,000,000 to 500,000,000. The amendment, if adopted, would make an
additional 380,000,000 shares of Crown Common Stock available for issuance from
time to time for such purposes and consideration as Crown's Board of Directors
may approve, including for the proposed CarnaudMetalbox Transaction as
discussed below, and no further shareholder approval will be required, except
as otherwise provided under applicable law or rules of securities exchanges or
quotation systems upon which shares of Crown are at the time listed or
authorized for quotation. The relevant portion of the Acquisition Articles
Amendment dealing with the authorization of Crown Common Stock consists of
Article THIRD, Section A of the Acquisition Articles Amendment.
The number of shares of Crown Common Stock that may be issued in the Offer
for CarnaudMetalbox Shares exceeds the number of authorized shares of Crown
Common Stock currently available for issuance. Therefore, Crown is requesting
approval of additional authorized Crown Common Stock to be available for the
Offer for CarnaudMetalbox Shares. Crown is also requesting approval of the
authorization of additional Crown Common Stock to be available following
consummation of the proposed CarnaudMetalbox Transaction, including shares to
be reserved for options for Crown Common Stock which may be issued to replace
certain currently outstanding and issuable options for CarnaudMetalbox Shares.
See "THE OFFER--Interest of Certain Persons in the Offer." The availability of
additional shares of Crown Common Stock for issuance without the delay and
expense of obtaining the approval of shareholders will afford Crown greater
flexibility in acting upon proposed transactions in which shares of Crown
Common Stock may be issued in the future. Such proposed transactions might
include, without limitation, issuance by Crown as part or all of the
consideration required to be paid by Crown for acquisitions of other businesses
or properties, issuance in public or private sales for cash as a means of
obtaining capital for Crown's business and operations or retiring indebtedness
(see, for example, "--Recommendation of Crown's Board of Directors; Reasons for
the CarnaudMetalbox Transaction" and "--Sources of Funds"), issuance pursuant
to employee benefit or other compensatory plans or stock splits or stock
dividends. Crown has no current plan or commitment with respect to the
additional authorized shares of Crown Common Stock other than Crown Common
Stock to be issued under the Exchange Offer Agreement or, as referred to above,
to be reserved for issuance upon exercise of options to replace certain options
for CarnaudMetalbox Shares if the CarnaudMetalbox Proposals are approved.
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The shares of Crown Common Stock authorized by adoption of the proposed
Acquisition Articles Amendment would have rights identical to those of shares
of currently outstanding Crown Common Stock. Adoption of the Acquisition
Articles Amendment would not affect the rights of currently outstanding shares
of Crown Common Stock, except for the effects incidental to increasing the
number of outstanding shares of Crown Common Stock and except for the effects
incidental to authorizing the Crown Acquisition Preferred Stock and, as
discussed below, rendering Subchapter E inapplicable to Crown. For a
description of Crown Common Stock, see "DESCRIPTION OF CROWN STOCK--Crown
Common Stock."
Although the proposed increase in authorized shares of Crown Common Stock is
not prompted by a belief that additional takeover defenses are needed, the
additional shares could be used to oppose persons seeking to gain control of
Crown without negotiating with Crown's Board of Directors by, for example,
privately placing such shares with purchasers who might side with Crown's Board
in opposing a hostile takeover bid or diluting the stock ownership of a person
or entity seeking to gain control of Crown. Such uses of Crown Common Stock
could render more difficult an unsolicited tender offer or other attempt to
acquire control of Crown, as would Crown's existing anti-takeover devices,
including the shareholder rights plan Crown announced it had adopted on July
28, 1995. See "DESCRIPTION OF CROWN STOCK--Rights Plan."
"Opt-Out" of Subchapter E of the PBCL. The Acquisition Articles Amendment
will also, if adopted, render Subchapter E of the PBCL inapplicable to Crown.
The relevant portion of the Acquisition Articles Amendment adds a new Article
ELEVENTH, which reads as follows:
"ELEVENTH: Subchapter E, Control Transactions, of Chapter 25 of the
Pennsylvania Business Corporation Law, as amended, shall not be applicable
to the Corporation."
Subchapter E provides that any holder of voting shares of a registered
Pennsylvania corporation who objects to a "control transaction" will be
entitled to make a written demand on the "controlling person or group" for
payment of the fair value of the voting shares of the corporation held by the
shareholder. A "control transaction" is defined as the acquisition by a person
or group of the status of a "controlling person or group." For this purpose, a
"controlling person or group" is generally defined as a person or group which
has voting power over voting shares of the registered corporation that would
entitle the holder thereof to cast at least 20% of the votes that all
shareholders would be entitled to cast in an election of directors of the
corporation. Crown is a registered corporation for purposes of the PBCL.
Pursuant to Subchapter E, the "controlling person or group" is obligated to
give prompt notice following the occurrence of a control transaction to all
shareholders of record of the corporation. A shareholder making written demand
in accordance with Subchapter E upon the controlling person or group is
entitled to receive cash for each of the shareholder's shares in an amount
equal to the fair value of each voting share of the corporation as of the date
on which the control transaction occurs, taking into account all relevant
factors, including an increment representing a proportion of any value payable
for the acquisition of control over the corporation. The minimum per share
value the shareholder can receive under Subchapter E is the highest price per
share paid by the controlling person or group for shares of the corporation
within the 90-day period ending on and including the date of the control
transaction (the "Minimum Value").
If the shareholder and the controlling person or group are unable to agree on
the fair value of the shares or on a binding procedure to determine the fair
value of the shares within the time set forth in Subchapter E, the shareholder
is entitled to surrender his certificates for the voting shares of the
corporation, duly endorsed for transfer to the controlling person or group, to
the court of common pleas in the county in which the corporation's registered
office is located. Within 10 business days of receipt of notice of the court of
the receipt of such shares, the controlling person or group is required to make
a partial payment for the fair value of the shares in an amount equal to the
Minimum Value to the court, and within 10 business days following receipt of
such amount, the court is required to remit such amount to the shareholder who
surrendered his or her shares to the court. Following such partial payment, in
accordance with the appraisal procedures set forth in Subchapter E, the court
receiving the shareholder's shares determines the fair value of the shares.
Within 10 business days following the final determination of such value, the
controlling person or group is required to make any supplemental payment
necessary pursuant to such appraisal proceedings to the court, and the court,
within 10 business days thereafter, is required to remit any such amount to the
shareholder.
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Following the consummation of the Offer, it is possible (depending upon the
number of CarnaudMetalbox shareholders who tender into the Offer, the Exchange
Ratio and the proportion of CarnaudMetalbox shareholders electing to receive
Units, as opposed to cash, in the Offer) that CGIP will be a "controlling
person or group" under Subchapter E, thereby triggering the applicability of
Subchapter E if Subchapter E were then applicable to Crown. Pennsylvania law
permits a corporation covered by Subchapter E to amend its Articles of
Incorporation to exclude the applicability of Subchapter E generally.
Accordingly, pursuant to the Exchange Offer Agreement, Crown's shareholders
are being requested to render Subchapter E inapplicable to Crown (and,
therefore, CGIP's acquisition of Crown Stock or other voting securities of
Crown pursuant to the Offer or otherwise). If adopted by Crown's shareholders,
the Acquisition Articles Amendment will prevent Subchapter E from applying not
only to the acquisition by CGIP of shares of Crown Stock or other voting
securities of Crown in connection with the proposed CarnaudMetalbox
Transaction, or thereafter, but also from applying to other "control
transactions." If adopted, the Acquisition Articles Amendment would render
Subchapter E inapplicable to Crown even if CGIP does not become a "controlling
person" as a result of the consummation of the Offer.
BACKGROUND OF THE CARNAUDMETALBOX TRANSACTION
For several years, Crown has grown its historical core metal packaging
businesses and expanded into new product lines such as plastic containers,
primarily through selected strategic acquisitions. In 1989 and 1990, Crown
acquired Continental Can Canada Inc., Continental Beverage Packaging, Inc. and
Continental Technology, Inc., significantly increasing the size of Crown's
North American operations. In 1991, Crown acquired the remainder of the non-
European operations of Continental Can International Corporation. In 1992,
Crown acquired CONSTAR International Inc., a leading manufacturer of plastic
containers for the beverage, processed food, household product and other
industries, which provided Crown with a significant presence in the plastic
containers market and enabled it to offer a wider product range to its
customers. Additional acquisitions in 1993 and 1994 of Van Dorn Company, the
remaining interests in CONSTAR's affiliates, Wellstar Acquisition, B.V. and
Wellstar Holding, B.V., and the can manufacturing facilities of Tri Valley
Growers all enhanced Crown's ability to compete as a global packaging company.
During that time, Crown also continued to invest in subsidiaries and joint
ventures located in South America, Europe, Asia and the Middle East.
As part of Crown's focus on global packaging opportunities, Crown management
recognized the need to expand the scope of its non-U.S. operations, especially
in Europe. Crown's management identified CarnaudMetalbox as an attractive
potential partner for a combination particularly in light of the complementary
fit between Crown's strong presence in North America and CarnaudMetalbox's
strong presence in Europe.
On January 27, 1995, at the prior invitation of Mr. William J. Avery,
Chairman of the Board, President and Chief Executive Officer of Crown, Mr.
Ernest-Antoine Seilliere, Chairman and Chief Executive Officer of CGIP and
Chairman of the supervisory board of CarnaudMetalbox, met with Mr. Avery to
discuss in broad outline the feasibility of a possible business combination
between Crown and CarnaudMetalbox. On February 24, 1995, Mr. Seilliere
contacted Mr. Avery to express his interest in pursuing a more in-depth study
of a possible combination between Crown and CarnaudMetalbox. Thereafter, on
March 8 and March 24, 1995, the two met to discuss further the form of a
possible transaction.
In February 1995, CGIP retained Lazard Freres & Co. LLC as its exclusive
financial advisor in connection with the proposed transaction. In March and
August 1995, Crown retained CS First Boston and Societe Generale,
respectively, as financial advisors for Crown in connection with the proposed
transaction.
During the latter part of March, and in April and May 1995, discussions
continued between Crown and CGIP, and the parties negotiated the proposed
terms of an agreement for the transaction. These negotiations centered
principally on: valuation issues; a transaction structure in which all
CarnaudMetalbox shareholders could participate on equal terms; the issuance of
a security by Crown or one of its subsidiaries as part of the transaction that
would create under certain circumstances a tax-free exchange for
CarnaudMetalbox Shares and provide aggregate dividend levels roughly
commensurate with dividends currently paid to CarnaudMetalbox's shareholders;
and a governance structure for Crown after consummation of the Offer that
would afford CGIP, in
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light of its significant share ownership in Crown, an ability to influence,
but not control, Crown's business and affairs.
On April 18, 1995, Crown and CGIP executed mutual confidentiality and
standstill agreements, which permit Crown to make the Offer for
CarnaudMetalbox Shares pursuant to the Exchange Offer Agreement. Thereafter,
certain limited non-public information was provided by CGIP to Crown, and
certain limited non-public information was provided by Crown to CGIP.
On May 18, 1995, CarnaudMetalbox entered into a confidentiality and
standstill agreement with respect to Crown and its confidential information.
Beginning May 18 and continuing until May 22, 1995, representatives of Crown
and CGIP and their advisors negotiated a definitive agreement. On May 22,
1995, Crown and CGIP entered into the Exchange Offer Agreement (which was
subsequently amended in certain technical respects as of November 13, 1995)
and publicly announced the transaction.
Also on May 22, 1995, Parfinance, a societe anonyme organized under the laws
of the Republic of France ("Parfinance"), that owned, directly and indirectly,
approximately 6.6% of the outstanding CarnaudMetalbox Shares and approximately
9.0% of the aggregate voting power of CarnaudMetalbox as of October 31, 1995,
and CGIP entered into a mutual waiver of the rights of first refusal each of
them had with respect to the sale pursuant to the Offer of CarnaudMetalbox
Shares owned, directly or indirectly, by the other. This mutual right of first
refusal exists pursuant to a shareholders agreement which Parfinance and CGIP
entered into in April 1993 with respect to their investment in
CarnaudMetalbox.
On June 9, 1995, Crown entered into a confidentiality and standstill
agreement with respect to CarnaudMetalbox and its confidential information
(which permits the Offer on the terms publicly announced on May 22, 1995). In
accordance with the terms of the Exchange Offer Agreement, Crown and CGIP
commenced their respective due diligence investigations on June 12, 1995.
During this time, Crown and CarnaudMetalbox exchanged confidential
information.
Pursuant to the Exchange Offer Agreement, each of Crown and CGIP retained
the right to terminate the Exchange Offer Agreement at the end of a 30-day due
diligence period ending on July 11, 1995 in the event that such party was
informed by its outside accountants (subject to an arbitration procedure) that
the net adverse effect on the value (determined as provided under the Exchange
Offer Agreement) of CarnaudMetalbox, in the case of Crown, or of Crown, in the
case of CGIP, attributable to certain information reviewed by such party
during the 30-day period exceeded $250 million. On July 11, 1995, Crown and
CGIP announced that they had completed their due diligence reviews provided
for under the Exchange Offer Agreement without exercising such termination
rights.
RECOMMENDATION OF CROWN'S BOARD OF DIRECTORS; REASONS FOR THE CARNAUDMETALBOX
TRANSACTION
At meetings held on May 17, 1995 and July 27, 1995, Crown's Board of
Directors determined by unanimous vote of the directors present that the terms
of the CarnaudMetalbox Transaction, the Offer and the Exchange Offer Agreement
and the transactions contemplated thereby are fair to, and in the best
interests of, Crown and its shareholders, and approved a resolution approving
and recommending to Crown's shareholders for their approval the
CarnaudMetalbox Proposals.
In making such determination, and in evaluating the fairness of the terms of
the CarnaudMetalbox Transaction and the Offer to Crown and its shareholders,
Crown's Board of Directors considered, among other things, presentations by
Crown management concerning due diligence; financial assessments of Crown,
CarnaudMetalbox and the combined entity which included valuation analyses
focusing on the combined entity's anticipated future operating performance,
the discounted cash flow and return on investment expected from the
transaction, earnings per share and cash flow dilution and accretion, the
historical per share market prices and
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trading multiples of Crown Common Stock and CarnaudMetalbox Shares, and pro
forma combined company analysis; various strategic factors, including those
described in further detail below; legal considerations for Crown's Board in
applying its fiduciary responsibilities to the proposed transaction; the terms
of the Exchange Offer Agreement and the Shareholders Agreement (including the
impact on Crown's capital structure and operations of CGIP's proposed
substantial investment in Crown and the dividend and investment grade debt
rating agreements by Crown contemplated by these agreements); the structure of
the proposed transactions (including the fact that CarnaudMetalbox was not a
party to the Exchange Offer Agreement and therefore did not take action to
approve the Offer at such time, as well as the possibility that there could
remain minority shareholders in CarnaudMetalbox after consummation of the Offer
and that such minority holders could restrict Crown's ability to restructure
and generally to control CarnaudMetalbox); the terms and conversion price of
the Crown Acquisition Preferred Stock; the regulatory approval requirements;
and the potential impact of the proposed acquisition on the employees,
customers and suppliers of Crown and the communities in which Crown operates.
At its meeting on May 17, 1995, Crown's Board of Directors received the
written opinion of CS First Boston to the effect that, based upon and subject
to certain matters stated therein, as of such date, the consideration proposed
to be paid by Crown pursuant to the Offer contemplated by the draft Exchange
Offer Agreement was fair to Crown from a financial point of view. CS First
Boston subsequently confirmed its May 17, 1995 opinion by delivery of written
opinions dated May 22, 1995 and the date of this Proxy Statement/Prospectus to
the effect that, based upon and subject to certain matters stated therein, as
of such dates, the consideration proposed to be paid by Crown pursuant to the
Offer contemplated by the Exchange Offer Agreement was fair to Crown from a
financial point of view. See "--Opinion of Crown's Financial Advisor."
The strategic factors considered by Crown's Board of Directors in approving
the transactions contemplated by the Exchange Offer Agreement and the
Shareholders Agreement and such other matters discussed above included the
following:
1. Complementary Geographic and Product Markets. Crown's Board of Directors
believes that the proposed CarnaudMetalbox Transaction presents a unique
strategic opportunity for Crown that will create the world's largest packaging
company and diversify Crown's business on a geographic and product basis.
Although there is some geographic and product market overlap between the
companies, Crown believes CarnaudMetalbox operates in market segments which
complement Crown's existing market presence, and the proposed transaction will
enhance and diversify Crown's ability to compete outside North America on a
global basis. Crown currently derives approximately 75% of its revenues from
operations in North America and approximately 15% of its revenues from
operations in Europe. Conversely, CarnaudMetalbox currently derives
approximately 10% of its revenues from operations in North America and 80% of
its revenues from the European market.
In addition, the Crown Board believes the CarnaudMetalbox Transaction will
enhance and diversify Crown's presence in different product markets. Crown will
assume CarnaudMetalbox's position as a market leader in the European food can
market, which will complement Crown's existing position as the North American
market leader for food cans, and CarnaudMetalbox's health and beauty packaging
segment will provide Crown with a significant vehicle for future growth. Crown
will also acquire a European market presence in the specialty packaging
segment, including such products as printed steel cans for paints, food,
automotive lubricants and promotional packaging. CarnaudMetalbox also has an
established reputation as one of the leading manufacturers of packaging
equipment and technology.
Moreover, while CarnaudMetalbox is predominantly a European-based packaging
company, it has significant presence outside Europe, including presence in
markets which will complement Crown's existing international markets. In
particular, the Crown Board believes the proposed combination will provide
Crown with a critical mass in the emerging Asia/Pacific and Middle East
markets. In the Asia/Pacific market, CarnaudMetalbox has historically focused
on the steel and aluminum cans and aerosols product segments, whereas Crown's
presence is more in the beverage can segment. The combined operations of the
companies will result in Crown being one of the leading packaging companies in
the Asia/Pacific region.
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2. Synergies. Crown's Board of Directors determined that there may be
opportunities to increase the combined cash flow of the companies through cost
reductions attributable to the increased purchasing volume, knowledge of
markets and economies of scale of the combined company with respect to certain
raw materials. Crown also believes that certain cost savings are possible
through reductions and elimination of redundancies in sales, general and
administrative, marketing and research and development expenses and other
integration efficiencies, net of associated restructuring and other transaction
costs and expenses. In considering these possible cost savings, the Crown Board
recognized that Crown's ability to achieve any such cost savings depends on
many variables, several of which are outside Crown's control, including the
nature and extent of redundancies in the operations and organizations of Crown
and CarnaudMetalbox, as well as cultural, political and legal differences
applicable to the two companies which may affect the extent to and timing in
which costs can be managed and controlled.
3. Size and Advantages of Combined Company. Crown's Board of Directors
believes that the transaction has the potential to generate profit and cash
flow growth due to the strong market and competitive position of the combined
company. In addition, the size of the combined company may provide the
opportunity to create product concepts and the flexibility to spread the cost
of future research and development activities and technological investment over
a larger revenue base. CarnaudMetalbox's product offerings, when added to
Crown's product offerings, may also create additional opportunities for cross-
selling of packaging products to existing and potential customers.
4. Other Factors. Based on its financial analyses discussed above, Crown's
Board of Directors considered that the proposed transaction initially could be
dilutive to the earnings per share of Crown Common Stock and that such dilution
would be higher if a greater number of CarnaudMetalbox shareholders elect to
receive the Cash Election Price for their CarnaudMetalbox Shares. The Crown
Board believes that such risks of dilution are offset by the benefits of
increased earnings and cash flows expected in connection with the combination
and the expectation that the proposed transaction will be accretive to future
earnings. See "UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS."
Crown's Board of Directors also recognized that the cash and Unit election
available to CarnaudMetalbox's shareholders in the Offer may have consequences
for Crown's prospective business, financial position and results of operations.
Depending on the amount of cash paid by Crown pursuant to the Offer, the
indebtedness incurred or assumed in connection with the proposed
CarnaudMetalbox Transaction may increase Crown's level of leverage, which could
affect, among other things, the ratings of its debt securities in the absence
of a program to adjust Crown's capital structure and debt/equity and other
related ratios. Conversely, depending upon the number of Units issued by Crown
pursuant to the Offer, Crown's resulting capital structure may have more
outstanding equity than the Crown Board considers desirable. The Crown Board
considered the alternatives available after consummation of the Offer,
including the issuance of additional shares of Crown Common Stock or other
equity or equity-linked securities of Crown in a public offering or private
placement, and the repurchase by Crown of Crown Stock, to enable Crown to
maintain an acceptable degree of debt and equity capitalization and to preserve
or achieve acceptable financial ratios and ratings of its debt securities. See
"--Sources of Funds." For information as to certain agreements regarding debt
ratings Crown proposes to make in the Shareholders Agreement, see "THE
SHAREHOLDERS AGREEMENT--Debt Rating." For information as to certain pro forma
effects of the Offer depending on the number of CarnaudMetalbox Shares
exchanged for cash or Units, see "UNAUDITED PRO FORMA CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS" and the notes thereto.
Crown's Board of Directors further considered that Crown expects to incur
various transition and restructuring costs and expenses in connection with
consummating the CarnaudMetalbox Transaction and integrating the operations of
Crown and CarnaudMetalbox to achieve the expected synergies discussed above.
Although Crown is presently unable to quantify the level of such transition and
restructuring costs and expenses under U.S. GAAP, Crown believes that they may
be material. After consummation of the Offer, Crown anticipates that it will
review and analyze the combined operations of Crown and CarnaudMetalbox with a
view to developing specific plans for the operations of the combined company,
including identifying and quantifying
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the components of any such restructuring charge. The possible effect of any
such restructuring charge on the combined company is further discussed in Note
3 to the unaudited pro forma consolidated condensed financial statements. See
"UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS."
The foregoing discussion of the information and factors considered and given
weight by Crown's Board is not intended to be exhaustive. In reaching its
determinations, the Crown Board evaluated the factors considered by it in light
of the directors' knowledge of the business and operations of Crown and
CarnaudMetalbox and their business judgment. The Crown Board did not find it
practicable to and did not quantify or otherwise assign relative weight to the
specific factors considered by it in reaching its determination, and individual
directors may have given differing weights to differing factors.
OPINION OF CROWN'S FINANCIAL ADVISOR
Crown retained CS First Boston and its affiliates as of March 14, 1995 to act
as its non-exclusive financial advisor with respect to Crown's proposed
acquisition of CarnaudMetalbox. On May 17, 1995, CS First Boston delivered to
Crown's Board of Directors its written opinion to the effect that, based upon
and subject to certain matters stated therein, as of such date, the
consideration proposed to be paid by Crown pursuant to the Offer contemplated
by the draft Exchange Offer Agreement was fair to Crown from a financial point
of view. CS First Boston subsequently confirmed its opinion of May 17, 1995 by
delivery of written opinions dated May 22, 1995 and the date of this Proxy
Statement/Prospectus, to the effect that, based upon and subject to certain
matters stated therein, as of such dates, the consideration proposed to be paid
by Crown pursuant to the Offer contemplated by the Exchange Offer Agreement was
fair to Crown from a financial point of view. The text of the written opinion
of CS First Boston dated May 22, 1995 is substantially identical to the text of
the written opinion of CS First Boston dated May 17, 1995 and, except as
referred to under "--Miscellaneous" below, to the text of the written opinion
of CS First Boston dated the date of this Proxy Statement/Prospectus.
References herein to the opinion of CS First Boston are, unless otherwise
noted, references to its opinion dated May 22, 1995.
THE FULL TEXT OF CS FIRST BOSTON'S WRITTEN OPINION DATED THE DATE OF THIS
PROXY STATEMENT/PROSPECTUS WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS
CONSIDERED AND LIMITATIONS OF THE REVIEW UNDERTAKEN IN RENDERING SUCH OPINION,
IS ATTACHED AS ANNEX C TO THE PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED
HEREIN BY REFERENCE. NO LIMITATIONS WERE IMPOSED BY CROWN WITH RESPECT TO THE
INVESTIGATIONS MADE OR THE PROCEDURES FOLLOWED BY CS FIRST BOSTON IN RENDERING
ITS OPINION. CROWN SHAREHOLDERS ARE URGED TO READ THIS OPINION IN ITS ENTIRETY.
THE SUMMARY OF THE OPINION SET FORTH IN THIS PROXY STATEMENT/PROSPECTUS IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.
CS First Boston's opinion is addressed to Crown's Board of Directors and
addresses only the fairness to Crown from a financial point of view of the
Consideration (as defined below) proposed to be paid by Crown pursuant to the
Offer and does not constitute a recommendation to any Crown shareholder as to
how such shareholder should vote at the Special Meeting. The Consideration was
determined through negotiations between Crown and CGIP and was approved by the
Board of Directors of Crown. CS First Boston provided advice to Crown during
the course of such negotiations but did not make a recommendation with respect
to the amount of the Consideration. The CS First Boston opinion does not
address the fairness of the Consideration from a financial point of view or
otherwise to CarnaudMetalbox or CarnaudMetalbox shareholders and, consequently,
does not constitute a recommendation to any CarnaudMetalbox shareholder in
respect of such shareholder's decision whether to tender its CarnaudMetalbox
Shares in the Offer or in any other respect.
For purposes of its opinion, CS First Boston defined the consideration to be
paid (the "Consideration") as either (1) a number of Units consisting of .75
newly issued shares of Crown Common Stock and .25 newly issued shares of Crown
Acquisition Preferred Stock per CarnaudMetalbox Share equal to the Exchange
Ratio, with cash (in French francs) being paid in lieu of any fractional share
interest, or (2) FF 225 in cash per CarnaudMetalbox Share.
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In arriving at its opinion, CS First Boston (1) reviewed certain publicly
available business and financial information relating to Crown and
CarnaudMetalbox, (2) reviewed the Exchange Offer Agreement, including all
annexes thereto, (3) reviewed certain other information, including financial
forecasts for Crown, provided by Crown, (4) met with management of Crown to
discuss the businesses and prospects of Crown and CarnaudMetalbox, their
respective projected performance, the strategic importance of CarnaudMetalbox
to Crown, and the benefits expected to be achieved through the combination of
the operations of Crown and CarnaudMetalbox, (5) considered certain financial
and stock market data of Crown and CarnaudMetalbox and compared such data with
similar data for other publicly held companies in businesses similar to those
of Crown and CarnaudMetalbox, (6) considered the financial terms of certain
other business combinations and other transactions which have recently been
effected, and (7) considered such other information, financial studies,
analyses and investigations and financial, economic and market criteria which
CS First Boston deemed relevant.
In connection with its review, CS First Boston did not assume any
responsibility for independent verification of the foregoing information and
relied on it being complete and accurate in all material respects. With
respect to the financial forecasts, CS First Boston assumed that such
forecasts were reasonably prepared on bases reflecting the best currently
available estimates and judgments of management of Crown as to the future
financial performance of Crown and CarnaudMetalbox. In addition, CS First
Boston did not make an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of Crown and CarnaudMetalbox, nor was CS
First Boston furnished with any such evaluations or appraisals. CS First
Boston's opinion is necessarily based upon financial, economic, market and
other conditions as they existed and could be evaluated on the date of its
opinion. CS First Boston did not express any opinion as to what the value of
Crown Stock actually will be when issued to CarnaudMetalbox's shareholders
pursuant to the Offer or the prices at which Crown Stock will trade subsequent
to the Offer.
The following is a summary of the analyses performed by CS First Boston in
connection with its May 22, 1995 opinion.
Discounted Cash Flow Analysis. CS First Boston calculated ranges of
enterprise value for the Metal Packaging Business, Plastic Packaging Business
and the Engineering and Other Business of CarnaudMetalbox (each a
"CarnaudMetalbox Business" and together, the "CarnaudMetalbox Businesses"),
based upon the present value of each CarnaudMetalbox Business' 10 year stream
of forecasted unlevered free cash flows and fiscal year 2004 terminal value.
The fiscal year 2004 terminal value was calculated using a range of multiples
of fiscal year 2004 operating cash flow ("EBITDA") of each CarnaudMetalbox
Business. In conducting its analysis, CS First Boston relied on certain
assumptions relating to sales growth, operating margins and capital
expenditures of the CarnaudMetalbox Businesses provided by Crown management.
CS First Boston applied discount rates ranging from 10.0% to 11.5% for
CarnaudMetalbox, reflecting the weighted average cost of capital of
CarnaudMetalbox. CS First Boston applied multiples of terminal EBITDA ranging
from 5.00x to 6.00x for the Metal Packaging Business of CarnaudMetalbox, from
5.50x to 6.50x for the Plastic Packaging Business of CarnaudMetalbox and from
4.50x to 5.50x for the Engineering and Other Business of CarnaudMetalbox. The
range of terminal multiples was selected based on the trading multiples of
companies operating in businesses similar to those in which CarnaudMetalbox
operates. This analysis resulted in an enterprise valuation reference range
for CarnaudMetalbox's Metal Packaging Businesses, Plastic Packaging Business,
and Engineering and Other Business of approximately FF 17,702 million--FF
19,253 million, FF 5,684 million--FF 6,580 million and FF 386 million--FF 619
million, respectively. CS First Boston also calculated ranges of enterprise
value for the Metal Packaging Business and Plastic Packaging Business of Crown
(each a "Crown Business" and together, the "Crown Businesses"). In conducting
its analysis, CS First Boston relied on certain assumptions relating to the
sales growth, operating margins and capital expenditures of the Crown
Businesses provided by Crown management.
Comparable Company Analysis. CS First Boston reviewed and compared certain
actual and forecasted financial and operating information of the Metal
Packaging and Plastic Packaging Businesses of CarnaudMetalbox with comparable
information of the following publicly traded companies in the packaging
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industry: Pechiney International SA, Schmalbach-Lubeca AG, Ball Corporation, US
Can Corp., The West Company, Inc., Kerr Group, Inc. and Continental Can Co.,
Inc. (the "Packaging Comparable Companies"). In addition, CS First Boston
reviewed and compared certain actual and forecasted financial and operating
information of the Engineering and Other Business of CarnaudMetalbox with
comparable information of the following publicly traded companies in the
packaging machinery industry: Sasib S.p.A and APV Plc (the "Engineering
Comparable Companies" and, together with the Packaging Comparable Companies,
the "Comparable Companies"). CS First Boston selected these companies based on
their activity in businesses comparable to the Crown Businesses and
CarnaudMetalbox Businesses. CS First Boston derived multiples of enterprise
values relative to estimated sales, EBITDA, and earnings before interest and
taxes ("EBIT") for the 1994 and 1995 calendar years. In addition, CS First
Boston derived multiples of equity values relative to estimated net income for
the 1994 and 1995 calendar years. CS First Boston determined that the relevant
ranges of multiples for the Comparable Companies were: (1) sales: 0.5x to 1.3x;
(2) EBITDA: 4.0x to 6.3x; (3) EBIT: 7.0x to 9.4x; and (4) net income: 9.7x to
14.2x. CS First Boston then calculated imputed enterprise values of
CarnaudMetalbox by applying forecasted sales, EBITDA, EBIT and net income for
CarnaudMetalbox for fiscal year 1995 to the multiples derived from its analysis
of the comparable companies. This analysis resulted in an enterprise valuation
reference range for the Metal Packaging Business, Plastic Packaging Business,
and Engineering and Other Business of CarnaudMetalbox of approximately FF
13,000 million--FF 15,000 million, FF 3,900 million--FF 4,100 million and FF
500 million--FF 600 million, respectively.
All forecasted sales, EBITDA, EBIT and net income multiples for the
Comparable Companies were based on information contained in equity research
reports. The enterprise values and equity values of the Comparable Companies
used in the foregoing analyses were based on closing stock prices as of May 3,
1995. CS First Boston also reviewed and compared certain actual and forecasted
financial and operating information of the Crown Businesses with comparable
information of the Packaging Comparable Companies. All financial estimates for
Crown and CarnaudMetalbox for the 1995 financial year were based on certain
operating and financial forecasts provided by Crown.
Comparable Acquisition Analysis. Using publicly available information, CS
First Boston analyzed the purchase prices and multiples paid in the following
transactions in the packaging industry: the acquisition of Lawson Mardon Group
Ltd. by Alusuisse Lonza Holding AG; the acquisition of Van Dorn Company by
Crown; the acquisition of Heekin Can, Inc. by Ball Corporation; the acquisition
of Continental Can Europe, Inc. by VIAG AG; the acquisition of Continental Can
Canada Inc. by Crown; the acquisition of Triangle Industries, Inc. by Pechiney
International SA; the acquisition of Zeller Plastik Group GmbH by
CarnaudMetalbox; the acquisition of Impetus Packaging, Ltd. by VIAG AG; the
acquisition of CONSTAR International Inc. by Crown; and the acquisition of DRG
Medical Packaging Mount Holly by Bowater Inc. CS First Boston selected these
acquisitions based on the activity of the acquired companies in businesses
comparable to that of Crown and CarnaudMetalbox. CS First Boston calculated the
adjusted purchase price (purchase price plus total assumed debt less assumed
cash) as a multiple of sales, EBITDA and EBIT of each acquired company for the
latest available 12 month period immediately preceding the announcement of the
acquisition of such company and calculated the purchase price as a multiple of
the net income of each acquired company for such period. CS First Boston
determined that the relevant range of multiples for the comparable acquired
metal packaging companies were: (1) sales: 0.4x to 1.5x; (2) EBITDA: 5.8x to
10.6x; (3) EBIT: 7.8x to 16.9x; and (4) net income: 12.2x to 21.0x. CS First
Boston determined that relevant range of multiples for the comparable acquired
plastic packaging companies were: (1) sales: 0.5x to 1.5x; (2) EBITDA: 5.1x to
9.5x; (3) EBIT: 6.8x to 14.8x; and (4) net income: 11.4x to 32.4x. CS First
Boston then calculated imputed enterprise values of CarnaudMetalbox by applying
forecasted sales, EBITDA, EBIT and net income for CarnaudMetalbox for fiscal
year 1995 to the multiples derived from its analyses of the acquired companies.
This analysis resulted in an enterprise valuation reference range for
CarnaudMetalbox's Metal Packaging Business and Plastic Packaging Business of
approximately FF 18,000 million-FF 22,000 million and FF 5,000 million-FF 6,000
million, respectively. CS First Boston also calculated imputed enterprise
values of Crown by applying forecasted sales, EBITDA, EBIT and net income for
Crown for fiscal year 1995 to the multiples derived from its analysis of the
acquired companies.
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Applying its judgment to the results of the Discounted Cash Flow, Comparable
Company and Comparable Acquisition analyses for the Plastic Packaging and Metal
Packaging Businesses of CarnaudMetalbox and the Discounted Cash Flow and
Comparable Company analyses for the Engineering and Other Business of
CarnaudMetalbox, CS First Boston concluded that these analyses indicated an
enterprise valuation reference range for CarnaudMetalbox of approximately FF
23,500-FF 27,100 million and an equity valuation range per share (fully
diluted) for CarnaudMetalbox of approximately FF 218-FF 259 ($43.05-$51.15 at
the Noon Buying Rate on May 15, 1995). CS First Boston also applied its
judgment to the results of the Discounted Cash Flow, Comparable Company and
Comparable Acquisition analyses for the Crown Businesses and derived an
enterprise valuation range therefrom for Crown.
Relative Contribution Analysis. Using 1994 actual data and 1995 forecasted
data provided by Crown, CS First Boston analyzed the contribution attributable
to CarnaudMetalbox to the sales, EBITDA, EBIT, net income, shareholder's
equity, net capital employed and total assets of Crown following the
transaction and compared it to the exchange ratio implied by comparing the
current market price of Crown Common Stock as of May 15, 1995 ($42.125 and FF
213 at the Noon Buying Rate as of May 15, 1995) to the Cash Election Price of
FF 225 per share. The actual results achieved by the combined company may vary
from forecasted results, and the variations may be material.
Pro Forma Analysis. CS First Boston also analyzed certain pro forma effects
projected to result from the transaction, assuming Crown acquires 100% of
CarnaudMetalbox in the Offer, CGIP elects to receive only Crown Stock in the
Offer and all other CarnaudMetalbox shareholders elect to receive cash and that
certain synergistic pre-tax cost savings (aggregating $50 million in 1995 and
$100 million in each of 1996 and 1997) are realized, on the forecasted earnings
per share ("EPS") of Crown for fiscal years 1995, 1996 and 1997 based on
financial forecasts provided by Crown. CS First Boston was advised by the
management of Crown that the transaction will be accounted for as a purchase
under generally accepted accounting principles. This analysis indicated that
the transaction would be dilutive to the EPS of Crown for fiscal year 1995 and
accretive to the EPS of Crown for fiscal years 1996 and 1997. CS First Boston
also reviewed certain 1995, 1996 and 1997 estimated financial coverage ratios
of the combined entity resulting from the transaction, including EBITDA to
estimated interest expense and preferred dividend payments (3.4x in 1995, 4.0x
in 1996, and 4.6x in 1997) and estimated total debt to total capital (62.1% in
1995, 58.0% in 1996, and 53.3% in 1997). The actual results achieved by the
combined company may vary from forecasted results, and the variations may be
material.
Miscellaneous. In preparing its May 22, 1995 opinion for Crown, CS First
Boston performed the financial and comparative analysis and considered all the
factors described above. In connection with these analyses, CS First Boston
assumed that the theoretical value of each share of Crown Acquisition Preferred
Stock is equal to the value of a share of Crown Common Stock. In connection
with their opinion dated the date of this Proxy Statement/Prospectus, CS First
Boston confirmed the appropriateness of their reliance on the analyses used to
render their May 22, 1995 opinion by performing procedures to update certain of
such analyses, including (1) reviewing certain projections of CarnaudMetalbox
for the 1995 financial year, provided by CarnaudMetalbox, and (2) reviewing
certain projections of Crown and CarnaudMetalbox for the 1995-1998 fiscal
years, provided by Crown. CS First Boston also reviewed the assumptions on
which such analyses were based and the factors considered therewith (and in
connection therewith, updated its analyses to assume (1) that the synergistic
pre-tax cost savings referred to under "--Pro Forma Analysis" above started to
be realized in 1996 and (2) that Crown will divest the European aerosol can
operations referred to below under "--Regulatory Approvals"). In addition, in
its opinion dated the date of this Proxy Statement/Prospectus, CS First Boston
noted that the Exchange Ratio is subject to a collar providing that the
Exchange Ratio shall not exceed 1.183 Units nor be less than 0.968 Units. The
summary of such analyses does not purport to be a complete description of the
analyses underlying CS First Boston's opinion. The preparation of a fairness
opinion is a complex analytic process involving various determinations as to
the most appropriate and relevant methods of financial analyses and the
application of those methods to the particular circumstances, and therefore,
such an opinion is not readily susceptible to summary description. CS First
Boston believes that its analyses must be considered as a whole and that
selecting portions of its analyses or portions of the factors considered by it,
without considering all analyses and factors, could
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create an incomplete view of the evaluation process underlying its opinion. In
its analysis, CS First Boston made numerous assumptions with respect to Crown
and CarnaudMetalbox, industry performance, general business, regulatory,
economic, market and financial condition and other matters, many of which are
beyond the control of Crown and CarnaudMetalbox. The estimates contained in
such analyses are not necessarily indicative of actual values or of future
results or values, which may be significantly more or less favorable than
those suggested by such analyses. In addition, analyses relating to the value
of businesses or securities do not purport to be appraisals or to reflect the
prices at which businesses or securities actually may be sold. Accordingly,
because such estimates of actual values or future results or values are
inherently subject to substantial uncertainty, CS First Boston assumes no
responsibility for their accuracy.
Crown selected CS First Boston to be one of its financial advisors in
connection with the transaction and dealer-manager with respect to the Offer
in the United States because CS First Boston is an internationally recognized
investment banking firm and is regularly engaged in the valuation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, secondary distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes. In addition to acting as financial advisor to Crown in connection
with the proposed transaction (including rendering its fairness opinion), CS
First Boston has rendered certain investment banking services to Crown in the
past including acting as lead-manager in its $85 million Crown Common Stock
offering in 1991 and as financial advisor in its acquisition of CONSTAR
International Inc. in 1992. CS First Boston has also rendered investment
banking services to CarnaudMetalbox in the past, including acting as sole
agent in a $205 million private placement of bonds in the U.S. market in 1993.
For information on certain fees and expenses Crown has agreed to pay to CS
First Boston in connection with its services and the services of CS France and
CS First Boston Limited, affiliates of CS First Boston, see "THE OFFER--Fees
and Expenses." For information regarding certain fees provided to Credit
Suisse, an affiliate of CS First Boston, in connection with the financing of
the CarnaudMetalbox Transaction, see "--Sources of Funds." CS First Boston has
in the past and may in the future provide financial advisory services and act
as an underwriter or placement agent for public and private offerings by Crown
of its securities. CS First Boston has purchased and sold shares of Crown and
CarnaudMetalbox from time to time in the normal course of its trading
activities for its own account and for the accounts of customers and may at
any time hold a long or short position in such securities.
CONDITIONS TO CROWN'S OBLIGATIONS TO COMMENCE AND CLOSE THE OFFER
For information as to certain conditions to Crown's obligations to commence
and/or close the Offer, shareholders are referred to "THE OFFER--Conditions to
the Offer."
REGULATORY APPROVALS
General. Based upon its examination of publicly available information with
respect to CarnaudMetalbox, the review of certain information furnished by
CarnaudMetalbox to Crown and discussions of representatives of Crown with
representatives of CarnaudMetalbox during Crown's investigation of
CarnaudMetalbox, Crown is not aware of any license or other regulatory permit
that appears to be material to the business of CarnaudMetalbox, which might be
adversely affected by the acquisition of CarnaudMetalbox Shares by Crown
pursuant to the Offer or, except as set forth below, of any material approval
or other action by any French or U.S. (federal or state) or other
governmental, administrative or regulatory authority or agency which would be
required prior to the acquisition of CarnaudMetalbox Shares by Crown pursuant
to the Offer. Should any such approval or other action be required, it is
Crown's present intention to seek such approval or action. However, except
with respect to the specific authorization of the European Commission
described below which has not yet been obtained, Crown does not currently
intend to delay the Offer for CarnaudMetalbox Shares pending the outcome of
any such action or the receipt of any such approval. There can be no assurance
that any such approval or other action, if needed, would be obtained without
substantial conditions or that adverse consequences might not result to the
business of CarnaudMetalbox or Crown or that certain parts of the businesses
of
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CarnaudMetalbox or Crown might not have to be disposed of or held separate or
other substantial conditions complied with in order to obtain such approval or
other action or in the event that such approval was not obtained or such other
action was not taken. Under the Exchange Offer Agreement, Crown has agreed, if
required by a regulatory authority to obtain a necessary consent or approval
for the Offer, to sell, hold separate, or divest itself of all or a portion of
the business, assets, or operations of CarnaudMetalbox or Crown as shall be
required to obtain the consent or approval, except that Crown will not be
required to take such action if such action will result in a material
diminution in the value of Crown and CarnaudMetalbox as a combined entity.
European Community. The proposed CarnaudMetalbox Transaction is subject to
the requirements of EC Regulation 4064/89. Crown filed a notification with the
European Commission on June 23, 1995 and provided certain information to the
European Commission. The European Commission must review a notifiable proposed
acquisition to determine whether it is compatible with the common market and
make such a final determination no later than four months after the initiation
of proceedings (i.e., in the case of the proposed CarnaudMetalbox Transaction,
no later than November 30, 1995). Crown believes a European Commission
decision could occur as early as November 14, 1995.
Crown believes that the proposed CarnaudMetalbox Transaction is compatible
with the common market under EC Regulation 4064/89. However, in order to
address certain competitive concerns raised by the European Commission, Crown
has proposed divesting en bloc a total of five aerosol can plants and
operations and one support operation of Crown and CarnaudMetalbox located in
five European countries. These plants and operations represent less than 1.5%
of 1994 pro forma combined net sales of Crown and CarnaudMetalbox. Crown
believes such proposed divestitures will not be material to the combined
company or its results of operations or financial position and that the
European Commission will authorize the proposed CarnaudMetalbox Transaction
subject to these proposed divestitures. Nevertheless, there can be no
assurance that the European Commission will accept Crown's divestiture
proposal and determine that the proposed CarnaudMetalbox Transaction is
compatible with the common market. Crown intends to issue a press release and
include information in an Exchange Act filing prior to the Special Meeting
with respect to the decision of the European Commission.
French Foreign Investment Control. Under French foreign investment
regulations, the acquisition of a controlling interest in a French company
such as the acquisition of CarnaudMetalbox by an entity or person who is not a
resident of the European Community requires the prior approval of the
Direction du tresor du ministere de l'economie et des finances, the Treasury
Department of the Ministry of Economy and Finance (the "Department"). The
notification of the Department for the Offer was made on July 20, 1995, and
certain information in connection therewith was furnished to the Department.
The Department approved the Offer on August 22, 1995.
United States Antitrust Laws. Under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the rules
promulgated thereunder by the Federal Trade Commission (the "FTC"), Crown and
CGIP may not consummate the transactions contemplated under the Exchange Offer
Agreement until notifications have been given and certain information has been
furnished to the FTC and the Antitrust Division of the Department of Justice
(the "Antitrust Division") and specified waiting period requirements have been
satisfied. Crown filed a notification under the HSR Act on July 5, 1995.
CarnaudMetalbox filed a notification under the HSR Act on July 13, 1995. The
waiting period of the Crown filing expired on August 4, 1995. The waiting
period for the CarnaudMetalbox filing expired August 12, 1995. Societe de
Gerance de Valeurs Mobilieres, the ultimate parent entity of CGIP ("SGVM"),
filed a notification under the HSR Act on July 7, 1995. The waiting period for
the SGVM filing expired on August 6, 1995.
Notwithstanding that the HSR Act waiting periods have expired, the FTC or
the Antitrust Division could take such action under the federal antitrust laws
as it deems necessary or desirable in the public interest, including seeking
to enjoin the Offer or seeking divestiture of substantial assets of Crown or
CarnaudMetalbox. In addition, any state (and under certain circumstances,
other persons) could take such action under its antitrust laws as it deems
necessary or desirable. Such action could include seeking to enjoin the Offer
or seeking divestiture of substantial assets of Crown or CarnaudMetalbox.
Based on information available to Crown, Crown believes that
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the Offer will comply with federal and state antitrust laws. However, there
can be no assurance that a challenge to the Offer on antitrust grounds will
not be made or that, if such a challenge were made, Crown would prevail.
Canada Competition Act. Certain provisions of Canada's Competition Act
require pre-notification to the Director of the Canadian Bureau of Competition
Policy (the "Director") of a significant acquisition of assets in Canada of an
operating business or, subject to certain share thresholds, voting shares of a
corporation that directly or through subsidiaries conducts an operating
business in Canada where the parties to the transaction and their affiliates
have assets or sales in Canada exceeding certain thresholds (a "Notifiable
Transaction"). If a transaction is a Notifiable Transaction it may not be
completed prior to the expiration or earlier termination of the applicable
waiting period after notice of such transaction has been delivered to the
Director. Crown, CarnaudMetalbox and CGIP filed the required notices on August
22, 1995. The waiting period regarding the acquisition of CarnaudMetalbox
Shares by Crown expired on September 12, 1995. The waiting period regarding
the acquisition of Crown Stock by CGIP expired on August 29, 1995.
Notwithstanding the expiration of the applicable waiting periods, if the
Director determines that either the acquisition of CarnaudMetalbox Shares by
Crown or the acquisition of Crown Stock by CGIP would lessen or prevent, or is
likely to have, the effect of lessening or preventing, competition
substantially in a definable market, the Director may apply to the Competition
Tribunal (a special purpose Canadian tribunal) for an order enjoining the
Offer or seeking divestiture of the Canadian assets or shares acquired in such
transaction. Crown and CarnaudMetalbox have applied to the Director for an
advance ruling certificate which, if granted, will exempt the proposed
acquisition from the substantive review provisions of the Competition Act. The
Director is currently reviewing the proposed acquisition and to date has not
issued an advance ruling certificate. Based on information currently available
to it, Crown believes that Offer will comply with the Competition Act.
Nevertheless, there can be no assurance that the advance ruling certificate
will be obtained. In addition, any approval by the Director of the
CarnaudMetalbox Transaction could impose conditions on Crown which require
divestitures of plants or operations to prevent increased concentration and
may require other undertakings by Crown, although Crown believes that any such
conditions or undertakings would not be material to the combined company or
its results of operations or financial position.
Other Foreign Approvals. Based upon Crown's examination of publicly
available information concerning CarnaudMetalbox and CGIP's representations to
Crown, Crown understands that CarnaudMetalbox and its subsidiaries own
property and conduct business in a number of other foreign countries. In
connection with the acquisition of CarnaudMetalbox Shares pursuant to the
Offer, the laws of certain foreign countries may require the filing of
information with, or obtaining the approval of, governmental authorities
therein. Crown is seeking further information regarding the applicability of
any such laws and currently intends to take such action as they may require.
However, Crown has no present reason to believe that any delay in the Offer
will be required. Such governments might attempt to impose additional
conditions on Crown's or CarnaudMetalbox's operations conducted in such
countries as a result of the acquisition of CarnaudMetalbox Shares pursuant to
the Offer. There can be no assurance that Crown will be able to satisfy or
comply with such laws or be able to cause CarnaudMetalbox to satisfy or comply
with such laws or that compliance or noncompliance will not have adverse
consequences for CarnaudMetalbox or Crown or any subsidiary after the
acquisition of CarnaudMetalbox Shares pursuant to the Offer.
For information on the required approval of the CBV of the terms of the
Offer prior to commencement of the Offer, see "SUMMARY--The Offer--Nature of
The Offer."
U.S. TAX CONSEQUENCES TO CROWN SHAREHOLDERS
No gain or loss will be recognized for federal income tax purposes by Crown
or any holder of Crown Common Stock as a result of the Offer. For a
description of certain tax consequences to holders of CarnaudMetalbox Shares
who tender CarnaudMetalbox Shares into the Offer, see "THE OFFER--Certain Tax
Consequences of the Offer."
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SOURCES OF FUNDS
Description of Financing Commitment. The total amount of funds required by
Crown to acquire the outstanding CarnaudMetalbox Shares and to pay related
fees and expenses will be approximately $2.8 billion, based upon the Noon
Buying Rate as of November 10, 1995, and assuming all holders of
CarnaudMetalbox Shares tender their CarnaudMetalbox Shares into the Offer and
that all such holders (other than CGIP) elect to receive the Cash Election
Price.
Crown intends to obtain the funds from a credit facility to be arranged and
managed by Chemical Bank ("Chemical") and Chemical Securities Inc. ("CSI").
Crown has entered into a commitment letter with Chemical and CSI dated August
25, 1995, as amended (the "Financing Commitment") pursuant to which Chemical
and CSI have committed to arrange and manage a syndication of financial
institutions to provide FF 13.7 billion (or $2.8 billion based upon the Noon
Buying Rate on November 10, 1995) in a multi-currency credit facility (the
"Credit Facility") to pay the cash portion of the consideration to be paid in
connection with the Offer, to fund the costs and expenses of the Offer, to
repurchase shares of capital stock of Crown, and following the Offer, to be
used for general corporate purposes. Chemical will act as exclusive
administrative agent for the Credit Facility and will also provide a portion
of the Credit Facility equal to FF 1.75 billion. CSI also will act as arranger
for and manage the syndication of the Credit Facility. In addition, Societe
Generale and Credit Suisse, an affiliate of CS First Boston, will act as co-
arrangers and documentation agents for the Credit Facility and, in connection
with such activities, will receive customary fees for such services. The
aforementioned banks along with 11 other banks have, subject to the conditions
set forth below, committed to provide the full FF 13.7 billion amount.
Chemical's commitment under the Financing Commitment is subject to the
following conditions: (1) the negotiation, execution and delivery of
definitive documentation with respect to the Credit Facility satisfactory to
Chemical and its counsel; (2) Chemical's satisfaction with the structure,
terms and conditions of the Offer and the related documentation; (3) the lack
of any material adverse change in the business, operations, conditions
(financial or otherwise) or prospects of Crown and its subsidiaries taken as a
whole; and (4) obtaining commitments for the balance of the Credit Facility
for which Chemical has not committed.
Set forth below is a summary description of the Credit Facility. The summary
description is qualified by reference to the Financing Commitment which has
been filed as an exhibit to the Registration Statement and is hereby
incorporated by reference thereto. The actual terms of the Credit Facility may
differ in certain respects from those described below.
The Credit Facility will consist of a multi-currency credit facility in a
principal amount of FF 13.7 billion. During the period commencing on the date
of execution of the definitive documentation for the Credit Facility (the
"Financing Closing Date") and ending 364 days thereafter (the "Commitment
Termination Date"), amounts borrowed and repaid may be reborrowed, subject to
availability under the Credit Facility. On the Commitment Termination Date,
all commitments to advance loans under the Credit Facility will terminate and
any loans outstanding under the Credit Facility will be converted to term
loans (the "Term Loans"). All Term Loans will mature on the date one year
after the Commitment Termination Date.
Loans under the Credit Facility will bear interest, at the option of Crown,
at either (1) the London interbank offered rate ("LIBOR") (as adjusted for
certain reserve requirements, as incurred by the lenders), or the Paris
interbank offered rate for certain loans in British pounds sterling to
borrowers not located in the United Kingdom, for one-, two-, three-, six- and
(subject to the lenders' consent) twelve-month periods plus .100% if Crown's
unsecured long term debt (the "Index Debt") is rated A or better by S&P or A2
or better by Moody's, .125% if the Index Debt is rated A- to BBB by S&P and A3
to Baa2 by Moody's and .175% if the Index Debt is rated BBB- or below by S&P
and Baa3 or below by Moody's (an additional .05% will be added to such rates
on the earlier of (a) the date six months after the initial borrowing under
the Credit Facility and (b) 210 days after the
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Financing Closing Date) or (2) a base rate equal to the highest of (a) the rate
announced from time to time by Chemical as its prime commercial lending rate,
(b) the Base CD Rate plus 1% per annum or (c) the Federal Funds Effective Rate
plus 1/2 of 1% per annum.
Except as otherwise agreed by Crown and the lenders, the documentation
governing the Credit Facility will include customary terms and conditions
(including conditions precedent to the lenders' funding obligations, cost and
yield protection provisions, events of default and covenants limiting Crown's
and its subsidiaries' ability to encumber their assets and (in the case of the
subsidiaries) to incur debt and imposing maximum leverage ratios and minimum
fixed charge coverage ratios) and will substantially incorporate the
representations and warranties, covenants, conditions and events of default
contained in Crown's existing Revolving Credit and Competitive Advance Credit
Facility Agreement dated as of February 10, 1995.
The Offer will not be conditioned on Crown's obtaining of any financing for
the Offer.
Repayment of Credit Facility; Debt Ratings; Possible Equity Offering. The
total amount of indebtedness to be borrowed by Crown under the Credit Facility
will depend on the number of CarnaudMetalbox Shares exchanged for cash in the
Offer. It is anticipated that the indebtedness incurred by Crown pursuant to
the Credit Facility will be repaid from funds generated internally by Crown and
its subsidiaries (possibly including funds generated by CarnaudMetalbox and its
subsidiaries), through additional borrowings, net proceeds of dispositions,
possible equity offerings (as discussed below) or a combination of two or more
of such sources.
On May 23, 1995, S&P announced that it had placed Crown's BBB+ senior
unsecured debt and A-2 commercial paper ratings on Creditwatch in light of the
proposed CarnaudMetalbox Transaction and that "ratings could be lowered on
Crown if management is unable to take prompt action to strengthen the balance
sheet." At the same time, Moody's announced that it had placed Crown's Baa1
senior unsecured debt rating under "review-direction uncertain" in light of the
proposed CarnaudMetalbox Transaction. The announcements of such rating agencies
cited uncertainties associated with the number of CarnaudMetalbox shareholders
electing to receive cash versus Units in the Offer (and the resulting effect on
Crown's capital structure) in taking such actions.
It is Crown's objective to maintain its existing investment grade debt credit
ratings, and Crown continues to have discussions with such rating agencies in
this regard. Subsequent to consummation of the Offer, Crown intends to take
steps, if necessary, to achieve a capital structure which it considers to be
consistent with this ratings objective. Such steps could include an offering of
Crown Common Stock or other equity or equity-linked securities of up to
approximately $1 billion, which may occur as promptly as practicable following
consummation of the Offer. The manner of any such offering has not been
decided, and the price and other terms upon which such securities would be
offered cannot be determined at this time. Crown anticipates that the net
proceeds from any such offering would be used to reduce debt incurred in
connection with the CarnaudMetalbox Transaction. The issuance of any such
equity or equity-linked securities may, depending on the terms of such
issuance, be dilutive to Crown's shareholders.
For information on the significance of Crown's debt ratings with respect to
CGIP's obligation to tender into the Offer and with respect to Shareholders
Agreement, see "THE EXCHANGE OFFER AGREEMENT--Conditions; Waiver" and "THE
SHAREHOLDERS AGREEMENT--Debt Rating," respectively. See "THE CARNAUDMETALBOX
PROPOSALS--Recommendation of Crown's Board of Directors; Reasons for the
CarnaudMetalbox Transaction" for additional information regarding Crown's
possible capital structure following the Offer.
Crown anticipates obtaining appropriate waivers or modifications of material
CarnaudMetalbox indebtedness which may become due as a result of the
CarnaudMetalbox Transaction or refinancing such debt through replacement
facilities to be negotiated as necessary. See "THE OFFER--Operation of
CarnaudMetalbox After the Offer."
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ACCOUNTING TREATMENT
The acquisition of CarnaudMetalbox will be treated as a purchase of
CarnaudMetalbox by Crown under U.S. GAAP. Under the purchase method of
accounting, the assets and liabilities of CarnaudMetalbox would be recorded on
the consolidated financial statements of Crown at their respective fair market
values at the time of the consummation of the acquisition of CarnaudMetalbox
Shares pursuant to the Offer. Any excess of the consideration paid in the
Offer or otherwise to complete the acquisition of CarnaudMetalbox over the
fair market value of CarnaudMetalbox's identifiable net tangible assets
acquired would be allocated to identified intangible assets and then to
goodwill which, in accordance with U.S. GAAP, would be amortized over the
future periods during which Crown recognizes a benefit from the transaction,
not exceeding 40 years. Given the limited nature of Crown's due diligence
investigation to date, and depending on the final purchase price allocation,
the average lives ascribed to the excess purchase price over net assets
acquired may vary substantially. See Notes 2 and 7 to the unaudited pro forma
consolidated condensed financial statements contained in "UNAUDITED PRO FORMA
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS."
OTHER PROPOSALS TO BE CONSIDERED AT THE MEETING
ARTICLES MODERNIZATION PROPOSAL
Crown's Board of Directors is requesting approval of an amendment to Crown's
Articles of Incorporation which is unrelated to the CarnaudMetalbox Proposals
to remove a superfluous provision which provides that shareholder approval is
specifically not required in connection with the authorization of secured bond
indebtedness of not more than $5,500,000 of Crown.
The relevant part of Article THIRD of Crown's Articles of Incorporation
reads as follows:
"The holders of Common Stock are specifically excluded from the right to
vote in any proceeding to authorize and/or upon the question of authorizing
a mortgage or mortgages to secure an aggregate of not more than $5,500,000
principal amount of bonds (in addition to any pledges of current assets) to
secure current indebtedness at any one time outstanding which may be issued
on such terms and conditions as the directors, in their exclusive and
uncontrolled discretion, may determine without notice to or vote by or
consent of such holders."
This provision has been in Crown's charter for several decades and was not
changed when Crown changed its state of incorporation from New York to
Pennsylvania in 1989.
Under the PBCL, the statute governing shareholder voting rights of
Pennsylvania corporations such as Crown, the vote of shareholders is not
required to authorize secured indebtedness of Crown. Moreover, Crown does not
believe the existence of this provision means that a shareholder vote is
required to authorize secured indebtedness of more than $5,500,000.
Accordingly, Crown believes the provision excluding from shareholders the
right to vote to authorize secured bond indebtedness of not more than
$5,500,000 is superfluous and creates potential ambiguity as to the
circumstances in which a shareholder vote may be required.
Crown has no specific plans to incur secured indebtedness in connection with
the CarnaudMetalbox Transaction or otherwise, but it is possible it may do so.
Crown's Board of Directors has by unanimous vote of the directors present
approved a resolution approving the proposed Articles Modernization Proposal
and recommending to Crown's shareholders for their approval the proposal for
the foregoing reasons.
Shareholders of Crown who vote against the Articles Modernization Proposal
will not be entitled to appraisal rights under the PBCL.
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THE ADDITIONAL PREFERRED STOCK PROPOSAL
General. Crown's Board of Directors is requesting the shareholders of Crown
to approve the Additional Preferred Stock Proposal to amend Crown's Articles
of Incorporation as set forth in Annex E to this Proxy Statement/Prospectus.
Under the proposed amendment, Crown's Board of Directors will have authority
to issue, at any time or from time to time up to 30,000,000 shares of one or
more series of preferred stock without further shareholder approval, except as
otherwise provided under applicable law or the rules of securities exchanges
or quotation systems on which shares of Crown are at the time listed or
authorized for quotation. In addition, subject to the limitations described
below, Crown's Board will have the authority to determine all designations,
relative rights, preferences and limitations of such class or series. This
includes, among other things, the designation of such classes or series and
the number of shares making up such class or series; the dividend rights, if
any, the rights upon liquidation or distribution of the assets of Crown, if
any; the conversion or exchange rights, if any; the redemption provisions, if
any; the sinking fund provisions, if any; and the voting rights, if any;
provided, however, that such shares will rank on a parity with or junior to
Crown Acquisition Preferred Stock in respect of dividend and liquidation
rights and provided further that any such shares will not be entitled to more
than one vote per share when voting as a class with holders of Crown Common
Stock.
Unlike shares of Crown Acquisition Preferred Stock, the shares of preferred
stock authorized under the Additional Preferred Stock Proposal could be issued
for purposes other than the CarnaudMetalbox Transaction. As discussed below,
Crown believes that the additional shares of preferred stock will provide
enhanced flexibility in connection with financings, acquisitions and other
transactions and in raising capital for Crown's business and operations. The
authorization of preferred stock as contemplated under the Additional
Preferred Stock Proposal could have the effect of discouraging or rendering
more difficult an unsolicited tender offer or other attempt to acquire control
of Crown. However, with the intention of mitigating these anti-takeover
efforts in certain situations, Crown's Board of Directors will, if the
Additional Preferred Stock Proposal is approved, adopt a policy providing that
no future issuance of such preferred stock will be effected without
shareholder approval unless the Crown Board (whose decision shall be
conclusive) determines in good faith (1) that such issuance is primarily for
the purpose of facilitating a financing, an acquisition or another proper
corporate objective or transaction and (2) that any anti-takeover effects of
such issuance are not Crown's primary purpose for effecting such issuance.
Crown's Board of Directors will not amend or revoke this policy without giving
written notice to the holders of all outstanding shares of Crown's voting
securities. However, no such amendment or revocation will be effective,
without approval of Crown's shareholders (voting as a group) by a majority of
votes cast, to permit a subsequent issuance of such preferred stock for the
primary purpose of obstructing a takeover of Crown by any person who has,
prior to such written notice to shareholders, notified Crown's Board of
Directors of such person's desire to pursue a takeover of Crown.
Shareholders of Crown will not be entitled to exercise preemptive rights
with respect to issuances of the preferred stock to be authorized pursuant to
the Additional Preferred Stock Proposal.
Recommendation of Crown's Board of Directors. Crown's Board of Directors has
approved the Additional Preferred Stock Proposal and recommends that Crown's
shareholders vote in favor of its approval because Crown's Board believes the
additional authorized shares will provide flexibility for future acquisitions,
corporate financings and other corporate purposes (which is advisable in view
of the complexity of modern business financing and acquisition transactions).
The provisions of the Additional Preferred Stock Proposal will permit Crown's
Board to specify the precise characteristics of the preferred stock to be
issued, depending on current market conditions and the nature of the specific
transaction, without the delay and expense of further shareholder action
(except as otherwise required pursuant to applicable law or rules of
securities exchanges or quotation systems on which shares of Crown are at the
time listed or authorized for quotation). The purposes of the issuance of such
preferred stock might include, without limitation, issuance as part or all of
the consideration required to be paid by Crown for acquisitions of other
businesses or properties, and issuance in public or private sales for cash as
a means of obtaining capital for Crown's business and operations. Crown has no
current plan or commitment with respect to any preferred stock of Crown other
than the Crown Acquisition Preferred Stock to be issued under the Exchange
Offer Agreement if the CarnaudMetalbox Proposals are approved by the Crown
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shareholders. See "DESCRIPTION OF CROWN STOCK--Rights Plan." However, it is
possible the preferred stock to be authorized under the Additional Preferred
Stock Proposal could be used in connection with the repayment of the Credit
Facility. See "--Sources of Funds."
Appraisal Rights. Shareholders of Crown who vote against the Additional
Preferred Stock Proposal will not be entitled to appraisal rights under the
PBCL.
CARNAUDMETALBOX
GENERAL
CarnaudMetalbox, a multinational manufacturer of metal and plastic packaging
materials and equipment with consolidated revenue of FF 24.9 billion in 1994,
was formed in 1989 as a result of the merger of Carnaud S.A. and MetalBox, a
French and British packaging company, respectively. Approximately 78% of
CarnaudMetalbox's 1994 net sales were derived from its operations in the
European Union, with France, the United Kingdom and all other European Union
member countries accounting for approximately 24%, 25% and 29% respectively;
approximately 12% of net sales were derived from operations in Europe outside
of the European Union and in North America and the remaining 10% were derived
from the Asia-Pacific and Africa, Middle East and Caribbean regions. For
further information regarding operations by geographic areas, see Note 26-2 to
the annual consolidated financial statements of CarnaudMetalbox included
elsewhere in this Proxy Statement/Prospectus ("CarnaudMetalbox's Consolidated
Financial Statements").
CarnaudMetalbox's operations consist of Metal Packaging, Plastic Packaging
and Engineering and Other. Metal Packaging, which represented approximately 75%
of 1994 net sales, includes manufacture of food cans, food closures, specialty
packaging, aerosols and beverage cans. Plastic Packaging, which represented
approximately 20% of 1994 net sales, includes rigid plastic packaging for food,
household and health and beauty plastic items and flexible packaging for food
products. Engineering and Other, which represented approximately 5% of 1994 net
sales, includes sales of can manufacturing and filling lines for bottlers and
other activities.
CarnaudMetalbox's principal executive offices are located at 153 rue de
Courcelles, 75017 Paris. The telephone number is (33-1) 44-15-68-00.
Metal Packaging
Metal Packaging operations, which accounted for approximately 75% of
consolidated net sales and 85% of consolidated operating income in 1994, are
conducted through the Food Can, Food Closures, Specialty Packaging, Aerosols
and Beverage Can divisions and include metal packaging operations in the Asia-
Pacific and Africa, Middle East and Caribbean regions. The segment employed
approximately 20,240 persons at December 31, 1994.
Manufacturing
Metal packaging is manufactured primarily from tinplate or aluminum coil,
which is cut, lacquered, decorated and flanged. Lacquering prevents contact
between the packaging and product. Decoration generally consists of printing.
Beverage can plants generally have a limited number of production lines
producing a limited number of can types. In general, food packaging, aerosols
and specialty packing plants have a greater number of lines corresponding to
the wide variety of products produced.
Marketing and Distribution
CarnaudMetalbox markets and sells products to global customers through a
sales and marketing staff based at each division and to regional customers
through sales and marketing personnel based at each plant.
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Marketing contracts are centrally negotiated through the CarnaudMetalbox head
office, although products are ordered through and distributed directly by each
plant. Certain products, such as ends, may be distributed to customers through
a wide geographic range, although bulkier products such as cans are generally
not shipped further than 300 km due to higher transportation costs.
Raw Materials
Principal raw materials include tinplate, which accounted for approximately
78% of CarnaudMetalbox's raw material expenditures in 1994, and aluminum, which
accounted for approximately 13% of CarnaudMetalbox's raw material expenditure
in 1994. Tinplate is purchased primarily from a limited number of European
suppliers. In 1994, the four largest suppliers of tinplate to CarnaudMetalbox
accounted for approximately 61% of its tinplate purchases. Aluminum is
purchased from a limited number of global suppliers. In 1994, the six largest
aluminum suppliers of CarnaudMetalbox accounted for approximately 74% of its
purchases of aluminum.
Supply contracts for aluminum and tinplate are centrally negotiated through
the CarnaudMetalbox head office although quantities are ordered directly by
each plant. Operating subsidiaries in the Asia-Pacific and Africa, Middle East
and Caribbean regions also contract directly with suppliers for tinplate.
CarnaudMetalbox generally enters into annual agreements with its tinplate and
aluminum suppliers, but in recent years has executed longer-term contracts for
a small portion of its raw material requirements.
Tinplate contracts generally contain negotiated prices and aluminum contracts
historically have been tied to the price of energy. In 1994, suppliers of
aluminum can and end sheet announced and implemented a new pricing program for
1995. Pursuant to the new formula, aluminum can and end sheet prices are
directly tied to the price of aluminum ingot on the London Metal Exchange
("LME"). The formula price is generally the LME spot price of aluminum ingot
plus a charge for the cost of conversion and transportation. The prices
CarnaudMetalbox has paid for aluminum in the first half of 1995 have increased
significantly compared to prices paid in the first half of 1994.
CarnaudMetalbox believes that the new formula will result in increased
volatility in the cost of its aluminum requirements in the future. See "--
Management's Discussion and Analysis of Financial Condition and Results of
Operations--Results of Operations for the Six Months Ended June 30, 1995
Compared to the Six Months Ended June 30, 1994."
Historically, CarnaudMetalbox has sought to adjust the prices for its
products in response to changes in the cost of tinplate and aluminum and is
seeking to adjust prices for its products in response to changes in the
aluminum pricing formula in 1994. There can be no assurance that
CarnaudMetalbox will be able to recover fully any increases in metal prices
from its customers.
In 1994, CarnaudMetalbox was among the world's largest consumers of tinplate
and a significant consumer of aluminum for packaging. Although adequate
quantities of tinplate and aluminum have been available to CarnaudMetalbox in
the past, there can be no assurance that adequate quantities will be available
in the future.
Food Cans Division
The Food Cans division produces and distributes metal food cans and ends in
11 European countries. The division accounted for approximately 34% of 1994
consolidated net sales and employed approximately 6,650 persons at December 31,
1994.
Products are sold to a wide variety of European food processors, and in 1994
no one customer accounted for more than 12.5% of net sales for this division.
The market is highly competitive based on price and innovation, as packaging
manufacturers seek to enable customers to add value to their products by
offering more efficient packaging such as tinplate easy-open ends, stackable
cans and ferrolite cans and ends.
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Principal competitors include Pechiney International, Schmalbach-Lubeca,
Ferembal and Lawson-Mardon Packaging.
Food Closures Division
The Food Closures division produces vacuum metal closures for the food and
beverage industries, as well as sealing systems for integration into its
customers' production lines. The division, which operates in Europe and North
America, accounted for approximately 8% of CarnaudMetalbox's consolidated net
sales in 1994 and employed approximately 2,350 persons at December 31, 1994.
Closures are sold to a wide variety of European and U.S. food processors, and
in 1994 no one customer accounted for more than 8% of net sales for this
division. Sealing systems are generally rented to customers.
The metal food closure market is highly competitive based on price and
innovation in new products. CarnaudMetalbox believes that its ability to
provide sealing systems as well as closures strengthens its relationship with
customers. CarnaudMetalbox's principal competitor in this market is Schmalbach-
Lubecca although it has experienced competition from producers of plastic
products in recent years.
In 1994, CarnaudMetalbox launched a number of innovative, highly specialized
products, including 27 millimeter twist-caps for use on fruit juice and milk
bottles and a metal-plastic combination cap for closure of baby formula
bottles.
Specialty Packaging Division
The Specialty Packaging division produces printed steel cans for industrial
products and promotional packaging for consumer products. The division, which
operates in Europe and the United States, accounted for approximately 9% of
1994 consolidated net sales and employed approximately 3,650 persons at
December 31, 1994.
The market is segmented into consumer and industrial sectors. Principal
customers include manufacturers of paints and automotive lubricants in the
industrial sector and non-processed food, wine and spirits and cosmetics in the
consumer sector. In 1994, this division's 10 largest customers accounted for
25% of its net sales.
In the consumer sector, product launches contribute to demand as an easily
identifiable package is perceived by customers as a commercial advantage.
Products are often designed specifically for a customer. Competition is intense
and is based on design, quality and price. In the industrial sector,
competition is intense due to industry overcapacity resulting from a trend
towards plastic packaging for products such as paint and motor oil. Principal
competitors in the consumer and industrial sectors include Schmalbach-Lubeca,
Pechiney International and Lawson-Mardon Packaging.
Aerosols Division
The Aerosols division produces steel aerosol cans in Europe and the United
States. The division accounted for approximately 4% of CarnaudMetalbox's 1994
consolidated net sales and employed approximately 1,150 persons at December 31,
1994.
Customers include manufacturers of personal care, food, pharmaceutical,
household and industrial products, primarily in Europe. In 1994, the division's
10 largest customers accounted for 53% of its net sales.
The market is highly competitive due to slow overall growth in the market and
competition from aluminum aerosol cans, which generally are available in a
wider range of sizes. Principal competitors include Crown, Schmalbach-Lubeca
and Pechiney International.
In recent years, CarnaudMetalbox has increased its sales of aerosols to the
dairy products sector as a result of its development of the inside powder
stripe, which offers improved coverage of the internal weld of spray
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cans for greater resistance to pressure and corrosion. The protection against
rust offered by ferrolite ends and separation of product from propellant
offered by the bi-can also contributed to increased demand for aerosols by a
number of industries in recent years.
Beverage Can Division
The Beverage Can division, which accounted for approximately 11% of
CarnaudMetalbox's 1994 consolidated net sales, produces steel and aluminum cans
and ends for the beverage industry in Europe and Turkey. Principal products
include 33 centiliter and 50 centiliter cans and 206 diameter and 202 diameter
cans and ends. The division employed approximately 1,330 persons at December
31, 1994.
Customers include the beer, soft drink and "new age" beverage industries. New
age beverages include fruit and mineral based carbonated and non-carbonated
beverages. The 10 largest customers of this division accounted for 75% of its
net sales in 1994, with the largest customer accounting for 22% of its net
sales.
The beverage can market is highly competitive based on price due to customer
concentration and industry overcapacity. Principal competitors of
CarnaudMetalbox in this division include Pechiney International, Schmalbach-
Lubeca and P.L.M.
During 1994, CarnaudMetalbox began conversion of its beverage can lines to
the lighter "202" cans and ends. CarnaudMetalbox expects to launch easy-open
ends made of alulite, a bonded plastic on aluminum, in the second half of 1995.
Asia-Pacific
CarnaudMetalbox produces a full range of metal packaging in the Asia-Pacific
region through its wholly owned Malaysian subsidiary as well as through
operating companies controlled by CarnaudMetalbox through a 51%-owned Singapore
holding company, which in turn holds controlling interests in the operating
companies. See Note 29 to CarnaudMetalbox's Consolidated Financial Statements.
The shares of such holding company not owned by CarnaudMetalbox are publicly
traded in Singapore. At December 31, 1994, consolidated operations in the
region employed approximately 2,670 persons. Metal packaging operations in the
region accounted for approximately 6% of CarnaudMetalbox's 1994 consolidated
net sales.
At December 31, 1994, four new plants were under construction in China and
one plant was under construction in each of Vietnam and Singapore.
CarnaudMetalbox has budgeted approximately FF 500 million for capital
expenditure in the region in 1995. In January 1995 CarnaudMetalbox acquired
Wuxi Huapeng Caps and Closures in the Jiangsu Province of China and intends to
construct a new plant at Wuxi. See "--Management's Discussion and Analysis of
Financial Condition and Results of Operations--Capital Expenditure."
In September 1994, CarnaudMetalbox opened a research and development center
in Singapore which it expects will enhance its ability to respond to the needs
of its customers in the Asia-Pacific region. See "--Research and Development"
below.
Africa, Middle East and Caribbean
CarnaudMetalbox produces a full range of metal packaging through subsidiaries
in more than 10 countries in the Africa, Middle East and Caribbean region.
Metal packaging operations in the region accounted for approximately 3% of
CarnaudMetalbox's 1994 consolidated net sales and employed approximately 2,420
persons at December 31, 1994.
Marketing in this region generally is carried out locally due principally to
high tariffs, transportation costs and foreign exchange limitations, although
CarnaudMetalbox has recently entered into agreements to supply global customers
operating in this region.
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Plastic Packaging
Plastic Packaging operations, which accounted for approximately 20% of
consolidated net sales and approximately 14% of consolidated operating income
in 1994, are conducted through the Health and Beauty Plastics division and the
Food, Beverage and Household Plastics division, each of which accounted for
approximately 10% of CarnaudMetalbox's 1994 consolidated net sales. Plastic
Packaging operations employed approximately 7,350 persons at December 31, 1994.
Manufacturing
Plastic packaging is manufactured by heating and molding of resins to form
containers and closures which are decorated by hot-stamping, printing and
labelling. Different molds are required for each product, which range from
mass-produced rigid plastic bottles to packaging designed specifically for
individual customers.
Marketing and Distribution
Plastic packaging is marketed to global customers through a sales staff based
at each division and to regional customers by sales personnel based at each
plant. Marketing and product development efforts have been intense in recent
years as new products contribute significantly to sales.
Marketing contracts are centrally negotiated through the CarnaudMetalbox head
office although products are ordered through and distributed directly by each
plant. Plastic packaging is generally distributed to customers through a wider
geographic area than metal packaging due to customer's demand for individually
designed products.
Raw Materials
Principal raw materials are various types of resins, which are petrochemical
derivatives. Resin supply contracts are negotiated centrally by the
CarnaudMetalbox head office, although orders are placed directly by individual
factories. Resins are purchased from a number of global suppliers. In 1994, no
one supplier of resins accounted for more than 11% of CarnaudMetalbox's resin
purchases. The European operations of CarnaudMetalbox accounted for 94% of its
consumption of resins in 1994. Although adequate quantities of resins have been
available in the past, there can be no assurance that adequate quantities will
be available in the future.
CarnaudMetalbox has from time to time experienced fluctuations in the cost of
resins and has sought to adjust its selling prices for plastic containers and
closures to cover increased raw material costs. There can be no assurance,
however, that CarnaudMetalbox will be able to recover fully any increases in
resin prices from its customers.
Health and Beauty Plastics Division
The Health and Beauty Plastics division manufactures rigid plastic packaging,
including closures and dispensing systems for perfumes, cosmetics, personal
care and pharmaceutical products. The division, which employed approximately
3,800 persons at December 31, 1994, operates in Europe and the United States.
CarnaudMetalbox's major customers in this division include European and U.S.
cosmetics, fragrance, pharmaceutical and personal care product manufacturers.
In 1994, no one customer accounted for more than 15% of divisional net sales.
The market is highly competitive based on innovation and price as customers
perceive new packaging designs to be important to the effectiveness of their
marketing efforts. Products are often designed specifically for individual
customers. Wheaton International, Bowater Reboul, TechPack International,
Calmar and Owens Illinois are among CarnaudMetalbox's principal competitors in
this division.
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In 1994, CarnaudMetalbox introduced the low profile pump to the fragrance
industry, new child-proof security closures and soap and shampoo dispensers.
Food, Beverage and Household Plastics Division
The Food, Beverage and Household Plastics division produces rigid plastic
packaging, including closures for the food, beverage, chemical, pharmaceutical
and household products industries, as well as flexible packaging for the food
industry. The division sells its products in Europe and Turkey and employed
approximately 3,200 persons at December 31, 1994.
Major customers include a variety of European mass market household goods,
chemical, pharmaceutical and food and beverage producers, and in 1994 no one
customer accounted for more than 15% of divisional net sales.
The market, which is highly competitive as industry overcapacity has resulted
in severe pricing pressure, has been impacted in recent years by recession in
Europe and a shift towards smaller packaging. Alpla and Graham Packaging are
among CarnaudMetalbox's principal competitors in the plastic container sector
and Berg, Novenbal and Weener are among its principal competitors in the
plastic closure sector.
New products launched in 1994 included specialized packaging for sliced
bakery products, a plastic bag with similar properties to greaseproof paper for
dairy products, lightweight multi-layered bottles and new wide-mouth plastic
closures for drinks and jars.
Regional
CarnaudMetalbox produces plastic packaging through subsidiaries in the
Africa, Middle East and Caribbean and Asia-Pacific regions. Plastic packaging
operations in these regions accounted for less than 1% of 1994 consolidated net
sales.
Engineering and Other
The engineering division produces can manufacturing and filling lines for
sale to packaging manufacturers in countries where it does not operate directly
as well as to bottlers in the United Kingdom and the United States. Engineering
division net sales in 1994 (prior to elimination of approximately FF 155
million of intersegment sales) represented approximately 4% of
CarnaudMetalbox's 1994 consolidated net sales. The division employed
approximately 970 persons at December 31, 1994. Major customers include global
beverage and food can manufacturers and bottlers.
The market is highly competitive, based on reliability of service,
technological advances and price. In 1993 and 1994, CarnaudMetalbox began to
market a new airjet conveyor system. CarnaudMetalbox's principal competitors
include Klockner Holstein Seitz, Krones, Sequa Corp. and Belvac.
Other activities principally include the manufacture of glass bottles in
Nigeria and security printing in Kenya. An equity interest in CMB Sonoco, a
manufacturer of composite packaging in the United Kingdom, was sold in January
1995.
Research and Development
CarnaudMetalbox believes that cost control and innovation, which permit it to
add value to its packaging products and respond rapidly to changing customer
needs, are important to its ability to compete in its relatively mature
markets. CarnaudMetalbox operates research and development facilities in
Wantage in the United Kingdom, Chatenay-Malabry in France and Singapore.
General long term research and development is conducted at Wantage, while
Chatenay-Malabry and Singapore are solely development centers.
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Expenditure on research and development amounted to FF 340 million in 1994,
FF 291 million in 1993 and FF 296 million in 1992. In 1994, research and
development expenditure was principally in connection with alulite lamination
techniques, conversion of beverage lines to 202 can ends, steel easy-open ends
and can shaping. See Note 18 to CarnaudMetalbox's Consolidated Financial
Statements.
Environmental Matters
CarnaudMetalbox's operations are subject to broad environmental regulations
governing emissions to air and water, the handling of hazardous materials,
releases to the environment and the protection of employee health and safety.
Future regulations are likely to impose stricter environmental requirements on
the packaging industry in general. In particular, anticipated future
restrictions in some jurisdictions on the use of certain paint and lacquering
ingredients may require CarnaudMetalbox to employ additional control equipment
or alternative coating technologies. Internal compliance examinations and other
events have upon occasion identified permitting inadequacies and releases to
the environment. In addition, future consumer packaging laws could affect the
design or marketability of particular packaging products in certain
jurisdictions. CarnaudMetalbox devotes considerable resources to improving
environmental compliance at its facilities and is committed to designing
products and manufacturing processes that are consistent with the protection of
the environment. While CarnaudMetalbox does not believe that any of the
foregoing matters are likely to have a material effect on CarnaudMetalbox,
there can be no assurance that current or future environmental laws or
remediation liabilities will not have a material effect on the financial
condition or results of operations for CarnaudMetalbox.
Properties
CarnaudMetalbox's products are manufactured in 185 plants worldwide, of which
34 are located in France, 31 are located in the United Kingdom and 120 are
located in 34 other countries in Europe, North America, Asia and Africa. These
facilities are owned or held under long-term leases by operating subsidiaries.
CarnaudMetalbox plants are designed to address the requirements of the
manufacturing process of its products. Particular emphasis is placed on safety
and environmental concerns as well as the quality of the finished product.
CarnaudMetalbox employs a permanent engineering staff to improve the
integration of design, construction and manufacturing at its plants.
CarnaudMetalbox owns or leases warehouses and delivery facilities at its
manufacturing plants.
Employees and Management
At June 30, 1995, CarnaudMetalbox employed approximately 30,700 persons
worldwide. Relations with employees are subject to numerous laws and
regulations in its countries of operation. A significant number of
CarnaudMetalbox's employees are covered by collective bargaining agreements
with varying terms and expiration dates.
CarnaudMetalbox's Supervisory Board is elected by its shareholders and
currently consists of nine members. The Supervisory Board appoints the
Management Board, which consists of a President, who is the Chief Executive
Officer, and four members, the Chief Financial Officer, the Chief Operating
Officer for Europe and the United States, and the executive vice presidents for
Asia and Africa and for food cans and closures in Europe. The President of the
Management Board, together with CarnaudMetalbox's nine executive vice
presidents, form its executive committee. CarnaudMetalbox's 25 group vice
presidents report to the members of the executive committee.
Each member of the executive committee and group vice president has entered
into an employment contract with CarnaudMetalbox. Employment contracts for
members of the executive committee, including the Chief Executive Officer,
generally contain notice provisions ranging from six months to two years and
non-competition agreements generally lasting one year from the date of
termination and renewable for one additional year. These contracts provide for
aggregate severance payments, which include salary in lieu of notice, of
approximately FF 46 million.
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Employment contracts for group vice presidents generally contain notice
provisions ranging from three months to two years and non-competition
agreements. These contracts provide for aggregate severance payments, which
include salary in lieu of notice, of approximately FF 42 million.
B. Jurgen Hintz resigned as chairman of CarnaudMetalbox in September of 1995
and was paid certain severance payments. See "THE OFFER--Interests of Certain
Persons in The Offer." He has been replaced by Tommy Karlsson, formerly of AB
SKF, a Swedish roller bearing manufacturer, on October 15, 1995.
Legal Proceedings
CarnaudMetalbox is involved in certain litigation in the ordinary course of
its business and litigation with a joint venture partner in Tunisia. In light
of the nature of such litigation and reserves established with respect thereto,
CarnaudMetalbox does not expect the outcome of such litigation to have a
material adverse effect on its financial position or future results of
operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with CarnaudMetalbox's
Consolidated Financial Statements and the Notes thereto included elsewhere in
this Proxy Statement/Prospectus. CarnaudMetalbox's Consolidated Financial
Statements have been prepared in accordance with French law, which differs in
certain respects from U.S. GAAP. See "--Results of Operations--Reconciliation
to U.S. GAAP" and Note 2 to CarnaudMetalbox's Consolidated Financial
Statements.
General
CarnaudMetalbox publishes its consolidated financial statements in French
francs. Approximately three-fourths of CarnaudMetalbox's net sales and expenses
are denominated in currencies other than the French franc, principally the
British pound and other European currencies. For further information on
CarnaudMetalbox's operations in geographic areas, see "CARNAUDMETALBOX--
General" and Note 26-2 to CarnaudMetalbox's Consolidated Financial Statements.
In general, appreciation of the French franc relative to other currencies has
an adverse effect on net sales and operating income generated in such other
currencies when such amounts are reported in French francs. Appreciation of the
French franc relative to the currencies of most countries in which
CarnaudMetalbox operates in 1993, 1994 and for the first six months of 1995 has
adversely affected CarnaudMetalbox's consolidated results of operations
reported in French francs for such periods compared to prior periods. See Note
3 to CarnaudMetalbox's Consolidated Financial Statements. CarnaudMetalbox seeks
to minimize the effect of currency fluctuation on its consolidated results of
operations reported in French francs by incurring liabilities denominated in
currencies other than the French franc to hedge a portion of assets denominated
in such currencies, which generates an increase or decrease in financial
expense reported in French francs partially offsetting the effect of currency
fluctuations on consolidated operating income reported in French francs.
CarnaudMetalbox also hedges cash flow commitments in currencies other than the
functional currency of the relevant operating company. See "--Liquidity and
Capital Resources" and Notes 14 and 24 to CarnaudMetalbox's Consolidated
Financial Statements.
Inflation in the countries in which CarnaudMetalbox conducts its principal
operations has been moderate over the past several years and have not had a
material impact on CarnaudMetalbox's consolidated results of operations. Due to
the high level of inflation in Nigeria, Turkey and China in recent years, the
functional currency of CarnaudMetalbox's subsidiaries operating in those
countries is not the local currency and the method used to translate the
financial statements of such subsidiaries takes into account the effects of
inflation.
Although CarnaudMetalbox's consolidated results of operations generally do
not show substantial seasonal variation, certain of its businesses are affected
by seasonality. Its businesses are predominately located in the Northern
Hemisphere. Generally, beverage products are consumed in greater quantities
during warmer months of the year. Consequently, CarnaudMetalbox's beverage can
sales and earnings generally have been and are
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expected to be higher in the second and third quarters of the calendar year.
Demand for food packaging materials for particular products generally is higher
during the harvest and processing season for such products. Because the
processing season varies from product to product, CarnaudMetalbox's food can
operations are less seasonal than beverage can operations, although food can
sales and earnings generally have been and are expected to be higher in the
third quarter of the calendar year due to the agricultural harvest.
During the three-year period ended December 31, 1994 and the six months ended
June 30, 1995, CarnaudMetalbox carried out a series of acquisitions and
dispositions, the objective of which has been to focus its business on
manufacture of metal and plastic packaging and to expand its geographic
presence, particularly in the Asia-Pacific region. Principal transactions in
1992 included acquisition of an Italian metal food closure manufacturer and
disposition of all other metal food closure operations in Italy. In 1993,
principal transactions included acquisition of Anchor Hocking, a U.S. closures
manufacturer with 1993 annual net sales of approximately FF 935 million, Zeller
Plastik, a German-based multinational manufacturer of plastic closures and
dispensing systems with 1993 annual net sales of approximately FF 650 million
and Fima Metal Box Bhd, a Malaysian metal and packaging company with net sales
of approximately FF 370 million for the 10 months ended December 31, 1993, as
well as formation of joint ventures in Vietnam and China and disposition of a
majority of its polyethylene terephtalate ("PET") business and its multi-layer
thermoform plastics ("High Performance") business. In 1994, CarnaudMetalbox
disposed of its interest in several non-core businesses with aggregate annual
revenues of FF 158 million in 1993. See Note 1 to CarnaudMetalbox's
Consolidated Financial Statements. In the first six months of 1995,
CarnaudMetalbox acquired Wuxi Huapeng Caps and Closures, a manufacturer of
closures in China, and BMW Vogel A.G., a Swiss manufacturer of specialty metal
packaging, as well as the outstanding minority interest in FaBa S.p.a., its
Italian food can subsidiary. In the first six months of 1995, CarnaudMetalbox
also disposed of its interest in CMB Sonoco, a manufacturer of composite
packaging in the United Kingdom with annual net sales of FF 152 million in
1994.
To achieve cost reductions, CarnaudMetalbox continually reviews and
reorganizes its operations worldwide. During 1992, 1993, 1994 and the first six
months of 1995, CarnaudMetalbox closed 22 plants in 10 countries and
reorganized operations at other plants and may close or reorganize operations
at additional plants during the remainder of 1995.
Results of Operations--Six Months Ended June 30, 1995 Compared to Six Months
Ended June 30, 1994
Results of operations in the six months ended June 30, 1995 compared to the
six months ended June 30, 1994 were affected by the impact of appreciation of
the French franc relative to the Italian lira, British pound and U.S. dollar,
which adversely affected net sales and operating income generated in these
currencies when translated into French francs. Local currency price increases
and, to a lesser extent, higher sales volumes in Europe and North America in
the six months ended June 30, 1995 compared to the six months ended June 30,
1994 were more than offset by significant increases in raw material costs.
The accounting principles used by CarnaudMetalbox for the 1995 period are
comparable to those applied in 1994. These principles are in accordance with
accounting principles formulated by the International Accounting Standards
Committee with the exception of the IAS rules that became effective January 1,
1995, the application of which has been deferred as permitted by the COB. The
only significant impact of those new rules on the consolidated accounts of
CarnaudMetalbox relates to the changes in the permitted amortization periods
with respect to goodwill. Had this change been applied as of January 1, 1995 on
the prospective method based on a 20 year amortization period there would have
been no impact on shareholders' equity at the beginning of the period and net
income for the six month period ended June 30, 1995 would have been reduced by
FF 46 million. See Note 1 to the interim consolidated financial statements of
CarnaudMetalbox included elsewhere in this Proxy Statement/Prospectus
("CarnaudMetalbox's Interim Consolidated Financial Statements").
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Net Sales
In the six months ended June 30, 1995 consolidated net sales decreased 0.3%
to FF 12,282 million from FF 12,317 million in the six months ended June 30,
1994. This slight decrease reflected increased net sales in the metal packaging
and plastic packaging segments partially offset by decreased net sales in the
engineering and other segment. The effect of currency fluctuation on
translation of local currency net sales into French francs reduced consolidated
net sales stated in French francs by approximately 5.4% in the six months ended
June 30, 1995 compared to the six months ended June 30, 1994.
The following table sets forth CarnaudMetalbox's net sales by division for
the periods shown. The divisional net sales amounts set forth in the table
below and in the following discussion include inter-divisional sales.
Accordingly, the sum of divisional net sales exceeds total segment and
consolidated net sales.
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1994 JUNE 30, 1995
----------------------- -----------------------
% OF % OF
FF CONSOLIDATED FF CONSOLIDATED
(MILLIONS) NET SALES (MILLIONS) NET SALES
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Metal Packaging................ 9,018 73.2% 9,095 74.1%
------ ------
Food cans.................... 4,002 32.5% 4,067 33.1%
Beverage Cans................ 1,371 11.1% 1,472 12.0%
Specialty Packaging.......... 1,150 9.3% 1,154 9.4%
Food closures................ 945 7.7% 859 7.0%
Aerosols..................... 585 4.7% 602 4.9%
Asia-Pacific................. 738 6.0% 722 5.9%
Africa, Middle East and Ca-
ribbean..................... 392 3.2% 364 3.0%
Eliminations................. (165) (1.3%) (145) (1.2%)
------ ------
Plastic Packaging.............. 2,614 21.2% 2,722 22.2%
------ ------
Food, Beverage and House-
hold........................ 1,254 10.2% 1,377 11.2%
Health and Beauty............ 1,298 10.5% 1,304 10.6%
Africa, Middle East and Ca-
ribbean..................... 40 0.3% 44 0.4%
Asia-Pacific................. 31 0.3% 10 0.1%
Eliminations................. (9) (0.1%) (13) (0.1%)
------ ------
Engineering and Other.......... 685 5.6% 465 3.8%
------ ------
Engineering.................. 490 4.0% 447 3.6%
Other and Regional........... 274 2.2% 108 0.9%
Eliminations................. (79) (0.6%) (90) (0.7%)
Consolidated................... 12,317 100% 12,282 100%
</TABLE>
Metal Packaging. Net sales in the metal packaging segment increased 0.9% in
the six months ended June 30, 1995 to FF 9,095 million from FF 9,018 million in
the six months ended June 30, 1994, reflecting increased net sales in the food
can, specialty packaging, aerosols and beverage cans divisions partially offset
by decreased net sales in the food closures division and the metal packaging
division in the Asia Pacific and Africa, Middle East and Caribbean regions.
Currency translation effect reduced metal packaging net sales by approximately
5.4% in the six months ended June 30, 1995 compared to the six months ended
June 30, 1994.
Food can net sales increased 1.6% in the six months ended June 30, 1995 to FF
4,067 million from FF 4,002 million, reflecting increased sales volume
attributable to continued expansion in Eastern Europe, increased outsourcing by
certain clients rather than internal production of food cans, continued demand
for products introduced in recent years including stackable cans and cans and
ends made of ferrolite, which is a bonded plastic on tinplate, and the
introduction of a wider range of easy open ends, as well as an increase in
local currency prices following higher raw material prices. The volume and
price increases were partially offset by currency
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translation effect, which reduced the division's net sales stated in French
francs by approximately 4.3% in the six months ended June 30, 1995 compared to
the six months ended June 30, 1994.
Food closures net sales decreased 9.1% in the six months ended June 30, 1995
to FF 859 million from FF 945 million in the six months ended June 30, 1994,
principally reflecting currency translation effect, which reduced the
division's net sales stated in French francs by approximately 8.9% in the six
months ended June 30, 1995 compared to the six months ended June 30, 1994.
Increased sales volumes and local currency prices in Europe, particularly in
Germany, Spain, Belgium, the Netherlands and Luxembourg, were offset by weak
demand and competitive pricing conditions in the United States.
Specialty packaging net sales increased 0.3% in the six months ended June 30,
1995 to FF 1,154 million from FF 1,150 million in the six months ended June 30,
1994. Net sales of FF 44 million attributable to the acquisition of BMW Vogel
were mostly offset by lower local currency prices reflecting competition from
imports from Italy and Spain and currency translation effect, which reduced the
division's net sales stated in French francs by approximately 2.0% in the six
months ended June 30, 1995 compared to the six months ended June 30, 1994.
Aerosols net sales increased 2.9% in the six months ended June 30, 1995 to FF
602 million from FF 585 million in the six months ended June 30, 1994,
reflecting higher volumes attributable to continued demand for new products
introduced over the past few years, including ferrolite and the bican, as well
as higher local currency prices following increases in raw material costs. The
volume and price increases were partially offset by currency translation
effect, which reduced the division's net sales stated in French francs by
approximately 6.9% in the six months ended June 30, 1995 compared to the six
months ended June 30, 1994.
Beverage can net sales increased 7.4% in the six months ended June 30, 1995
to FF 1,472 million from FF 1,371 million in the six months ended June 30,
1994, reflecting increases in sales volumes and local currency prices. The
volume and price increases were offset in part by currency translation effect,
which reduced the division's net sales stated in French francs by approximately
6.5% in the six months ended June 30, 1995 compared to the six months ended
June 30, 1994.
Net sales of metal packaging in the Asia-Pacific region decreased 2.2% in the
six months ended June 30, 1995 to FF 722 million from FF 738 million in the six
months ended June 30, 1994, as increased sales volume attributable to the
acquisition of the Wuxi plant in China was more than offset by currency
translation effect, which reduced the division's net sales stated in French
francs by 8.2% in the six months ended June 30, 1995 compared to the six months
ended June 30, 1994.
Net sales of metal packaging in the Africa, Middle East and Caribbean region
decreased 7.1% in the six months ended June 30, 1995 to FF 364 million from FF
392 million in the six months ended June 30, 1994, reflecting the effects of
continued economic and political turmoil in Nigeria on metal packaging
operations in that country, partially offset by increased sales volume in
francophone Africa and slightly improved economic conditions in Kenya. Currency
translation effect, which reduced net sales stated in French francs by 4.2% in
the six months ended June 30, 1995 compared to the six months ended June 30,
1994, was mostly offset by increased local currency prices.
Plastic Packaging. In the six months ended June 30, 1995, plastic packaging
net sales increased 4.1% to FF 2,722 million from FF 2,614 million in the six
months ended June 30, 1994, reflecting a 9.8% increase in net sales in the
food, beverage and household plastics division and a 0.5% increase in net sales
in the health and beauty plastics division due principally to higher prices
following increased raw material costs. Currency translation effect reduced
plastic packaging net sales stated in French francs by approximately 4.6% in
the six months ended June 30, 1995 compared to the six months ended June 30,
1994.
Net sales in the food, beverage and household plastics division increased
9.8% in the six months ended June 30, 1995 to FF 1,377 from FF 1,254 in the six
months ended June 30, 1994. The increase was due to
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generally increased local currency prices following increased raw material
costs and increased sales volumes, partially offset by currency translation
effect, which resulted in a decrease of approximately 3.6% in the division's
net sales stated in French francs in the six months ended June 30, 1995
compared to the six months ended June 30, 1994.
Net sales in the health and beauty plastics division increased 0.5% in the
six months ended June 30, 1995 to FF 1,304 million from FF 1,298 million, as
currency translation effect, which resulted in a decrease of approximately 5.8%
in the division's net sales stated in French francs in the six months ended
June 30, 1995 compared to the six months ended June 30, 1994, was more than
offset by increased local currency prices following higher raw material costs
as well as increased sales volumes attributable to demand for pharmaceutical
and personal care products and the development of the health and beauty
plastics division in North America.
Engineering and Other. Engineering net sales, which consist of sales of can
manufacturing, filling and handling equipment, are dependent on the level of
capital expenditure by bottling companies in the United Kingdom and the United
States, the division's principal markets. In the six months ended June 30,
1995, engineering net sales decreased 8.8% to FF 447 million (including
intercompany sales of FF 90 million) from FF 490 million (including
intercompany sales of FF 79 million) in the six months ended June 30, 1994. The
decrease principally reflected currency translation effect, which decreased the
division's net sales stated in French francs by approximately 10.1% in the six
months ended June 30, 1995 compared to the six months ended June 30, 1994,
partially offset by higher local currency prices which reflected continued
demand by companies in the United States for filling equipment.
Other and regional net sales consist of sales relating to a glass bottle
business in Nigeria and other non-core businesses, most of which had been
disposed of at June 30, 1995. Other net sales decreased 60.6% to FF 108 million
in the six months ended June 30, 1995 from FF 274 million in the six months
ended June 30, 1994. The decrease principally reflected the disposition of
CarnaudMetalbox's interest in CMB Sonoco and the effect of continued economic
and political turmoil in Nigeria on the glass business in that country, as well
as currency translation effect, which reduced the division's net sales stated
in French francs by approximately 3.8% in the six months ended June 30, 1995
compared to the six months ended June 30, 1994.
Cost of Sales, Selling and General Expense and Research and Development
Expense
Cost of sales includes cost of raw materials, manufacturing labor and
transportation of products. Selling and administrative expense includes sales
and marketing and general expenses.
Consolidated cost of sales increased 1.1% in the six months ended June 30,
1995 to FF 9,583 million from FF 9,481 million in the six months ended June 30,
1994. The increase principally reflected increased raw material prices in the
metal and plastic packaging segments and to a lesser extent higher sales
volumes, partially offset by increased productivity and currency translation
effect, which reduced cost of sales stated in French francs in the six months
ended June 30, 1995 compared to the six months ended June 30, 1994. As a
percentage of net sales, cost of sales increased to 78.0% in the six months
ended June 30, 1995 from 77.0% in the six months ended June 30, 1994,
reflecting higher raw material prices which were not fully passed on to
customers partially offset by increased productivity in each segment.
Selling and administrative expense decreased 1.1% to FF 988 million in the
six months ended June 30, 1995 from FF 999 million in the six months ended June
30, 1994, primarily reflecting currency translation effect, which reduced
selling and administrative expense stated in French francs in the six months
ended June 30, 1995 compared to the six months ended June 30, 1994. Selling and
administrative expense represented 8.0% and 8.1% of net sales in the six months
ended June 30, 1995 and the six months ended June 30, 1994, respectively.
Research and development expense increased 3.4% in the six months ended June
30, 1995 to FF 180 million (1.5% of net sales) from FF 174 million in the six
months ended June 30, 1994 (1.4% of net sales), reflecting CarnaudMetalbox's
emphasis on development of new products.
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Depreciation and Amortization
Depreciation and amortization increased to FF 687 million in the six months
ended June 30, 1995 from FF 681 million in the six months ended June 30, 1994.
Depreciation increased 1.1% in the six months ended June 30, 1995 to FF 631
million from FF 624 million in the six months ended June 30, 1994. The
increases reflected increases in depreciable fixed assets offset in part by
currency translation effect.
Goodwill does not include the difference of FF 4,691 million between the net
assets acquired in connection with the 1989 merger of Carnaud and Metal Box
and the consideration paid for those assets, which is classified as an
intangible asset. This intangible asset is not amortized in CarnaudMetalbox's
consolidated financial statements and its value is periodically reviewed.
Goodwill is amortized on a straight-line basis over a period not exceeding 40
years. See Notes to CarnaudMetalbox's Consolidated Financial Statements.
Amortization of goodwill was FF 56 million in the six months ended June 30,
1995 and FF 57 million in the six months ended June 30, 1994, as amortization
of additional goodwill attributable to recent acquisitions was offset by
currency translation effect.
As permitted by the COB, CarnaudMetalbox has deferred the application of IAS
rules that became effective January 1, 1995 relating to changes in the
permitted amortization periods with respect to goodwill. Had this change been
applied as of January 1, 1995 amortization of goodwill for the six month
period ended June 30, 1995 would have increased by FF 46 million and net
income for the period would have decreased by FF 46 million. See Note 1 to
CarnaudMetalbox's Interim Consolidated Financial Statements.
Provision for Restructuring
Provision for restructuring relates to reserves established in respect of
severance payments, loss on disposal of fixed assets and transfer costs in
connection with relocation of production, discontinuing of product lines,
closing of locations and reduction of the labor force. See Note 13-3 to
CarnaudMetalbox's Consolidated Financial Statements.
In the six months ended June 30, 1995, provision for restructuring charged
to results was FF 90 million and principally related to the metal packaging
segment. There were no reserves established in respect of reorganization costs
in connection with acquisitions for the six months ended June 30, 1995. In the
six months ended June 30, 1994, provision for restructuring charged to results
was FF 86 million and principally related to the plastic packaging segment. In
addition, reserves of FF 43 million were established in the six months ended
June 30, 1994 in respect of reorganization costs in connection with the
acquisition of Zeller Plastik. See Note 13-3 to the Consolidated Financial
Statements for information regarding utilization of these provisions.
Operating Income
Because CarnaudMetalbox generally hedges its cash flow commitments in
currencies other than the functional currency of the relevant operating
company, currency fluctuations generally do not have a significant impact on
operating income as a percentage of net sales. See "--Liquidity and Capital
Resources."
In the six months ended June 30, 1995, consolidated operating income
decreased 15.8% to FF 754 million from FF 896 million in the six months ended
June 30, 1994. The decrease reflected decreased operating income in the metal
packaging and the engineering and other segments partially offset by increased
operating income in the plastic packaging segment. The metal packaging,
plastic packaging and engineering and other segments represented 79.6%, 22.4%
and (2.0)% of operating income, respectively, for the six months ended June
30, 1995, and 80.0%, 17.6% and 2.3% of operating income, respectively, for the
six months ended June 30, 1994. Currency translation effect reduced
consolidated operating income stated in French francs by approximately 5.5% in
the six months ended June 30, 1995 compared to the six months ended June 30,
1994.
Operating income in the metal packaging segment decreased 16.3% in the six
months ended June 30, 1995 to FF 600 million from FF 717 million in the six
months ended June 30, 1994. The decrease was attributable to
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higher raw material costs and higher provision for restructuring, as well as
currency translation effect, which reduced the segment's operating income
stated in French francs by approximately 5.1% in the six months ended June 30,
1995 compared to the six months ended June 30, 1994. Metal packaging operating
income as a percentage of segment net sales decreased to 6.6% in the six months
ended June 30, 1995 from 8.0% in the six months ended June 30, 1994, reflecting
higher raw material prices not fully recovered in product pricing and higher
restructuring costs, partially offset by increased productivity.
The 7.0% increase in operating income in the plastic packaging segment to FF
169 million in the six months ended June 30, 1995 from FF 158 million in the
six months ended June 30, 1994 was primarily due to lower provision for
restructuring partially offset by increases in raw material prices not fully
recovered in product pricing, particularly for mass market bottles, and
currency translation effect, which reduced the segment's operating income
stated in French francs by approximately 5.0% in the six months ended June 30,
1995 compared to the six months ended June 30, 1994. Plastic packaging
operating income as a percentage of segment net sales increased to 6.2% in the
six months ended June 30, 1995 from 6.0% in the six months ended June 30, 1994,
due to lower restructuring costs and improved productivity, partially offset by
higher raw material prices not fully recovered in product pricing.
Operating income in the engineering and other segment decreased to a loss of
FF 15 million in the six months ended June 30, 1995 from income of FF 21
million in the six months ended June 30, 1994, primarily due to operating loss
from the Nigerian glass operation, which produced operating income in the prior
period, the disposition of CarnaudMetalbox's interest in CMB Sonoco, and
currency translation effect, which increased operating loss stated in French
francs by approximately FF 7 million in the six months ended June 30, 1995
compared to the six months ended June 30, 1994. Engineering and other operating
income (loss) as a percentage of segment net sales decreased to (3.2)% in the
six months ended June 30, 1995 from 3.1% in the six months ended June 30, 1994
due to decreased operating income from the Nigerian glass operation.
Financial Expense
Financial expense (net) includes total financial expense less total financial
income and dividends received.
In the six months ended June 30, 1995 financial expense (net) decreased 27.4%
to FF 220 million from FF 303 million in the six months ended June 30, 1994,
reflecting reduced interest costs due to lower average debt levels, profits on
currency hedging transactions and the effect of currency fluctuation on
translation of interest payments denominated in other currencies into French
francs, which reduced financial expense (net) by approximately 2.5% in the six
months ended June 30, 1995 compared to the six months ended June 30, 1994.
Gain on Disposals
Gain on disposals decreased 66.3% in the six months ended June 30, 1995
compared to the six months ended June 30, 1994. In the six months ended June
30, 1995, gain on disposals of FF 82 million consisted of FF 11 million gain on
sale of fixed assets and FF 71 million on gain of disposal of businesses,
principally CarnaudMetalbox's interest in CMB Sonoco. In the six months ended
June 30, 1994, gain on disposals of FF 243 million consisted of FF 217 million
gain on sale of fixed assets, principally the Woodlands factory site in
Singapore, and FF 26 million relating to disposal of other businesses,
principally the security printing business.
Taxation
Consolidated income before taxation decreased 26.3% to FF 616 million in the
six months ended June 30, 1995 from FF 836 million in the six months ended June
30, 1994.
Statutory tax rates in CarnaudMetalbox's countries of operation range from
approximately 30% to 50%. CarnaudMetalbox's effective tax rate decreased to
12.1% in the six months ended June 30, 1995 from 13.2% in the six months ended
June 30, 1994 primarily reflecting on-going tax planning and utilization of tax
loss carry
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forwards. At June 30, 1995, CarnaudMetalbox had available tax loss
carryforwards worldwide of approximately FF 1,700 million.
Consolidated income from operations after taxation decreased 25.5% to FF 535
million in the six months ended June 30, 1995 from FF 718 million in the six
months ended June 30, 1994.
Share of Profits of Associated Companies
Share of profits (losses) of associated companies, which reflect
CarnaudMetalbox's interest in the results of unconsolidated affiliates, were a
profit of FF 8 million in the six months ended June 30, 1995 and a loss of FF 8
million in the six months ended June 30, 1994. The improvement in 1995 was due
to the consolidation of Impalsa from July 1, 1994.
Minority Interests in Consolidated Subsidiaries
Minority interests in consolidated subsidiaries primarily arise in connection
with minority interests in packaging operations in the Asia-Pacific region,
Greece and the Africa, Middle East and Caribbean region. Minority interest
decreased from FF 200 million in the six months ended June 30, 1994 to FF 3
million in the six months ended June 30, 1995, principally reflecting minority
interests in the FF 196 million non-recurring gain generated by the sale of a
factory site in Singapore in the six months ended June 30, 1994 and the
acquisition of the outstanding 50% interest in FaBa S.p.a. and the disposal of
CarnaudMetalbox's interest in CMB Sonoco in the six months ended June 30, 1995.
Net Income
Net income increased 5.9% to FF 540 million in the six months ended June 30,
1995 from FF 510 million in the six months ended June 30, 1994. Currency
translation effect reduced net income stated in French francs by approximately
5.9% in the six months ended June 30, 1995 compared to the six months ended
June 30, 1994.
As permitted by the COB, CarnaudMetalbox has deferred the application of IAS
rules that became effective January 1, 1995 relating to changes in the
permitted amortization periods with respect to goodwill. Had this change been
applied as of January 1, 1995 net income for the period would have decreased by
FF 46 million. See Note 1 to CarnaudMetalbox's Interim Consolidated Financial
Statements.
Results of Operations--1994 Compared to 1993; 1993 Compared to 1992
Results of operations in 1994 compared to 1993 and 1993 compared to 1992 were
affected by the impact of appreciation of the French franc relative to the
Italian lira, British pound, Spanish peseta and U.S. dollar, which adversely
affected net sales and operating income generated in these currencies when
translated into French francs. Appreciation of the French franc and German mark
also contributed to increasingly competitive market conditions in France and
Germany as economic recession weakened demand in 1993 and imports became
cheaper. These effects were partially offset by stronger demand and expanded
export opportunities in the United Kingdom, Italy and Spain.
Net Sales
In 1994 consolidated net sales increased 2.3% to FF 24,890 million from FF
24,340 million in 1993. The increase reflected increased net sales in the metal
packaging and engineering and other segments partially offset by decreased net
sales in the plastic packaging segment. The effect of currency fluctuation on
translation of local currency net sales into French francs reduced consolidated
net sales stated in French francs by approximately 2.2% in 1994 compared to
1993.
In 1993 consolidated net sales decreased 2.0% to FF 24,340 million from FF
24,830 million in 1992, reflecting currency translation effect, which reduced
consolidated net sales by approximately 5.0% in 1993
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compared to 1992. Net sales decreased in the plastic packaging and engineering
and other segments and increased in the metal packaging segment.
The following table sets forth CarnaudMetalbox's net sales by division for
the periods shown. The divisional net sales amounts set forth in the table
below and in the following discussion include inter-divisional sales.
Accordingly, the sum of divisional net sales exceeds total segment and
consolidated net sales.
<TABLE>
<CAPTION>
1992 1993 1994
----------------------- ----------------------- -----------------------
% OF % OF % OF
FF CONSOLIDATED FF CONSOLIDATED FF CONSOLIDATED
(MILLIONS) NET SALES (MILLIONS) NET SALES (MILLIONS) NET SALES
---------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Metal Packaging......... 17,842 71.9% 17,890 73.5% 18,610 74.8%
------ ------ ------
Food cans.............. 9,008 36.3% 8,302 34.1% 8,526 34.3%
Beverage Cans.......... 2,438 9.8% 2,258 9.3% 2,811 11.3%
Specialty Packaging.... 2,436 9.8% 2,347 9.6% 2,304 9.3%
Food closures.......... 1,330 5.4% 2,047 8.4% 1,982 8.0%
Aerosols............... 1,020 4.1% 1,028 4.2% 1,098 4.4%
Asia-Pacific........... 953 3.8% 1,295 5.3% 1,421 5.7%
Africa, Middle East and
Caribbean............. 998 4.0% 864 3.6% 707 2.8%
Eliminations........... (341) (1.3%) (251) (1.0%) (239) (1.0%)
------ ------ ------
Plastic Packaging....... 5,598 22.5% 5,328 21.9% 5,040 20.2%
------ ------ ------
Food, Beverage and
Household............. 3,051 12.3% 2,845 11.8% 2,473 9.9%
Health and Beauty...... 2,469 9.9% 2,392 9.8% 2,479 10.0%
Africa, Middle East and
Caribbean............. 79 0.3% 78 0.3% 79 0.3%
Asia-Pacific........... 21 0.1% 54 0.2% 51 0.2%
Eliminations........... (22) (0.1%) (41) (0.2%) (42) (0.2%)
------ ------ ------
Engineering and Other... 1,390 5.6% 1,122 4.6% 1,240 5.0%
------ ------ ------
Engineering............ 894 3.6% 783 3.2% 938 3.8%
Other and Regional..... 625 2.5% 469 1.9% 435 1.7%
Eliminations........... (129) (0.5%) (130) (0.5%) (133) (0.5%)
Consolidated............ 24,830 100% 24,340 100% 24,890 100%
</TABLE>
Metal Packaging. Net sales in the metal packaging segment increased 4.0% in
1994 to FF 18,610 million from FF 17,890 million in 1993, reflecting increased
net sales in the food can, beverage can and aerosols divisions, partially
offset by decreased net sales in the specialty packaging and food closures
divisions. In 1993, metal packaging net sales increased 0.3% to FF 17,890
million from FF 17,842 million in 1992, primarily reflecting increased net
sales in the food closures division partially offset by decreased net sales in
the food can, specialty packaging, aerosols and beverage can divisions.
Currency translation effect reduced metal packaging net sales by 2.4% in 1994
compared to 1993, and by approximately 5.7% in 1993 compared to 1992.
Food can net sales increased 2.7% in 1994 to FF 8,526 million from FF 8,302
million, reflecting increased sales volume attributable to expanded operations
in Eastern Europe and demand for new products launched in recent years,
including stackable cans, easy-open ends and cans and ends made of ferrolite,
as well as increased prices in local currency terms. The volume and price
increases were partially offset by currency translation effect, which reduced
the division's net sales stated in French francs by approximately 2.2% in 1994
compared to 1993. Food can net sales decreased 7.8% in 1993 to FF 8,302 million
from FF 9,008 million in 1992, reflecting currency translation effect, which
reduced net sales stated in French francs by approximately 6.9% in 1993
compared to 1992, as well as decreased prices in local currency terms and lower
sales volume.
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Food closures net sales decreased 3.2% in 1994 to FF 1,982 million from FF
2,047 million in 1993, principally reflecting currency translation effect,
which reduced net sales stated in French francs by approximately 1.9% in 1994
compared to 1993. Food closures net sales increased 53.9% in 1993 to FF 2,047
million from FF 1,330 million in 1992, reflecting FF 935 million of net sales
attributable to the acquisition of Anchor Hocking in January 1993 and slightly
increased sales volume, partially offset by decreased prices in local currency
terms and currency translation effect, which reduced net sales stated in French
francs by approximately 15.4% in 1993 compared to 1992.
Specialty packaging net sales decreased 1.8% in 1994 to FF 2,304 million from
FF 2,347 million in 1993, principally reflecting lower sales volume and
downward pressure on local currency prices in the industrial sector due to weak
demand and a continuing trend towards plastic packaging for certain industrial
products, as well as currency translation effect, which reduced net sales
stated in French francs by approximately 0.6% in 1994 compared to 1993. These
effects were offset in part by increased volume and higher local currency
prices in the consumer goods sector. In 1993, specialty packaging net sales
decreased 3.7% to FF 2,347 million from FF 2,436 million in 1992, principally
due to currency translation effect, which reduced net sales stated in French
francs by approximately 3.5% in 1993 compared to 1992, as well as lower sales
volume and prices in the industrial sector which were partially offset by
higher volume and local currency prices in the consumer sector.
Aerosols net sales increased 6.8% in 1994 to FF 1,098 million from FF 1,028
million in 1993, reflecting increased sales volume and higher prices resulting
from strong demand for new products introduced in recent years including
ferrolite and the bi-can, offset in part by currency translation effect, which
reduced net sales stated in French francs by approximately 2.6% in 1994
compared to 1993. Aerosols net sales increased 0.8% in 1993 to FF 1,028 million
from FF 1,020 million in 1992, as demand for new products enabled
CarnaudMetalbox to increase local currency prices on increased volume, mostly
offset by currency translation effect, which reduced net sales stated in French
francs by approximately 8.9% in 1993 compared to 1992.
Beverage can net sales increased 24.5% in 1994 to FF 2,811 million from FF
2,258 million in 1993, reflecting significantly increased volume as a result of
market share gains, market growth due to an unusually hot summer in
CarnaudMetalbox's principal markets in Europe and operation of a new plant in
Turkey for the full year, offset in part by currency translation effect, which
reduced net sales stated in French francs by approximately 3.1% in 1994
compared to 1993 and by a slight decrease in local currency prices. Beverage
can net sales decreased 7.4% in 1993 to FF 2,258 million from FF 2,438 million
in 1992, reflecting currency translation effect, which reduced net sales stated
in French francs by approximately 8.4% in 1993 compared to 1992, lower local
currency prices and decreased sales volume in Europe as industry overcapacity
generated intense competitive pressure, partially offset by sales volume from a
new plant in Turkey which commenced operation in the second half of the year.
Net sales of metal packaging in the Asia-Pacific region increased 9.7% in
1994 to FF 1,421 million from FF 1,295 million in 1993, as CarnaudMetalbox
slightly increased local currency prices on increased sales volume. Net sales
of metal packaging in the Asia-Pacific region increased 35.9% in 1993 to FF
1,295 million from FF 953 million in 1992, reflecting the acquisition of Fima
Metal Box Bhd. Declining local currency prices in Thailand and lower volumes
were generally offset by currency translation effect, which increased net sales
stated in French francs by approximately 9.3% in 1993 compared to 1992.
Net sales of metal packaging in the Africa, Middle East and Caribbean region
decreased 18.2% in 1994 to FF 707 million from FF 864 million in 1993,
reflecting the effects of continued economic and political turmoil in Nigeria
on metal packaging operations in that country, as the effect of a significant
devaluation of the CFA (African Francophone Confederation) franc relative to
the French franc on translation of CFA franc net sales into French francs, was
mostly offset by higher local currency prices. Net sales of metal packaging in
the Africa, Middle East and Caribbean region decreased 13.4% in 1993 to FF 864
million from FF 998 million in 1992, primarily reflecting the deconsolidation
of Tunisian metal packaging operations in the second half of 1993 offset in
part by currency translation effect.
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Plastic Packaging. In 1994, plastic packaging net sales decreased 5.4% to FF
5,040 million from FF 5,328 million in 1993, reflecting a 13.1% decrease in net
sales from the food, beverage and household plastics division partially offset
by a 3.6% increase in net sales in the health and beauty plastics division. In
1993, plastic packaging net sales decreased 4.8% to FF 5,328 million from FF
5,598 million in 1992, reflecting a 6.8% decrease in net sales in the food,
beverage and household plastics division and a 3.1% decrease in net sales in
the health and beauty plastics division. Currency translation effect reduced
plastic packaging net sales stated in French francs by approximately 1.6% in
1994 compared to 1993, and by approximately 2.7% in 1993 compared to 1992.
Net sales in the food, beverage and household plastics division decreased
13.1% in 1994 to FF 2,473 from FF 2,845 in 1993. The decrease resulted from
currency translation effect, which resulted in a decrease of approximately 1.0%
in the division's net sales stated in French francs in 1994 compared to 1993,
as well as lower prices and volumes due to raw material cost decreases in the
first half of the year, which were passed along to customers, as well as the
recession in Europe and industry overcapacity. The foregoing factors were
partially offset by net effect of acquisitions and dispositions, which
contributed approximately FF 270 million to net sales in 1994 compared to 1993.
Net sales in the food, beverage and household plastics division decreased 6.8%
in 1993 to FF 2,845 million from FF 3,051 million in 1992. The decrease
reflects currency translation effect, which resulted in a decrease of
approximately 4.8% in the division's net sales stated in French francs in 1993
compared to 1992, as well as decreased prices following decreases in raw
material costs. The effect on net sales in 1993 compared to 1992 of disposition
of CarnaudMetalbox's High Performance plastics business in the second half of
1993 was mostly offset by the effect of the acquisition of Zeller Plastik in
September.
Net sales in the health and beauty plastics division increased 3.6% in 1994
to FF 2,479 million from FF 2,392 million, as lower local currency prices and
currency translation effect, which resulted in a decrease of approximately 1.1%
in the division's net sales stated in French francs in 1994 compared to 1993,
were more than offset by the inclusion of Zeller Plastik net sales for the full
year. Net sales in the health and beauty plastics division decreased 3.1% in
1993 to FF 2,392 million from FF 2,469 million in 1992, reflecting lower prices
following decreases in raw material costs and lower volumes resulting from
increased competition and delayed new product launches, partially offset by net
sales attributable to the acquisition of Zeller Plastik in September 1993 and
currency translation effect, which resulted in an increase of approximately
0.3% in the division's net sales stated in French francs in 1993 compared to
1992.
Engineering and Other. In 1994, engineering net sales increased 19.8% to FF
938 million (including intercompany sales of FF 155) from FF 783 million
(including intercompany sales of FF 163) in 1993 due to strong demand for new
technology and currency translation effect, which increased the division's net
sales stated in French francs by approximately 1.8% in 1994 compared to 1993.
In 1993, engineering net sales decreased 12.4% to FF 783 million from FF 894
million in 1992, reflecting lower demand by bottlers for new equipment and
currency translation effect, which reduced the division's net sales stated in
French francs by approximately 1.6% in 1993 compared to 1992.
Other and regional net sales consist of a glass bottle business in Nigeria
and other non-core businesses, most of which had been disposed of at June 30,
1995. Other net sales decreased 7.2% to FF 435 million in 1994 from FF 469
million in 1993, which was 25.0% lower than 1992 net sales of FF 625 million.
The decreases principally reflect declines in sales volumes in Nigeria as a
result of supply difficulties due to the economic and political situation, as
well as currency translation effect, which reduced the division's net sales
stated in French francs by approximately 1.4% in 1994 compared to 1993 and
approximately 5.0% in 1993 compared to 1992.
Cost of Sales, Selling and General Expense and Research and Development
Expense
Prior to 1993, CarnaudMetalbox did not record cost of sales and selling and
administrative expense separately in its consolidated financial statements.
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Consolidated cost of sales increased 1.5% in 1994 to FF 19,315 million from
FF 19,035 million in 1993. The increase principally reflected increased volume
in the metal packaging segment and higher raw material prices, partially offset
by increased productivity in each segment and currency translation effect,
which reduced cost of sales in 1994 compared to 1993. As a percentage of net
sales, cost of sales decreased to 77.8% in 1994 from 78.4% in 1993, reflecting
productivity increases partially offset by increases in raw materials prices
which were not fully reflected in product pricing.
Selling and administrative expense increased 2.8% in 1994 to FF 1,883 million
from FF 1,831 million in 1993, primarily reflecting expenses in connection with
expansion of operations in Asia partially offset by currency translation
effect, which reduced selling and administrative expense in 1994 compared to
1993. Selling and administrative expense represented 7.6% and 7.5% of net sales
in each of 1994 and 1993, respectively.
Research and development expense increased 16.8% in 1994 to FF 340 million
(1.4% of net sales) from FF 291 million in 1993 (1.2% of net sales) reflecting
CarnaudMetalbox's emphasis on development of new products.
In 1993, cost of sales and selling and administrative expense decreased 0.9%
to FF 20,866 million from FF 21,057 million in 1992. The decrease reflected
decreased sales volume in the plastic packaging and engineering and other
segments, increased productivity and currency translation effect, which reduced
cost of sales and selling and administrative expense in 1993 compared to 1992,
partially offset by higher raw material prices and sales volumes in the metal
packaging segment. As a percentage of net sales, cost of sales and selling and
administrative expense increased to 85.7% in 1993 from 84.8% in 1992.
Research and development expense, which represented 1.2% of net sales in each
of 1993 and 1992, decreased slightly in 1993 to FF 291 million from FF 296
million in 1992.
Depreciation and Amortization
Depreciation and amortization increased to FF 1,355 million in 1994 from FF
1,294 million in 1993 and FF 1,189 million in 1992. Depreciation increased 4.2%
in 1994 to FF 1,240 million from FF 1,190 million in 1993, which was 6.8%
higher than 1992 depreciation of FF 1,114 million in 1992. In each case, the
increases reflected increases in depreciable fixed assets offset in part by
currency translation effect.
Amortization of goodwill increased to FF 115 million in 1994 from FF 104
million in 1993 and FF 75 million in 1992, primarily as a result of the
acquisition of Anchor Hocking in January 1993 and Zeller Plastik in September
1993.
Provision for Restructuring
In 1994, provision for restructuring charged to results was FF 288 million
and in addition, reserves of FF 5 million and FF 56 million were established in
respect of reorganization costs in connection with the acquisition of Anchor
Hocking and Zeller Plastik, respectively. In 1993, provision for restructuring
charged to results was FF 306 million and in addition, reserves of FF 186
million and FF 90 million were established in respect of reorganization costs
in connection with the acquisition of Anchor Hocking and Zeller Plastik,
respectively. In 1992, provision for restructuring charged to results was FF
262 million. See Note 13-3 to the Consolidated Financial Statements for
information regarding utilization of these provisions.
Operating Income
In 1994 consolidated operating income increased 8.0% to FF 1,709 million from
FF 1,583 million in 1993. The increase primarily reflected increased operating
income in the metal packaging segment, which accounted for 84.9% and 81.4% of
consolidated operating profit in 1994 and 1993, respectively. Increased
operating income in the metal packaging segment was partially offset by
decreased operating income in the plastic packaging segment, which accounted
for 14.3% and 20.0% of consolidated operating income in 1994 and 1993,
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respectively. Currency translation effect reduced consolidated operating income
stated in French francs by approximately 2.8% in 1994 compared to 1993.
Operating income in the metal packaging segment increased 12.7% in 1994 to FF
1,451 million from FF 1,288 million in 1993. The increase was attributable to
increased margin in the beverage can, food can and aerosols divisions,
partially offset by currency translation effect, which reduced operating income
stated in French francs by approximately 3.5% in 1994 compared to 1993. Metal
packaging operating income as a percentage of segment net sales increased to
7.8% in 1994 from 7.2% in 1993, reflecting improved gross margins due to
productivity gains.
The 22.5% decrease in operating income in the plastic packaging segment to FF
245 million in 1994 from FF 316 million in 1993 was primarily due to lower net
sales and higher provision for restructuring, as well as currency translation
effect, which reduced the segment's operating income stated in French francs by
approximately 1.0% in 1994 compared to 1993. Plastic packaging operating income
as a percentage of segment net sales decreased to 4.9% in 1994 from 5.9% in
1993, due to higher raw material prices not fully recovered in product pricing
and higher restructuring costs.
Operating income in the engineering and other segment improved to FF 13
million in 1994 from a loss of FF 21 million in 1993, primarily due to higher
net sales and cost savings from plant closings in each of 1993 and 1992 in the
engineering division and currency translation effect, which increased operating
income stated in French francs by approximately FF 3 million in 1994 compared
to 1993, partially offset by decreased operating income from other activities,
principally the Nigerian glass operation. Engineering and other operating
income (loss) as a percentage of segment net sales improved to 1.0% in 1994
from (1.9)% in 1993, due to increased productivity in the engineering division.
In 1993 consolidated operating income decreased 21.9% to FF 1,583 million
from FF 2,026 million in 1992, reflecting decreased operating income in each
segment. Currency translation effect reduced consolidated operating income
stated in French francs by 6.6% in 1993 compared to 1992. See Note 3 to
CarnaudMetalbox's Consolidated Financial Statements.
The metal packaging segment represented 81.4% and 81.8% of consolidated
operating income in 1993 and 1992, respectively. Operating income in the metal
packaging segment decreased 22.3% in 1993 to FF 1,288 million from FF 1,658
million in 1992, primarily as a result of lower prices, volume and margins in
the beverage can division, lower local currency prices and volumes in Asia,
expenses associated with planned expansion in the region, currency translation
effect, which reduced the segment's operating income stated in French francs by
approximately 5.7% in 1993 compared to 1992, and lower volumes and
profitability in businesses affected by the recession in Germany. Metal
packaging operating income as a percentage of segment net sales decreased to
7.2% in 1993 from 9.3% in 1992 principally due to lower volumes and prices in
the beverage can division and reduced profitability in businesses affected by
the recession in Germany.
The plastic packaging segment represented 20.0% and 18.7% of consolidated
operating income in 1993 and 1992, respectively. Operating income in the
plastic packaging segment decreased 16.6% in 1993 to FF 316 million from FF 379
million in 1992, primarily as a result of lower prices and sales volumes and
currency translation effect, which reduced the segment's operating income
stated in French francs by approximately 3.0% in 1993 compared to 1992. Plastic
packaging operating income as a percentage of segment net sales decreased to
5.9% in 1993 from 6.8% in 1992 due primarily to lower prices.
Operating loss in the engineering and other segment increased in 1993 to a
loss of FF 21 million from a loss of FF 11 million in 1992, reflecting
decreased net sales and higher restructuring costs in the engineering division
and the Nigerian glass business and currency translation effect, which reduced
the segment's operating income stated in French francs by approximately FF 30
million in 1993 compared to 1992. Engineering and other operating loss as a
percentage of net sales increased to 1.9% in 1993 from 0.8% in 1992 due
primarily to restructuring costs associated with plant closings in the
engineering division.
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Financial Expense (Net)
Financial expense (net) includes total financial expense less total financial
income and dividends received. See Note 16 to CarnaudMetalbox's Consolidated
Financial Statements.
In 1994 financial expense (net) decreased 7.8% to FF 530 million from FF 575
million in 1993, reflecting reduced levels of debt and improved management of
working capital as well as the effect of currency fluctuation on translation of
interest payments denominated in other currencies into French francs, which
reduced financial expense (net) by approximately 1.6% in 1994 compared to 1993.
In 1993 financial expense (net) decreased 10.4% to FF 575 million from FF 642
million in 1992, reflecting the generally lower interest rates as well as the
effect of currency fluctuation on translation of interest payments denominated
in other currencies which reduced financial expense (net) by approximately 7.9%
in 1993 compared to 1992, offset by an increase in net debt primarily due to
the acquisition of Anchor Hocking and Zeller Plastik.
Gain on Disposals
In 1994, gain on disposals of FF 242 million consisted of FF 219 million gain
on sale of fixed assets, principally the Woodlands factory site in Singapore,
and FF 23 million gain on disposal of the security printing and flexible
businesses. In 1993, gain on disposals of FF 193 million principally consisted
of FF 178 million gain on sale of the PET and High Performance plastics
businesses. In 1992, gain on disposals of FF 235 million consisted of FF 201
million gain on sale of a cartons business in Asia Pacific and the Italian
metal closures operation and FF 34 million gain on sale of other fixed assets.
Taxation
Consolidated income before taxation increased 18.3% to FF 1,421 million in
1994 from FF 1,201 million in 1993, which was 25.8% lower than 1992
consolidated income before taxation of FF 1,619 million.
Statutory tax rates in CarnaudMetalbox's countries of operation range from
approximately 30% to 50%. See Note 20 to CarnaudMetalbox's Consolidated
Financial Statements. CarnaudMetalbox's effective tax rate decreased to 16% in
1994 from 21.7% in 1993 and 26.2% in 1992. The decreases reflected the lower
tax rates on capital gains, which contributed more significantly to pre-tax
income in 1993 and 1994, and the re-evaluation and subsequent reversal of
provisions. At December 31, 1994, CarnaudMetalbox had available tax loss
carryforwards worldwide of FF 1,750 million.
Consolidated income from operations after taxation increased 28.1% to FF
1,176 million in 1994 from FF 918 million in 1993, which was 21.9% lower than
1992 consolidated income from operations of FF 1,175 million.
Share of Profits of Associated Companies
Share of profits of associated companies of FF 0 in 1994, FF 14 million in
1993 and FF 16 million in 1992 reflect CarnaudMetalbox's interest in the
results of unconsolidated affiliates. Certain of these interests were disposed
of in 1993 and others were consolidated in 1994. See Note 1 to
CarnaudMetalbox's Consolidated Financial Statements.
Minority Interests in Consolidated Subsidiaries
Minority interests in consolidated subsidiaries primarily arise in connection
with minority interests in packaging operations in the Asia-Pacific region,
Italy, Greece and the Africa, Middle East and Caribbean region. Minority
interest increased 133% from FF 97 million in 1993 to FF 226 million in 1994,
principally reflecting minority interest in the FF 196 million non-recurring
gain generated by the sale of a factory site in Singapore. In 1993, minority
interest decreased 54.9% to FF 97 million from FF 215 million in 1992,
reflecting the effect of devaluation of the Italian lira on translation of net
income of FaBa S.p.a., CarnaudMetalbox's principal Italian
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packaging subsidiary, into French francs, as well as reduced profitability of
partnership operations in Asia and Africa. In the first half of 1995,
CarnaudMetalbox acquired the outstanding minority interest in FaBa S.p.a.
Net Income
Net income increased 13.8% to FF 950 million in 1994 from FF 835 million in
1993, which was 14.4% lower than 1992 net income of FF 976 million. Currency
translation effect reduced net income stated in French francs by approximately
1.9% in 1994 compared to 1993 and approximately 5.7% in 1993 compared to 1992.
Liquidity and Capital Resources
CarnaudMetalbox's primary source of cash in 1994 was FF 2,447 million
provided by operations, net of the effect of the difference between the FF 534
million of receivables sold by CarnaudMetalbox with limited recourse in 1994
and the FF 638 million of receivables sold in 1993. See Note 9 to
CarnaudMetalbox's Consolidated Financial Statements. An additional FF 629
million, FF 597 million and FF 184 million were provided by proceeds on
disposals, net increase in borrowing and capital increases in the first quarter
of 1994, respectively. Uses of cash in 1994 consisted of capital expenditures
of FF 1,896 million, redemption of FF 627 million of preference shares issued
by a United Kingdom subsidiary, acquisition of businesses of FF 410 million (of
which FF 16 million was goodwill) and dividends paid of FF 370 million.
CarnaudMetalbox funds its short-term working capital requirements primarily
through a FF 3 billion commercial paper program in France, supplemented by
borrowings under revolving credit agreements with 10 banks for an aggregate of
up to FF 3.0 billion at December 31, 1994 and June 30, 1995. Availability under
these agreements, which expire in May 1998, was approximately FF 2.75 billion
at December 31, 1994 and FF 2.61 billion at June 30, 1995. The consent of the
lenders under these agreements will be required to maintain these facilities in
connection with the Offer. See "THE OFFER--Operation of CarnaudMetalbox After
the Offer."
Short term borrowings at December 31, 1994 and June 30, 1995 consisted of the
current portion of bank loans and overdrafts.
On June 2, 1995, CarnaudMetalbox issued 3,416,667 shares in connection with
the acquisition of the outstanding minority interest in FaBa S.p.a. See Note 2
to CarnaudMetalbox's Interim Consolidated Financial Statements.
In June 1994, CarnaudMetalbox guaranteed 7.45% bonds due 2001 issued by a
subsidiary. Approximately FF 1 billion of these bonds were outstanding at
December 31, 1994. The consent of the holders of this indebtedness will be
required in connection with the Exchange Offers.
In May 1993, CarnaudMetalbox guaranteed US$205 million of indebtedness
privately placed by a U.S. subsidiary in connection with the acquisition of
Anchor Hocking at an average interest rate of 7.3%. Of this indebtedness,
US$100 million matures in 2000 and US$105 million matures in 2005.
Other long-term borrowings at December 31, 1994 principally comprised FF 1.1
billion of perpetual notes issued in 1991, FF 627 million of outstanding
preference shares issued by a United Kingdom subsidiary, FF 250 million of
outstanding borrowings under the revolving credit agreements referred to above
and FF 286 million of obligations under finance leases. See Note 12 to
CarnaudMetalbox's Consolidated Financial Statements.
CarnaudMetalbox manages its exposure to fluctuations in interest rates,
foreign exchange rates and commodity prices by seeking to match foreign
currency assets and liabilities and by entering into currency and interest rate
swaps and forward rate agreements and purchasing currency and interest rate
options to cover foreign currency cashflows. CarnaudMetalbox manages its
exposure to foreign currency fluctuation by netting its foreign currency
commitments on a consolidated basis and hedging its net exposure. In 1995
CarnaudMetalbox began to seek to reduce exposure to commodity price
fluctuations by hedging commitments through a combination of commercial supply
contracts, forward swaps and options over commodity prices. CarnaudMetalbox
policy with
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respect to financial hedging transactions requires its counterparties to be
financial institutions with ratings ranging from A-1/P-1 or higher for short-
term exposures to A or higher for long-term exposures. CarnaudMetalbox does not
enter into leveraged or tiered contracts. See Note 24 to CarnaudMetalbox's
Consolidated Financial Statements.
CarnaudMetalbox reinsures a portion of its insured risks through a
consolidated subsidiary.
Capital Expenditures
The following table sets forth CarnaudMetalbox's consolidated capital
expenditures by segment for the periods shown.
<TABLE>
<CAPTION>
1992 1993 1994
--------- --------- ---------
(MILLIONS OF FRENCH FRANCS)
<S> <C> <C> <C>
Metal Packaging.............................. 1,179 1,125 1,540
Plastic Packaging............................ 420 385 382
Engineering and Other........................ 104 57 66
--------- --------- ---------
Total...................................... 1,703 1,567 1,988
========= ========= =========
</TABLE>
Consolidated capital expenditure in 1994 of FF 1,540 million in the metal
packaging segment principally related to investment to increase automation,
improve productivity and install new metal printing technology in Europe and to
construct and equip new plants in the Asia-Pacific region. Capital expenditure
of FF 382 million in the plastic packaging segment principally related to new
equipment and automation in connection with reorganization of the food,
beverage and household plastics divisions and additions to capacity in the
U.S., Mexico and the Asia-Pacific region, as well as client-specific molds and
improvements in its plants and equipment to increase automation and
productivity and enhance quality. Capital expenditure of FF 66 million in the
engineering and other segment principally related to improvements in its plants
and new equipment.
Capital expenditure in 1993 of FF 1,125 million in the metal packaging
segment principally related to investment to build capacity in new products
including easy-open ends, commence installation of new metal printing
technology, and construct a beverage plant in Turkey, new plants in the Asia-
Pacific region and a new aerosols plant in France, as well as improvements in
plants and equipment. Capital expenditure of FF 385 million in the plastic
packaging segment principally related to investment to build capacity in new
products, install new printing technology and improvements in plants and
equipment, as well as client-specific molds. Capital expenditure of FF 57
million in the engineering and other segment principally related to rebuilding
of a glass furnace in Nigeria, as well as improvements in plants and equipment.
Capital expenditure in 1992 of FF 1,179 million in the metal packaging
segment principally related to investment to build capacity in new products
including easy-open ends, as well as improvements in plants and equipment.
Capital expenditure of FF 420 million in the plastic packaging segment
principally related to investment in new product molds, as well as improvements
in plant and equipment. Capital expenditure of FF 104 million in the
engineering and other segment principally related to a variety of projects to
build capacity and improve efficiency.
CarnaudMetalbox's budget for 1995 included consolidated capital expenditures
of approximately FF 2,300 million; CarnaudMetalbox currently expects that such
expenditures will be approximately FF 2,000 in 1995. These expenditures
principally include additions to capacity in the Asia-Pacific region through
construction and equipping of four new plants in China and one new plant in
Vietnam and construction and equipping a new plant in connection with
relocation of production in Singapore, conversion of beverage lines to
production of the lighter "202" cans and use of tinplate, additions to capacity
in easy-open ends, construction of a new metal closures plant in the U.S. and
continued installation of new printing technology in the metal packaging
segment, investment in new product molds and new plants in Poland and China in
the plastic packaging segment, and improvements in plants and equipment to
increase automation and productivity and enhance quality in each
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segment. At June 30, 1995, approximately FF 847 million of these expenditures
had been made. Although CarnaudMetalbox expects that cash flow from operating
activities will provide sufficient funds for the remainder of these
expenditures, depending upon its evaluation of growth opportunities and other
existing market conditions, external financing may be utilized from time to
time.
See "--General--Environmental Matters" and Note 13-5 to CarnaudMetalbox's
Consolidated Financial Statements for a discussion of potential capital
expenditure in connection with environmental matters.
Research and development expenditures are disclosed under cost of sales,
selling and general and research and development expense. For a discussion of
historical research and development expenditures, see "--General--Research and
Development" and "--Results of Operations--Cost of Sales, Selling and General
and Research and Development Expense" above. CarnaudMetalbox has budgeted FF
370 million for research and development expense in 1995, of which
approximately FF 180 million had been spent at June 30, 1995.
U.S. GAAP Reconciliation
CarnaudMetalbox prepares its financial statements in accordance with French
law. The accounting principles applied by CarnaudMetalbox differ in certain
material respects from U.S. GAAP. Note 2 to CarnaudMetalbox's Consolidated
Financial Statements, which are included elsewhere in this Proxy
Statement/Prospectus, contains a reconciliation of CarnaudMetalbox's net income
for the years ended December 31, 1993 and 1994 and shareholders' equity as of
December 31, 1993 and 1994.
CarnaudMetalbox's approximate net income for the six months ended June 30,
1995 and 1994 calculated in accordance with U.S. GAAP was FF 505 million and FF
468 million, respectively, compared to CarnaudMetalbox's reported net income
for such periods of FF 540 million and FF 510 million, respectively.
CarnaudMetalbox's approximate shareholders' equity as of June 30, 1995 and 1994
calculated in accordance with U.S. GAAP was FF 10,075 million and FF 9,511
million, respectively, compared to CarnaudMetalbox's reported shareholders'
equity as of such dates of FF 12,007 million and FF 11,269 million,
respectively.
CarnaudMetalbox's approximate net income for the years ended December 31,
1994 and 1993 calculated in accordance with U.S. GAAP was FF 1,001 million and
FF 714 million, respectively, compared to CarnaudMetalbox's reported net income
for such periods of FF 950 million and FF 835 million, respectively.
CarnaudMetalbox's approximate shareholders' equity as of December 31, 1994 and
1993 calculated in accordance with U.S. GAAP was FF 10,174 million and FF 9,502
million, respectively, compared to CarnaudMetalbox's reported shareholders'
equity as of such dates of FF 11,679 million and FF 11,118 million,
respectively.
The principal differences in the accounting principles applied by
CarnaudMetalbox and U.S. GAAP are the treatment of: (1) income taxes (primarily
relating to the application of SFAS 109 under U.S. GAAP effective as of January
1, 1993); (2) amortization of intangible assets, including the goodwill arising
as a result of the 1989 merger of Carnaud and MB Packaging which
CarnaudMetalbox does not amortize but which must be amortized over a period of
up to 40 years under U.S. GAAP; (3) the loss incurred by CarnaudMetalbox upon
the redemption of certain preference shares, which CarnaudMetalbox deferred but
which must be charged to income under U.S. GAAP; (4) certain restructuring
costs which CarnaudMetalbox provided for but which are not permitted under U.S.
GAAP; (5) pension plans (primarily relating to the application of SFAS 87 and
SFAS 88 under U.S. GAAP); and (6) post-retirement benefits (primarily relating
to the application of SFAS 106 under U.S. GAAP).
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Pursuant to French company law, any individual or entity, acting alone or in
concert with others, that, directly or indirectly, acquires more than one-
twentieth, one-tenth, one-fifth, one-half or two-thirds of the share capital of
a listed company (or, having acquired any of such amounts, disposes of
sufficient shares to own less than any of such amounts) must notify the company
within 15 calendar days, and the CBV within five trading
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days, of the date of such acquisition or disposition, of the number of shares
it holds (including any rights to acquire further shares) and the voting rights
attached thereto. In addition, Article 18 of the CarnaudMetalbox statuts, or
charter, provides that any individual or entity, acting alone or in concert
with others, that, directly or indirectly, acquires more than 1% (or any
multiple thereof) of the share capital or voting rights of CarnaudMetalbox (or,
having acquired such amount, disposes of sufficient shares to own less than
such amount) must notify CarnaudMetalbox within 15 calendar days. This
obligation to notify CarnaudMetalbox ceases when the individual or entity
acquires a percentage of the share capital or voting rights which reaches the
threshold of 10%.
Based on information provided by CGIP, as of October 31, 1995,
CarnaudMetalbox had two registered holders of more than 5% of the outstanding
CarnaudMetalbox Shares. As of such date, CGIP beneficially owned, directly or
indirectly, 30.4% of the outstanding CarnaudMetalbox Shares, and Parfinance
owned 6.6% of the outstanding CarnaudMetalbox Shares. As the vast majority of
CarnaudMetalbox Shares beneficially owned by persons other than CGIP and
Parfinance are held in bearer form, CGIP has advised Crown that it does not
know the approximate number of holders of the CarnaudMetalbox Shares. As of
October 31, 1995, there were 86,051,191 CarnaudMetalbox Shares outstanding, of
which 30,877,155 were entitled to double voting rights.
INFORMATION AS TO ADDITIONAL CROWN DIRECTORS AFTER THE OFFER
Pursuant to the Shareholders Agreement and subject to the terms and
conditions thereof, Crown will agree to appoint three designees of CGIP (the
"CGIP Designees") to Crown's Board of Directors as of the Closing Date of the
Offer. Thereafter, during the Standstill Period (as defined in the Shareholders
Agreement) and subject to the further provisions of the Shareholders Agreement,
Crown will agree to support the nomination of, and to cause Crown's nominating
committee (or any other committee exercising a similar function) to recommend
to Crown's Board of Directors that (1) one CGIP Designee, so long as CGIP
beneficially owns voting securities of Crown having voting power equal to or
greater than 5% of the total voting power and less than 10% of the total voting
power of Crown, (2) two CGIP Designees, so long as CGIP beneficially owns
voting securities having voting power equal to or greater than 10% of the total
voting power and less than 15% of the total voting power, and (3) three CGIP
Designees, so long as CGIP beneficially owns voting securities having voting
power equal to or greater than 15% of the total voting power, be included in
the slate of nominees recommended by Crown's Board of Directors to shareholders
for election as directors at each annual meeting of shareholders of Crown
commencing with the 1996 annual meeting of shareholders. In the event that any
of such designees shall cease to serve as a director for any reason, Crown will
agree that Crown's Board of Directors will fill the vacancy resulting thereby,
subject to the terms of the Shareholders Agreement, with a person designated by
CGIP. See "THE SHAREHOLDERS AGREEMENT."
Crown's Articles of Incorporation and Bylaws provide for a variable number of
directors from 10 to 18. Presently, there are 14 directors on Crown's Board.
Under the terms of the Shareholders Agreement, and subject to the terms
thereof, as of the Closing Date, Crown's Board will consist of no more than 18
directors and will be reduced to 16 directors no later than immediately after
the time of Crown's first annual meeting following the Closing Date. CGIP has
informed Crown that the initial CGIP Designees will be Ernest-Antoine
Seilliere, the Chairman and Chief Executive Officer of CGIP, Guy de Wouters, a
Director of CGIP and Deputy Chairman of the Supervisory Board of
CarnaudMetalbox, and Felix G. Rohatyn, an investment banker with Lazard Freres
& Co. LLC.
Based on information supplied by CGIP, none of such persons, during the last
five years, was involved as a defendant in any legal proceedings that could
adversely affect his capacity to serve as a member of Crown's Board. Set forth
below is certain information in respect of the three initial CGIP Designees, as
provided by CGIP:
Ernest-Antoine Seilliere
Mr. Seilliere, 57, is the Chairman and Chief Executive Officer of CGIP,
Chairman of the supervisory board of CarnaudMetalbox and Chairman and Chief
Executive Officer of Marine-Wendel, a societe anonyme organized
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<PAGE>
under the laws of the Republic of France and the owner of a majority of the
outstanding shares of CGIP ("Marine-Wendel"). He is also a member of the
supervisory board of Peugeot S.A., the French car manufacturer, a member of the
Board of Directors of Cap Gemini Sogeti, the French computer services and
consulting company, Societe Generale, one of the largest French and European
banks and Valeo, the French car components manufacturer.
Mr. Seilliere is a French national. He graduated from Ecole Nationale
d'Administration, which trains top French civil servants. Upon graduation, he
joined the French diplomatic service and became a member of various ministerial
cabinets. In 1975, he joined the Marine-Wendel Group, which was founded by his
family in the 18th century and is still under the family's control. He is
Chairman of Europlace, which is in charge of the development of the Paris Stock
Exchange, and Vice-Chairman of the French Business Association (CNPF). He is a
Chevalier in the Legion d'Honneur.
Guy de Wouters
Mr. de Wouters, 65, has been a Director of CGIP since 1984 and is Deputy
Chairman of the Supervisory Board of CarnaudMetalbox.
Following a long career (1956-83) with the Royal Dutch/Shell Group of
Companies where his last assignment was as Head of Group, Strategic Planning in
London, Mr. de Wouters joined the Boards of CGIP and Societe Generale de
Belgique in 1985 and has served on the Boards of Societe Generale de Belgique
subsidiaries such as Petrofina and Union Miniere.
Mr. de Wouters currently serves on the Boards of Directors of Electrabel and
Powerfin (Belgian utility companies) as well as of Marine-Wendel and Suez
Industries (a diversified financial holding company).
Mr. de Wouters is also a Director and Chairman of the audit committee of
Eurotunnel, the company that recently built and operates the rail tunnel under
the Channel between Great Britain and France.
Mr. de Wouters is of Belgian nationality. He graduated in Law and Business
Administration from the University of Leuven (Belgium). He plays an active part
in cultural sponsorship activities and is a Chevalier in the Legion d'Honneur
(France) and in the Ordre de la Couronne et de Leopold (Belgium).
Felix G. Rohatyn
Mr. Rohatyn, 67, is a managing director of the New York investment banking
house, Lazard Freres & Co. LLC. He joined the firm in 1948 and became a partner
in 1960. He is widely recognized in the investment banking community as one of
the preeminent experts in corporate mergers and acquisitions.
Mr. Rohatyn also served from 1975 to 1993 as the Chairman of the Municipal
Assistance Corporation for the City of New York (a State agency). In this
position, and earlier as Special Advisor to the Governor and a member of the
Emergency Financial Control Board, he directed the negotiations that
restructured the City's obligations during the fiscal crisis of the mid-1970s.
Mr. Rohatyn serves on the boards of directors of Pfizer Inc., Howmet
Corporation and General Instrument. He was formerly a member of the Board of
Governors of the NYSE. He is a member of the Council on Foreign Relations. He
is also a Vice-Chairman of Carnegie Hall and a number of other non-profit
organizations.
Mr. Rohatyn was born in Vienna, Austria on May 29, 1928. He graduated from
Middlebury College in Vermont in 1948. He holds honorary degrees from a number
of universities. He is a member of the American Academy of Arts and Sciences.
He is a commander in the Legion d'Honneur.
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<PAGE>
CROWN CORK & SEAL COMPANY, INC.
GENERAL
Crown is a leading worldwide manufacturer of metal and plastic packaging
products. The products include metal cans for beverage, food and aerosol
products, plastic containers for beverage, processed food and other products,
metal crowns (also known as bottle caps), metal and plastic closures and
composite containers. Crown also manufactures filling, packaging and handling
machinery for the bottling industry.
In the United States, Crown is one of the two leading manufacturers of
beverage cans and, including its operations in Canada and Mexico, management
believes Crown is the largest manufacturer of beverage cans in North America.
Based on management estimates and industry sources, Crown is also among the
leading worldwide manufacturers of plastic containers, food cans, aerosol cans,
plastic and metal closures and metal crowns.
The metal packaging businesses are organized into the North American
Division, comprised of the United States, Canada, Mexico and Central America,
and the International Division, which covers the rest of the world. Following
the October 1992 acquisition of CONSTAR International Inc. ("CONSTAR"), Crown
created the Plastics Division, which included CONSTAR and two plastic closure
businesses. Crown also has a Machinery Division. Crown's Technical Center,
located near Chicago, Illinois, is a premier product development and research
center supporting the packaging businesses worldwide. Subsidiaries involved in
aluminum scrap and used beverage can recycling, coil coating and shearing, and
machine engineering and maintenance support primarily the North American
Division.
Crown was founded in 1892. The principal executive offices are located at
9300 Ashton Road, Philadelphia, Pennsylvania 19136, and the telephone number at
such address is (215) 698-5100.
For information as to the market value of shares of Crown Common Stock, see
"COMPARATIVE MARKET PRICE DATA."
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth, as of October 23, 1995, information with
respect to the beneficial ownership of Crown Common Stock of each director of
Crown and the percentage of issued and outstanding shares of Crown Common Stock
such ownership represents, calculated in accordance with the rules of the
Exchange Act.
<TABLE>
<CAPTION>
SHARES OF CROWN
COMMON STOCK AND
NATURE OF BENEFICIAL
NAME OWNERSHIP PERCENTAGE(1)
---- -------------------- -------------
<S> <C> <C>
William J. Avery(2)(3).................... 5,547,673 6.122%
Henry E. Butwel........................... 99,100 0.109%
Charles F. Casey.......................... 4,000 0.004%
Francis X. Dalton......................... 66,761 0.074%
Francis J. Dunleavy....................... 6,600 0.007%
Chester C. Hilinski....................... 16,100 0.018%
Richard L. Krzyzanowski(4)................ 133,198 0.147%
Josephine C. Mandeville................... 312,900 0.345%
Michael J. McKenna(5)..................... 127,114 0.140%
Alan W. Rutherford(3)(6).................. 5,401,703 5.961%
J. Douglass Scott......................... 12,000 0.013%
Robert J. Siebert......................... 46,170 0.051%
Harold A. Sorgenti........................ 4,800 0.005%
Edward P. Stuart.......................... 234,988 0.259%
</TABLE>
(See footnotes on next page)
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- --------
(1) As this information is presented as of October 23, 1995, the percentage
reflected does not give effect to the proposed issuance of Crown Common
Stock and Crown Acquisition Preferred Stock pursuant to the proposed
transaction with CarnaudMetalbox.
(2) Includes 20,000 shares owned by a charitable foundation of which Mr. Avery
is one of three trustees and 32,800 shares subject to presently
exercisable options held by Mr. Avery.
(3) Includes 5,372,215 shares of Crown Common Stock held in the Crown Cork &
Seal Company, Inc. Master Retirement Trust (the "Trust") as of October 31,
1995 on behalf of various Crown pension plans (the "Trust Shares"). Under
the Trust, the Benefits Plans Investment Committee (the "Investment
Committee") has sole voting and dispositive power with respect to the
Trust Shares. As a member of the Investment Committee, the named executive
officer of Crown may be deemed to beneficially own such Trust Shares.
(4) Includes 3,700 shares owned by a charitable foundation of which Mr.
Krzyzanowski is one of five trustees, 5,100 shares subject to presently
exercisable options held by Mr. Krzyzanowski and 31,750 shares held by a
charitable remainder trust of which Mr. Krzyzanowski is a trustee.
(5) Includes 4,300 shares owned by a charitable foundation of which Mr.
McKenna is one of eight trustees and 11,100 shares subject to presently
exercisable options held by Mr. McKenna.
(6) Includes 12,000 shares subject to presently exercisable options held by
Mr. Rutherford.
As of October 23, 1995, Mark W. Hartman, Executive Vice President, Corporate
Technologies, was the beneficial owner of 52,762 shares of Crown Common Stock
(including 7,275 shares subject to presently exercisable options) or 0.058% of
the outstanding shares, and Hans J. Loliger, Executive Vice President and
President of the Plastics Division of Crown, was the beneficial owner of
22,046 shares of Crown Common Stock (including 12,625 shares subject to
presently exercisable options) or 0.024% of the outstanding shares. As of
October 23, 1995, all directors and executive officers of Crown as a group of
22 including the foregoing were beneficial owners of 6,900,095 shares of Crown
Common Stock or 7.615% of the outstanding shares (including the shares
beneficially owned by the Investment Committee discussed in note (3) to the
table above).
Not included in the table above are 7,840,850 shares of Crown Common Stock
beneficially owned by The Connelly Foundation, a private charitable foundation
located in West Conshohocken, Pennsylvania. Messrs. Avery and Hilinski and
Mrs. Mandeville are three of 15 Trustees of The Connelly Foundation and
disclaim any beneficial ownership of these shares. In addition, not included
in the above table are 72,598 shares of Crown Common Stock held in the
Josephine C. Connelly Trust, of which Mrs. Mandeville is one of the Trustees
and in which shares she disclaims any beneficial ownership. Also not included
are 36,942 shares of Crown Common Stock held under the will of John F.
Connelly of which Mrs. Mandeville and Mr. Hilinski are Trustees and in which
shares Mrs. Mandeville and Mr. Hilinski disclaim any beneficial ownership.
The officers and directors of Crown, in respect of the securities of Crown
listed above, have sole voting and investment power, except as to the shares
held in the aforementioned trusts and charitable foundations, which respect to
which the Trustees have shared voting and investment power.
As of November 10, 1995, The Connelly Foundation was the beneficial owner of
7,840,850 shares of Crown Common Stock, constituting 8.7% of the Crown Common
Stock outstanding. In addition, according to reports dated September 8, 1995
filed with the SEC, Janus Fund, an investment company registered under the
Investment Company Act of 1940, beneficially owned 6,689,975 shares or 7.4% of
the outstanding Crown Common Stock as of August 31, 1995. Also based on
reports filed with the SEC, Janus Capital, a registered investment advisor,
furnishes investment advice to certain investment companies registered under
the Investment Company Act of 1940 (including Janus Fund). As a result of such
activity, Janus Capital (together with its principal Thomas H. Bailey) may be
deemed to be the beneficial owner of 10,206,636 shares or 11.3% of the
outstanding Crown Common Stock as of August 31, 1995. As discussed in Note (3)
to the table above, as of October 31, 1995, the Investment Committee of Crown
beneficially owned 5,372,215 shares of Crown Common Stock, constituting 5.93%
of the Crown Common Stock outstanding.
Crown has, to the best of its knowledge, no other beneficial owner of more
than 5% of the outstanding Crown Common Stock.
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<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated condensed financial
statements give effect to the acquisition of CarnaudMetalbox under the
purchase method of accounting. Under the purchase method of accounting, the
total purchase cost will be allocated to the assets and liabilities of
CarnaudMetalbox based upon their relative fair values. The accompanying pro
forma consolidated condensed financial statements do not reflect any
allocation of purchase price to assets and liabilities since the appraisals
and other studies on which the allocation will be based are not yet completed.
Accordingly, the final allocations will be different from the amounts
reflected herein. The unaudited pro forma consolidated condensed balance sheet
combines the historical consolidated balance sheets of Crown and
CarnaudMetalbox giving effect to the acquisition as if it had occurred on June
30, 1995. The unaudited pro forma consolidated condensed statements of
operations for the year ended December 31, 1994 and the six months ended June
30, 1995 combine the historical consolidated statements of operations of Crown
and CarnaudMetalbox giving effect to the acquisition as if it had occurred on
January 1, 1994.
The unaudited pro forma consolidated condensed financial statements are for
illustrative purposes only and have been presented to meet the requirements of
the SEC. They are not necessarily indicative of the results of operations that
might have occurred had the acquisition actually taken place on January 1,
1994 or the actual financial position that might have resulted had the
acquisition been consummated on June 30, 1995, or of future results of
operations or financial position of Crown. Crown believes that the assumptions
used, and sensitivity analyses presented, in the unaudited pro forma
consolidated condensed financial statements are reasonable given the current
structure of the Offer. Significant changes to the structure of the Offer may
have a material effect on the unaudited pro forma consolidated condensed
financial statements. Crown also believes that any further adjustments to the
unaudited pro forma consolidated condensed financial statements, other than in
respect of the preceding sentence or in respect of transition and
restructuring costs and expenses, would not have a material effect on these
statements.
The unaudited pro forma consolidated condensed financial statements are
based on the historical consolidated financial statements of Crown and
CarnaudMetalbox and should be read in conjunction with such historical
financial statements and the notes thereto, which are, in the case of
CarnaudMetalbox, included elsewhere in this Proxy Statement/Prospectus, and,
in the case of Crown, incorporated by reference herein. Furthermore, the
historical financial statements for CarnaudMetalbox, prepared in accordance
with French law (see "CARNAUDMETALBOX--Management's Discussion and Analysis of
Financial Condition and Results of Operations--Results of Operations--Six
Months Ended June 30, 1995 Compared to Six Months Ended June 30, 1994") and
presented in French francs, have for purposes of preparing these pro forma
consolidated condensed financial statements been conformed to comply with U.S.
GAAP and, in accordance with SFAS No. 52, have been translated to U.S. dollars
at an assumed exchange rate equal to FF 5.511/$1.00 (the Average 1994 Noon
Buying Rate) and FF 4.992/$1.00 (the Average Six Month 1995 Noon Buying Rate)
for the pro forma statements of operations presented for the year ended
December 31, 1994 and the six months ended June 30, 1995, respectively, and FF
4.853/$1.00 (the June 1995 Noon Buying Rate) for the pro forma balance sheet
presented as of June 30, 1995. See Note 2 of CarnaudMetalbox's consolidated
financial statements for a reconciliation of CarnaudMetalbox's 1994 and 1993
net income and shareholders' equity to U.S. GAAP. Such translations should not
be construed as representations that French franc amounts represent, have been
or could be converted into, U.S. dollars at that or any other rate. The Noon
Buying Rate on November 10, 1995 was FF 4.872/$1.00. The use of exchange rates
different from those used in the unaudited pro forma consolidated condensed
financial statements could have a material impact on the information presented
therein. Certain information presented in the unaudited pro forma consolidated
condensed financial statements is calculated based upon the Noon Buying Rate
as of October 31, 1995 which was FF 4.891/$1.00, as expressly noted therein.
The unaudited pro forma consolidated condensed financial statements are
based in part on the historical consolidated financial statements of
CarnaudMetalbox included elsewhere in this Proxy Statement/Prospectus.
Although Crown has no knowledge that would indicate such financial statements
are materially inaccurate or incomplete, Crown did not prepare such financial
statements and is not in a position to verify the information therein.
SEE THE NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS FOR A DESCRIPTION OF THE PRINCIPAL ASSUMPTIONS MADE IN THE
PREPARATION OF THE PRO FORMA INFORMATION. THE UNAUDITED PRO FORMA FINANCIAL
STATEMENTS DO NOT REFLECT FINANCIAL RESULTS FOR CROWN OR CARNAUDMETALBOX AFTER
JUNE 30, 1995. SEE "SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL
INFORMATION--CROWN CORK & SEAL COMPANY, INC.--RECENT DEVELOPMENTS" AND "--
CARNAUDMETALBOX--RECENT DEVELOPMENTS."
84
<PAGE>
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995
UNAUDITED
<TABLE>
<CAPTION>
ASSUMING 51% TENDERED ASSUMING 100% TENDERED
CARNAUDMETALBOX SHARES CARNAUDMETALBOX SHARES
HISTORICAL AMOUNTS 36% UNITS/15% CASH(1) 50% UNITS/50% CASH(1)
---------------------- ----------------------- -----------------------
PRO FORMA PRO FORMA
CROWN CMB ADJUSTMENTS PRO FORMA ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ----------- ----------- -----------
(IN $ MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
NET SALES............... $ 2,513 $ 2,460 $ 4,973 $ 4,973
Costs of products sold.. 2,086 1,919 4,005 4,005
Depreciation and
amortization(2)(11).... 129 146 $ 4 279 $ 35 310
Selling and
administrative
expense................ 72 234 306 306
Provision for
restructuring(3)....... 20 18 38 38
Interest expense(4)..... 74 58 24 156 83 215
Interest income......... (6) (12) (18) (18)
Translation and exchange
adjustments............ 1 2 3 3
Preference share
dividends and other.... (21) (21) (21)
---------- ---------- ---- ----------- ----- -----------
INCOME FROM OPERATIONS
BEFORE INCOME TAXES.... 137 116 (28) 225 (118) 135
Income taxes(5)......... 41 16 (8) 49 (27) 30
Equity in earnings of
affiliates............. 3 2 5 5
Minority interests...... (10) (1) (49) (60) (11)
---------- ---------- ---- ----------- ----- -----------
NET INCOME.............. $ 89 $ 101 $(69) $ 121 $ (91) $ 99
Crown Acquisition
Preferred Stock
dividends(6)........... 8 8 11 11
---------- ---------- ---- ----------- ----- -----------
Net income available for
common stock........... $ 89 $ 101 $(77) $ 113 $(102) $ 88
========== ========== ==== =========== ===== ===========
EARNINGS PER SHARE(12).. $ 0.99 $ 1.19 $ 0.98 $ 0.71
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING..... 89,920,245 84,605,561 114,779,464 124,202,796
</TABLE>
85
<PAGE>
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
JUNE 30, 1995
UNAUDITED
<TABLE>
<CAPTION>
ASSUMING 51% TENDERED ASSUMING 100% TENDERED
CARNAUDMETALBOX SHARES CARNAUDMETALBOX SHARES
HISTORICAL AMOUNTS 36% UNITS/15% CASH(1) 50% UNITS/50% CASH(1)
-------------------- -------------------------- --------------------------
PRO FORMA PRO FORMA
CROWN CMB ADJUSTMENTS PRO FORMA ADJUSTMENTS PRO FORMA
---------- --------- ------------ ----------- ------------ -----------
(IN $ MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents(10(a))............. $ 69 $ 474 $ (32) $ 511 $ (92) $ 451
Receivables.................................. 911 899 1,810 1,810
Inventories.................................. 945 936 1,881 1,881
Prepaid expenses and other current assets.... 72 503 575 575
Long-term receivables........................ 66 19 85 85
Investments.................................. 57 41 98 98
Excess of purchase price over net assets
acquired, net of amortization(2)(7)(10(b)).. 1,112 1,292 392 2,796 1,915 4,319
Property, plant and equipment(2)(7).......... 1,937 1,766 3,703 3,703
Other non-current assets..................... 109 109 109
--------- --------- ----------- ----------- ----------- -----------
TOTAL ASSETS............................... $ 5,278 $ 5,930 $ 360 $ 11,568 $ 1,823 $ 13,031
========= ========= =========== =========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt and current portion of long-
term debt................................... $ 1,087 $ 568 $ 1,655 $ 1,655
Accounts payable and accrued liabilities..... 700 1,383 2,083 2,083
Other current liabilities(10(c))............. 13 72 $ 42 127 $ 23 108
Long-term debt, excluding current
maturities(4)(7)............................ 1,152 1,055 582 2,789 1,975 4,182
Postretirement and pension liabilities....... 627 127 754 754
Other non-current liabilities................ 127 361 488 488
Minority interests........................... 102 288 431 821 390
Crown Acquisition Preferred Stock(7)......... 358 358 494 494
Crown Common Stock(10(d)).................... 593 177 (53) 717 (6) 764
Retained earnings(10)(e)).................... 1,063 959 (1,036) 986 (1,061) 961
Cumulative translation adjustment............ (174) (537) 543 (168) 545 (166)
Other shareholders' equity(10(f))............ (12) 1,477 (507) 958 (147) 1,318
--------- --------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY.................................... $ 5,278 $ 5,930 $ 360 $ 11,568 $ 1,823 $ 13,031
========= ========= =========== =========== =========== ===========
</TABLE>
86
<PAGE>
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
UNAUDITED
<TABLE>
<CAPTION>
ASSUMING 51% TENDERED ASSUMING 100% TENDERED
CARNAUDMETALBOX SHARES CARNAUDMETALBOX SHARES
HISTORICAL AMOUNTS 37% UNITS/14% CASH (1) 50% UNITS/50% CASH (1)
---------------------- ----------------------- -----------------------
PRO FORMA PRO FORMA
CROWN CMB ADJUSTMENTS PRO FORMA ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ----------- ----------- -----------
(IN $ MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
NET SALES............... $4,452 $4,516 $8,968 $8,968
Costs of products
sold.................. 3,700 3,521 7,221 7,221
Depreciation and
amortization(2)(11)... 218 262 $ 11 491 $ 73 553
Selling and
administrative
expense............... 135 403 538 538
Provision for
restructuring(3)...... 115 38 153 153
Interest expense(4).... 99 73 49 221 168 340
Interest income........ (7) (17) (24) (24)
Translation and
exchange adjustments.. 10 2 12 12
Preference share
dividends and other... (11) (11) (11)
---------- ---------- ----- ----------- ----- -----------
INCOME FROM OPERATIONS
BEFORE INCOME TAXES.... 182 245 (60) 367 (241) 186
Income taxes(5)........ 55 22 (16) 61 (55) 22
Equity in earnings of
affiliates............ 16 16 16
Minority interests..... (12) (41) (84) (137) 5 (48)
---------- ---------- ----- ----------- ----- -----------
NET INCOME.............. 131 182 (128) 185 (181) 132
Crown Acquisition
Preferred Stock
dividends(6)........... 16 16 22 22
---------- ---------- ----- ----------- ----- -----------
Net income available for
common stock........... $ 131 $ 182 $(144) $ 169 $(203) $ 110
========== ========== ===== =========== ===== ===========
EARNINGS PER SHARE(12).. $ 1.47 $ 2.22 $ 1.47 $ 0.89
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING..... 89,086,999 82,048,458 114,779,464 124,202,796
</TABLE>
87
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The pro forma adjustments set forth herein were prepared on the basis of
the following principal assumptions:
(a) The Average Crown Common Stock Price is FF 211.27, the Exchange Ratio is
1.065 and all of the 2,017,922 employee options to purchase CarnaudMetalbox
Shares outstanding as of June 30, 1995 are converted into outstanding options
to purchase Crown Common Stock. The number of CarnaudMetalbox Shares
outstanding was 85,841,476 as of June 30, 1995. Since Crown is unable to
determine in advance the proportion of tenders for the Cash Election Price
versus Units in the Offer, Crown has prepared the pro forma consolidated
condensed financial statements using the arbitrary assumption that, in the case
where 100% of the CarnaudMetalbox Shares are tendered, 50% of such shares are
tendered for cash and 50% for Units, meaning approximately 28% of the shares
tendered by persons other than CGIP are tendered for Units. In addition, to
facilitate comparison, Crown has assumed in the case where 51% of the
CarnaudMetalbox Shares are tendered, approximately 28% of the shares tendered
by persons other than CGIP are similarly tendered for Units, meaning that, in
the aggregate, approximately 36% of the outstanding CarnaudMetalbox Shares are
tendered for Units and approximately 15% are tendered for cash.
The purchase price and related excess of purchase price over net assets
acquired have been recorded in the unaudited pro forma consolidated condensed
financial statements in U.S. dollars. The borrowings necessary to finance the
cash portion of consideration under the Credit Facility have been committed in
French francs. For information with respect to the impact of these assumptions
on the unaudited pro forma consolidated condensed financial statements, see
Note 7.
The following table presents certain information with respect to the number
of tendered CarnaudMetalbox Shares and cash/Unit elections resulting from the
assumptions described in the preceding paragraph and used in the preparation of
the unaudited pro forma consolidated condensed financial statements:
<TABLE>
<CAPTION>
ASSUMING ASSUMING
51% TENDERED 100% TENDERED
CARNAUDMETALBOX CARNAUDMETALBOX
SHARES SHARES
--------------- ---------------
<S> <C> <C>
Number of Shares Outstanding................... 85,841,476 85,841,476
CarnaudMetalbox Shares Owned by CGIP........... 26,188,956 26,188,956
CarnaudMetalbox Shares Held by Persons Other
Than CGIP..................................... 59,652,520 59,652,520
CarnaudMetalbox Shares Tendered by Persons
Other Than CGIP............................... 17,590,197 59,652,520
CarnaudMetalbox Shares Tendered for Units by
Persons Other than CGIP....................... 4,934,050 16,731,782
Percentage of Non-CGIP CarnaudMetalbox Shares
Tendered For Units(1)......................... 28.0% 28.0%
CarnaudMetalbox Shares Tendered for Cash by
Persons Other Than CGIP....................... 12,656,147 42,920,738
Percentage of Non-CGIP CarnaudMetalbox Shares
Tendered for Cash............................. 72.0% 72.0%
Total CarnaudMetalbox Shares Tendered for
Units........................................ 31,123,006 42,920,738
Assumed Exchange Ratio(2)...................... 1.065 1.065
Units Issued................................... 33,146,001 45,710,585
Shares of Crown Common Stock (75%)............ 24,859,501 34,282,939
Shares of Crown Acquisition Preferred Stock
(25%)........................................ 8,286,500 11,427,646
Share Value................................... $43.20 $43.20
Value of Crown Common Stock Consideration ($
millions).................................... $1,075 $1,481
Value of Crown Acquisition Preferred Stock
Consideration ($ millions)................... $358 $494
Cash Paid ($ millions)(3)...................... $582 $1,975
</TABLE>
- --------
(1) Changes in the cash/Unit elections by tendering CarnaudMetalbox
shareholders will affect the pro forma financial information. See Note 6
for certain effects of all CarnaudMetalbox shareholders tendering and
electing Units. See Note 4 for certain effects of all CarnaudMetalbox
shareholders tendering and, except for CGIP, electing cash.
(2) See Note 9(a) for the effect of variations in the Exchange Ratio.
(3) Equals assumed number of CarnaudMetalbox Shares tendered for cash
multiplied by the Cash Election Price of FF 225 divided by FF 4.891, the
Noon Buying Rate at October 31, 1995. Only holders of CarnaudMetalbox
Shares who elect to receive cash will be entitled to receive such cash.
Consequently, there can be no assurance as to the amount of cash that will
be paid as consideration in the Offer.
88
<PAGE>
(b) As is explained in Notes 8 and 9, the number of shares of Crown Stock to
be issued in the Offer also varies with changes in the Exchange Ratio; the
Exchange Ratio varies with changes in the Average Crown Common Stock Price;
and the Average Crown Common Stock Price varies with changes in the Market
Closing Price per share of Crown Common Stock and the Noon Buying Rate. The
table below sets forth the implied Average Crown Common Stock Price for
various combinations of Noon Buying Rates and Average French Franc Crown
Common Stock Prices (calculated by dividing the Average French Franc Crown
Common Stock Price by the Noon Buying Rate):
<TABLE>
<CAPTION>
AVERAGE FRENCH FRANC CROWN COMMON STOCK PRICE
---------------------------------------------------------------------
NOON BUYING RATE FF 169.02 FF 179.58 FF 190.14 FF 211.27 FF 232.39 FF 242.96 FF 253.52
---------------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
4.75 $35.58 $37.21 $40.03 $44.48 $48.92 $51.15 $53.37
(FF/$US)
5.00 $33.80 $35.92 $38.03 $42.25 $46.48 $48.59 $50.70
5.25 $32.19 $34.21 $36.22 $40.24 $44.26 $46.28 $48.29
</TABLE>
On November 10, 1995, the closing price of Crown Common Stock was $40.00 and
the Noon Buying Rate was FF 4.872. The French Franc Crown Common Stock Price
on November 10, 1995 was FF 194.88. Assuming the Measurement Date were
November 13, 1995, the Average Crown Common Stock Price would have been
FF 174.03.
2. The pro forma adjustments reflect (a) assuming Crown acquires 100% of the
CarnaudMetalbox Shares, increased amortization expense of $73 million and $35
million for the year ended December 31, 1994 and the six months ended June 30,
1995, respectively, resulting from purchase price in excess of net assets
acquired of $3,242 million, and total pro forma depreciation and amortization
for the year ended December 31, 1994 and the six months ended June 30, 1995 of
$553 million and $310 million, respectively, and (b) assuming Crown acquires
51% of the CarnaudMetalbox Shares, increased amortization expense of $11
million and of $4 million for the year ended December 31, 1994 and the six
months ended June 30, 1995, respectively, resulting from the purchase price in
excess of net assets acquired of $1,688 million, and total pro forma
depreciation and amortization for the year ended December 31, 1994 and the six
months ended June 30, 1995 of $491 million of $279 million, respectively.
The purchase price in excess of net assets acquired aggregates $3,242
million assuming Crown acquires 100% of CarnaudMetalbox Shares, and $1,688
million assuming Crown acquires 51% of the CarnaudMetalbox Shares. For
additional information as to the allocation of the purchase price for
CarnaudMetalbox Shares among the assets of CarnaudMetalbox and the
determination of the purchase price in excess of net assets acquired, refer to
Note 7 below. For purposes of determining amortization expense for the
unaudited pro forma income statement the following assumptions were made:
. Historical goodwill of approximately $1.3 billion reflected on
CarnaudMetalbox's financial statements has been amortized over a period of
40 years. This balance arose primarily from acquisitions, and the 40 year
life assigned by CarnaudMetalbox was therefore deemed appropriate. Crown
believes, based on knowledge obtained during its due diligence
investigation, that this amount is the minimum amount which ultimately will
be assigned a 40 year life.
. The remaining purchase price in excess of net assets acquired of
approximately $1.9 billion, assuming Crown acquires 100% of CarnaudMetalbox
Shares, and $400 million, assuming Crown acquires 51% of CarnaudMetalbox
Shares, has been amortized over a period of 25 years. Given the incomplete
status of the property, plant and equipment appraisals, no fair value
allocation can be made to these assets or to other identifiable intangible
assets. Since no final allocation can currently be made, based upon an
assumed range of depreciable lives of a minimum of 10 years up to a maximum
of 40 years, an average of 25 years was used to amortize this excess. Crown
believes that no material depreciable assets will be acquired from
CarnaudMetalbox with lives shorter than 10 years. Depending on the final
allocation of purchase price to intangibles other than excess purchase
price over net assets acquired and property, plant and equipment, these
average lives could vary substantially. Assuming Crown acquires 100% of the
CarnaudMetalbox Shares, if the average life of the remaining excess
purchase price increased five years, the effect would be to decrease
amortization expense by $13.0 million per year
89
<PAGE>
and increase pro forma net income by $13.0 million or $0.10 per share for the
year ended December 31, 1994 and $6.5 million or $0.05 per share for the six
months ended June 30, 1995. Assuming Crown acquires 100% of the
CarnaudMetalbox Shares, if the average life of the remaining excess purchase
price decreased five years, the effect would be to increase pro forma
amortization expense by $20.0 million per year and decrease pro forma net
income by $20.0 million or $0.16 per share for the year ended December 31,
1994 and $10.0 million or $0.08 per share for the six months ended June 30,
1995.
3. The unaudited pro forma consolidated condensed financial statements do
not reflect any cost reductions attributable to increased purchasing volumes,
knowledge of markets and economies of scale of the combined company with
respect to certain raw materials or any cost savings which may result from
reductions and elimination of redundancies in sales, general and
administrative, marketing and research and development expenses and other
integration efficiencies. In addition, these unaudited consolidated condensed
pro forma financial statements do not include any transition and restructuring
costs and expenses which are expected to be incurred in connection with
consummating the proposed CarnaudMetalbox Transaction and integrating the
operations of Crown and CarnaudMetalbox. Such costs and expenses presently
cannot be reasonably predicted by Crown, given the limited nature of Crown's
due diligence investigation to date, in a manner sufficient to quantify the
amount and timing of such charges under U.S. GAAP. Crown expects to determine
the amount and timing of these costs and expenses after the consummation of
the Offer and to make appropriate adjustments to amortization expense and
reserves for restructuring charges and other appropriate items. Such
adjustments to the purchase price in excess of net assets acquired will be
consistent with the principles set forth in APB 16, SFAS 38 and EITF 95-3. Any
such adjustments may have a material impact on these unaudited pro forma
consolidated condensed financial statements. To the extent that such costs are
incurred, the purchase price in excess of net assets acquired and the related
amortization would increase. For illustrative purposes only, if costs of this
nature totalled $250 million, assuming Crown acquires 100% of the Carnaud
Metalbox Shares, amortization expense would increase by approximately $10
million on a yearly basis and pro forma income per share would decrease by
$0.08. For every increment or reduction by $50 million of such restructuring
costs, amortization expense would increase or decrease, respectively, by
approximately $2 million on a yearly basis and pro forma income would increase
or decrease by $0.02 per share. See "THE CARNAUDMETALBOX PROPOSALS--
Recommendation of Crown's Board of Directors; Reasons for the CarnaudMetalbox
Transaction."
In addition, these unaudited consolidated condensed pro forma financial
statements do not include the effects of any proposed divestiture of plants
and operations Crown has undertaken in connection with the obtaining of the
authorization of the European Commission. Crown believes such proposed
divestiture will not be material to the combined company or its results of
operations or financial position. See "THE CARNAUDMETALBOX PROPOSALS--
Regulatory Approvals."
4. Assuming 100% of the CarnaudMetalbox Shares are acquired by Crown in the
Offer, the pro forma adjustments reflect the estimated interest expense
attributable to borrowings of $1,975 million for the year ended December 31,
1994 and for the six months ended June 30, 1995 under the Credit Facility
incurred to finance the acquisition at an estimated borrowing rate of 8.5% per
annum. Changing the estimated borrowing rate by .5% ( 1/2%) per annum would
change pro forma net income by $6.6 million or $0.05 per share and $3.3
million or $0.03 per share for the year ended December 31, 1994 and the six
months ended June 30, 1995, respectively. Assuming 51% of the CarnaudMetalbox
Shares are acquired by Crown in the Offer, the pro forma adjustments reflect
the estimated interest expense attributable to borrowings of $582 million for
the year ended December 31, 1994 and for the six months ended June 30, 1995
incurred to finance the acquisition at an estimated borrowing rate of 8.5% per
annum. Changing the estimated borrowing rate by 0.5% ( 1/2%) per annum would
change pro forma net income by $1.9 million or $0.02 per share and $1.0
million or $0.01 per share for the year ended December 31, 1994 and the six
months ended June 30, 1995, respectively. See "THE CARNAUDMETALBOX PROPOSALS--
Sources of Funds." For information regarding the determination of the
borrowings required to finance the acquisition, see Note 1 above. If 100% of
the CarnaudMetalbox Shares were tendered into the Offer, and all holders of
such shares, other than CGIP, elected to receive cash, the pro forma
adjustment for borrowings as of June 30, 1995 would have been $2.8 billion and
(a) the pro forma adjustment for interest expense would
90
<PAGE>
have been $233 million and pro forma net income would have been $66 million or
$0.53 per share for the year ended December 31, 1994 and (b) the pro forma
adjustment for interest expense would have been $117 million and pro forma net
income would have been $65 million or $0.52 per share for the six months ended
June 30, 1995. For information with respect to the Credit Facility and the
intended repayment thereof, including Crown's intentions with respect to
possible issuances of equity or equity-linked securities following the Offer,
see "THE CARNAUDMETALBOX PROPOSALS--Recommendation of Crown's Board of
Directors; Reasons for the CarnaudMetalbox Acquisition" and "--Sources of
Funds." See Note 9(b) for additional effects of varying interest rates on pro
forma net income. The foregoing borrowings were calculated based on the October
31, 1995 Noon Buying Rate of 4.891.
5. Pro forma adjustments to reflect the income tax effects are calculated at
an estimated statutory rate of 33% for those adjustments subject to tax or
which qualify for tax deductions for the periods presented. The pro forma
adjustments were prepared on the assumption that interest expense on borrowings
incurred to finance the acquisition (see Note 4) is deductible at such
statutory rate. The applicable statutory tax rate may vary depending upon the
ultimate structure of such borrowings and the number of CarnaudMetalbox Shares
acquired by Crown in the Offer. See Note 9(b) for the effect of varying tax
rates on pro forma net income. Changing the estimated tax rate by 3% would (a)
assuming 100% of the CarnaudMetalbox Shares are acquired by Crown in the Offer,
change pro forma net income by $5.0 million or $0.04 per share and $2.5 million
or $0.02 per share for the year ended December 31, 1994 and the six months
ended June 30, 1995, respectively, and (b) assuming 51% of the CarnaudMetalbox
Shares are acquired by Crown in the Offer, change pro forma net income by $1.5
million or $0.01 per share and $0.7 million or less than $0.01 per share for
the year ended December 31, 1994 and the six months ended June 30, 1995,
respectively.
6. Assuming 100% of the CarnaudMetalbox Shares are tendered into the Offer,
the pro forma adjustment reflects $22 million and $11 million of dividends for
the year ended December 31, 1994 and six months ended June 30, 1995,
respectively, payable on $494 million aggregate liquidation value of Crown
Acquisition Preferred Stock issued in the Offer, respectively, and net income
available to common shareholders would have been $110 million or $0.89 per
share for the year ended December 31, 1994 and $88 million or $0.71 per share
for the six months ended June 30, 1995. See Notes 1 and 9. If the average Crown
Common Stock Price is more than
FF 242.96, Crown can terminate the Exchange Offer Agreement. If Crown elects
not to so terminate the Exchange Offer Agreement, assuming 100% of the
CarnaudMetalbox Shares are tendered in the Offer, for each increase of FF 5
above FF 242.96 in the average Crown Common Stock price, the pro forma
adjustment for preferred stock dividends would increase by $0.5 million.
Assuming 51% of the CarnaudMetalbox Shares are tendered into the Offer, the pro
forma adjustment reflects $16 million and $8 million of dividends for the year
ended December 31, 1994 and six months ended June 30, 1995, respectively,
payable on $358 million aggregate liquidation value of Crown Acquisition
Preferred Stock issued in the Offer, respectively, and net income available to
common shareholders would have been $169 million or $1.47 per share for the
year ended December 31, 1994 and $113 million or $0.98 per share for the six
months ended June 30, 1995. If 100% of the CarnaudMetalbox Shares were tendered
into the Offer, and all holders of such shares elected to receive Units, the
pro forma adjustment for preferred stock dividends would have been $44 million
and $22 million for the year ended December 31, 1994 and six months ended June
30, 1995, respectively, payable on $987 million aggregate liquidation value of
Crown Acquisition Preferred Stock issued in the Offer, and net income available
to common shareholders would have been $200 million or $1.26 per share for the
year ended December 31, 1994 and $133 million or $0.84 per share for the six
months ended June 30, 1995.
91
<PAGE>
7. Pro forma adjustments to allocate the purchase price are as follows:
<TABLE>
<CAPTION>
51% SHARES 100% SHARES
TENDERED TENDERED
36% UNITS/ 50% UNITS/
15% CASH 50% CASH
---------- -----------
(IN $ MILLIONS)
<S> <C> <C>
Components of estimated purchase price:
Crown Common Stock............................ $1,075 $1,481
Crown Acquisition Preferred Stock............. 358 494
Cash portion of consideration................. 582 1,975
Transaction costs incurred.................... 50 50
Value of Crown stock options issued to
CarnaudMetalbox employees.................... 20 20
------ ------
Total purchase price: $2,085 $4,020
====== ======
Allocation of purchase price:
Net assets acquired at historical cost(1)..... $ 397 $ 778
Excess of purchase price over net assets
acquired..................................... 1,688 3,242
------ ------
$2,085 $4,020
====== ======
</TABLE>
- --------
(1) The historical cost of CarnaudMetalbox's net assets is calculated as set
forth below (all French franc amounts are translated into U.S. dollars at
the June 30, 1995 Noon Buying Rate of 4.853).
(2) As set forth above, the purchase price allocation has been determined using
U.S. dollars. Assuming 100% of the CarnaudMetalbox shares are acquired by
Crown in the Offer, the effect of financing the cash portion of the
consideration in French francs would reduce pro forma interest and
amortization expense by $26 million or $0.21 per share for the year ended
December 31, 1994 and by $2 million or $0.02 per share for the six months
ended June 30, 1995.
<TABLE>
<CAPTION>
FF $US
------- -------
(IN MILLIONS)
<S> <C> <C>
U.S. GAAP shareholders equity.................................. 10,075 2,076
Goodwill....................................................... (4,241) (874)
U.S. GAAP adjustments to goodwill.............................. 161 33
Intangible assets.............................................. (4,812) (992)
U.S. GAAP adjustments to intangible assets..................... 2,593 535
------- ------
Historical cost of net assets.................................. 3,776 778
======= ======
</TABLE>
There may be additional adjustments to reflect the fair value of assets
acquired or for costs to be incurred subsequent to the acquisition to reflect
the combination of the two companies. See Notes 2 and 3 above. In addition, as
described above, the allocations and adjustments set forth herein are not final
and are subject to change. Fluctuations in the Exchange Ratio and the value of
Crown Common Stock and Crown Acquisition Preferred Stock as of the consummation
of the Offer will affect the actual amount of the excess of purchase price over
net assets acquired and the related amortization expense of the combined
company. Solely for purposes of calculating the estimated purchase price above,
each share of Crown Common Stock and Crown Acquisition Preferred Stock is
assumed to have a value of FF 211.27, or $43.20, assuming an exchange rate
equal to FF 4.891/$1.00 (the October 31, 1995 Noon Buying Rate). If the Noon
Buying Rate at the time of consummation of the Offer is less than the October
31, 1995 Noon Buying Rate, the total purchase price and the amount allocated to
goodwill and other identified intangible assets will increase.
8. The unaudited pro forma consolidated condensed financial statements
presented above are based on an Exchange Ratio of 1.065 assuming an Average
Crown Common Stock Price of FF 211.27. Under the Exchange Offer Agreement, the
Exchange Ratio will be adjusted based on the Average Crown Common Stock Price.
The Average Crown Common Stock Price is based on the 20 trading day average of
the French Franc Crown
92
<PAGE>
Common Stock Price. The French Franc Crown Common Stock price for any given
day is equal to the product of the Market Closing Price per share of Crown
Common Stock, in U.S. dollars, and the Noon Buying Rate for such day. However,
the adjustment of the Exchange Ratio is subject to limitations which generally
prevent the Exchange Ratio from exceeding 1.183 (equivalent to an Average
Crown Common Stock Price of FF 190.14) or being less than 0.968 (equivalent to
an Average Crown Common Stock Price of FF 232.39). Under the terms of the
Exchange Offer Agreement, as the Average Crown Common Stock Price changes
during the 20 trading day period prior to the Measurement Date between FF
190.14 and FF 232.39 per share, the value (on the Closing Date) of the
consideration paid to holders of CarnaudMetalbox Shares would remain constant
at FF 225 per CarnaudMetalbox Share (assuming that the Average Crown Common
Stock Price equals the French Franc Crown Common Stock Price on the date of
settlement of the Offer), but the number of Units to be issued pursuant to the
Offer would change. If the Average Crown Common Stock Price falls during such
fixed period below FF 190.14 per share, the number of Units per
CarnaudMetalbox Share to be issued would remain constant, but the value of the
consideration per CarnaudMetalbox Share paid to holders of CarnaudMetalbox
Shares would decline. If the Average Crown Common Stock Price rises during
such fixed period above FF 232.39 per CarnaudMetalbox Share, the number of
Units per CarnaudMetalbox Share to be issued would remain constant, but the
value of the consideration per CarnaudMetalbox Share paid to holders of
CarnaudMetalbox would increase. Notwithstanding the foregoing, under the
Exchange Offer Agreement, if the Average Crown Common Stock Price is less than
FF 179.58, CGIP can terminate the Exchange Offer Agreement unless Crown amends
the Exchange Ratio to provide that the implied value of Units exchangeable for
one CarnaudMetalbox Share is not less than FF 212.50. If Crown were to so
amend the Exchange Ratio, the amended Exchange Ratio would exceed 1.183. The
French Franc Crown Common Stock Price on November 10, 1995 was FF 194.88.
Assuming the Measurement Date were November 13, 1995, the Average Crown Common
Stock Price would have been FF 174.03, and the Exchange Ratio would have been
1.221 (assuming Crown adjusted the Exchange Ratio so that the implied value of
one CarnaudMetalbox share is not less than FF 212.50). If the Average Crown
Common Stock Price is more than FF 242.96, Crown can terminate the Exchange
Offer Agreement. See "SUMMARY--The Offer--Exchange Ratio and Market Value of
Crown Common Stock;" "THE EXCHANGE OFFER AGREEMENT--The Exchange Offer."
9. (a) The following tables reflect the impact of different Exchange Ratios
(as a result of adjustments to the Exchange Ratio based on the Average Crown
Common Stock Price) on certain aspects of the transaction, including the pro
forma per share results.
<TABLE>
<CAPTION>
51% SHARES TENDERED
36% UNITS/15% CASH
----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Average Crown
Common Stock
Price (in
French
francs)(1)..... 169.02 179.58(/2/) 190.14 211.27 232.39 242.96(/3/) 253.52
Exchange Ratio.. 1.257 1.183 1.183 1.065 0.968 0.968 0.968
Number of Shares
of Crown Common
Stock Issued in
Offer
(thousands).... 29,347 27,622 27,622 24,859 22,600 22,600 22,600
Number of Shares
of Crown
Acquisition
Preferred Stock
Issued in Offer
(thousands).... 9,782 9,207 9,207 8,286 7,533 7,533 7,533
PRO FORMA CON-
SOLIDATED NET
INCOME PER
SHARE OF CROWN
COMMON STOCK
For the six
months ended
June 30, 1995.. $0.95 $0.97 $0.95 $0.98 $0.99 $0.97 $0.96
For the year
ended December
31, 1994....... $1.43 $1.45 $1.44 $1.47 $1.51 $1.50 $1.49
<CAPTION>
100% SHARES TENDERED
50% UNITS/50% CASH
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Average Crown
Common Stock
Price (in
French
francs)(1)..... 169.02 179.58(/4/) 190.14 211.27 232.39 242.96(/5/) 253.52
Exchange Ratio.. 1.257 1.183 1.183 1.065 0.968 0.968 0.968
Number of Shares
of Crown Common
Stock Issued in
Offer
(thousands).... 40,471 38,092 38,092 34,283 31,167 31,167 31,167
Number of Shares
of Crown
Acquisition
Preferred Stock
Issued in Offer
(thousands).... 13,490 12,697 12,697 11,428 10,389 10,389 10,389
PRO FORMA CON-
SOLIDATED NET
INCOME PER
SHARE OF CROWN
COMMON STOCK
For the six
months ended
June 30, 1995.. $0.69 $0.70 $0.68 $0.71(/6/) $0.71 $0.69 $0.68
For the year
ended December
31, 1994....... $0.86 $0.88 $0.87 $0.89(/6/) $0.92 $0.90 $0.89
</TABLE>
- -------
(1) The Average Crown Common Stock Price used to adjust the Exchange Ratio
will vary in response to fluctuations in the Market Closing Price per
share of Crown Common Stock and the Noon Buying Rate. See Note 1 above.
However, under the Exchange Offer Agreement, there are certain limitations
affecting the minimum and maximum Exchange Ratio. See Note 8 above.
(2) If the Average Crown Common Stock Price is less than FF 179.58, CGIP can
terminate the Exchange Offer Agreement unless Crown has increased the
Exchange Ratio as set forth in Note 8 above. In such event, assuming 51%
of the CarnaudMetalbox Shares are tendered in the Offer, for each decrease
of FF 5 below FF 179.58 in the Average Crown Common Stock Price, the
number of shares of Crown Common Stock and Crown Acquisition Preferred
Stock issued in the Offer will increase by 791,000 and 264,000,
respectively, and pro forma consolidated
93
<PAGE>
net income per share of Crown Common Stock would decrease by $0.01 for the
six months ended June 30, 1995 and $0.01 for the year ended December 31,
1994.
(3) If the Average Crown Common Stock Price is more than FF 242.96, Crown can
terminate the Exchange Offer Agreement as set forth in Note 8 above. If
Crown elects not to so terminate the Exchange Offer Agreement, assuming
51% of the CarnaudMetalbox Shares are tendered in the Offer, for each
increase of FF 5 above FF 242.96 in the Average Crown Common Stock Price,
pro forma consolidated net income per share of Crown Common Stock would
decrease by $0.01 for the six months ended June 30, 1995 and $0.01 for the
year ended December 31, 1994.
(4) If the Average Crown Common Stock Price is less than FF 179.58, CGIP can
terminate the Exchange Offer Agreement unless Crown has increased the
Exchange Ratio as set forth in Note 8 above. In such event, assuming 100%
of the CarnaudMetalbox Shares are tendered in the Offer, for each decrease
of FF 5 below FF 179.58 in the Average Crown Common Stock Price, the
number of shares of Crown Common Stock and Crown Acquisition Preferred
Stock issued in the Offer will increase by 1,091,000 and 364,000,
respectively, and pro forma consolidated net income per share of Crown
Common Stock would decrease by $0.01 for the six months ended June 30,
1995 and $0.01 for the year ended December 31, 1994.
(5) If the Average Crown Common Stock Price is more than FF 242.96, Crown can
terminate the Exchange Offer Agreement as set forth in Note 8 above. If
Crown elects not to so terminate the Exchange Offer Agreement, assuming
100% of the CarnaudMetalbox Shares are tendered in the Offer, for each
increase of FF 5 above FF 242.96 in the Average Crown Common Stock Price,
pro forma consolidated net income per share of Crown Common Stock would
decrease by $0.01 for the six months ended June 30, 1995 and $.01, for the
year ended December 31, 1994.
(6) Although Crown has no current intention of changing the Offer
Consideration (see "THE CARNAUDMETALBOX PROPOSALS--Description of the
CarnaudMetalbox Proposals--Possible Modifications to the Offer
Consideration"), for each FF 5 by which the Cash Election Price is
increased (and assuming an associated increase in the Exchange Ratio of
0.023, and that Crown acquires 100% of the CarnaudMetalbox Shares),
borrowings would increase by $44 million and pro forma net income per
share of Crown Common Stock would decrease by $0.06 and $0.03 for the year
ended December 31, 1994 and the six months ended June 30, 1995,
respectively.
(b) The following tables reflect the compounded impact of different Exchange
Ratios and changes in assumed interest rates, tax rates and the amortization
period for the excess of the purchase price over net assets acquired. As
described in Note 8 above, changes in the price of Crown Common Stock, in U.S.
dollars, and the Noon Buying Rate affect the Exchange Ratio. Variations in
such amounts are reflected in the Exchange Ratios used to calculate the
information presented below:
With respect to the highest pro forma net income per share of Crown Common
Stock set forth in the table in (a) above, the effect of decreasing the
interest rate to 8%, increasing the tax rate to 36% and increasing the
amortization period to 30 years for the excess of the purchase price over net
assets acquired is as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1994
---------------------------- ----------------------
51% SHARES 100% SHARES 51% SHARES 100% SHARES
TENDERED TENDERED TENDERED TENDERED
36% UNITS/ 50% UNITS/ 36% UNITS/ 50% UNITS/
15% CASH 50% CASH 15% CASH 50% CASH
------------ ------------ ---------- -----------
<S> <C> <C> <C> <C>
Net income per share of
Crown Common Stock...... $ 0.99 $ 0.71 $1.51 $0.92
Effect of decreasing the
interest rate by 1/2 of
1%...................... .01 .03 .02 .05
Effect of increasing the
tax rate by 3 percentage
points.................. -- .02 .01 .04
Effect of increasing the
amortization period by 5
years for the excess of
the purchase price over
net assets acquired..... .01 .05 .03 .10
------------ ------------ ----- -----
Revised net income per
share of Crown Common
Stock................... $ 1.01 $ 0.81 $1.57 $1.11
============ ============ ===== =====
</TABLE>
94
<PAGE>
With respect to the lowest pro forma net income per share of Crown Common
Stock set forth in the table in (a) above, the effect of increasing the
interest rate to 9%, decreasing the tax rate to 30% and reducing the
amortization period to 20 years for the excess of the purchase price over net
assets acquired is as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1994
----------------------------- ----------------------
51% SHARES 100% SHARES 51% SHARES 100% SHARES
TENDERED TENDERED TENDERED TENDERED
36% UNITS/ 50% UNITS/ 36% UNITS/ 50% UNITS/
15% CASH 50% CASH 15% CASH 50% CASH
------------ ------------ ---------- -----------
<S> <C> <C> <C> <C>
Net income per share of
Crown Common Stock..... $ 0.95 $ 0.68 $1.43 $0.86
Effect of increasing the
interest rate by 1/2 of
1%..................... (.01) (.03) (.02) (.05)
Effect of decreasing the
tax rate by 3 percent-
age points............. -- (.02) (.01) (.04)
Effect of reducing the
amortization period by
5 years for the excess
of the purchase price
over net assets ac-
quired................. (.02) (.08) (.04) (.16)
------------ ------------ ----- -----
Revised net income per
share of Crown Common
Stock.................. $ 0.92 $ 0.55 $1.36 $0.61
============ ============ ===== =====
</TABLE>
10. The pro forma adjustments reflected on the pro forma consolidated
condensed balance sheet at June 30, 1995 were prepared on the basis of the
following principal assumptions:
<TABLE>
<CAPTION>
ASSUMING ASSUMING
51% TENDERED 100% TENDERED
SHARES SHARES
------------ -------------
<S> <C> <C>
(a)Cash and cash equivalents:
Interest for period.............................. (24) (83)
Preferred dividends.............................. (8) (11)
Cumulative translation adjustment................ 2
------ ------
(32) (92)
====== ======
(b)Excess of purchase price over net assets
acquired, net of amortization:
Total acquisition goodwill....................... 1,688 3,242
Eliminate CarnaudMetalbox goodwill............... (1,292) (1,292)
Amortization for the period...................... (4) (35)
------ ------
392 1,915
====== ======
(c)Other current liabilities:
Taxes for period................................. (8) (27)
Transaction Fees................................. 50 50
------ ------
42 23
====== ======
(d)Common stock:
Total value of common stock issued............... 1,074 1,481
Excess over par.................................. (950) (1,310)
------ ------
Par value of common stock issued................. 124 171
Eliminate common stock of CarnaudMetalbox........ (177) (177)
------ ------
(53) (6)
====== ======
</TABLE>
95
<PAGE>
<TABLE>
<CAPTION>
ASSUMING ASSUMING
51% TENDERED 100% TENDERED
SHARES SHARES
------------ -------------
<S> <C> <C>
(e)Retained earnings:
Eliminate retained earnings of CarnaudMetalbox.... (959) (959)
Net income for six months ended June 30, 1995..... (77) (102)
------ ------
(1,036) (1,061)
====== ======
(f)Other shareholders' equity:
Excess over par of common stock issued............ 950 1,310
Eliminate CarnaudMetalbox other shareholders'
equity........................................... (1,477) (1,477)
Value of Common stock options issued to
CarnaudMetalbox employees........................ 20 20
------ ------
(507) (147)
====== ======
</TABLE>
11. The pro forma adjustments reflected on the pro forma consolidated
condensed statement of operations for the year ended December 31, 1994 and the
six month period ended June 30, 1995 were prepared on the basis of the
following principal assumptions:
<TABLE>
<CAPTION>
ASSUMING ASSUMING
51% TENDERED 100% TENDERED
SHARES SHARES
--------------------- ---------------------
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1994 1995 1994 1995
------------ -------- ------------ --------
<S> <C> <C> <C> <C>
Depreciation and Amortization:
Amortization of Crown purchase
price in excess of net assets
acquired......................... 49 24 111 55
CMB historical amortization....... (38) (20) (38) (20)
--- --- --- ---
11 4 73 35
=== === === ===
</TABLE>
12. Crown Common Stock equivalents do not reduce primary earnings per share
by more than 3% and have been excluded from the earnings per share calculation.
Crown has determined that the Crown Acquisition Preferred Stock is not a Crown
Common Stock equivalent and is not assumed to be converted for purposes of
computing net income per common share.
96
<PAGE>
THE OFFER
GENERAL
Crown will offer, upon the terms and subject to the conditions set forth
herein, to exchange, at the election of the holder, either (1) a number of
Units equal to the Exchange Ratio (determined as set forth below), each Unit
consisting of (x) .75 shares of Crown Common Stock and (y) .25 shares of Crown
Acquisition Preferred Stock, with cash (in French francs) being paid in lieu
of any fractional share interest, or (2) the Cash Election Price of FF 225 in
cash for each CarnaudMetalbox Share validly tendered in the Offer. See "--
Exchange and Payment of Offer Consideration." The "Expiration Date" for the
Offer will be 11:59 p.m., Paris time, 10:59 p.m., London time, and 5:59 p.m.,
New York City time, on the date set forth in the avis d'ouverture, the opening
notice for the Offer published by the SBF, or in any subsequent SBF notice, as
the expiration date of the Offer.
The Offer will extend to any CarnaudMetalbox Shares which are
unconditionally allotted or issued and fully paid while the Offer remains open
for acceptance pursuant to the exercise of options granted under the
CarnaudMetalbox Share option plans as well as to any other CarnaudMetalbox
Shares which are issued while the Offer remains open for acceptance.
Crown currently anticipates that the Offer will not commence prior to, among
other things, approval by Crown's shareholders of the CarnaudMetalbox
Proposals at the Special Meeting and approval by the necessary French
regulatory authorities of the terms of the Offer; provided, however, that
Crown reserves the right to commence the Offer prior to the Special Meeting.
See "SUMMARY--The Offer--Exchange Ratio and Market Value of Crown Common
Stock." Crown anticipates that this Proxy Statement/Prospectus will be
supplemented or amended (which may occur via incorporation by reference into
the Registration Statement) as soon as practicable following receipt of such
necessary approvals and fulfillment (or waiver) of the other conditions to
Crown's obligations to commence the Offer to disclose the commencement thereof
and the tender period for the Offer, as well as the actual Exchange Ratio, the
liquidation preference for Crown Acquisition Preferred Stock and certain other
information. Such amendment may be effected through Crown's filing of a
Current Report on Form 8-K or other Exchange Act report and issuance of a
press release. Notwithstanding the foregoing, the failure of any person to
receive a copy of this Proxy Statement/Prospectus (or such supplement or
amendment) or any other documentation relating to the Offer shall not
invalidate any aspect of the Offer or any acceptance thereof. All
communications, notices, certificates, documents of title and remittances to
be delivered by or sent to or from holders of CarnaudMetalbox Shares (or their
designated agents) will be delivered by or sent to or from such holders (or
their designated agents) at their own risk.
The Exchange Ratio has been initially set at 1.065 but is subject to
adjustment, subject to certain exceptions, based on the Average Market Closing
Price (expressed in French francs) of Crown Common Stock. For a description of
the adjustments to the Exchange Ratio and the limitations and exceptions
thereto called for under the Exchange Offer Agreement, see "SUMMARY--The
Offer--Exchange Ratio and Market Value of Crown Common Stock."
Under the Exchange Offer Agreement, the liquidation preference of Crown
Acquisition Preferred Stock will be an amount equal to the sum of (1) the
average Market Closing Price of Crown Common Stock over the 20 trading day
period prior to the Measurement Date, determined without regard to the
limitations on the minimum and maximum Exchange Ratio (see "SUMMARY--The
Offer--Exchange Ratio and Market Value of Crown Common Stock"), and (2) all
accrued and unpaid dividends on Crown Acquisition Preferred Stock. See
"DESCRIPTION OF CROWN STOCK--Crown Acquisition Preferred Stock."
If the Offer is consummated with Crown acquiring more than 95% of the
aggregate voting power of CarnaudMetalbox, Crown may, after consummation of
the Offer, decide to undertake an Offre publique de retrait (an "OPR") which
may be followed by a Retrait obligatoire (a "Compulsory Acquisition") under
regulations of the CBV, pursuant to which each outstanding CarnaudMetalbox
Share which is not tendered in acceptance of
97
<PAGE>
the OPR (except for CarnaudMetalbox Shares held by Crown or any subsidiary of
Crown other than in a fiduciary capacity) would be transferred automatically
to Crown in exchange for the right to receive the consideration offered in
such Compulsory Acquisition.
Subject to the applicable securities and takeover laws and the regulations
of the SEC, the COB, the CBV and any other administrative, governmental or
regulatory authority or organization with jurisdiction over the subject matter
hereof and subject to the provisions of the Exchange Offer Agreement, Crown
expressly reserves the right, in its sole discretion, at any time and from
time to time, to (1) extend the period of time during which the Offer is open
and thereby delay the payment for, or exchange of, any CarnaudMetalbox Shares
as to which valid tenders or acceptances have been made, (2) subject to the
terms of the Exchange Offer Agreement, amend the Offer (including the Exchange
Ratio and the Minimum Condition) in any respect by surenchere (i.e., an
increase in the Offer) or otherwise or (3) terminate the Offer. Subject to the
provisions of the Exchange Offer Agreement, if by the expiration or closing of
the Offer any or all of the conditions to the Offer have not been satisfied,
Crown reserves the right (but shall not be obligated) (1) to terminate the
Offer and (2) to commence another offer or offers. Crown shall have no
obligation to pay interest on the Offer Consideration for tendered
CarnaudMetalbox Shares. The CarnaudMetalbox Shares acquired in the Offer will
be acquired fully paid and free and clear from all liens, charges, equitable
interests, encumbrances, rights of pre-emption and any other third party
rights of any nature whatsoever and together with all rights attaching thereto
on or after the date the SBF exchanges the CarnaudMetalbox Shares tendered
into the Offer for the Offer Consideration, including the right to receive and
retain all dividends and other distributions declared, made or paid on such
date or thereafter. Shareholders of CarnaudMetalbox should note that if the
Offer is consummated, shares which have been tendered into the Offer will not
be entitled to receive all or any portion of any annual or other dividend of
CarnaudMetalbox other than the FF 4.40 per share dividend paid following the
CarnaudMetalbox general meeting of shareholders on June 2, 1995. For
information on possible changes in CarnaudMetalbox's dividend policy following
the Offer, see "--Purpose of the Offer." For information on possible changes
in Crown's dividend policy following the Offer, see "--Ownership of Crown
Stock after the Offer." In the event the Offer is not consummated,
CarnaudMetalbox Shares tendered in connection with the Offer will be returned
to the holder without interest or other compensation. See "--Exchange and
Payment of Offer Consideration."
It is Crown's current intention that holders of CarnaudMetalbox Shares who
accept the Offer will not be obliged to pay certain brokerage fees and
commissions, charges of Societe Generale or CS France (the co-presenting banks
for the Offer under French law), or stock exchange taxes in respect of the
purchase or exchange of CarnaudMetalbox Shares pursuant to the Offer. Crown
will pay all charges and expenses incurred in connection with the Offer of CS
First Boston, Societe Generale and CS France, as well as CS First Boston
Limited and Societe Generale Strauss Turnbull Securities Limited, affiliates
of CS First Boston and Societe Generale, respectively, which will act as the
financial advisors with respect to the Offer in the United Kingdom. See "--
Fees and Expenses."
Subject to the terms and conditions of the Offer, Crown will accept for
purchase or exchange any CarnaudMetalbox Shares validly tendered in the Offer;
provided that Crown reserves the right to designate a wholly owned subsidiary
of Crown to accept for purchase or exchange CarnaudMetalbox Shares validly
tendered in the Offer. Following the Offer, Crown currently intends to
transfer any CarnaudMetalbox Shares acquired by Crown pursuant to the Offer to
SNC, a societe en nom collectif newly formed under the laws of the Republic of
France by Crown and a wholly owned subsidiary of Crown, and to cause SNC, in
connection with the consummation of the Offer, to incur indebtedness or to
assume certain indebtedness incurred by Crown. See "--Purpose of the Offer."
For information with respect to Crown, see "CROWN CORK & SEAL COMPANY, INC."
Crown has made application to the SEC to bid for or purchase CarnaudMetalbox
Shares prior to and after the pendency of the Offer, subject to French law and
regulation, in accordance with exemptions obtained from the SEC from the
application of Rules 10b-6, 10b-7 and 10b-13 under the Exchange Act. In
addition, Societe Generale and its affiliates engage in, among other things,
investment advisory services, including managing on a discretionary basis the
portfolios of customers, and trading activities with respect to securities and
derivative
98
<PAGE>
instruments in the cash market and options market both for their own account
and for accounts managed for others, including in respect of CarnaudMetalbox
Shares and options for CarnaudMetalbox Shares. Delahaye Generale Options, a
subsidiary of Societe Generale, is one of 21 general market makers on the
Marche des Options Negociables de Paris, the Paris options market ("MONEP"),
where options on CarnaudMetalbox Shares are traded, and Societe Generale
Equities International, also a subsidiary of Societe Generale, is a market
maker on SEAQ International with respect to CarnaudMetalbox Shares. Societe
Generale has made application to the SEC on behalf of itself and its affiliates
to continue to engage in such activities, subject to French and other
applicable law and regulation, prior to, after and during the pendency of the
Offer in accordance with exemptions obtained from the SEC from the application
of Rules 10b-6, 10b-7 and 10b-13 under the Exchange Act.
The activities referred to above may result in the market prices for
CarnaudMetalbox Shares (and, possibly, Crown Common Stock) being different from
those that might otherwise have prevailed in the open market if Rules 10b-6,
10b-7 and 10b-13 had applied.
To facilitate the making of the Offer in the United States, the SEC has
granted certain relief to Crown with respect to certain regulations under the
Exchange Act pertaining to tender and exchange offers in the United States,
particularly with respect to the manner of announcements of amendments and
extensions of the Offer and the timing of the purchase or exchange or return of
tendered securities as described herein.
For information as to certain regulatory approvals affecting the Offer, the
sources of funds for the Offer and the accounting treatment of the acquisition
of CarnaudMetalbox, see "THE CARNAUDMETALBOX PROPOSALS--Regulatory Approvals,"
"--Sources of Funds" and "--Accounting Treatment," respectively.
CarnaudMetalbox shareholders may not accept the Offer prior to the date of
its commencement.
CONDITIONS TO THE OFFER
Conditions to Crown's Obligation to Commence the Offer. The obligation of
Crown to commence the Offer is subject to certain conditions, including
obtaining requisite regulatory approvals, the approval by Crown shareholders of
the CarnaudMetalbox Proposals and the acceptance of the shares of Crown Common
Stock and Crown Acquisition Preferred Stock to be issued in the Offer, and the
shares of Crown Common Stock issued upon conversion of Crown Acquisition
Preferred Stock, for listing on the NYSE, subject to official notice of
issuance.
Conditions to Crown's Obligation to Close the Offer. The obligation of Crown
to exchange the Offer Consideration for CarnaudMetalbox Shares pursuant to the
Offer is subject to satisfaction of the Minimum Condition. See "SUMMARY--The
CarnaudMetalbox Proposals--Conditions to Crown's Obligation to Commence and
Close the Offer." On October 31, 1995, 86,051,191 CarnaudMetalbox Shares were
outstanding and of those CarnaudMetalbox Shares, 30,877,155 (including
25,689,032 CarnaudMetalbox Shares beneficially owned, directly or indirectly,
by CGIP) had double voting rights. See "THE EXCHANGE OFFER AGREEMENT--
Conditions; Waiver." In addition, if Crown commences the Offer prior to the
Special Meeting (which Crown does not currently expect to be the case), the
Offer will be conditioned on the approval by Crown's shareholders of the
CarnaudMetalbox Proposals. See "SUMMARY--The Offer--Exchange Ratio and Market
Value of Crown Common Stock."
The foregoing conditions are for the sole benefit of Crown and may be
asserted by Crown regardless of the circumstances giving rise to any such
condition and may be waived by Crown in whole or in part, subject to the terms
of the Exchange Offer Agreement. Crown's failure at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any other right, and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time.
CGIP's obligation to tender into the Offer is subject to certain conditions.
See "THE EXCHANGE OFFER AGREEMENT--Conditions; Waiver."
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OWNERSHIP OF CROWN STOCK AFTER THE OFFER
Shareholders Agreement; Strategic Committee. For information with respect to
the proposed Shareholders Agreement between Crown and CGIP and other related
matters, see "THE CARNAUDMETALBOX PROPOSALS--Description of the
CarnaudMetalbox Proposals" and, for a description of the Shareholders
Agreement, see "THE SHAREHOLDERS AGREEMENT."
Dividends. Historically, Crown has not paid dividends on Crown Common Stock.
As contemplated by the Shareholders Agreement, it is the current intention of
Crown's Board of Directors following the consummation of the Offer to declare
per share quarterly dividends on Crown Common Stock beginning with the
calendar quarter in which the Closing Date occurs (which dividend will be paid
to holders of record of Crown Common Stock as of a date after the Closing
Date), at a rate of $0.20 per quarter or $0.80 per year for calendar year
1995, and $0.25 per quarter or $1.00 per year for calendar year 1996. Crown
currently anticipates that the Closing Date will occur in the first quarter of
1996 if the Offer is commenced and consummated (in which case the 1995
dividends described above would not be paid). Crown believes the decision to
institute a dividend on Crown Common Stock if the Offer is consummated is
consistent with the financial strength of the combined company. However, no
such dividends have been declared, and any future declaration of dividends
(including those contemplated in the last sentence of this paragraph) will be
determined by Crown's Board in light of earnings, cash flow, results of
operations and the financial position of Crown, the nature of Crown's
shareholder base, whether or not the Shareholders Agreement is in effect, and
such other factors and business conditions as Crown's Board deems relevant
from time to time. There can be no assurances with respect to the payment of
dividends by Crown after consummation of the proposed transaction. Also, as
contemplated by the Shareholders Agreement, it is the current intention of
Crown's Board if the Offer is consummated to increase the amount of the
dividends paid on Crown Common Stock following the mandatory conversion of
Crown Acquisition Preferred Stock such that the amount of dividends paid
during the four full quarters following such mandatory conversion to a former
shareholder of CarnaudMetalbox who elected to receive Units in the Offer will
be not less than the amount of dividends paid to such shareholder during the
four full fiscal quarters following consummation of the Offer on the Crown
Stock received in the Offer (assuming for these purposes that such shareholder
has neither purchased nor disposed of any securities of Crown after the Offer
is consummated). See "THE SHAREHOLDERS AGREEMENT--Dividend Policy."
Reports. If the Offer is consummated, holders of CarnaudMetalbox Shares who
elect to receive shares of Crown Common Stock and Crown Acquisition Preferred
Stock in the Offer will receive annual reports, proxy statements, and other
information pertaining to Crown required to be disseminated by Crown to its
shareholders pursuant to the Exchange Act. In respect of holders whose shares
are held through Societe interprofessionelle pour la compensation des valeurs
mobilieres, the central depository and transfer agent for listed securities in
France ("SICOVAM"), it is anticipated that all documentation will be sent by
Crown to SICOVAM and a designated financial institution in France, and such
financial institution will make available the documentation to such holders.
For additional information regarding trading in Crown Stock after the Offer
and the effect of holding shares of Crown Stock through SICOVAM, see
"COMPARISON OF SHAREHOLDER RIGHTS--Form, Holding and Transfer of Shares." If
any of the Crown Stock is listed on the Paris Stock Exchange following the
Offer, Crown anticipates that it will also file with the COB a French
translation of its annual reports (or excerpts thereof) in accordance with
applicable listing requirements.
Additional Transactions. Depending upon the Exchange Ratio and the
proportion of holders of CarnaudMetalbox Shares electing to receive cash
versus Units of Crown Stock in the Offer, following consummation of the Offer,
Crown may issue additional equity or equity-linked securities, engage in share
repurchases, or engage in certain other transactions in order to maintain an
acceptable degree of debt and equity capitalization and preserve or achieve
acceptable financial ratios and ratings on its debt securities. See "THE
CARNAUDMETALBOX PROPOSALS--Recommendation of Crown's Board of Directors;
Reasons for the CarnaudMetalbox Transaction" and "--Sources of Funds." For
information as to certain agreements Crown proposes to make in the
Shareholders Agreement with respect to its debt ratings, see "THE SHAREHOLDERS
AGREEMENT--Debt Rating."
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Rights Plan. On July 28, 1995, Crown announced that it had adopted a common
stock purchase rights plan. For a description of the Rights Plan, see
"DESCRIPTION OF CROWN STOCK--Rights Plan."
PURPOSE OF THE OFFER
The purpose of the Offer is for Crown to acquire control of CarnaudMetalbox.
The Offer, as the first step in such acquisition, is intended to facilitate
the acquisition of all CarnaudMetalbox Shares. If the Offer is consummated, to
the extent permitted by CarnaudMetalbox's statuts, or charter, and other
organizational documents and applicable law, Crown intends to seek to obtain
maximum representation on the supervisory board and otherwise to exercise
control over the business and affairs of CarnaudMetalbox. Satisfaction of the
Minimum Condition will assure that after consummation of the Offer, Crown
will, among other things, have the ability under French law to elect a
majority of the members of the supervisory board of CarnaudMetalbox. For
information in respect of certain agreements of CGIP in the Exchange Offer
Agreement to facilitate, if the Offer is consummated, Crown's representation
on the supervisory board of CarnaudMetalbox, see "THE EXCHANGE OFFER
AGREEMENT--Certain Covenants."
In the event the Offer is consummated, Crown will reevaluate and may change
the dividend policy of CarnaudMetalbox depending on business and market
conditions, the capital structure, earnings and cash flow of CarnaudMetalbox,
the extent of any minority shareholdings in CarnaudMetalbox and other factors.
There can be no assurance that CarnaudMetalbox will continue to pay dividends
on CarnaudMetalbox Shares following consummation of the Offer.
Depending on the number of CarnaudMetalbox Shares acquired pursuant to the
Offer and other factors such as market conditions and applicable laws and
regulations (see "THE CARNAUDMETALBOX PROPOSALS--Regulatory Approvals"),
following consummation of the Offer, Crown may increase its percentage
ownership of CarnaudMetalbox Shares, including to the extent necessary to
attain the requisite ownership of CarnaudMetalbox Shares to effect certain
shareholder actions under French law, to consolidate CarnaudMetalbox's tax
results with the consolidated tax group of SNC for purposes of French tax law,
or possibly to engage in an OPR to delist CarnaudMetalbox Shares from the
Paris Stock Exchange or an OPR followed by a Compulsory Acquisition to attain
100% ownership of the equity interests in CarnaudMetalbox. Under French law,
ownership of 66 2/3% of the aggregate voting power of the CarnaudMetalbox
Shares by Crown would assure that Crown could amend the charter of
CarnaudMetalbox or approve of certain other extraordinary transactions or
events regarding CarnaudMetalbox (see "COMPARISON OF SHAREHOLDER RIGHTS--
Amendment of Charter Documents"). Under French law, ownership of 95% of the
aggregate voting power, rights to dividends and rights to assets upon
liquidation in CarnaudMetalbox by a French subsidiary of Crown (such as SNC)
would be required to consolidate CarnaudMetalbox's tax results with those of
the French subsidiary. For information on Crown's intention to transfer
CarnaudMetalbox Shares acquired in the Offer to SNC, see "--General." Under
CBV regulations, ownership of 95% of the aggregate voting power of
CarnaudMetalbox Shares will be required for a majority shareholder such as
Crown to engage in an OPR (including an OPR followed by a Compulsory
Acquisition). If Crown determines to increase its percentage ownership of
CarnaudMetalbox Shares after the Offer is consummated, Crown may, subject to
applicable law, acquire such additional CarnaudMetalbox Shares through capital
contributions and equity issuances, open market purchases, privately
negotiated transactions, share repurchases, a tender or exchange offer or
otherwise, upon such terms and at such prices as Crown may determine, which
may be more or less than the price to be paid pursuant to the Offer and which
could be for cash or other consideration, or both. The timing and nature of
such transactions will depend on market conditions, legal and regulatory
requirements and other factors.
In the event Crown elects to proceed with an OPR followed by a Compulsory
Acquisition, Crown will appoint an independent expert with the approval of the
CBV and the COB to issue an opinion regarding the valuation methods used by
the bank presenting the OPR in accordance with French law. The price to be
offered in such transaction, which may be higher or lower than the value of
the Offer Consideration, must be determined in accordance with customary
valuation criteria in accordance with CBV regulations and will be subject to
the approval of the CBV. When such expert has been appointed and has issued
its opinion, Crown will file the necessary documents with the CBV and COB to
initiate the Compulsory Acquisition. If Crown were to proceed with an OPR
followed by a Compulsory Acquisition, CarnaudMetalbox Shares which were not
tendered in
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acceptance of the OPR would, upon consummation of the OPR, be transferred
automatically to Crown, and the former holders of such CarnaudMetalbox Shares
would retain only the right to the offer consideration under the OPR (or, in
certain circumstances, alternative consideration offered in the Compulsory
Acquisition) for such CarnaudMetalbox Shares. No assurance can be given that a
Compulsory Acquisition will be consummated or, if consummated, as to the
timing or price thereof. The decision by the CBV to approve a Compulsory
Acquisition with respect to the CarnaudMetalbox Shares would result in the
delisting of the CarnaudMetalbox Shares from the Paris Stock Exchange.
Delisting of CarnaudMetalbox Shares from the Paris Stock Exchange would also
result in the cessation of quotations of CarnaudMetalbox Shares on SEAQ
International. In addition, as a result of Crown's becoming a substantial
shareholder in CarnaudMetalbox, it is possible that the number of
CarnaudMetalbox Shares held in public hands will no longer satisfy the
requirements for listing of the London Stock Exchange, and even in the event
that the CarnaudMetalbox Shares remain eligible for such listing, Crown may
nevertheless seek to have the CarnaudMetalbox Shares delisted from the London
Stock Exchange. See also "--Effect of Offer on Market for CarnaudMetalbox
Shares."
Whether or not the Offer is consummated, Crown reserves the right, subject
to applicable legal restrictions, to sell or otherwise dispose of any or all
CarnaudMetalbox Shares acquired pursuant to the Offer or otherwise. Such
transactions may be effected on terms and at prices as Crown shall determine,
which may be more or less than the price to be paid pursuant to the Offer and
could be for cash or other consideration, or both. However, Crown has no
current intention to sell any CarnaudMetalbox Shares acquired in the Offer
(other than with respect to the transfer of CarnaudMetalbox Shares acquired by
Crown in the Offer to SNC as set forth in "--General" above).
EXTENSION, TERMINATION AND AMENDMENT
Subject to applicable law and regulation, Crown expressly reserves the
right, in its sole discretion, at any time or from time to time, to extend the
period of time during which the Offer is to remain open by giving written
notice of such extension to the CBV (and any other applicable authorities) at
any time on or prior to the Expiration Date. There can be no assurance that
Crown will exercise its right to extend the Offer, or that, if such right is
exercised, such extension will be approved by the CBV. Subject to the
applicable regulations of the CBV and the provisions of the Exchange Offer
Agreement, Crown also reserves the right to amend or modify any terms and
conditions of the Offer, including the Exchange Ratio and the Minimum
Condition, or to terminate the Offer. Any such amendment or modification will
be subject to the prior approval of the CBV, which, in the event of any such
amendment or modification or for any reason, may or may not extend the period
of time the Offer is to stay open.
Under SEC rules which are applicable to the Offer in the U.S., the Offer
must be open for (1) at least 20 "business days" (i.e., any day other than a
Saturday, Sunday or U.S. federal holiday and consists of the time period from
12:01 a.m. through 12:00 midnight, Philadelphia time) from the time the Offer
is first published, sent or given to CarnaudMetalbox shareholders covered by
the SEC rules and (2) at least ten business days from the date when the notice
of any increase in the offered consideration (other than a de minimus
increase) is first published, sent or given to such shareholders (or,
according to the SEC's announced interpretation of the rule, from the date of
any material change in the terms of the subject offer).
In the event of any competing offer for CarnaudMetalbox Shares, Crown
reserves the right, at the sole discretion of Crown and subject to applicable
regulations of the CBV and the provisions of the Exchange Offer Agreement, (1)
to withdraw the Offer, (2) to maintain the terms of the Offer or (3) to amend
or modify the terms of the Offer, including in respect of the consideration to
be paid in the Offer or the Minimum Condition. If, prior to the Expiration
Date, Crown shall increase the consideration offered to holders of
CarnaudMetalbox Shares, such increase shall be applicable to all holders whose
CarnaudMetalbox Shares are purchased or exchanged pursuant to Offer. Any such
extension, termination or amendment shall be announced by the SBF in
accordance with applicable law and regulation in France.
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CASH IN LIEU OF FRACTIONAL SHARES OF CROWN COMMON STOCK AND CROWN ACQUISITION
PREFERRED STOCK
No fraction of a share of Crown Stock will be issued by Crown in the Offer.
In lieu thereof, each tendering shareholder who would otherwise be entitled to
a fractional share of Crown Common Stock or Crown Acquisition Preferred Stock
(after aggregating all fractional shares of Crown Common Stock and Crown
Acquisition Preferred Stock to be received by the holder), will receive from
Crown an amount in cash in French francs rounded to the nearest French franc
equal to the product of (1) such fraction and (2) the Average Crown Common
Stock Price.
TENDER PROCEDURES
General
CarnaudMetalbox shareholders hold CarnaudMetalbox Shares in either forme
nominative ("registered form") or forme au porteur ("bearer form"). Because
CarnaudMetalbox Shares have been issued under French law, both registered and
bearer shares are held in uncertificated, or book-entry, form in SICOVAM
accounts. Registered CarnaudMetalbox Shares are recorded in a register
maintained by Demachy Worms et Cie ("Demachy") on behalf of CarnaudMetalbox and
are inscribed in SICOVAM accounts under the SICOVAM identification number of
Demachy. Certain registered CarnaudMetalbox Shares are held through a sub-
register maintained by Barclays Registrars, a trading name of Barclays Bank
PLC. Depositary certificates ("Certificates of Registration") representing
shares held through the Barclays sub-register have been issued to facilitate
trading of CarnaudMetalbox Shares on the London Stock Exchange.
The manner in which tenders into the Offer may be made depends on the manner
in which a shareholder of CarnaudMetalbox holds CarnaudMetalbox Shares (i.e.,
in bearer or registered form, and if in registered form, whether through
Certificates of Registration). Shareholders who wish to accept the Offer should
contact the bank, financial institution, broker or other intermediary (an
"Intermediary") through which such shareholder holds CarnaudMetalbox Shares to
determine the manner in which such holder's shares are held and how to tender
in the Offer. Holders of Certificates of Registration should contact Barclays
Registrars at the address and telephone number below with any questions
regarding tender procedures.
CarnaudMetalbox shareholders who hold CarnaudMetalbox Shares in both
registered and bearer form and/or who hold Certificates of Registration should
use the appropriate tender procedure with respect to each holding.
If the Offer is consummated, the Offer Consideration will be distributed as
set forth in "--Exchange and Payment of Offer Consideration." If the Offer is
not consummated, the tendered CarnaudMetalbox Shares will be returned to
applicable Intermediaries without any interest or other compensation, and
Certificates of Registration will be returned by mail in the manner referred to
in the Form of Acceptance (as defined below).
None of Crown, Societe Generale or CS First Boston or their respective
affiliates will be under any duty to give notification of any defect or
irregularities in any tendering or non-tendering shareholder's instructions or
incur any liability for failure to give any such notification.
No acknowledgement of the receipt by any Intermediary or Barclays Registrars
of any tender instructions or other documentation will be given by Crown,
Societe Generale or CS First Boston or their respective affiliates. All
communications, documents, certificates and remittances to be delivered by or
sent to or from CarnaudMetalbox shareholders (or their designated agents) will
be delivered by or sent to or from CarnaudMetalbox shareholders (or their
designated agents) at their own risk. If CarnaudMetalbox shareholders make
delivery by mail, registered mail with return receipt requested, properly
insured, is recommended.
Tender Procedures for Bearer Shares
To accept the Offer, a holder of CarnaudMetalbox Shares in bearer form
should, as soon as possible after commencement of the Offer but in any event on
or prior to the Expiration Date, transmit a sale or exchange
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order to the Intermediary through which the CarnaudMetalbox Shares being
tendered are held in accordance with the procedures specified by such
Intermediary (including, if required, by executing any necessary
documentation). If such Intermediary is not an Intermediary authorized to deal
directly through the SICOVAM clearance system (an "Accredited Intermediary"),
such Intermediary should forward the shareholder's instructions to the
Accredited Intermediary through which such Intermediary holds the
CarnaudMetalbox Shares.
A CarnaudMetalbox shareholder tendering into the Offer should indicate in the
sale or exchange order transmitted to the holder's Intermediary that such
shareholder is electing to receive the Cash Election Price or Units for all of
the CarnaudMetalbox Shares being tendered by such shareholder or,
alternatively, that such shareholder is electing to receive the Cash Election
Price for a portion of such shares and Units for the remaining portion of such
shares.
Tender Procedures for Registered Shares (other than Certificates of
Registration)
To accept the Offer, a holder of CarnaudMetalbox Shares in registered form
should, as soon as possible after commencement of the Offer but in any event on
or prior to the Expiration Date, (1) if the holder holds directly through
Demachy, transmit a sale or exchange order to Demachy in accordance with the
procedures specified by Demachy (including, if required, by executing any
necessary documentation) or (2) if the holder holds through an Intermediary
other than Demachy, transmit a sale or exchange order to the Intermediary
through which the CarnaudMetalbox Shares being tendered are held in accordance
with the procedures specified by such Intermediary (including, if required, by
execution of necessary documentation). In the latter case, for the tender to be
effective, it will be necessary for such Intermediary to forward the
shareholder's instructions to Demachy on or prior to the Expiration Date.
A CarnaudMetalbox shareholder tendering into the Offer should indicate in the
sale or exchange order transmitted to the holder's Intermediary or to Demachy
that such shareholder is electing to receive the Cash Election Price or Units
for all of the CarnaudMetalbox Shares being tendered by such shareholder or,
alternatively, that such shareholder is electing to receive the Cash Election
Price for a portion of such shares and Units for the remaining portion of such
shares.
In the event the Offer is consummated, the SBF will convert any registered
shares tendered into the Offer into bearer form. Holders of registered shares
need not request Demachy or their Intermediary to convert their registered
shares into bearer form; such conversion will be effected by the SBF
automatically upon publication of the closing notice for the Offer. ANY PRIOR
CONVERSION BY A HOLDER OF REGISTERED CARNAUDMETALBOX SHARES TO BEARER FORM WILL
RESULT IN THE LOSS OF DOUBLE VOTING RIGHTS, IF ANY, AT THE TIME OF SUCH
CONVERSION, INCLUDING IF THE OFFER IS NOT CONSUMMATED.
Tender Procedures for Certificates of Registration
Holders of Certificates of Registration will be sent with this Proxy
Statement/Prospectus a form of acceptance (a "Form of Acceptance"). To accept
the Offer, holders of Certificates of Registration should, as soon as possible
following commencement of the Offer but in any event on or prior to the
Expiration Date, submit the Certificates of Registration, together with a
properly completed and duly executed Form of Acceptance, and all other
documents required by the Form of Acceptance in accordance with the
instructions and to the address thereon. The Form of Acceptance will constitute
an authority and request to Barclays Registrars to instruct Demachy to tender
the CarnaudMetalbox Shares to which the relevant Certificates of Registration
relate in the Offer.
IF HOLDERS OF CERTIFICATES OF REGISTRATION HAVE ANY QUESTIONS RELATING TO THE
PROCEDURE THEY SHOULD FOLLOW, THEY SHOULD CONTACT NEW ISSUES DEPARTMENT,
BARCLAYS REGISTRARS AT PO BOX 166, BOURNE HOUSE, 34 BECKENHAM ROAD, BECKENHAM
KENT, BR3 4TH UNITED KINGDOM (TELEPHONE 0-181-639-2152 FOR PERSONS IN THE
UNITED KINGDOM AND (011) 44-181-639-2152 FOR PERSONS IN THE UNITED STATES).
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If a holder of Certificates of Registration has not received a Form of
Acceptance, such shareholder should contact Barclays Registrars at the address
and telephone number above to obtain such a form.
EXCHANGE AND PAYMENT OF OFFER CONSIDERATION
Following the Expiration Date, Demachy and the other Accredited
Intermediaries which have received valid sale or exchange orders for
CarnaudMetalbox Shares will be required under regulations of the CBV to forward
such shares by book-entry transfer to the SICOVAM account of the SBF. Upon the
terms and subject to the conditions of the Offer (including, if the Offer is
extended or amended, the terms and conditions of any such extension or
amendment), Crown will purchase and pay for or exchange all CarnaudMetalbox
Shares as to which valid sale or exchange orders were received by the
applicable Accredited Intermediary on or prior to the Expiration Date and which
have been forwarded by book-entry transfer to the SBF following expiration of
the Offer in accordance with CBV regulations. Crown will be deemed to have
accepted for purchase or exchange all such CarnaudMetalbox Shares upon
consummation of the Offer, which will occur upon the publication by the SBF of
the closing notice confirming the success of the Offer following the Expiration
Date. The timing of publication of such notice will be dependent upon the
complexity of calculating the results of the Offer and other factors, and a
period of up to four weeks or more could elapse between the Expiration Date and
the publication of such closing notice.
HOLDERS OF CARNAUDMETALBOX SHARES WHO HAVE INSTRUCTED THE APPLICABLE
INTERMEDIARY TO TENDER SUCH SHARES IN THE OFFER WILL NOT HAVE THE RIGHT TO
WITHDRAW SUCH SHARES FOLLOWING EXPIRATION OF THE OFFER AND PRIOR TO THE CLOSING
DATE.
Following publication of the closing notice, the SBF, together with, in the
case of CarnaudMetalbox Shares tendered for cash, the applicable brokers
selected by the Accredited Intermediaries which have validly tendered
CarnaudMetalbox Shares in the Offer, will exchange or pay for such shares as
promptly as practicable in accordance with applicable French practice. Under no
circumstances will interest or other compensation on the Offer Consideration be
paid by or on behalf of Crown by reason of any delay in making such payment or
exchange. Further information in respect of the timing of settlement for the
Offer will be published by the SBF in the opening notice for the Offer or in a
subsequent SBF notice.
If the Offer is not consummated, tendered CarnaudMetalbox Shares will be
returned to shareholders (without interest or other compensation) following
publication of the results of the Offer by the SBF.
RIGHTS OF TENDERING SHAREHOLDERS TO CANCEL ACCEPTANCE OF OFFER
Any sale or exchange order forwarded to an Intermediary (or Form of
Acceptance forwarded to Barclays Registrars) may be cancelled at any time on or
prior to the Expiration Date. Following the Expiration Date, such sale or
exchange orders (or Forms of Acceptance), including any elections as to cash
versus Units in the Offer, are irrevocable, and tendering shareholders may not
cancel acceptances or withdraw their CarnaudMetalbox Shares or Certificates of
Registration.
In the event of publication of a notice of suspension of trading of
CarnaudMetalbox Shares on the Paris Stock Exchange by the SBF as a result of
the filing with the CBV of a competing offer for CarnaudMetalbox Shares, any
sale or exchange order transmitted to an Intermediary (or Form of Acceptance
forwarded to Barclays Registrars) with respect to the Offer will be
automatically revoked and cancelled, and any shareholder who desires, following
publication of such notice to tender CarnaudMetalbox Shares into the Offer will
be required to transmit a new sale or exchange order to the applicable
Intermediary holding such CarnaudMetalbox Shares (or, in the case of
Certificates of Registration, a new Form of Acceptance to Barclays Registrars).
LISTING OF CROWN COMMON STOCK AND CROWN ACQUISITION PREFERRED STOCK
Crown Common Stock is listed on the NYSE. Crown Common Stock is not currently
listed on the Paris Stock Exchange or the London Stock Exchange, and there
currently is no established trading market for shares
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of Crown Common Stock in France or the United Kingdom, except that shares of
Crown Common Stock are currently quoted on SEAQ International on an indicative
basis only. Crown will apply to the NYSE for approval of the listing on the
NYSE of the shares of Crown Stock to be issued in the Offer. Crown will also
apply to the Paris Stock Exchange for the listing of the shares of Crown Stock
to be issued to the Offer (and the currently issued Crown Common Stock) on the
Official List of the Paris Stock Exchange. CarnaudMetalbox shareholders should
be aware that if an insufficient number of holders of CarnaudMetalbox Shares
elect Units of Crown Stock, as opposed to cash, in the Offer, the NYSE or Paris
Stock Exchange could delist, or decline to permit the listing of, Crown
Acquisition Preferred Stock, and the Paris Stock Exchange could delist, or
decline to permit the listing of, Crown Common Stock. In the event Crown
Acquisition Preferred Stock is not so listed, its liquidity and market price
could be adversely affected.
It is anticipated that holders of Crown Stock will receive any dividends or
distributions thereon by Crown in U.S. dollars, although sales proceeds with
respect to trades on any exchange on which the Crown Stock is listed will be in
the local currency. Fluctuations in the exchange rate between the French franc
and the U.S. dollar will affect the French franc equivalent of the U.S. dollar
prices of the Crown Common Stock and Crown Acquisition Preferred Stock traded
on the Paris Stock Exchange and, as a result, are likely to affect the market
price of Crown Common Stock and Crown Acquisition Preferred Stock in France.
Such fluctuations will also affect the French franc amounts received by holders
of Crown Common Stock and Crown Acquisition Preferred Stock in respect of cash
dividends paid in U.S. dollars on the Crown Common Stock and Crown Acquisition
Preferred Stock.
EFFECT OF OFFER ON MARKET FOR CARNAUDMETALBOX SHARES
If the Offer is consummated, the purchase or exchange of the CarnaudMetalbox
Shares pursuant to the Offer will reduce the number of holders of the
CarnaudMetalbox Shares and the number of CarnaudMetalbox Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining CarnaudMetalbox Shares, if any, held by the public.
Moreover, after consummation of the Offer, Crown may decide to initiate an OPR
which may be followed by a Compulsory Acquisition to transfer the remaining
CarnaudMetalbox Shares to Crown if Crown has obtained ownership of 95% or more
of aggregate voting power of CarnaudMetalbox as required under French law and
regulation.
If Crown decides to forego an OPR and Crown holds 95% or more of the
aggregate voting rights of CarnaudMetalbox Shares, minority shareholders may,
subject to applicable regulations of the CBV, request the CBV to require Crown
to file with the CBV a proposed OPR for the remaining CarnaudMetalbox Shares.
In such circumstances, the CBV will be required to consult with Crown prior to
approving the requested OPR.
Paris Stock Exchange. As stated above, Crown may decide, if the Offer is
consummated, to initiate an OPR following the Offer in accordance with French
law and regulation. A consequence of any such OPR which is approved by the CBV
(including an OPR initiated by minority holders of CarnaudMetalbox Shares) may
be the delisting of CarnaudMetalbox Shares from the Paris Stock Exchange. In
addition, the CBV published guidelines indicate that the CBV may decide to
remove equity securities from the Official List of the Paris Stock Exchange
where the percentage of such equity securities held by the public falls below
5% and where the average daily trading volume of such securities is less than
FF 10,000 and involves fewer than 250 shares, among other circumstances.
Although generally the CBV will not delist French equity securities in the
absence of an OPR, in certain cases (generally where the issuer has minimal
float and trading volume) the CBV may decide, upon the request of an issuer or
on its own initiative, to delist such securities. Crown reserves the right, if
the Offer is consummated, to cause CarnaudMetalbox to make such request. Such
delisting could have a material adverse effect on the market for, and trading
in, CarnaudMetalbox Shares. If the CarnaudMetalbox Shares are removed from the
Official List, the CarnaudMetalbox Shares would be transferred to the marche
hors cote ("unlisted") market, which is largely unregulated and illiquid.
Further, any delisting of CarnaudMetalbox Shares from the Paris Stock Exchange
will also result in the cessation of quotations of CarnaudMetalbox Shares on
SEAQ International.
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In addition, following the Offer, the CarnaudMetalbox Shares may no longer be
traded on the marche a reglement mensuel, or monthly settlement market, which
is the primary equity market in France where the most liquid equity issues are
traded. In the monthly settlement market, the purchaser may, upon payment of a
fee, select settlement within three trading days following the trade (reglement
immediat, or immediate settlement) or decide on the date de liquidation, or
determination date, which is the sixth trading date prior to the end of the
month, either (1) to settle the trade on the last trading day of the such month
or (2) upon payment of an additional fee, to extend to the determination date
of the following month the option either to settle on the last trading day of
such month or to postpone again the selection of a settlement date until the
next determination date. Such option may be maintained on each subsequent
determination date upon payment of an additional fee. Issues not traded on the
monthly settlement market are traded on the marche au comptant, or cash market,
on the second marche, or second market, in each case where trades are settled
within three trading days after the transaction, or on the unlisted market.
In the event that CarnaudMetalbox Shares continue to be listed on the
Official List of the Paris Stock Exchange following the Offer, shareholders who
have not accepted the Offer will continue to receive the same financial and
other information from CarnaudMetalbox that CarnaudMetalbox presently is
required by applicable law and regulation to make available to holders of
CarnaudMetalbox Shares. If CarnaudMetalbox Shares are no longer listed on the
Paris Stock Exchange following the Offer, CarnaudMetalbox would no longer be
required by such laws and regulations to make publicly available financial and
other information about CarnaudMetalbox to the same degree as is presently
provided to CarnaudMetalbox's shareholders, although CarnaudMetalbox would be
required by applicable French law to make available its audited annual accounts
to holders of CarnaudMetalbox Shares.
Crown has been advised by CGIP that as of October 31, 1995, there were
35,712,932 CarnaudMetalbox Shares held in registered form and 50,338,259
CarnaudMetalbox Shares held in bearer form. At such date, a total of 86,051,191
CarnaudMetalbox Shares were outstanding. If, as a result of the acquisition of
the CarnaudMetalbox Shares pursuant to the Offer or otherwise, the
CarnaudMetalbox Shares are delisted from the Paris Stock Exchange or are no
longer traded on the monthly settlement market, the market for, and trading in,
the CarnaudMetalbox Shares could be adversely affected.
London Stock Exchange. In the event that CarnaudMetalbox Shares continue to
be listed on the London Stock Exchange following the purchase or exchange of
CarnaudMetalbox Shares pursuant to the Offer, shareholders of CarnaudMetalbox
who have not accepted the Offer will continue to receive the same financial and
other information from CarnaudMetalbox that CarnaudMetalbox presently is
required by the Listing Rules of the London Stock Exchange (the "LSE Listing
Rules") to make available to CarnaudMetalbox's shareholders. If CarnaudMetalbox
Shares are no longer listed on the London Stock Exchange following the Offer,
CarnaudMetalbox would no longer be subject to the LSE Listing Rules, including
with respect to the provision of information about CarnaudMetalbox.
Crown reserves the right to delist CarnaudMetalbox Shares following the Offer
from the London Stock Exchange. In addition, as a result of Crown's becoming a
substantial shareholder of CarnaudMetalbox following consummation of the Offer,
it is possible that the number of CarnaudMetalbox Shares held in public hands
will no longer satisfy the requirements for listing of the London Stock
Exchange. Any termination and delisting of CarnaudMetalbox Shares from the
London Stock Exchange could have a material adverse effect on the market for,
and trading in, CarnaudMetalbox Shares.
FEES AND EXPENSES
CS First Boston is acting as Crown's financial advisor in connection with the
CarnaudMetalbox Transaction and as the dealer-manager with respect to the Offer
in the United States. In addition, CS France is acting as co-presenting bank
with respect to the Offer, and CS First Boston Limited is acting as one of
Crown's two financial advisors with respect to the Offer in the United Kingdom.
As compensation for these services, Crown agreed to pay CS First Boston a
financial advisory fee of $100,000 upon the execution of CS First Boston's
engagement letter, an implementation fee of $1,000,000, of which $500,000 was
payable upon the execution by Crown and
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CGIP of the Exchange Offer Agreement and $500,000 is payable upon receipt by
Crown of all relevant material regulatory approvals required by Crown in
connection with the transaction. The financial advisory fee and implementation
fee are creditable against the transaction fee of $4,500,000 payable upon the
closing of the Offer. Crown has also agreed to reimburse CS First Boston and
its affiliates (including CS France and CS First Boston Limited) for out-of-
pocket expenses incurred in connection with the engagement by Crown, including
fees and expenses of legal counsel, and to indemnify CS First Boston and its
affiliates against certain claims and liabilities to which they may become
subject, including liabilities under United States federal securities laws
relating to or arising out of the engagement. See "THE CARNAUDMETALBOX
PROPOSALS--Opinion of Crown's Financial Advisor."
Societe Generale is acting as Crown's financial advisor in connection with
the Offer and as the co-presenting bank with respect to the Offer. In addition,
Societe Generale Strauss Turnbull Securities Limited is acting as one of
Crown's two financial advisors with respect to the Offer in the United Kingdom.
As compensation for these services, Crown agreed to pay Societe Generale a fee
of up to $3,000,000 consisting of a base fee of $1,750,000 if the Offer is
consummated and the Minimum Condition is fulfilled; and additional success fees
of $650,000 and $600,000, respectively, if, after the Offer is consummated,
Crown owns in excess of 90% and 95%, respectively, of the outstanding
CarnaudMetalbox Shares (based on voting power, rights to dividends and rights
to assets on liquidation of CarnaudMetalbox) (collectively, the "Societe
Generale Offer Fees").
Crown may in its sole discretion with respect to the Societe Generale Offer
Fees designate certain CarnaudMetalbox Shares purchased after the consummation
of the Offer to be added to the CarnaudMetalbox Share ownership benchmarks set
forth above for purposes of determining the Societe Generale Offer Fees. In
addition, Crown has acknowledged to Societe Generale that Crown intends,
subject to the circumstances then prevailing, to permit Societe Generale to
purchase CarnaudMetalbox Shares in the open market on Crown's behalf beginning
after the Offer expires until two weeks after the SBF publishes the results of
the Offer in France, and these CarnaudMetalbox Shares will be added to the
foregoing benchmarks as well. Crown will pay Societe Generale competitive
commissions for such open market purchases. Crown has also agreed to engage
Societe Generale with respect to any subsequent offers for CarnaudMetalbox
Shares, subject to a step down in fees. Crown will pay Societe Generale a
$150,000 retainer fee (to be credited against other fees and expenses payable
to Societe Generale) if the Offer is not commenced, or if commenced, the Offer
is not successfully consummated, and $100,000 if the Offer is successfully
consummated and Crown thereafter successfully completes a Compulsory
Acquisition. Any fees paid by a French affiliate of Crown to Societe Generale
will include any French value added tax, if necessary. Crown has also agreed to
reimburse Societe Generale for its authorized out-of-pocket expenses (including
fees and expenses of legal counsel), and will indemnify Societe Generale
against certain claims and liabilities to which it may become subject.
Prior to commencement of the Offer, Crown and Societe Generale will agree to
the appropriate amount of any financial intermediary fees with respect to the
collection of acceptance orders in respect of the successful consummation of
the Offer. Societe Generale has advised Crown that conventional fees for such
purposes for offers in France are 1% of the value of the subject shares held in
a shareholder's account, subject to a maximum of FF 2,000 and a minimum of FF
25 per account. The financial intermediary fees (plus any related applicable
value added tax) will be paid by the SBF for the account of Crown. Such
financial intermediary fees will be reduced by 50% in the event the Offer is
not consummated, except that no such fees will be paid to intermediaries in the
event a competing offer for CarnaudMetalbox Shares is filed with the CBV and
Crown does not consummate the Offer. With respect to any CarnaudMetalbox Shares
tendered for cash pursuant to the Offer, both Crown and the tendering
shareholder are obligated to pay an impot de bourse, or stock exchange tax,
assessed on the price at which the securities were traded at the rate of 0.3%
on transactions up to FF 1 million and at a rate of 0.15% thereafter (less, in
either case, a tax discount of FF 150), subject to a maximum assessment of FF
4,000 per transaction. No such tax will be assessed in respect of
CarnaudMetalbox Shares tendered for Units. Persons who are residents outside
France are not obligated to pay such stock exchange tax. Crown currently
intends to pay any applicable stock exchange tax incurred by tendering
shareholders in connection with the tender of CarnaudMetalbox Shares (plus any
related applicable value added tax). In addition, in all
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transactions involving the sale of securities through licensed brokers in
France, a fee or commission is payable by both the buyer and the selling
shareholder to the societe de bourse, or broker, involved in the transaction.
Each tendering shareholder will also incur such brokerage fees in respect of
the sale of the holder's CarnaudMetalbox Shares to Crown pursuant to the Offer.
Crown has been advised that customary brokerage fees per transaction in France
are 0.5% for transactions up to FF 1 million, 0.3% for transactions from FF 1
million up to FF 5 million, and .15% thereafter. Crown currently intends to pay
all such brokerage fees incurred by any tendering shareholders (plus any
related applicable value added tax) up to these amounts.
As of October 23, 1995, Societe Generale has advised Crown that it (or its
affiliates) beneficially owns for its own account 3,186,109 CarnaudMetalbox
Shares, representing approximately 2.7% of the aggregate voting power of the
CarnaudMetalbox Shares outstanding. Subsidiaries of Societe Generale also make
a market in the CarnaudMetalbox Shares both on SEAQ International and, with
respect to options on CarnaudMetalbox Shares, on MONEP, and Mr. Seilliere, the
Chairman and Chief Executive Officer of CGIP and Chairman of the supervisory
board of CarnaudMetalbox, is a director of Societe Generale. See "--General"
and "--Interests of Certain Persons in the Offer."
For information as to certain fees which will be paid to Societe Generale and
Credit Suisse, among others, in connection with the financing of the Offer, See
"THE CARNAUDMETALBOX PROPOSALS--Source of Funds."
Under the Exchange Offer Agreement, in the event the Offer is consummated,
Crown (or its designee) has agreed to reimburse CGIP for 80% of the total
amount of documented fees and expenses of CGIP's legal and financial advisors
up to a maximum of $15 million in connection with the transactions contemplated
under the Exchange Offer Agreement. CGIP has advised Crown that it expects to
incur fees and expenses in excess of the maximum reimbursement amount of $15
million.
Except as provided above, Crown will not pay fees or commissions to any
broker or dealer or any other person for soliciting tenders of CarnaudMetalbox
Shares pursuant to the Offer. In the United States, brokers, dealers,
commercial banks and trust companies will, upon request, be reimbursed by Crown
for reasonable and necessary costs incurred by them in forwarding material to
their customers.
INTERESTS OF CERTAIN PERSONS IN THE OFFER
General. Following consummation of the Offer, CarnaudMetalbox will be either
a direct or indirect subsidiary of Crown.
Stock Options. For information regarding certain commitments of Crown with
respect to CarnaudMetalbox's employee stock options, see "THE EXCHANGE OFFER
AGREEMENT--CarnaudMetalbox Stock Options."
Employment Agreements. Each member of the executive committee and each group
vice president has entered into an employment contract with CarnaudMetalbox.
Employment contracts for members of the executive committee, including the
Chief Executive Officer, generally contain notice provisions ranging from six
months to two years and non-competition agreements generally lasting one year
from the date of termination and renewable for one additional year. These
contracts provide for aggregate severance payments, which include salary in
lieu of notice, of approximately FF 88 million (or approximately $18.1 million
based on the Noon Buying Rate on November 10, 1995) if each severance payment
is triggered, which includes the amounts paid in September 1995 to Mr. B.
Jurgen Hintz, the former chairman of CarnaudMetalbox, in connection with his
resignation from CarnaudMetalbox. See "CARNAUDMETALBOX--General."
Shareholders Agreement. For information as to certain commitments of Crown
with respect to representation on Crown's Board of Directors and the formation
of a Strategic Committee of Crown directors following consummation of the Offer
and other matters, see "--Ownership of Crown Stock after the Offer" and "THE
SHAREHOLDERS AGREEMENT."
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Fees and Expenses. For information regarding agreements by Crown to pay
certain fees and expenses of CGIP, CS First Boston (or its affiliates) and
Societe Generale with respect to the Offer, see "--Fees and Expenses" above.
Management Agreement. On May 20, 1995, CarnaudMetalbox and CGIP entered into
a letter agreement pursuant to which CGIP has agreed to provide management and
administrative services to CarnaudMetalbox through 1999. This letter agreement
conformed with the prior agreement in effect since 1977 between CarnaudMetalbox
and CGIP with respect to CGIP's provisions of such services. In 1994, the
amount paid by CarnaudMetalbox to CGIP (on pre-tax basis) under such agreement
was approximately FF 11.1 million. After 1999, the letter agreement will be
automatically renewable unless terminated in the first quarter of the prior
year, in which case such agreement will terminate on the next succeeding
January 1.
CERTAIN TAX CONSEQUENCES OF THE OFFER
The following is a summary of certain tax consequences that may be relevant
to persons who are subject to tax in the United States, France or the United
Kingdom upon the exchange of CarnaudMetalbox Shares for Units of Crown Stock
and/or the Cash Election Price pursuant to the Offer and upon holding and
disposing of any Crown Stock acquired pursuant to the terms of the Offer. This
summary is for general informational purposes only and does not purport to
address specific tax consequences that may be relevant to certain persons
(including, for example, persons who are employed by CarnaudMetalbox, financial
institutions, broker-dealers, insurance companies or tax-exempt organizations).
Persons who may be subject to tax in more than one jurisdiction should consult
the provisions of any applicable tax treaty in determining the potential tax
consequences to them.
The discussion is based upon the advice of Dechert Price & Rhoads, counsel to
Crown, with respect to U.S. federal income tax consequences; Jeantet et
Associes, special French counsel to Crown, with respect to French tax
consequences; and Titmuss Sainer Dechert, special United Kingdom counsel to
Crown, with respect to United Kingdom tax consequences. The discussion is based
on the current statutory provisions of U.S., French and United Kingdom law,
applicable regulations, judicial authority and administrative rulings and
practice. Any of such authorities is subject to change at any time by
legislative, judicial or administrative action. Any such changes may be applied
retroactively in a manner that could adversely affect a person participating in
the Offer or holding Crown Stock.
HOLDERS OF CARNAUDMETALBOX SHARES ARE URGED TO CONSULT THEIR TAX ADVISORS
WITH RESPECT TO THE U.S., FRENCH OR UNITED KINGDOM TAX CONSIDERATIONS THAT MAY
BE SPECIFIC TO THEM, AS WELL AS WITH RESPECT TO ANY TAX CONSIDERATIONS OF OTHER
COUNTRIES, AS WELL AS LOCAL (INCLUDING U.S. STATE) TAX CONSIDERATIONS OF
PARTICIPATING IN THE EXCHANGE OFFER OR OF HOLDING OR DISPOSING OF CROWN STOCK.
Income Tax Consequences to U.S. Shareholders
Dispositions of CarnaudMetalbox Shares Pursuant to the Offer. Persons who are
U.S. citizens or are taxed as residents of the United States or that otherwise
will be subject to U.S. federal income tax on a net basis in respect of
CarnaudMetalbox Shares or, as applicable, the Crown Stock received
(collectively, "U.S. Holders") will recognize taxable gain or loss for U.S.
federal income tax purposes on the exchange. The amount of gain or loss
recognized will be equal to the difference between the amount of cash and/or
the fair market value of the Crown Stock received, as applicable, and the U.S.
Holder's adjusted tax basis in the CarnaudMetalbox Shares surrendered in the
exchange. If the CarnaudMetalbox Shares are held as a capital asset by the U.S.
Holder, any such gain or loss will be capital gain or loss. Any such capital
gain or loss will be taxed as long-term capital gain or loss if the
CarnaudMetalbox Shares have been held for more than one year as of the date of
the exchange; otherwise such capital gain or loss will be taxed as short-term
capital gain or loss. The amount of a U.S. Holder's gain or loss and the
characterization of such gain or loss must be determined separately for each
block of CarnaudMetalbox Shares that was acquired at different times or prices.
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A U.S. Holder's tax basis in the shares of Crown Stock received in the
exchange will be equal to the fair market value of such shares on the date of
the exchange. The U.S. Holder's holding period for such shares will begin on
the day immediately following the date of the exchange.
Conversion of Crown Acquisition Preferred Stock. U.S. Holders of Crown
Acquisition Preferred Stock that convert such shares into shares of Crown
Common Stock will recognize no gain or loss on the conversion for U.S. federal
income tax purposes. The U.S. Holder's adjusted tax basis in the shares of
Crown Common Stock received in the conversion will be equal to the adjusted tax
basis in the shares of Crown Acquisition Preferred Stock surrendered in the
conversion. The U.S. Holder's holding period for the shares of Crown Common
Stock will include the period during which the shares of Crown Acquisition
Preferred Stock were held.
Dividends on Crown Stock. Dividend distributions with respect to the shares
of Crown Stock will be taxable as ordinary income to the U.S. Holders of such
shares provided Crown has current or accumulated earnings and profits in the
amount of the distribution.
Backup Withholding Considerations. U.S. Holders who receive cash in exchange
for their CarnaudMetalbox Shares pursuant to the Offer may be subject to backup
withholding in the amount of 31% of the cash proceeds of the exchange if they
fail to provide the person responsible for the distribution of the cash
proceeds to U.S. Holder's account their taxpayer identification number ("TIN"),
certified under penalties of perjury, or a certification that the person is
awaiting a TIN. Certain persons, including all corporate shareholders, are
exempt from the backup withholding rules. Backup withholding is not an
additional tax, but rather may be credited against the person's federal income
tax liability for the year in which the withholding occurs.
U.S. Holders of Crown Stock who do not otherwise qualify as exempt recipients
(exempt recipients generally include, for this purpose, corporate shareholders
of Crown Stock) may also be subject to backup withholding in the amount of 31%
of the dividend payments received with respect to Crown Stock, unless the U.S.
Holder provides Crown with its TIN certified under penalties of perjury and
also certifies that the recipient has not been notified by the IRS that it is
subject to backup withholding.
U.S. Tax Considerations Applicable to Non-U.S. Holders
The following discussion concerns certain United States federal income and
estate tax consequences of participating in the Offer and in the ownership or
disposition of Crown Stock that may be applicable to Non-U.S. Holders. In
general, a "Non-U.S. Holder" is any person other than (1) a citizen or resident
of the United States for U.S. federal income tax purposes, (2) a corporation or
partnership created or organized in the United States or under the laws of the
United States or any state thereof, or (3) an estate or trust that is subject
(or potentially subject) to U.S. federal income tax on its worldwide income on
a net basis.
U.S. Taxation of Non-U.S. Holders and Backup Withholding on Disposition of
CarnaudMetalbox Shares. In general, Non-U.S. Holders who exchange
CarnaudMetalbox Shares for cash or shares of Crown Stock pursuant to the Offer
are not subject to U.S. income tax on the gain recognized on the disposition of
such CarnaudMetalbox Shares. However, a Non-U.S. Holder will be subject to U.S.
tax if (1) the holder is an individual who holds the CarnaudMetalbox Shares as
a capital asset and is present in the U.S. for 183 days or more during the
calendar year in which the CarnaudMetalbox Shares are sold, or (2) the holder
is engaged in a U.S. trade or business with which the sale of the
CarnaudMetalbox Shares is effectively connected, unless, in either case, the
tax on such gain is reduced or eliminated under an applicable tax treaty.
Under the Convention Between the United States of America and France with
respect to Taxes on Income and Property (the "French Tax Treaty") currently in
force, gain recognized from the sale of CarnaudMetalbox Shares by a resident of
France is not subject to U.S. tax, unless the shareholder (1) has a permanent
establishment (or, in the case of an individual, a fixed base) in the United
States and the gain on the CarnaudMetalbox Shares is effectively connected with
such permanent establishment (or fixed base) or (2) the shareholder is an
individual who holds the CarnaudMetalbox Shares as a capital asset and is
present in the United States for 183 days or more during the taxable year in
which the CarnaudMetalbox Shares are sold.
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Under the Convention Between the Government of the United States of America
and the Government of the French Republic for the Avoidance of Double Taxation
and the Prevention of Fiscal Evasion with Respect to Taxes on Income and
Capital signed on August 31, 1994, but not yet ratified, gain on the sale of
CarnaudMetalbox Shares by a French resident may be subject to U.S. tax only if
such shares were part of the business property of a permanent establishment or
fixed base maintained by the French resident in the United States.
The United States-United Kingdom Income Tax Convention (the "United Kingdom
Tax Treaty") currently in force does not impose any limitations on the U.S.
taxation of gain recognized by Non-U.S. Holders beyond those generally
applicable under U.S. law.
In order to avoid U.S. backup withholding at the rate of 31% of the cash
proceeds paid, Non-U.S. Holders who exchange CarnaudMetalbox Shares through
brokers or intermediaries subject to the backup withholding requirements may be
required to certify to the broker or intermediary on Internal Revenue Service
Form W-8 that the holder is an "exempt foreign person" for backup withholding
purposes, because it generally does not fall into one of the categories of Non-
U.S. Holders subject to U.S. tax as described above. Backup withholding is not
a tax, but rather may be credited against the holder's U.S. tax liability for
the year and may be refunded to the extent that it exceeds the holder's U.S.
tax liability. Non-U.S. Holders should consult with their broker or
intermediary regarding the possible application of U.S. backup withholding to
cash proceeds received upon the disposition of CarnaudMetalbox Shares.
Withholding Tax on Dividends Paid to Non-U.S. Holders. In general, dividends
paid by Crown to a Non-U.S. Holder will be subject to United States withholding
tax at a 30% rate (or any lower rate prescribed by an applicable treaty) unless
the dividends are either (1) effectively connected with a trade or business
carried on by the Non-U.S. Holder within the United States, or (2) if a tax
treaty applies, attributable to a United States permanent establishment
maintained by the Non-U.S. Holder.
Under the French Tax Treaty currently in force, dividends paid with respect
to Crown Stock to shareholders who are residents of France will generally be
subject to a U.S. withholding tax in the amount of 15% (rather than 30%) of the
gross amount of the dividend paid. A 5% withholding rate is available to
certain French corporations that own 10% or more of the voting stock of Crown.
Under the United Kingdom Tax Treaty currently in force, dividends paid with
respect to Crown Stock to shareholders who are residents of the United Kingdom
will generally be subject to a U.S. withholding tax in the amount of 15%
(rather than 30%) of the gross amount of the dividend paid. A 5% withholding
rate is available to United Kingdom corporations that own 10% or more of the
voting stock of Crown.
Under current United States Treasury regulations, dividends paid to a holder
having a foreign address are presumed to be paid to a Non-U.S. Holder for
purposes of the reduced treaty withholding rate, unless Crown has definite
knowledge that such a presumption is not warranted. Proposed United States
Treasury regulations would, if finally adopted, require Non-U.S. Holders to
file certain forms to obtain the benefit of the lower treaty withholding rate.
Such forms would contain the holder's name and address and an official
statement by the competent authority of the country of the shareholder's
residence attesting to the holder's status as a resident of the country.
As noted above, dividends paid to a Non-U.S. Holder will generally not be
subject to the withholding tax described above if the dividends are effectively
connected with the conduct of a trade or business in the U.S. or, under an
applicable treaty, with a permanent establishment maintained by the shareholder
in the United States, if the shareholder files certain forms with the payor.
Such dividend income will, however, generally be subject to United States
federal income tax at the same rates applicable to United States persons.
Dividends paid to Non-U.S. Holders that are subject to or exempt from
withholding on payments to foreign persons under the foregoing rules are
generally exempt from backup withholding. However, Non-U.S. Holders whose
dividend income is effectively connected with the conduct of a United States
trade or business will still
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be required to certify as to the non-applicability of the backup withholding
rules or otherwise establish an exemption to avoid backup withholding on
dividend payments.
U.S. Taxation of Non-U.S. Holders and Backup Withholding on Dispositions of
Crown Stock. Generally, a Non-U.S. Holder will not be subject to United States
federal income tax on any gain realized upon the disposition of Crown Stock
unless (1) the gain is effectively connected with the conduct of a trade or
business in the United States, or (2) the Non-U.S. Holder is an individual who
holds the shares of Crown Stock as a capital asset and is present in the United
States for 183 days or more in the taxable year of the disposition.
As described above, United States taxation of French residents may be further
limited by the terms of the French-United States income tax treaty.
The payment of the proceeds for the disposition of Crown Stock to or through
the United States office of a broker will be subject to United States
information reporting and backup withholding unless the owner certifies, among
other things, its status as a Non-U.S. Holder (and the broker does not have
actual knowledge to the contrary), or otherwise establishes an exemption. The
payment of proceeds from the disposition of Crown Stock to or through a non-
U.S. office of a non-U.S. broker will generally not be subject to information
reporting (except under the circumstances described in the following sentence)
and, under current temporary regulations, will not be subject to backup
withholding. Unless the broker has documentary evidence in its files that the
owner is a Non-U.S. holder (and does not have actual knowledge to the
contrary), information reporting will apply to dispositions through (a) a non-
U.S. office of a U.S. broker and (b) a non-U.S. office of a non-U.S. broker
that is either a "controlled foreign corporation" for United States federal
income tax purposes or a person 50% or more of whose gross income from all
sources for a certain three-year period was effectively connected with a United
States trade or business. Under proposed regulations that are not currently
effective, backup withholding would also apply to proceeds from such
dispositions if such broker had actual knowledge that the payee is a U.S.
Holder.
The backup withholding and information reporting rules are currently under
review by the U.S. Treasury Department and their application to the Crown Stock
is subject to change.
U.S. Estate Tax Considerations of Non-U.S. Holders. Crown Stock owned or
treated as owned by a Non-U.S. Holder who is not a citizen or resident of the
United States at the time of death generally will be includible in the
individual's gross estate for United States federal estate tax purposes and may
be subject to United States estate tax. Under the United Kingdom-United States
and France-United States Estate and Gift Tax Treaties, however, Crown Stock
owned by a person domiciled in the United Kingdom or France at the time of
death will not be subject to U.S. estate tax, unless the person is a citizen of
the United States.
French Income Tax Consequences to French Tax Resident Shareholders
Disposition of CarnaudMetalbox Shares For Cash in the Offer. Persons who are
taxed as residents of France ("French Holders") and who receive only cash in
exchange for CarnaudMetalbox Shares pursuant to the Offer will recognize
taxable gain or loss for French income purposes.
For French Holders subject to corporate tax, gain or loss recognized on the
disposition of CarnaudMetalbox Shares may be eligible under certain conditions
for treatment as long term capital gain (taxable at a 19% rate, without taking
into account the 10% surtax recently imposed on all corporate tax liabilities)
or loss if the CarnaudMetalbox Shares qualify as a controlling interest (titres
de participations). Otherwise, the disposition will give rise to a gain or loss
included in income taxable at the regular income tax rate.
If a French Holder who is an individual holds CarnaudMetalbox Shares as
personal assets, and if the individual's aggregate transfers of securities
during a taxable year exceed the threshold set forth each year by La Loi de
Finances (the "Finance Act") gain or loss that is recognized will be subject to
capital gains tax. (This threshold was set at FF 336,700 for 1994 and should
not be lower in 1995. A draft finance bill provides for a reduction of this
threshold down to FF 200,000 for 1996.)
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Disposition of CarnaudMetalbox Shares for Crown Stock in the Offer. Under the
Code General des Impots (the "French Tax Code"), any gain that is realized by a
shareholder that is a corporation upon the exchange of shares of one
corporation for shares of another corporation in a public bid is not subject to
tax, provided that the amount of cash received by the holder does not exceed
(1) 10% of the par value of the shares received in the exchange or (2) the
total capital gain realized by the holder in the exchange. Instead, the gain is
deferred until the shareholder disposes of the shares received in a taxable
transaction. Such holders would, in any event, recognize gain to the extent of
cash received in the transaction.
The Service de la legislation fiscale has confirmed in a ruling sent to
CGIP's counsel that the capital gain realized by French Holders that are
corporations that exchange their CarnaudMetalbox Shares for Crown Stock may be
deferred in accordance with the foregoing rules until the time that the French
Holder disposes of the shares of Crown Stock that are received in the exchange.
The SLF ruling described in the preceding paragraph may not apply to French
Holders who acquired CarnaudMetalbox Shares in a transaction that involved a
commitment to retain those shares for a period of time to receive favorable tax
treatment. Such persons are urged to review the ruling issued by the SLF, a
copy of which is available for inspection at the offices of CarnaudMetalbox.
Any gain that is realized by a shareholder who is an individual upon the
exchange is taxed in accordance with the rules described above for disposition
of CarnaudMetalbox Shares for cash. However, the French Tax Code provides that
individuals may defer the gain on the exchange of shares in the context of a
public bid substantially on the same terms as shareholders who are
corporations, as described above. The SLF has confirmed that individual holders
who exchange CarnaudMetalbox Shares for shares of Crown Stock may, by making an
election with their tax returns, defer the gain that is realized in the
transaction in accordance with this provision.
The SLF has also confirmed for shareholders that are corporations that the
exchange of some CarnaudMetalbox Shares for the Cash Election Price and some
CarnaudMetalbox Shares for Units of Crown Stock (and any cash paid in lieu of
fractional shares) will be treated as two separate exchanges, each subject to
the rules described above. According to the SLF, if CarnaudMetalbox Shares were
acquired at different times or at different prices, each such block of
CarnaudMetalbox Shares should be allocated among the two exchanges based on the
overall allocation of CarnaudMetalbox Shares between the two exchanges. No such
express confirmation has been received from the SLF for shareholders that are
individuals, but it is believed the same rule would apply.
Conversion of Crown Acquisition Preferred Stock into Crown Common Stock. The
SLF has ruled that, in the case of a French Holder that is a corporation, the
conversion of Crown Acquisition Preferred Stock into Crown Common Stock will
not be considered a taxable event. As a result, no gain or loss will be
recognized in connection with such conversion, and the portion of any gain that
was deferred with respect to the exchange of CarnaudMetalbox Shares for Crown
Stock that is attributable to the Crown Acquisition Preferred Stock will
continue to be deferred.
The SLF ruling described above may not apply to French Holders who acquired
CarnaudMetalbox Shares in a transaction that involved a commitment to retain
those shares for a period of time to receive favorable tax treatment. Such
persons are urged to review the ruling issued by the SLF, a copy of which is
available for inspection at the offices of CarnaudMetalbox.
The SLF has confirmed that any gain realized by individual holders upon the
conversion of shares of Crown Acquisition Preferred Stock into shares of Crown
Common Stock may be deferred and that any gain that was deferred in connection
with the receipt of such shares of Crown Acquisition Preferred Stock pursuant
to the Offer will not be triggered as a result of such conversion, provided the
shares of Crown Acquisition Preferred Stock were acquired pursuant to the
Offer. To obtain such treatment, it will be necessary to file an appropriate
election with the applicable tax return.
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Dividends Received by French Holders of Crown Stock. French Holders who are
residents of France will generally be subject to French income tax on the
receipt of dividends paid with respect to shares of Crown Stock. Credit may
generally be claimed for any U.S. withholding tax paid with respect to such
dividend distributions. See "U.S. Tax Considerations Applicable to Non-US
Holders," above. Dividend distributions with respect to Crown Stock will not
bear any avoir fiscal that is includible in a French Holder's income or that
may be credited against the French Holder's income tax liability.
For the potential U.S. tax considerations applicable to French shareholders
participating in the Offer, see "U.S. Tax Considerations Applicable to Non-U.S.
Holders," above.
United Kingdom Income and Capital Tax Consequences to United Kingdom
Shareholders
Dispositions of CarnaudMetalbox Shares Pursuant to the Offer. Persons that
are resident or ordinarily resident in the United Kingdom or that are carrying
on business in the United Kingdom through an establishment with which their
investment is connected, that hold the CarnaudMetalbox Shares as a capital
asset (a "United Kingdom Holder") and that receive cash in exchange for such
CarnaudMetalbox Shares pursuant to the Offer will recognize a taxable gain or
allowable loss for the purposes of United Kingdom taxation of capital gains.
The amount of the gain or loss will be equal to the difference between the cash
received and the recipient's base cost in the CarnaudMetalbox Shares
surrendered for cash in the exchange, subject to a United Kingdom Holder's
particular circumstances and the availability of any relevant exemptions or
reliefs. An allowance based on movements in the United Kingdom retail price
index between the date of acquisition of the CarnaudMetalbox Shares and the
date of surrender is available to reduce the extent of any gain recognized but
will not convert a gain into a loss, or increase the amount of a loss.
If a United Kingdom Holder exchanges CarnaudMetalbox Shares all or in part
for Crown Stock, the United Kingdom Holder will not be subject to United
Kingdom taxation on capital gains to the extent the United Kingdom Holder
exchanges CarnaudMetalbox Shares for shares of Crown Stock. A United Kingdom
Holder's existing base cost in the CarnaudMetalbox Shares surrendered for Crown
Stock will be transferred to the new holding in the shares of Crown Stock for
the purposes of calculating any gain or loss on subsequent transactions in the
shares of Crown Stock received, and the shares of Crown Stock received will be
treated as having been acquired at the time the surrendered CarnaudMetalbox
Shares were acquired. If Crown Common Stock or Crown Acquisition Preferred
Stock is subsequently sold or otherwise disposed of for the purposes of United
Kingdom taxation on capital gains, the existing base cost for the United
Kingdom Holder's CarnaudMetalbox Shares surrendered for Crown Stock would be
apportioned between the Crown Common Stock and the Crown Acquisition Preferred
Stock by reference to their respective market values or prices on the first day
on which market values or prices were quoted or published for such shares on
the relevant recognized stock exchange following their issue.
Conversion of Crown Acquisition Preferred Stock. A United Kingdom Holder of
Crown Acquisition Preferred Stock that converts such shares into shares of
Crown Common Stock will recognize no gain or loss on the conversion for United
Kingdom taxation purposes. A United Kingdom Holder's existing base cost in the
Crown Common Stock received in the conversion will be equal to the existing
base cost in the Crown Acquisition Preferred Stock surrendered in the
conversion.
Taxation of Dividends. A holder of shares of Crown Stock that is resident in
the United Kingdom for United Kingdom taxation purposes will be subject to
United Kingdom income tax or corporation tax on dividend distributions made
with respect to the shares of Crown Stock. However, individual holders that are
not domiciled in the United Kingdom, or that are Commonwealth subjects or
citizens of the Republic of Ireland not ordinarily resident in the United
Kingdom, will be assessable only on such income to the extent that it is
remitted, or deemed to be remitted for taxation purposes, to the United
Kingdom. Credit will be given for any U.S. withholding tax incurred against any
United Kingdom tax liability arising in respect of the dividend distributions.
See "U.S. Tax Considerations Applicable to Non-U.S. Holders," above.
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For the potential U.S. tax considerations applicable to United Kingdom
holders participating in the Offer, see "U.S. Tax Considerations Applicable to
Non-U.S. Holders," above.
CERTAIN TAX CONSEQUENCES OF THE OFFER TO CARNAUDMETALBOX AND TO CROWN
Crown will not recognize any taxable income as a result of the acquisition of
CarnaudMetalbox Shares pursuant to the Offer.
As described above, Crown intends to transfer CarnaudMetalbox Shares acquired
in the Offer to SNC, a newly-formed societe en nom collectif created under the
laws of France, and SNC will, in connection with the acquisition of such
shares, incur indebtedness or will assume indebtedness incurred by Crown. The
acquisition of 95% or more of the CarnaudMetalbox Shares by a French
corporation (such as SNC) will terminate the existing tax consolidated group of
corporations of which CarnaudMetalbox is a parent. One consequence of this
termination is that some gains and profits which had been deferred by the
CarnaudMetalbox tax group will be recognized by CarnaudMetalbox. However, Crown
believes that the cost of terminating the existing tax group will not be
material as these gains will be offset by existing tax losses of the
CarnaudMetalbox tax group.
OPERATION OF CARNAUDMETALBOX AFTER THE OFFER
Crown believes that the proposed transaction presents a unique strategic
opportunity to become the world's largest packaging company. Crown management
currently intends, based on its review of available information, to reorganize
the combined company into three operating units: the Americas, Europe and Asia.
One president will be assigned to each unit and will report directly to Mr.
Avery, the Chairman of the Board, President and Chief Executive Officer of
Crown. Crown expects that the headquarters for the combined company's European
operations will be CarnaudMetalbox's current Paris headquarters. The Crown
Board and management expect from time to time before and after the consummation
of the proposed transaction to explore and evaluate the advantages of a variety
of strategic alternatives with respect to the combined companies' assets,
subsidiaries, operations and businesses, including alternatives with respect to
dispositions in whole or in part thereof. For information on proposed
divestitures by Crown in connection with the obtaining of regulatory approvals,
"THE CARNAUDMETALBOX PROPOSALS--Regulatory Approvals."
After the consummation of the proposed transaction, Crown management will
continue to explore opportunities for cost reductions and operational
efficiencies and other actions. See "THE CARNAUDMETALBOX PROPOSALS--
Recommendation of Crown's Board of Directors; Reasons for the CarnaudMetalbox
Transaction."
CarnaudMetalbox has a number of credit agreements and debt instruments which
provide that a default will or could possibly exist as a result of Crown's
acquisition of CarnaudMetalbox. In addition, CarnaudMetalbox has a number of
joint venture and other agreements which contain provisions potentially adverse
to Crown in the event Crown consummates the Offer. In certain cases, Crown
intends to seek appropriate waivers or modifications of the applicable
documents, although there can be no assurance such waivers or modifications can
be obtained, or as to the nature of the terms thereof. As to any such material
CarnaudMetalbox indebtedness for which Crown does not obtain appropriate
waivers or modifications, Crown intends to refinance such debt through
replacement facilities to be negotiated as necessary. Based on its review
during such due diligence period, Crown does not believe that the failure to
obtain such waivers or modifications, or the effect of such documents, will
result in a material adverse effect on the combined business, results of
operations or financial position of Crown and CarnaudMetalbox.
REGULATIONS AFFECTING SECURITY HOLDERS
Ownership of Crown Stock will be subject to a number of U.S. federal and
state regulatory provisions, including certain disclosure requirements under
the Exchange Act pertaining to persons beneficially owning more than 5% of a
class of securities registered under the Exchange Act, such as Crown Common
Stock and possibly
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the Crown Acquisition Preferred Stock, and certain restrictions on the resale
of Crown Stock by persons who are affiliates of Crown under the Securities Act
and the rules and regulations promulgated thereunder.
For a discussion of certain other limitations and statutory provisions
affecting shareholders, see "COMPARISON OF SHAREHOLDERS RIGHTS--Limitations on
Takeovers, Business Combinations and Share Accumulations."
OTHER MATTERS RELATED TO THE OFFER
This Proxy Statement/Prospectus constitutes the prospectus of Crown with
respect to offers and sales by Crown in the United States and to U.S. persons,
and reoffers and resales from time to time in the United States and to U.S.
persons, of shares of Crown Common Stock and Crown Acquisition Preferred Stock
issued in connection with the Offer (to the extent such offers, sales, reoffers
and resales are not exempt from registration under the Securities Act).
The Offer is not being made by means of this Proxy Statement/Prospectus in
any jurisdiction in which the making of the Offer by means of this Proxy
Statement/Prospectus or the acceptance thereof would not be in compliance with
the securities, blue sky or other laws of such jurisdiction. However, Crown
may, in its discretion, take such action as it may deem necessary to make the
Offer by means of this Proxy Statement/Prospectus in any jurisdiction and
extend the Offer to holders of CarnaudMetalbox Shares in such jurisdiction.
In the United States, in any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer is being made on behalf of Crown by CS First Boston or one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
The Offer and tenders to the Offer will be governed by the laws of the
Republic of France. The Offer may also be subject to applicable laws of the
United Kingdom and the United States.
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THE EXCHANGE OFFER AGREEMENT
The following is a summary of certain provisions of the Exchange Offer
Agreement, dated as of May 22, 1995, as amended, between Crown and CGIP. The
following description of the Exchange Offer Agreement is qualified in its
entirety by reference to the complete text of the Exchange Offer Agreement,
which is incorporated herein by reference and attached hereto as Annex A.
THE EXCHANGE OFFER
Crown has agreed, subject to the terms and conditions of the Exchange Offer
Agreement, to make (or to cause a wholly owned subsidiary to make) the Offer in
accordance with French law and regulations for all of the outstanding
CarnaudMetalbox Shares on the date of the Exchange Offer Agreement, together
with all CarnaudMetalbox Shares under options on the date thereof and certain
CarnaudMetalbox Shares to be issued following the execution of the Exchange
Offer Agreement (consisting of certain CarnaudMetalbox Shares to be issued by
CarnaudMetalbox as set forth in the announcement regarding CarnaudMetalbox
published in the Bulletin des Annonces Legales Obligatoires on April 12, 1995
(the "BALO Announcement") and the New Options and 1994 Options (as hereinafter
defined)) (the "Outstanding CarnaudMetalbox Shares"). The Exchange Offer
Agreement calls for the Offer to be made on the terms set forth under "THE
OFFER."
In addition, Crown has agreed, subject to the terms and conditions of the
Exchange Offer Agreement, to make (or to cause a wholly owned subsidiary to
make) an exchange offer in the United Kingdom (the "United Kingdom Offer") on,
or as promptly as practicable after, the date the SBF releases an opening
notice (avis d'ouverture) relating to the Offer (the "Commencement Date")
(unless Crown shall have determined in its good faith judgment that the United
Kingdom Offer is not necessary after consultation with CGIP) which, to the
extent permitted by law, shall be on the same terms as the Offer (the Offer and
the United Kingdom Offer are together referred to as the "Exchange Offers").
Under the Exchange Offer Agreement, the Cash Election Price in the United
Kingdom Offer is payable in French francs or, at Crown's option, in pounds
sterling (translated from French francs at the exchange rate in effect on the
closing date of the Offer as published in the Dow Jones Telerate Inc. currency
cross-rates published in the Wall Street Journal (U.S. Edition)). Crown has
determined that, rather than making a separate United Kingdom Offer, Crown
will, as described herein, extend the Offer to holders of CarnaudMetalbox
Shares in the United Kingdom and the United States and that the Cash Election
Price to be paid to United Kingdom and U.S. holders of CarnaudMetalbox Shares
will be paid in French francs. The United Kingdom City Code on Takeovers and
Mergers (the "City Code") will not apply to the Offer because CarnaudMetalbox
is not considered to be "resident" in the United Kingdom for purposes of the
City Code.
The initial Exchange Ratio of 1.065 Units for each CarnaudMetalbox Share
will, subject to certain limitations, be adjusted under the Exchange Offer
Agreement. See "SUMMARY--The Offer--Exchange Ratio and Market Value of Crown
Common Stock."
Subject to applicable securities and takeover laws and the regulations of the
SEC, the COB, the CBV, the SBF and other administrative, governmental or
regulatory authorities with jurisdiction over the subject matter of the
Exchange Offer Agreement, Crown has expressly reserved the right, in its sole
discretion, at any time and from time to time, and regardless of whether or not
any of the conditions to Crown's obligation to launch or close the Offer shall
have been satisfied or waived by Crown, to (1) extend the period of time during
which the Offer is open and thereby delay acceptance for payment of, and the
payment for, any CarnaudMetalbox Shares validly tendered and not withdrawn, and
(2) subject to the provisions summarized in the following paragraph, amend the
Offer (including the Exchange Ratio and the Minimum Condition) in any respect
by surenchere or otherwise. In any case where the terms of the Offer are
modified, any such modification will be effected such that the implied value of
the number of Units offered in exchange for one CarnaudMetalbox Share remains
equal to the Cash Election Price per Share under the terms of the Offer as so
modified. Subject to the provisions of the Exchange Offer Agreement, if by the
expiration of the Offer any or all of the conditions to the Offer have not been
satisfied, Crown has reserved the right (but shall not be obligated) to (1)
terminate the Offer and return all
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tendered CarnaudMetalbox Shares to tendering shareholders, (2) extend the
Offer and, subject to the terms of the Offer (including the rights of
shareholders to withdraw their CarnaudMetalbox Shares) retain the
CarnaudMetalbox Shares which have been tendered and are not subsequently
withdrawn until the termination of the Offer, as extended, or (3) commence
another offer. Crown has no obligation to pay interest on the purchase price
of tendered CarnaudMetalbox Shares under the Exchange Offer Agreement.
Without the prior written consent of CGIP, Crown has agreed not to decrease
the Cash Election Price or the Exchange Ratio (as adjusted pursuant to the
Exchange Offer Agreement), decrease the number of CarnaudMetalbox Shares being
sought in the Offer, change the form of consideration payable in the Offer or
make any other change in the terms or conditions of the Offer which is adverse
to the holders of CarnaudMetalbox Shares (including, without limitation, any
change that would cause CGIP or its indirectly wholly owned subsidiary Camebo
B.V. ("Camebo") to recognize taxable gain or loss in the Offer or in any
subsequent conversion of the Crown Acquisition Preferred Stock into Crown
Common Stock); provided, that an increase in the value of the consideration
offered in the Offer shall not be deemed to constitute an adverse change
solely because it increases the gain or diminishes the loss that holders of
CarnaudMetalbox Shares would otherwise be required to recognize for tax
purposes irrespective of such increase in consideration. Except with respect
to the Minimum Condition, a waiver by Crown of any condition to the Offer in
whole or in part at any time and from time to time in its discretion shall not
be deemed to be adverse to any holder of CarnaudMetalbox Shares.
Notwithstanding the foregoing, Crown has agreed in the Exchange Offer
Agreement that it will not reduce or waive the Minimum Condition.
No fraction of a share of Crown Common Stock or Crown Acquisition Preferred
Stock will be issued in the Offer, but, in lieu thereof, each holder of
CarnaudMetalbox Shares who would otherwise be entitled to a fraction of a
share of Crown Common Stock or Crown Acquisition Preferred Stock (after
aggregating all fractional shares of Crown Common Stock or Crown Acquisition
Preferred Stock to be received by the holder), as the case may be, will be
entitled to receive from Crown an amount of cash in French francs (rounded to
the nearest whole French franc) equal to the product of (1) such fraction and
(2) the Average Crown Common Stock Price.
The Exchange Ratio, the components of a Unit, the Cash Election Price and
the other terms of the Offer will be adjusted to reflect the effect of any
stock split, reverse stock split, stock dividend (including any dividend or
distribution to shareholders of securities convertible into Crown Common Stock
or Crown Acquisition Preferred Stock or CarnaudMetalbox Shares),
recapitalization, or other like change with respect to Crown Common Stock or
Crown Acquisition Preferred Stock or CarnaudMetalbox Shares occurring after
the date of the Exchange Offer Agreement and prior to the Filing Date.
AGREEMENT TO TENDER
Subject to the satisfaction or waiver on or prior to the Filing Date of the
conditions set forth in the Exchange Offer Agreement, CGIP has agreed to
validly tender, and to cause Camebo to validly tender, and not withdraw, all
of the CarnaudMetalbox Shares beneficially owned by CGIP and Camebo (and any
other subsidiary of CGIP) as of the date of the Exchange Offer Agreement and
any such shares acquired thereafter and prior to the date of termination of
the Exchange Offer Agreement, as adjusted by any stock split or similar event
(the "CGIP Shares") pursuant to the Offer on or before the second French
Market Day after the Commencement Date and will irrevocably elect, and cause
Camebo (and any other subsidiary of CGIP) to irrevocably elect (pursuant to
the procedures specified in the Offer and described in the Exchange Offer
Agreement), to receive only Units in consideration for such CGIP Shares.
"French Market Day" means a day on which the Paris Stock Exchange is open for
trading.
Notwithstanding anything to the contrary contained in the Exchange Offer
Agreement, CGIP at all times prior to the expiration of the Offer retains the
right to withdraw its shares previously tendered into the Offer and to tender
its CGIP Shares, and to cause Camebo to tender its CGIP Shares, into a tender
offer or exchange offer launched by a third party for all of the outstanding
CarnaudMetalbox Shares (a "Third Party Bid"), provided that (1) the Third
Party Bid has a greater value than the value of the Offer and Crown has not
increased the Offer, as permitted under the Exchange Offer Agreement, to match
the Third Party Bid; and (2) Crown is unable
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to demonstrate to CGIP that, immediately prior to the scheduled expiration of
the Offer, the Minimum Condition will be satisfied (assuming the CGIP Shares
are tendered in the Offer).
At any annual or special, ordinary or extraordinary meeting of the
shareholders of CarnaudMetalbox however called, CGIP has agreed to vote the
CGIP Shares against (1) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving CarnaudMetalbox
or any of its subsidiaries; (2) a sale or transfer of a material amount of
assets of CarnaudMetalbox or any of its subsidiaries or a reorganization,
recapitalization or liquidation of CarnaudMetalbox or any of its subsidiaries;
(3) any change in a majority of the directors or the supervisory board of
CarnaudMetalbox, except as otherwise agreed to in writing by Crown; (4) any
material change in the present capitalization of CarnaudMetalbox (other than
(x) relating to the transaction, (y) the issuance of New Options and the 1994
Options in accordance with the Exchange Offer Agreement and (z) the amendment
to the statuts, in each case described in the BALO Announcement), or any
material change in the dividend policy of CarnaudMetalbox; (5) any action which
would cause any of CGIP's representations and warranties to become untrue in
any material respect or any condition to the obligations of CGIP or Crown to
remain unsatisfied; and (6) any other material change in CarnaudMetalbox's
corporate structure or business, in each case (1) to (6) to the extent such
action or agreement would impede, interfere with, delay, postpone or attempt to
discourage the Offer or the consummation of the transactions contemplated by
the Exchange Offer Agreement.
The Exchange Offer Agreement, Crown's obligation to make the Offer pursuant
to the Exchange Offer Agreement, and CGIP's obligation to tender its CGIP
Shares and to cause Camebo (and any other subsidiary of CGIP) to tender its
CGIP Shares pursuant to the Offer, shall terminate on the first to occur of (1)
the first date on which the Offer has been successfully consummated (and the
Closing Date with respect thereto shall have occurred) or has expired without
being successfully consummated, and (2) termination of the Exchange Offer
Agreement in accordance with its terms.
CARNAUDMETALBOX STOCK OPTIONS
Subject to applicable law and regulation, and subject to the terms of
CarnaudMetalbox's employee stock options, Crown has agreed to make an offer to
each holder of CarnaudMetalbox's employee stock options outstanding on the date
of the Exchange Offer Agreement, and each holder of options (which may be for
up to 200,000 CarnaudMetalbox Shares) granted to management of CarnaudMetalbox
following execution of the Exchange Offer Agreement (the "New Options") and
options for up to 44,000 CarnaudMetalbox Shares to be granted pursuant to stock
options authorized in 1994 by CarnaudMetalbox's shareholders (the "1994
Options") to the extent issued in accordance with the Exchange Offer Agreement
(the outstanding options, the New Options and the 1994 Options are collectively
referred to as the "Outstanding Options") in respect of the CarnaudMetalbox
Shares for which such Outstanding Options have not been exercised as of the
Closing Date, to settle such holder's options, at the sole discretion of Crown,
(1) for cash at a price per CarnaudMetalbox Share equal to the Cash Election
Price to the extent such options are "in the money," provided that Crown shall
indemnify the holder against all tax claims and liabilities resulting from such
settlement, (2) by issuing options on Crown Common Stock that are exercisable
at such price as Crown determines not in excess of the then current market
price for Crown Common Stock that preserve, to the fullest extent practical,
the provisions of such holder's options as to the duration of such options, the
conditions for vesting of such options and the conditions for exercise of such
options or (3) by offering a choice to the holder of (1) or (2), or a
combination of (1) and (2) in a proportion to be agreed between Crown and the
option holder, provided that in the cases described in the foregoing clause (3)
Crown will have no obligation to indemnify a holder who elects cash from any
tax claims and liabilities resulting from such settlement. In addition, subject
to applicable law and regulation, to the extent any employee or former employee
of CarnaudMetalbox is prohibited under applicable law or regulation from
transferring CarnaudMetalbox Shares received upon exercise of options, Crown
will, on the date such employee or former employee is permitted to transfer
such CarnaudMetalbox Shares, offer such employee or former employee the right
to tender such CarnaudMetalbox Shares to Crown for Units (in an amount
determined by applying the Exchange Ratio as adjusted on the Measurement Date,
and provided Crown Acquisition Preferred Stock is then outstanding) or cash in
an amount equal to the Cash Election Price, in each case on the same basis
offered in the Offer. Subject to compliance with the foregoing, nothing in the
Exchange Offer Agreement limits
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Crown with respect to restricting or terminating such options as agreed
between Crown and the holders of such options. Such Outstanding Options will
otherwise remain outstanding and exercisable in accordance with their terms if
the Offer is consummated.
Since the execution of the Exchange Offer Agreement, Crown, CGIP,
CarnaudMetalbox and certain holders of the Outstanding Options have had, and
expect to continue having, discussions regarding the foregoing treatment of
the Outstanding Options under the Exchange Offer Agreement, including the
French tax impact to the holders of such options. It is possible that the
foregoing treatment could be modified in certain respects to provide for a
more tax-advantaged structure or other changes, including in certain cases
(depending on the holding period of the option) a possible repurchase by Crown
following consummation of the Offer at a fixed or formula price to be
determined by the parties. Such modifications could be materially different
from the foregoing treatment.
WARRANTIES
Crown has made certain warranties to CGIP in the Exchange Offer Agreement in
respect of Crown and, in some cases, subsidiaries of Crown, relating to, among
other things, the following matters (which warranties are subject, in certain
cases, to specified exceptions): (1) organization and qualification; (2)
capitalization; (3) Crown SEC reports and the accuracy of the information
contained therein; (4) the accuracy of financial statements; (5) absence of
certain changes or events since the date of Crown's financial statements; (6)
absence of material litigation; (7) Crown employee plans; (8) Articles of
Incorporation and Bylaws of Crown; (9) tax matters; (10) corporate power and
authority to enter into and consummate the transactions contemplated by the
Exchange Offer Agreement and the execution, delivery and enforceability of the
Exchange Offer Agreement; (11) absence of conflict of the Exchange Offer
Agreement with the Articles of Incorporation and Bylaws and of requirements
for consents and approvals and governmental and regulatory authorization,
except as disclosed; (12) absence of investment bankers, brokers, finders or
financial advisors entitled to compensation as a result of the Exchange Offer
Agreement, except as disclosed; (13) the validity of Crown Common Stock and
Crown Acquisition Preferred Stock issuable in the Offer; (14) the material
accuracy of the information supplied by Crown for use in this Proxy
Statement/Prospectus, and (15) the material accuracy of the information
supplied by Crown for the documents to be filed under applicable law in France
and the United Kingdom in connection with the Offer.
CGIP has made certain warranties to Crown in the Exchange Offer Agreement in
respect of CGIP, relating to, among other things, the following matters (which
warranties are subject in certain cases to specified exceptions): (1)
ownership of and title to the CGIP Shares; (2) organization; (3) corporate
power and authority to execute, deliver and consummate the transactions
contemplated by the Exchange Offer Agreement and the execution, delivery, and
enforceability of the Exchange Offer Agreement; (4) absence of conflict with
organizational documents, of requirement for consents, approvals or
governmental or regulatory authorizations, or of default under any contract or
violation of applicable law, except as disclosed; (5) ownership of Crown
Common Stock; (6) the investment intent of CGIP in acquiring Crown Common
Stock and Crown Acquisition Preferred Stock; (7) the absence of investment
bankers, brokers, finders, or financial advisers entitled to compensation as a
result of the Exchange Offer Agreement, except as disclosed; (8) the material
accuracy of information supplied by CGIP for the documents to be filed under
applicable law in France and the United Kingdom in connection with the Offer;
(9) the material accuracy of information supplied by CGIP for this Proxy
Statement/Prospectus; (10) delivery of the organizational documents of CGIP;
and (11) absence of material agreements between CGIP and CarnaudMetalbox and
its subsidiaries, except as disclosed.
CERTAIN COVENANTS
Covenants of CGIP. The Exchange Offer Agreement provides that CGIP will not
transfer, enter into any arrangement with respect to the transfer of, or grant
any proxies or enter into any voting agreement or trust with respect to, any
CGIP Shares and that CGIP will notify Crown of any equity interests in
CarnaudMetalbox acquired by CGIP (which will then become CGIP Shares for
purposes of the Exchange Offer Agreement), and transfer or pay over to Crown
any dividend or other distribution received by CGIP with respect to such CGIP
Shares (other than the previously paid 1995 regular dividend of FF 4.40). In
addition, CGIP will, and will use its
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reasonable best efforts to cause CarnaudMetalbox to, provide to Crown all
information relating to CGIP and CarnaudMetalbox necessary for Crown to prepare
filings required to be made in connection with the Offer and notify Crown of
the inclusion in any such filing of an untrue statement of a material fact or
the omission to state any material fact necessary in order to make the
statements therein not misleading, with respect to information provided by or
on behalf of CGIP or CarnaudMetalbox, and provide to Crown the information
necessary to prepare amendments or supplements. CGIP has also agreed to cause
its designees for the Board of Directors to deliver consents to be named in
this Proxy Statement/Prospectus.
CGIP has agreed to use its reasonable best efforts, to the extent practicable
and permitted under French law, to cause CarnaudMetalbox and its subsidiaries
to conduct their respective businesses in the ordinary course, subject to
certain exceptions. CGIP will also use its reasonable best efforts, to the
extent practicable and permitted under French law, to cause CarnaudMetalbox not
to (1) except as stated in the BALO Announcement, amend or otherwise change the
organizational documents of CarnaudMetalbox or any of its material
subsidiaries; (2) dispose of or encumber any material operating assets of
CarnaudMetalbox or any of its subsidiaries, except in the ordinary course of
business; (3) issue, encumber, dispose of, or authorize the foregoing with
respect to, any ownership interest in CarnaudMetalbox or any of its
subsidiaries, or otherwise alter its capital structure, subject to certain
exceptions; (4) amend the terms of, split, combine or reclassify any of its
capital stock, or authorize the issuance of, any other securities in
substitution for shares of its capital stock, except as agreed; (5) acquire any
other business organization or division thereof; (6) materially change its
method of accounting, subject to certain exceptions, or (7) change
CarnaudMetalbox's annual accounting period. CGIP has also agreed to use its
reasonable best efforts, to the extent practicable and permitted under French
law, to cause CarnaudMetalbox and its subsidiaries (1) to give Crown reasonable
access to information concerning CarnaudMetalbox and its subsidiaries; (2) to
provide certain information to Crown relating to the tax position of
CarnaudMetalbox and its subsidiaries and to engage in certain internal
corporate restructuring transactions in order to minimize taxes payable by
Crown and its affiliates, and to cooperate with Crown in connection with the
restructuring or refinancing of, or the obtaining of required waivers or
consents for any indebtedness or material contracts or agreements of
CarnaudMetalbox and its subsidiaries, (3) to deliver to Crown a report, a
consent and a "comfort letter" from CarnaudMetalbox's independent accountants
for use in connection with this Proxy Statement/Prospectus and (4) to file with
the French and United Kingdom securities authorities, and make available to
Crown, all forms, reports, and documents required to be filed.
In addition, CGIP has agreed following consummation of the Offer to cooperate
fully in assisting Crown to achieve representation on the supervisory board of
CarnaudMetalbox proportionate to Crown's ownership of CarnaudMetalbox Shares
and to use its best efforts to secure resignations of members of the
supervisory board to effectuate such representation.
Covenants of Crown. The Exchange Offer Agreement provides that Crown will
take all action necessary to convene a meeting of its shareholders to vote upon
the approval of the transactions contemplated by the Exchange Offer Agreement
and the adoption of the Acquisition Articles Amendment. The Board of Directors
of Crown will recommend approval by the Crown shareholders of such actions but
may change any recommendation if it determines that the failure to do so would
cause it to breach its fiduciary duties. In addition, Crown has agreed that it
will (1) file listing applications for and use its reasonable best efforts to
cause the NYSE and the Paris Stock Exchange to list the Crown Stock issued in
the Offer; (2) conduct, and cause its subsidiaries to conduct, their respective
businesses in the ordinary course of business, and not alter its organizational
documents or issue or sell capital stock, subject to certain exceptions
(including in respect of a shareholder rights plan of Crown); (3) give CGIP and
CarnaudMetalbox reasonable access to information regarding Crown; (4) prepare
and file a dossier and projet d'offre with the CBV in connection with the Offer
and use its reasonable best efforts to cause such filing to be approved as
promptly as practicable; (5) prepare and file with the SEC this Proxy
Statement/Prospectus, and with the COB, a note d'information, and cause the
note d'information to be approved as promptly as practicable and to take other
actions required under applicable securities laws; (6) make all filings
required with the London Stock Exchange and take any other actions required in
the United Kingdom; (7) notify CarnaudMetalbox and CGIP and prepare and file
amendments or supplements to the foregoing
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documents if Crown becomes aware that any event has occurred as a result of
which any filing would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements therein
not misleading, and (8) use its reasonable best efforts to cause Crown's
independent accountants to deliver to CGIP and each of its designees for
election to the Board of Directors of Crown a "comfort letter" with respect to
this Proxy Statement/Prospectus.
The Exchange Offer Agreement also provides that effective as of the Closing,
the Board of Directors of Crown will adopt a Bylaw amendment which provides
for the formation of a Strategic Committee of Crown directors, three of whom
(including the chair) will be designees of CGIP. The Strategic Committee will
be formed to consider (1) changes to CarnaudMetalbox's dividend and debt
rating policies, (2) approval of business combinations and other extraordinary
transactions, and (3) succession planning. The Board of Directors of Crown
will consider the vote of the Strategic Committee in determining whether to
pass or reject any such item but will not be bound to follow the vote of the
Strategic Committee.
Additional Covenants of CGIP and Crown. Crown and CGIP have further agreed
that each will, and CGIP will use its reasonable best efforts to cause
CarnaudMetalbox to, make all necessary filings with respect to the Exchange
Offer and make or cause to be made all filings required in connection with the
Exchange Offer Agreement. Crown and CGIP have also agreed to, and CGIP has
agreed to use reasonable best efforts to the extent practicable and permitted
under French law to cause CarnaudMetalbox to, obtain all consents, waivers,
approvals, authorizations and orders required by the transactions contemplated
by the Exchange Offer Agreement. In connection therewith, Crown has agreed, if
required by any governmental authority, to sell or divest itself of all or a
portion of its or CarnaudMetalbox's business to obtain a necessary approval;
provided that such action will not be required if it would result in a
material diminution of the value of Crown and CarnaudMetalbox as a combined
entity. For a discussion of such approvals and authorizations, including the
proposed divestiture of certain European aerosol can plants and operations of
Crown and CarnaudMetalbox, see "THE CARNAUDMETALBOX PROPOSALS--Regulatory
Approvals."
In addition, Crown and CGIP have agreed to cooperate in consummating the
transactions contemplated by the Exchange Offer Agreement, to consult with one
another with respect to public statements and filings and to notify one
another of material breaches of such agreement. Crown and CGIP have also
agreed to execute the Shareholders Agreement on the Closing Date.
NO SOLICITATION
The Exchange Offer Agreement provides that CGIP will not, and will use its
reasonable best efforts, to the extent practicable and to the extent permitted
under French law and regulation to cause CarnaudMetalbox not to, directly or
indirectly, solicit (including by way of furnishing information) any inquiries
or the making of any proposal by any person or entity (other than Crown or any
affiliate of Crown) or enter into any agreement, arrangement or understanding,
or any negotiations or discussions which might lead to any agreement,
arrangement or understanding which constitutes, or may reasonably be expected
to lead to, any direct or indirect sale or other transfer of the CGIP Shares
(or other equity interests in CarnaudMetalbox) or any other extraordinary
transaction involving the CGIP Shares (or other equity interests in
CarnaudMetalbox) or CarnaudMetalbox, including without limitation the
acquisition or sale of a material amount of assets, the sale, issuance or
transfer of any equity securities (other than pursuant to employee benefit
arrangements in the ordinary course of business and other than as disclosed by
CarnaudMetalbox in certain information regarding CarnaudMetalbox disclosed to
Crown prior to the date of the Exchange Offer Agreement, as more particularly
described in the Exchange Offer Agreement (the "Company Disclosure
Information")), or any tender or exchange offer, merger or other business
combination, involving CarnaudMetalbox or any of its subsidiaries. If CGIP or
CarnaudMetalbox receives an inquiry or proposal with respect to any such sale
of the CGIP Shares or other extraordinary transaction involving the CGIP
Shares or CarnaudMetalbox, then CGIP or CarnaudMetalbox, as the case may be,
will promptly inform Crown of the terms and conditions, if any, of the inquiry
or proposal and the identity of the person making it. CGIP will immediately
cease, and will use its reasonable best efforts, to the extent practicable and
to the extent permitted under French law and regulation, to cause
CarnaudMetalbox to
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terminate any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing.
CONDITIONS; WAIVER
Conditions to Obligations of Crown. The obligation of Crown to make the Offer
is subject to the satisfaction or waiver of the following conditions: (1) the
warranties of CGIP contained in the Exchange Offer Agreement shall be true and
correct in all material respects, on and as of the Filing Date as if made on
and as of the Filing Date, except for (a) changes contemplated by the Exchange
Offer Agreement, (b) those warranties that address matters only as of a
particular date (which will remain true and correct as of that date), and (c)
breaches or inaccuracies of warranties as to title to the CGIP Shares and
CGIP's corporate organization and authority to enter into the Exchange Offer
Agreement, which shall be absolutely true and correct; (2) CGIP shall have
performed or complied in all material respects with all of its obligations
under the Exchange Offer Agreement to be performed or complied with on or prior
to the Filing Date; (3) all material consents, waivers, approvals,
authorizations, or orders required to be obtained by CGIP or CarnaudMetalbox,
and all filings required to be made by CGIP or CarnaudMetalbox, for the
authorization, execution and delivery of the Exchange Offer Agreement by CGIP,
the performance of CGIP's and CarnaudMetalbox's obligations under the Exchange
Offer Agreement and the consummation by CarnaudMetalbox and CGIP of the
transactions contemplated by the Exchange Offer Agreement shall have been
obtained and made by CGIP or CarnaudMetalbox, as the case may be; (4) Crown's
shareholders shall have approved the CarnaudMetalbox Proposals; (5) the
registration statement of which this Proxy Statement/Prospectus is a part shall
have been declared effective and no stop order suspending effectiveness shall
have been issued, no action, suit, proceeding or investigation by the SEC to
suspend the effectiveness shall have been threatened or initiated, and all
necessary approvals relating to the Offer or the issuance or trading of the
Crown Common Stock, Crown Acquisition Preferred Stock or the Crown Common Stock
to be issued upon the conversion of the Crown Acquisition Preferred Stock shall
have been received (it being understood that the approvals of the United
Kingdom Offer and the listing of the Crown Common Stock and Crown Acquisition
Preferred Stock on the London Stock Exchange are not a condition to Crown's
obligation to launch the Offer); (6) there shall not exist any temporary
restraining orders, preliminary or permanent injunction, other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
(including any antitrust authority with jurisdiction over the Offer)
prohibiting Crown from launching the Offer; (7) the due diligence and other
procedures set forth in the Exchange Offer Agreement shall not be pending; (8)
except as otherwise disclosed, the statements regarding CarnaudMetalbox
contained in an annex to the Exchange Offer Agreement that are not qualified by
materiality shall be true and correct in all material respects, and the
statements regarding CarnaudMetalbox in such annex that are qualified by
materiality shall be true and correct, on and as of the date of the Exchange
Offer Agreement and the Filing Date, except for (a) changes contemplated by the
Exchange Offer Agreement and (b) those statements that address matters only as
of a particular date (which will remain true and correct as of that date) (for
purposes of determining whether this condition is satisfied as to any statement
included in such annex, any information as to CarnaudMetalbox provided to Crown
after the date of the Exchange Offer Agreement which is not Company Disclosure
Information and which is not publicly available ("Additional Company
Information") shall not be taken into account unless further information that
is not Additional Company Information when considered together with such
Additional Company Information (taking into account any materiality standards
included in such statement) results in a breach of such statement); (9)
CarnaudMetalbox shall have complied with certain obligations regarding Crown's
due diligence review of CarnaudMetalbox; (10) CarnaudMetalbox shall not have
(x) declared, set aside, or paid any dividend or other distribution (whether in
cash, stock, property or any combination thereof) in respect of any of its
capital stock between the date of the Exchange Offer Agreement and the Filing
Date, or indicated its intention to do so within three months of the Filing
Date, except that (a) CarnaudMetalbox is permitted under the Exchange Offer
Agreement to pay its regular dividend of FF 4.40 per share of Common Stock
which was paid after approval at CarnaudMetalbox's annual general meeting of
Shareholders held on June 2, 1995, (b) a direct or indirect wholly owned
subsidiary of CarnaudMetalbox may declare and pay a dividend to its parent, and
(c) other subsidiaries may declare and pay customary, regular dividends in the
ordinary course, consistent with past practice or (y) amended the terms of,
repurchased, redeemed, or otherwise acquired, or
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permitted any subsidiary to amend the terms of, repurchase, redeem, or
otherwise acquire, any of its capital stock; (11) there shall not have occurred
(a) any general suspension of trading in, or limitation on prices for,
securities on the NYSE or Paris Stock Exchange, (b) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States or France, or (c) any material limitation by any French or United States
governmental, administrative or regulatory authority or agency on the extension
of credit by banks or other lending institutions; (12) the shares of Crown
Common Stock and Crown Acquisition Preferred Stock issuable in connection with
the Offer and the Crown Common Stock issuable upon conversion of the Crown
Acquisition Preferred Stock shall have been accepted for listing on the NYSE
subject to official notice of issuance (provided Crown has complied with its
obligations in respect thereof); and (13) (a) CGIP shall not have been a party
to any merger, consolidation or share exchange, and shall not have sold all or
substantially all of its assets, under circumstances in which persons who were
members of the CGIP's Board of Directors at the date of the Exchange Offer
Agreement do not constitute a majority of CGIP's Board of Directors (or body
performing similar functions) of the corporation or other entity surviving such
transaction, and (b) it shall not have been publicly disclosed that 25% or more
of the outstanding shares of CGIP's common stock have been acquired by any
person or group (other than Crown and its affiliates).
The obligation of Crown to acquire the CarnaudMetalbox Shares tendered
pursuant to the Offer is subject to the satisfaction or waiver of the following
condition: upon completion of the Offer, the SBF shall have published a notice
(avis de resultat) confirming that the number of CarnaudMetalbox Shares validly
tendered to the Offer, when added together with CarnaudMetalbox Shares acquired
by Crown in the United Kingdom Offer and any other contemporaneous exchange
offer made by Crown or one of its subsidiaries in another jurisdiction, equals
or exceeds the Minimum Condition.
Conditions to Obligations of CGIP. The obligation of CGIP to tender or cause
the tender of the CGIP Shares pursuant to the Offer is subject to the
satisfaction or waiver of the following conditions: (1) except as disclosed in
writing by Crown to CGIP prior to the date of the Exchange Offer Agreement, the
warranties of Crown contained in the Exchange Offer Agreement that are not
qualified by materiality shall be true and correct in all material respects,
and the warranties of Crown in such agreement that are qualified by materiality
shall be true and correct, on and as of the Filing Date as if made on and as of
the Filing Date, except for (a) changes contemplated by the Exchange Offer
Agreement, (b) those warranties that address matters only as of a particular
date (which will remain true and correct as of that date) and (c) breaches or
inaccuracies of warranties as to corporate authority for and enforceability of
the Exchange Offer Agreement, due authorization and issuance of, and the fully-
paid, non-assessable status of, the Crown Stock to be issued in the Offer,
which shall be absolutely true and correct (for purposes of determining whether
this condition is satisfied as to any warranty, any information as to Crown
provided to CGIP after the date of the Exchange Offer Agreement and which is
not publicly available ("Additional Crown Information") shall not be taken into
account unless further information that is not Additional Crown Information
when considered together with such Additional Crown Information (taking into
account any materiality standards included in such warranty) results in a
breach of such warranty); (2) Crown shall have performed or complied in all
material respects with all of the obligations to be performed or complied with
by it on or prior to the Filing Date; (3) all material consents, waivers,
approvals, authorizations, or orders required to be obtained under, and all
filings required to be made, by Crown for the authorization, execution and
delivery of the Exchange Offer Agreement by Crown, the performance of Crown's
obligations under the Exchange Offer Agreement and the consummation by Crown of
the transactions contemplated hereby shall have been obtained and made by
Crown; (4) Crown's shareholders shall have approved the CarnaudMetalbox
Proposals; (5) the registration statement of which this Proxy
Statement/Prospectus is a part shall have been declared effective and no stop
order suspending effectiveness shall have been issued, no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness shall have
been threatened or initiated, and all necessary approvals relating to the Offer
or the issuance or trading of Crown Common Stock, Crown Acquisition Preferred
Stock or the Crown Common Stock to be issued upon the conversion of the Crown
Acquisition Preferred Stock shall have been received (it being understood that
the approvals of the United Kingdom Offer and the listing of Crown Common Stock
and Crown Acquisition Preferred Stock on the London Stock Exchange are not a
condition to CGIP's obligation to tender the CGIP Shares pursuant to the
Offer); (6)
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there shall not exist any temporary restraining order, preliminary or permanent
injunction, other than issued by any court of competent jurisdiction, or other
legal restraint or prohibition (including any antitrust authority with
jurisdiction over the Offer) prohibiting CGIP from tendering into the Offer;
(7) the due diligence and other procedures set forth in the Exchange Offer
Agreement shall not be pending; (8) Crown shall have complied with certain
obligations regarding CGIP's due diligence review of Crown; (9) the long-term
unsecured senior debt securities of Crown shall not have been downgraded (a
"Downgrade") by either Moody's or S&P to a rating below "investment grade",
provided that CGIP shall not be entitled to rely on this condition unless it
shall, prior to such reliance, have entered into good faith negotiations with
Crown for a reasonable period of time in an effort to modify the terms of the
transaction in a manner sufficient to alleviate such Downgrade ("investment
grade" shall mean either Moody's or S&P shall have rated the security in one of
its generic rating categories which signifies investment grade (typically the
four highest categories); see "THE CARNAUDMETALBOX PROPOSALS--Sources of Funds"
for information regarding the possible effects of the CarnaudMetalbox
Transaction on Crown's debt ratings); (10) there shall not have occurred (a)
any general suspension of trading in, or limitation on prices for, securities
on the NYSE or Paris Stock Exchange, (b) a declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States or
France, or (c) any material limitation by any French or United States
governmental, administrative or regulatory authority or agency on the extension
of credit by banks or other lending institutions; (11) the shares of Crown
Common Stock and Crown Acquisition Preferred Stock issuable in connection with
the Offer and the Crown Common Stock issuable upon conversion of the Crown
Acquisition Preferred Stock shall have been accepted for listing on the NYSE
subject to official notice of official issuance, and Crown shall have applied
for the listing thereof on the Paris Stock Exchange; and (12) (a) Crown shall
not have been a party to any merger, consolidation or share exchange, and shall
not have sold all or substantially all of its assets, under circumstances in
which persons who were members of the Crown's Board of Directors at the date of
the Exchange Offer Agreement do not constitute a majority of Crown's Board of
Directors (or body performing similar functions) of the corporation or other
entity surviving such transaction, and (b) it shall not have been publicly
disclosed that 25% or more of the outstanding shares of Crown Common Stock have
been acquired by any person or group (other than CGIP and its affiliates).
The obligation of CGIP to tender is further subject to the condition that the
applicable French regulatory authorities confirm certain tax consequences of
the Offer, which condition has been satisfied. See "THE OFFER--Certain Tax
Consequences of the Offer--Income Tax Consequences to French Tax Resident
Shareholders."
TERMINATION; AMENDMENT
The Exchange Offer Agreement may be terminated, by written notice from the
terminating party to the other party thereto, pursuant to the following
provisions at any time:
(1) Prior to the Filing Date by Crown if there has been (a) a breach of
any covenant or agreement therein on the part of CGIP that would result in
a failure of the conditions to Crown's obligations to launch or close the
Offer and which has not been cured within 30 calendar days following
receipt of notice of such breach or (b) a material breach of a warranty
therein on the part of CGIP that would result in a failure of the condition
to Crown's obligation to launch the Offer which breach by its nature is not
reasonably likely to be cured prior to March 31, 1996; or CGIP, Camebo,
CarnaudMetalbox or any of CarnaudMetalbox's material subsidiaries makes a
general assignment for the benefit of creditors, or any proceeding shall be
instituted by or against CGIP, Camebo, CarnaudMetalbox or any of its
material subsidiaries seeking to adjudicate any of them a bankrupt or
insolvent, or seeking liquidation, winding up or reorganization,
arrangement, adjustment, protection, relief or composition of its debts
under any law relating to bankruptcy, insolvency or reorganization (and if
such proceeding is against CGIP, Camebo, CarnaudMetalbox or any of
CarnaudMetalbox's material subsidiaries, it remains unstayed and in effect
for 60 consecutive days after institution of such proceeding).
(2) By Crown if (a) Crown has commenced the Offer and the Offer is
terminated or expires in accordance with its terms without Crown having
purchased any CarnaudMetalbox Shares thereunder due to a failure of the
conditions of the Offer (including the Minimum Condition) to be satisfied
or (b) CGIP tenders any of the CGIP Shares into a Third Party Bid.
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(3) Prior to the Filing Date by CGIP if (a) there has been (i) a breach
of any covenant or agreement herein on the part of Crown that would result
in a failure of the condition to CGIP's obligation to tender into the Offer
regarding the accuracy of Crown's warranties and performance of covenants
prior to the Filing Date which has not been cured within 30 calendar days
following receipt of notice of such breach or (ii) a material breach of a
warranty herein on the part of Crown that would result in a failure of the
condition to CGIP's obligation to tender into the Offer regarding the
accuracy of Crown's warranties which breach by its nature cannot be cured
prior to March 31, 1996; or (b) Crown or any of its material subsidiaries
makes a general assignment for the benefit of creditors, or any proceeding
shall be instituted by or against Crown or any of its material subsidiaries
seeking to adjudicate any of them a bankrupt or insolvent, or seeking
liquidation, winding up or reorganization, arrangement, adjustment,
protection, relief or composition of its debts under any law relating to
bankruptcy, insolvency or reorganization (and if such proceeding is against
Crown or any such material subsidiary, it remains unstayed and in effect
for 60 consecutive days after the institution of such proceeding).
(4) By CGIP if Crown has commenced the Offer, and the Offer (as the same
may have been modified or extended in accordance with the Exchange Offer
Agreement or replaced by a new offer) is terminated or expires in
accordance with its terms without Crown having purchased any
CarnaudMetalbox Shares thereunder due to a failure of the conditions of the
Offer (including the Minimum Condition) to be satisfied.
(5) By either CGIP or Crown if (a) the Closing Date shall not have
occurred on or prior to March 31, 1996 (the "Final Termination Date");
provided, however, that if Crown shall have commenced the Offer prior to
the Final Termination Date and the Offer shall not have terminated or
expired prior to the Final Termination Date, then the Final Termination
Date shall be extended until the termination or expiration of the Offer in
accordance with its terms, provided that Crown shall not have voluntarily
extended the time period of the Offer if the Final Termination Date would
occur prior to such extension (unless such extension is in connection with
an increase in the amount of consideration payable to shareholders of
CarnaudMetalbox (including CGIP) tendering in the Offer in response to a
Third Party Bid provided that the Final Termination Date shall not be later
than the termination date of such Third Party Bid), and, provided, further
that the right to terminate the Exchange Offer Agreement pursuant to the
foregoing shall not be available to any party whose failure to fulfill any
obligation or condition under the Exchange Offer Agreement shall have been
the cause of, or shall have resulted in, the failure of the Closing Date to
occur on or prior to such date, or (b) Crown's shareholders shall fail to
approve the CarnaudMetalbox Proposals at the Special Meeting, provided
that, with respect to any termination by Crown pursuant to the foregoing
that Crown shall have complied with its obligations in respect of the
Special Meeting.
(6) Prior to the Filing Date by either CGIP or Crown in the event that
any governmental, regulatory or judicial authority or tribunal shall have
issued a final, non-appealable order, decree or ruling or taken any other
final, non-appealable action restraining, enjoining or otherwise
prohibiting the Offer by Crown or the tender by CGIP of the CGIP Shares
into the Offer.
(7) By the mutual written consent of CGIP and Crown.
(8) On the date immediately prior to the Filing Date by Crown if, on the
Final Determination Date, the Average Crown Common Stock Price (computed
with the Final Determination Date being deemed the Measurement Date) is
greater than FF 242.96 (115% of the Initial Price).
(9) On the date immediately prior to the Filing Date by CGIP if, on the
Final Determination Date, the Average Crown Common Stock Price (computed
with the Final Determination Date being deemed the Measurement Date) is
less than FF 179.58 and Crown shall not by 12:00 Midnight, New York City
time, on the date prior to the Filing Date have delivered to CGIP a written
agreement by Crown to amend the Exchange Ratio such that the implied value
of the number of shares of Crown Common Stock and the number of shares of
Crown Acquisition Preferred Stock deliverable in exchange for one
CarnaudMetalbox Share is not less than FF 212.50. For this purpose, such
implied value shall be computed on the basis of the Average Crown Common
Stock Price, with the Final Determination Date being deemed to be the
Measurement Date, and the ratio of the number of shares of Crown Common
Stock to the number of shares of Crown Acquisition Preferred Stock per Unit
shall remain constant at .75 to .25.
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(10) By CGIP or Crown on the last day of the 30-day period commencing
June 12, 1995 (or such later date as is agreed by the parties) if CGIP's or
Crown's, as the case may be, outside accountants have advised CGIP or
Crown, respectively, that the net adverse effect on the value of Crown or
CarnaudMetalbox, respectively, attributable to the additional information
reviewed during such time exceeds $250 million, as determined in accordance
with the Exchange Offer Agreement.
(11) By CGIP if the Board of Directors of Crown shall withdraw, or
adversely modify or adversely change its recommendation to Crown
shareholders of the Exchange Offer Agreement and, thereafter, the necessary
shareholder approvals are not obtained at the Special Meeting, provided
that the Exchange Offer Agreement is not terminable at such time by Crown
for a reason other than the failure to obtain such shareholder approvals.
For further information in respect of the termination rights referred to in
paragraph (9) above, see "SUMMARY--The Offer--Exchange Ratio and Market Value
of Crown Common Stock." The due diligence termination rights referred to in
paragraph (11) above of CGIP and Crown expired on July 11, 1995, without either
party exercising such rights. See "THE CARNAUDMETALBOX PROPOSALS--Background of
the CarnaudMetalbox Transaction."
In the event of termination of the Exchange Offer Agreement as provided in
the foregoing, the Exchange Offer Agreement shall forthwith become void and
there shall be no liability on the part of either party thereto except that
nothing therein shall relieve either party from liability for any willful
breach of the Exchange Offer Agreement.
The Exchange Offer Agreement may be modified, amended or supplemented by a
written agreement executed by Crown and CGIP.
FEES AND EXPENSES; OTHER
Under the Exchange Offer Agreement, each of Crown, on the one hand, and CGIP
and CarnaudMetalbox, on the other hand, will bear and pay all costs and
expenses incurred by it or them or on its or their behalf in connection with
the transactions contemplated under the Exchange Offer Agreement, including
fees and expenses of its own financial or other consultants, investment
bankers, accountants and counsel, except that, to the fullest extent permitted
under law, in the event the Offer is successful, Crown or its designee will
reimburse CGIP for 80% of the total amount of the documented fees and expenses
of CGIP's legal and financial advisers with respect to the transactions
contemplated by the Exchange Offer Agreement, up to a maximum reimbursement
amount of $15 million.
Upon any termination by CGIP of the Exchange Offer Agreement pursuant to a
withdrawal by Crown's Board of Directors of its recommendation to Crown
shareholders at the Special Meeting, and the subsequent failure to obtain the
necessary shareholder approvals, Crown has agreed to pay CGIP $10 million (in
recognition of the expenses and effort devoted to the proposed transaction),
provided that CGIP shall give notice of such termination within 10 business
days following the date of the Special Meeting. In the event that CGIP tenders
any of the CGIP Shares to a Third Party Bid, CGIP has agreed to pay Crown $10
million (in recognition of the expenses and effort devoted to the proposed
transaction). The foregoing expense reimbursement obligations are subject to
prior approval of the COB. In the event that obtaining such COB approval
requires modification to one or both, Crown and CGIP may mutually agree to
modify the obligations. The parties have agreed that the dollar amount set
forth in the foregoing expense reimbursement obligations shall not be construed
to be liquidated damages, and, in the event of a breach of the Exchange Offer
Agreement by either party, the other party shall be entitled to such damages
and remedies as are available under the Exchange Offer Agreement and applicable
law.
None of the representations and warranties contained in the Exchange Offer
Agreement will survive the expiration of the Exchange Offer Agreement.
Notwithstanding the foregoing, the parties' warranties with respect to
corporate power and authority and the enforceability of the Exchange Offer
Agreement, Crown's warranty
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with respect to the validity of Crown Stock issued in the Offer and CGIP's
warranty with respect to title to the CGIP Shares will survive such expiration.
The foregoing provisions will not limit any covenant or agreement of the
parties which by its terms contemplates performance after the expiration of the
Exchange Offer Agreement. It being understood that the inclusion of the
warranties of Crown as to Crown's SEC filings, financial statements, absence of
certain events or changes, absence of material litigation, employee benefit
plans and taxes are for the purpose of establishing the conditions to CGIP's
obligation to tender under the Exchange Offer Agreement, the parties have
agreed that Crown shall have no liability for any breach of such warranties in
the event that the Exchange Offer Agreement is terminated due to the non-
occurrence of the Offer as a result of a failure to satisfy such condition,
provided that the foregoing shall not limit any liability of Crown for breach
of its other obligations under the Exchange Offer Agreement.
THE SHAREHOLDERS AGREEMENT
The following is a summary of certain provisions of the Shareholders
Agreement which Crown and CGIP have agreed to execute and deliver on the
Closing Date. The following description of the Shareholders Agreement is
qualified in its entirety by reference to the complete text of the form of
Shareholders Agreement, which is incorporated herein by reference and attached
hereto as part of Annex A. Under the terms of the Exchange Offer Agreement,
Crown and CGIP have agreed to execute the Shareholders Agreement in the form
incorporated herein or with such changes as shall be agreed to by Crown and
CGIP.
GENERAL
The Shareholders Agreement provides that the "Standstill Period" will be the
period commencing on the Closing Date and ending on the earliest of:
(1) the date which is the later of (a) three years after the Closing Date
and (b) the date on which CGIP beneficially owns Voting Securities (as
defined below) (whether now owned or hereafter acquired) having Crown
Voting Power (as defined below) representing, in the aggregate, less than
3.5% of the Total Voting Power of Crown (as defined below);
(2) the date the Crown Board of Directors agrees to recommend (or ceases
to oppose) the consummation of a Specified Event (as defined below), or
takes any action designed to induce or materially facilitate such Specified
Event, such as redeeming any rights issued under a shareholder rights plan
outstanding on the date a third party initiates a Specified Event (provided
that the sharing of confidential information with, or discussing the
possible sale of Crown to, or the merger or consolidation with, a potential
"white knight" will not constitute taking action designed to induce or
materially facilitate a Specified Event or result in a termination of the
Standstill Period, but provided further, in order to permit CGIP to have a
reasonable period of time to pursue other opportunities before such sale,
merger or consolidation, that if the Board of Directors resolves to proceed
with such sale, merger or consolidation opposed by a majority of the CGIP
Designees, then the Standstill Period may be terminated by CGIP);
(3) the date that Voting Securities representing 25% of the Total Voting
Power of Crown have been acquired by any individual, corporation, general
or limited partnership, limited liability company, governmental entity,
joint venture, estate, trust, association, organization or other entity of
any kind or nature (for purposes of the Shareholder Agreement, a "person")
or "group" as such term is used in Section 13(d)(3) of the Exchange Act (a
"Group") other than CGIP, its Controlled Affiliates (as defined below) or
any group of which CGIP or any such Controlled Affiliate is a member;
(4) the date that Crown has entered into an agreement with respect to the
merger or consolidation of Crown or the sale of all or substantially all of
the assets of Crown, or any tender or exchange offer for Voting Securities
representing 25% or more of the Total Voting Power of Crown, after which
the surviving company in any such transaction would have a board of
directors of which the majority of its members would not be Continuing
Directors (as defined below) (and in addition, in respect of an asset sale,
in which
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the shareholders of Crown do not receive capital stock of the successor
company), or Crown takes material steps to solicit any such transaction;
(5) the date that Crown materially breaches the provisions of the
Shareholders Agreement regarding representation of CGIP on the Board of
Directors of Crown (as discussed under "--Board Representation" below) and
the breach remains uncured for 15 days, or the provisions of the
Shareholders Agreement regarding CGIP's registration rights with respect to
Crown Stock and the breach remains uncured for 30 days, after written
notice of the breach has been given by CGIP to Crown (a "Designated Crown
Breach");
(6) the date that any CGIP Designee fails to be elected to the Board of
Directors, unless Crown has not taken appropriate action within 30 days
thereafter to cause another CGIP Designee to become a director, or to
otherwise adjust the size of the Board of Directors to preserve the
proportionate representation to which CGIP is then entitled to under the
Shareholders Agreement;
(7) the date that Crown breaches the dividend payment requirements of the
Shareholders Agreement (as discussed under "--Dividend Policy" below) (if
such payment is not excused by the Shareholders Agreement), unless Crown
has elected to its Board of Directors one CGIP Designee in excess of the
number of such CGIP Designees provided for in the Shareholders Agreement,
in which case Crown will have an additional period of one year to cure such
dividend payment breach (it being understood that CGIP will cause such CGIP
Designee to resign from the Board of Directors promptly after the earlier
of (x) the date of such cure and (y) the date of termination of the
Standstill Period); or
(8) the date that Crown breaches the debt rating maintenance provisions
of the Shareholders Agreement (as discussed under "--Debt Rating" below).
Notwithstanding the foregoing, the parties have agreed that the Standstill
Period will not terminate if, at the time the Standstill Period would otherwise
have terminated in accordance with clauses (1) through (8) above, CGIP is in
material breach of provisions of the Shareholders Agreement regarding the
restriction on certain actions by CGIP with regard to the Voting Securities (as
discussed under "--Restriction of Certain Actions of CGIP" below), the
obligations of CGIP with respect to the representation of CGIP on the Board of
Directors of Crown (as discussed under "--Board Representation" below), the
obligations of CGIP with respect to the presence of CGIP at all shareholder
meetings of Crown and the voting of the Voting Securities beneficially owned by
CGIP in a manner recommended by Crown's Board of Directors (as discussed under
"--Voting" below) or the restrictions on CGIP's ability to dispose of any
Voting Securities (as discussed under "--Transfer Restrictions on Crown Common
Stock and Crown Acquisition Preferred Stock" below) (each, a "Designated
Shareholder Breach").
As used above, "Specified Event" means any unsolicited tender or exchange
offer commenced by a person (other than CGIP or its Controlled Affiliates or
any group of which CGIP or any such Controlled Affiliate is a member) for
Voting Securities representing more of the Total Voting Power of Crown than the
amount beneficially owned by CGIP (but in any event for Voting Securities
representing not less than 20% of the Total Voting Power of Crown), or an
unsolicited proxy or consent solicitation by any such Person in order to
replace at least a majority of the Continuing Directors, or any unsolicited
tender or exchange offer for voting securities representing at least 20% of the
Total Voting Power of any material subsidiary of Crown. "Controlled Affiliate"
means, with respect to any person, any other person of which more than 50% of
the outstanding voting securities is beneficially owned, and any other person
which is actually controlled, directly or indirectly, by such person or one or
more of its Controlled Affiliates. For purposes of the Shareholders Agreement,
each of Marine-Wendel and Mr. Seilliere are deemed to be Controlled Affiliates
of CGIP.
"Voting Securities" means, without duplication, (x) any securities entitled,
or which may be entitled, to vote generally in the election of directors of
Crown, (y) any securities convertible or exercisable into or exchangeable for
such securities (whether or not the right to convert, exercise or exchange is
subject to the passage of time or contingencies or both) (including the Crown
Acquisition Preferred Stock), or (z) any direct or indirect rights or options
to acquire any such securities; provided that unexercised options granted
pursuant to
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any employment benefit or similar plan and rights issued pursuant to any
shareholder rights plan shall be deemed not to be "Voting Securities" (or to
have Crown Voting Power). "Crown Voting Power" means the voting power in the
general election of directors of Crown, and shall be calculated for each Voting
Security by reference to the maximum number of votes such Voting Security is or
would be entitled to cast in the general election of directors, and, in the
case of convertible (or exercisable or exchangeable) securities, by reference
to the maximum number of votes such Voting Security is entitled to cast in
unconverted or converted (or exercised, unexercised, exchanged or unexchanged)
status. For purposes of determining Crown Voting Power under the Shareholders
Agreement, a Voting Security which is convertible into or exchangeable for a
Voting Security will be counted as having the greater of (1) the number of
votes to which such Voting Security is entitled prior to conversion or exchange
and (2) the number of votes to which the Voting Security into which such Voting
Security is convertible or exchangeable is entitled. Notwithstanding anything
else to the contrary contained in the Shareholders Agreement, there shall not
be included in calculating Crown Voting Power any votes which a person will
have upon the non-payment of dividends on the Crown Acquisition Preferred Stock
in accordance with the terms of the Crown Acquisition Preferred Stock. The term
"Total Voting Power" means the total combined Crown Voting Power, on a fully
diluted basis, of all the Voting Securities then outstanding.
RESTRICTION OF CERTAIN ACTIONS BY CGIP
During the Standstill Period, CGIP has agreed that none of CGIP, any of its
Controlled Affiliates, or any Group of which CGIP or any such Controlled
Affiliate is a member, will in any manner, directly or indirectly, effect or
seek, initiate or propose (whether publicly or otherwise) to effect, or cause
or participate in, or in any way induce, assist or encourage any other person
to effect, seek, offer, initiate or propose (whether publicly or otherwise) to
effect or participate in, (1) any Specified Event, (2) any other proposal to
take over control of Crown or for a merger, share exchange, other business
combination, recapitalization, restructuring, liquidation or similar
transaction involving Crown or any of its material subsidiaries, or any
proposal or offer to acquire in any manner Voting Securities representing more
than 20% of the Total Voting Power of Crown or any of its material
subsidiaries, a substantial equity interest in any of Crown's material
subsidiaries or a substantial portion of the assets of Crown or any of its
material subsidiaries, (3) any request to invite any person to effect any of
the actions specified below or any request to challenge the validity of, waive
the benefit of, opt out of, or amend any provision of, the shareholder rights
plan of Crown contemplated by the Shareholders Agreement or any rights plan
approved by the Strategic Committee of the Board of Directors or any anti-
takeover statutes or other anti-takeover provisions applicable to Crown, or (4)
a proposal having similar effect (each of (1) through (4), a "Takeover
Proposal"), or (5) including without limitation any action described in (a)
through (c) below, unless in any such case invited in writing to do so by the
Board of Directors as specifically expressed in a resolution adopted by a
majority of the Continuing Directors who are not CGIP Designees:
(a) acquire, offer or propose to acquire, or agree to acquire, whether by
purchase, tender or exchange offer, gift or otherwise (any such act, to
"acquire"), beneficial ownership of any Voting Securities or any rights to
acquire (whether currently, upon lapse of time, following the satisfaction
of any conditions, upon the occurrence of any event or any combination of
the foregoing) any Voting Securities except for (x) the acquisition of
Voting Securities (provided that there is not a Designated Shareholder
Breach in existence of the time of such acquisition) which would not, after
giving effect to such acquisition, result in beneficial ownership of Voting
Securities representing Crown Voting Power in excess of CGIP's Crown Voting
Power percentage at the Closing Date of the Total Voting Power of Crown,
(y) pursuant to a stock split, stock dividend, rights offering,
recapitalization, reclassification or similar transaction made available to
holders of any Voting Securities generally or (z) upon conversion of the
Crown Acquisition Preferred Stock in accordance with its terms; provided,
that any such Voting Securities will be subject to the restrictions of the
Shareholders Agreement (if CGIP beneficially owns or acquires any Voting
Securities in violation of the Shareholders Agreement, such Voting
Securities will immediately be disposed of to persons who are not
affiliates thereof but only in compliance with the provisions of the
Shareholders Agreement; provided however, that Crown may also pursue any
other available remedy to which it may be entitled as a result of such
violation); provided further that the provisions described in this clause
(a) will not prohibit any CGIP
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Designee from acquiring Voting Securities pursuant to any Crown restricted
stock plan, option plan or similar plan available to directors of Crown;
(b) form, join, participate in or encourage the formation of, any Group
with respect to any Voting Securities or deposit any Voting Securities into
a voting trust or subject any such Voting Securities to a voting agreement
or any other arrangement or agreement with respect to the voting thereof;
provided however that, under certain circumstances, CGIP may enter into one
or more bona fide pledges of Voting Securities with major brokerage firms
and financial institutions; or
(c) request Crown (or its directors, officers, employees or agents) to
amend or waive any provision of the Shareholders Agreement.
Notwithstanding the foregoing, CGIP's ability to vote its shares will be
governed exclusively by the provisions of the Shareholders Agreement summarized
below under "--Voting," and the provisions of the Shareholders Agreement will
not restrict the CGIP Designees from acting in their capacity as directors of
Crown.
If at any time during the Standstill Period, CGIP or any of its Controlled
Affiliates is approached by any party concerning (1) a Takeover Proposal which
CGIP determines in its good faith judgment is so significant as to be
considered by the Board of Directors, or (2) a proposal to acquire all or a
substantial portion of the Voting Securities beneficially owned by CGIP which
CGIP determines in its good faith judgment is so significant as to be
considered by its supervisory board or directorate, CGIP will promptly inform
Crown of the Takeover Proposal or other such proposal, and in the case of a
Takeover Proposal, the Strategic Committee will consider and evaluate a
response to the Takeover Proposal and make a recommendation to the Board of
Directors.
BOARD REPRESENTATION
Pursuant to the Shareholders Agreement, Crown has agreed that it will cause
three CGIP Designees to be elected to the Board of Directors on the Closing
Date. CGIP has informed Crown that it expects Mr. Seilliere, Mr. de Wouters and
Mr. Rohatyn to be its initial CGIP Designees. During the Standstill Period and
subject to the terms and conditions of the Shareholders Agreement, Crown will
support the nomination of, and Crown's nominating committee (or any other
committee exercising a similar function) will recommend to the Board of
Directors, that (1) one CGIP Designee, so long as CGIP beneficially owns Voting
Securities having Crown Voting Power equal to or greater than 5% of the Total
Voting Power and less than 10% of the Total Voting Power, (2) two CGIP
Designees, so long as CGIP beneficially owns Voting Securities having Crown
Voting Power equal to or greater than 10% of the Total Voting Power and less
than 15% of the Total Voting Power, or (3) three CGIP Designees, so long as
CGIP beneficially owns Voting Securities having Crown Voting Power equal to or
greater than 15% of the Total Voting Power (collectively the "Beneficial
Ownership Thresholds"), be included in the slate of nominees recommended by the
Board of Directors for election as directors at each annual meeting of Crown
shareholders commencing with the next annual meeting after the Closing Date. In
the event that any of the designees ceases to serve as a director for any
reason, the Board of Directors will fill the resulting vacancy, subject to the
terms of the Shareholders Agreement, with a person designated by CGIP (and such
person shall be a "CGIP Designee" for purposes of the Shareholders Agreement).
Notwithstanding the foregoing, Crown will not have any obligation to support
the nomination, recommendation or election of any CGIP Designee to the extent
any of the Beneficial Ownership Thresholds is met or exceeded by CGIP as a
result of its acquisition of beneficial ownership of Voting Securities after
the Closing Date (except for such acquisitions to the extent necessary to
maintain CGIP's beneficial ownership of Voting Securities solely to the extent
such ownership has decreased as a result of the primary issuance of Voting
Securities by Crown or sale by Crown of Voting Securities held in treasury
prior to any such acquisition of Voting Securities by CGIP).
In addition, Crown has agreed that during such time as CGIP is entitled to
have at least one CGIP Designee on the Board of Directors, CGIP will also be
entitled to have one CGIP Designee appointed to serve on each committee of the
Board of Directors, including any special committee, and Crown has agreed to
cause one such CGIP Designee to be appointed. Notwithstanding the foregoing, if
none of the CGIP Designees would be considered "independent" of Crown or
"disinterested" (1) for purposes of any applicable rule of the NYSE,
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the Paris Stock Exchange, the London Stock Exchange or any other securities
exchange or other self-regulatory organization requiring that members of the
Audit Committee be independent of Crown, (2) for purposes of any law or
regulation that requires, in order to obtain or maintain favorable tax,
securities, corporate law or other material legal benefits with respect to any
plan or arrangement for employee compensation or benefits, that the members of
the committee of the Board of Directors charged with responsibility for such
plan or arrangement be "independent" of Crown or "disinterested," or (3) for
purposes of any special committee formed in connection with any transaction or
potential transaction involving Crown and any of CGIP, its Controlled
Affiliates or any Group of which CGIP is a member or such other transaction or
potential transaction which would involve a conflict of interest on the part
of the CGIP Designees, then a CGIP Designee will not be required to be
appointed to any such committee; provided that, the committees of the Board
will be organized so that, to the extent practicable, the only items to be
considered by any committee on which no CGIP Designee may serve will be those
items which prevent the CGIP Designee from serving on that committee.
Upon the expiration of the Standstill Period pursuant to paragraph (1) under
"--General" above, or in the event of a Designated Shareholder Breach, CGIP
will have no further rights under the Shareholders Agreement regarding Crown's
agreement to support the nomination, recommendation and election of persons
designated by CGIP to the Board of Directors and will cause its designees to
resign promptly from the Board of Directors and any of its committees. In
addition, if at any time CGIP beneficially owns Voting Securities in an amount
not sufficient to entitle CGIP to designate the number of CGIP Designees then
currently serving on the Board of Directors pursuant to the Shareholders
Agreement, then CGIP will cause to resign promptly that number of CGIP
Designees that exceed the number of directors that CGIP would then be entitled
to designate; provided, however, that to the extent CGIP's beneficial
ownership of Voting Securities has decreased as a result of the primary
issuance of Voting Securities by Crown or sale by Crown of Voting Securities
held in treasury, CGIP will not be required to cause any CGIP Designee to
resign for a period of 18 months after the date of the primary issuance or
sale of Voting Securities which triggered the resignation requirement set
forth in this sentence and, in the event that at the end of such 18 month
period CGIP then beneficially owns sufficient Voting Securities to entitle
CGIP to designate a number of CGIP Designees then sitting on the Board of
Directors, CGIP will cause only the CGIP Designees in excess of that number to
resign from the Board of Directors.
As of the Closing Date, the Board of Directors will consist of no more than
18 directors and will be reduced to 16 directors by no later than immediately
after the time of Crown's next annual meeting of shareholders. In the event
that the size of the Board of Directors is thereafter increased or decreased,
the number of directors CGIP will be entitled to designate will be adjusted
ratably. In the event the increase in the number of directors was approved by
a majority of the CGIP Designees serving on the Board of Directors, any
fraction will be rounded down to the nearest whole number. In the event the
increase in the number of directors was not approved by a majority of such
CGIP Designees, any fraction will be rounded up to the nearest whole number.
When required by the Shareholders Agreement, CGIP will promptly cause the
appropriate number of CGIP Designees to resign from the Board of Directors and
any of its committees, or Crown will promptly cause to be elected the
appropriate number of CGIP Designees to give effect to this paragraph, as the
case may be.
Notwithstanding the foregoing, CGIP will not be entitled to designate any
person to Crown's Board of Directors (or any of its committees) in the event
that Crown receives a written opinion of its outside counsel that a CGIP
Designee would not be qualified under any applicable law, rule or regulation
to serve as a director of Crown or if Crown objects to a CGIP Designee because
such CGIP Designee has engaged in any adverse conduct that would require
disclosure under Item 7 of Schedule 14A (promulgated under the Exchange Act)
or if the Board of Directors determines in good faith in its reasonable
judgment that nomination or election of a CGIP Designee would be a breach of
the fiduciary duties of the Board of Directors, and, in any such event, CGIP
will withdraw the designation of such proposed CGIP Designee and designate a
replacement (which replacement CGIP Designee shall also be subject to these
requirements). Crown will use its reasonable best efforts to notify CGIP of
any objection to a CGIP Designee sufficiently in advance of the date on which
proxy materials are mailed by Crown in connection with such election of
directors to enable CGIP to propose a replacement CGIP Designee in accordance
with the terms of the Shareholders Agreement.
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VOTING
Pursuant to the Shareholders Agreement, CGIP has agreed that, during the
Standstill Period, CGIP will, and will cause its Controlled Affiliates and any
person which is a member of any Group of which CGIP or any of its Controlled
Affiliates is a member, to be present, in person or represented by proxy, at
all shareholder meetings of Crown so that all Voting Securities beneficially
owned by CGIP will be counted for the purpose of determining the presence of a
quorum at such meetings. CGIP will be free to vote or cause to be voted such
Voting Securities in its discretion; provided that CGIP will vote or cause to
be voted, or consent with respect to, all Voting Securities beneficially owned
by CGIP in the manner recommended by Crown's Board of Directors in connection
with the following actions to be taken by holders of Voting Securities:
(1) the election of directors of Crown; provided that CGIP will not be
obliged to vote in such manner for any nominee for election as a director
who is, pursuant to an arrangement or agreement between Crown and a person
or Group (other than CGIP, its Controlled Affiliates or any Group of which
CGIP or any of its Controlled Affiliates is a member) holding Crown Voting
Power equal to or in excess of the Voting Power of CGIP at the record date
for voting in such election, designated as a nominee by such person or
Group, and
(2) any question, resolution or proposal relating to a Takeover Proposal
which is submitted to a vote of the shareholders of Crown.
DIVIDEND POLICY
Pursuant to the Shareholders Agreement, Crown has indicated that it is the
present intention of the Board of Directors to commence regularly paying
dividends on the Crown Common Stock on a quarterly basis, starting with the
calendar quarter in which the Closing Date occurs (and, with respect to
dividends paid in the calendar quarter in which the Closing Date occurs, such
dividends will be paid to holders of record of the Crown Common Stock as of a
date after the Closing Date). With respect to dividends paid in 1995, if any,
such dividends will be paid in an annualized amount equal to $0.80 per share
of Crown Common Stock ($ 0.20 per quarter). With respect to dividends paid in
1996, such dividends will be paid in an annualized amount of $1.00 per share
($0.25 per quarter). All such dividend rates will be subject to adjustment for
any stock splits, reverse stock splits, stock dividends and similar events
after the date of the Exchange Offer Agreement. Crown currently anticipates
that the Closing Date will occur in the first quarter of 1996 if the Offer is
commenced and consummated (in which case the 1995 dividends described above
would not be paid).
Crown has also indicated in the Shareholders Agreement that it is the
present intention of the Board of Directors to increase the amount of such
dividends over time based on the financial condition of Crown. Crown has
agreed for purposes of the Shareholders Agreement that the amount of dividends
paid to CGIP during the four full quarters following the Latest Mandatory
Conversion Date with respect to the Crown Acquisition Preferred Stock will not
be less than the amount of dividends paid to CGIP on Crown Common Stock and
Crown Acquisition Preferred Stock that CGIP receives in the Offer during the
four full fiscal quarters following the Offer (assuming for these purposes
that CGIP has neither purchased nor disposed of any securities of Crown after
the Closing Date), and thereafter Crown will maintain the policy of paying
dividends generally consistent with prior policy, it being understood that if
the provisions of this sentence are not complied with, CGIP will be entitled
solely to the remedies described in paragraph (7) under "--General" above.
Any change in the dividend payments actually made or any failure by Crown to
maintain the policy of paying dividends from that set forth in the
Shareholders Agreement that is recommended to the Board of Directors by the
Strategic Committee will replace the dividend payment or policy condition in
the Shareholders Agreement for all purposes thereunder. Crown will be excused
from its failure to pay any dividends in such dividend payment condition and
to maintain such dividend policy condition to the extent that Crown's cash
needs in connection with the conduct of its operations are such that the Board
of Directors in its good faith judgment determines that the payment of such
dividends or the maintenance of such policy would, under the circumstances, be
materially detrimental to Crown.
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Notwithstanding the foregoing, no such dividends have been declared and any
future declaration of dividends will be determined by Crown's Board of
Directors in light of earnings, cash flow, results of operations and the
financial position of Crown and such other factors and business conditions as
Crown's Board of Directors deems relevant from time to time. There can be no
assurances with respect to the payment of dividends by Crown after the Closing
Date.
DEBT RATING
Pursuant to the Shareholders Agreement, Crown has indicated that Crown
intends to conduct its business in a manner consistent with its maintaining an
"investment grade" rating for its long-term unsecured debt securities, and has
agreed that any failure to maintain such rating with at least one "nationally
recognized statistical rating organization" (as defined for purposes of Rule
436(g) under the Securities Act) for a period of longer than one year will
constitute a breach of the foregoing requirement, provided that the failure
does not result from changes in general economic or industry conditions or
other circumstances that could not have been reasonably avoided by the
management of Crown or from transactions, policies or activities approved by
the Strategic Committee (it being understood that if the provisions of this
sentence are not complied with, CGIP's sole remedy shall be the termination of
the Standstill Period). As of November 10, 1995, Crown's long-term unsecured
debt securities were rated Baa1 by Moody's and BBB+ by S&P. For information in
respect of recent actions by such rating agencies in placing certain Crown debt
securities under review, see "THE CARNAUDMETALBOX PROPOSALS--Sources of Funds."
TRANSFER RESTRICTIONS ON CROWN COMMON STOCK AND CROWN ACQUISITION PREFERRED
STOCK
During the Standstill Period, CGIP has agreed that it will not, and will
cause its Controlled Affiliates not to, directly or indirectly, dispose of any
interest in (or enter into an agreement or understanding with respect to the
foregoing) any Voting Securities (a "Disposition"), except as provided in the
Shareholders Agreement. The Shareholders Agreement provides that Dispositions
may be made (subject, in some cases, to certain specified exceptions): (1) to a
Controlled Affiliate of CGIP; (2) pursuant to a bona fide public offering in a
firm commitment or best efforts underwriting (an "Underwritten Offering"); (3)
pursuant to sales effected in accordance with Rule 144 under the Securities Act
(a "Rule 144 Sale"); (4) to any person (other than pursuant to a tender or
exchange offer) that would, following such sale, beneficially own no more than
3.5% of the Total Voting Power (a "Private Sale"); (5) to Crown in accordance
with certain provisions of the Shareholders Agreement relating to Crown's right
to purchase Crown Stock from CGIP; (6) pursuant to a tender offer or exchange
offer or any other transaction with a third party (a "Third Party Offeror")
which is recommended to the shareholders of Crown by a majority of Continuing
Directors of Crown (as defined below); (7) upon conversion, exercise or
exchange of Voting Securities convertible into or exercisable or exchangeable
for other Voting Securities; and (8) pursuant to one or more bona fide pledges
or grants of a security interest in Voting Securities to a major brokerage firm
or financial institution to secure bona fide indebtedness, or the sale of such
Voting Securities by foreclosure on such pledge. A "Continuing Director" means
a member of the Board of Directors of Crown who is not a Third Party Offeror or
an affiliate (as defined in Rule 12b-2 of the Exchange Act) of a Third Party
Offeror (or a representative or a nominee of a Third Party Offeror or any such
affiliate) and who either (1) was a member of the Board of Directors of Crown
prior to the Closing Date or (2) subsequently become a director of Crown and
whose election or nomination for election was approved or recommended by a vote
of a majority of the Board of Directors of Crown, which majority included a
majority of the Continuing Directors then on the Board of Directors.
Prior to any Disposition of Crown Acquisition Preferred Stock pursuant to an
Underwritten Offering, a Rule 144 Sale or a Private Sale, CGIP has agreed that
Crown will have the right to purchase any or all of the Crown Acquisition
Preferred Stock proposed to be sold upon certain terms and conditions and
pursuant to certain procedures set forth in the Shareholders Agreement. If
Crown does not exercise its right to purchase such Crown Acquisition Preferred
Stock, then CGIP will be free to effect the Disposition of such Crown
Acquisition Preferred Stock, subject to the Shareholders Agreement.
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Prior to any Disposition of Crown Common Stock pursuant to an Underwritten
Offering, a Rule 144 Sale or a Private Sale, CGIP will so notify Crown. Crown
will have the right to purchase all (but not less than all) of the shares of
Crown Common Stock, generally at the previous day's closing market price. As
promptly as practicable, and in no event more than 24 hours after receipt of
the notice from CGIP, Crown will advise CGIP whether Crown will purchase such
shares of Crown Common Stock. If Crown elects not to purchase such shares of
Crown Common Stock or if Crown fails to agree to purchase such shares, then
CGIP will be free to undertake the Disposition of such shares, in accordance
with the Shareholders Agreement.
If, as a result of Crown repurchases or reclassifications, CGIP at any time
during the Standstill Period beneficially owns Voting Securities having Crown
Voting Power in excess of the Cap (as defined below), then, if and to the
extent requested by Crown by written notice to CGIP, CGIP will, within 18
months after such request, dispose of or cause its Controlled Affiliates to
dispose of the number of shares of Voting Securities necessary to reduce CGIP's
beneficial ownership of Total Voting Power to no more than the Cap. The "Cap"
is equal to the sum of 3.5% and the percentage of Total Voting Power held by
CGIP on the Closing Date.
REGISTRATION RIGHTS
Crown has agreed that at any time after June 30, 1996, CGIP has eight demand
registration rights and unlimited incidental or "piggyback" registration
rights, subject to customary terms and conditions in the Shareholders
Agreement.
The registration rights granted to CGIP will terminate immediately at such
time as CGIP owns Voting Securities having a Crown Voting Power of less than
3.5% of the Total Voting Power or if there is a Designated Shareholder Breach.
RESTRICTIONS ON CERTAIN ACTIONS BY CROWN
During the Standstill Period (which for this purpose will terminate only on
the date which is the later of (1) three years after the Closing Date and (2)
the date on which CGIP beneficially owns Voting Securities (whether now owned
or hereafter acquired) having Crown Voting Power representing, in the
aggregate, less than 3.5% of the Total Voting Power), Crown has agreed that
neither Crown, nor any of its Controlled Affiliates nor any Group of which
Crown or any such Controlled Affiliate is a member will in any manner, directly
or indirectly, effect or seek, initiate or propose (whether publicly or
otherwise), to effect, or cause or participate in, or in any way induce, assist
or encourage any other person to effect, seek, offer, initiate or propose
(whether publicly or otherwise) to effect or participate in, (1) any
unsolicited tender or exchange offer commenced by a person for voting
securities representing 20% or more of the total voting power of CGIP, Marine-
Wendel, or any of their material subsidiaries, or an unsolicited proxy or
consent solicitation by any such person in order to replace at least a majority
of the directors of CGIP, Marine-Wendel or such subsidiary, (2) any other
proposal to take over control of CGIP or Marine-Wendel or for a merger, share
exchange, business combination, recapitalization, restructuring, liquidation or
similar transaction involving CGIP, Marine-Wendel or any of their material
subsidiaries or any proposal or offer to acquire in any manner voting
securities representing more than 20% of the total voting power of CGIP,
Marine-Wendel or any of their material subsidiaries, a substantial equity
interest in any of CGIP's or Marine-Wendel's material subsidiaries or a
substantial portion of the assets of CGIP or Marine-Wendel or any of their
respective material subsidiaries, (3) any request to invite any person to
effect any of the actions specified in this paragraph or any request to
challenge the validity of, waive the benefit of, opt out of, or amend any
provision of, any shareholder rights plan of CGIP or Marine-Wendel or any anti-
takeover statutes or other anti-takeover provisions applicable to CGIP or
Marine-Wendel, or (4) a proposal having similar effect, or (5) including
without limitation any action described in (a) through (c) below, unless in any
such case invited in writing to do so by the board of directors of CGIP or
Marine-Wendel, as the case may be, as specifically expressed in a resolution
adopted by a majority of the board of directors:
(a) acquire, offer or propose to acquire, or agree to acquire, whether by
purchase, tender or exchange offer, gift or otherwise, beneficial ownership
of any voting securities or any rights to acquire (whether currently, upon
lapse of time, following the satisfaction of any conditions, upon the
occurrence of any event
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or any confirmation of the foregoing) any voting securities of CGIP or
Marine-Wendel, as the case may be; provided, that, if Crown beneficially
owns or acquires any voting securities of CGIP or Marine-Wendel, as the
case may be, in violation of the Shareholders Agreement, such voting
securities shall immediately be disposed of to persons who are not
affiliates thereof; provided, further, that CGIP may also pursue any other
available remedies to which it may be entitled as a result of such
violation);
(b) form, join, participate in or encourage the formation of, any Group
with respect to any voting securities of CGIP or Marine-Wendel or deposit
any voting securities into a voting trust or subject any such voting
securities to a voting agreement or any other arrangement or agreement with
respect to the voting thereof; or
(c) request CGIP or Marine-Wendel (or their respective directors,
officers, employees or agents) to amend or waive any provision of the
Shareholders Agreement (including this paragraph).
The foregoing provisions restricting certain actions by Crown will terminate
on the earlier of (1) the date of a Designated Shareholder Breach and (2) the
date the Standstill Period (as described in the first sentence of the
preceding paragraph) terminates. Notwithstanding the foregoing, such
provisions will not terminate if, at the time the provisions would have
otherwise terminated in accordance with the previous sentence, there has been
a Designated Crown Breach.
If at any time during the Standstill Period, Crown is approached by any
party concerning a Takeover Proposal which the Chairman of the Board of Crown
determines in his good faith judgment is so significant as to be considered by
the Board of Directors, the Chairman of the Board of Crown will promptly
inform the Chairman of the Strategic Committee of the Takeover Proposal and
the Committee will consider and evaluate a response to such Takeover Proposal
and make a recommendation to Crown's Board of Directors.
DESCRIPTION OF CROWN STOCK
CROWN COMMON STOCK
The following description of Crown Common Stock is a summary and is
qualified in its entirety by reference to Crown's Articles of Incorporation
which have been filed as an exhibit to the Registration Statement. In
addition, the following description assumes the approval by the shareholders
of Crown at the Special Meeting of the CarnaudMetalbox Proposals, the Articles
Modernization Proposal and the Additional Preferred Stock Proposal.
General. Following approval of the CarnaudMetalbox Proposals at the Special
Meeting, Crown's authorized common stock will consist of 500,000,000 shares of
Crown Common Stock in registered form. As of November 10, 1995, Crown had
outstanding 90,610,547 shares of Crown Common Stock, and 27,877,087 shares of
Crown Common Stock were held in the treasury of Crown.
Dividends. Holders of Crown Common Stock will be entitled to receive such
dividends as may be declared by the Board of Directors. Crown intends, if the
Offer is consummated, to pay cash dividends as described under "THE
SHAREHOLDERS AGREEMENT--Dividend Policy." There can be no assurance that such
dividends will be paid. In addition, Crown's ability to pay dividends on Crown
Common Stock is subject to the availability of funds therefor under applicable
law and Crown's Articles of Incorporation and Bylaws, as well as contractual
restrictions (including prior full payment of dividends as to Crown
Acquisition Preferred Stock and any other outstanding preferred stock of
Crown). See the discussion of dividend rights under "--Crown Acquisition
Preferred Stock" below.
Voting Rights. Except as to matters as to which holders of Crown Acquisition
Preferred Stock (and any other capital stock of Crown) have the right to vote
separately as a class, the holders of shares of Crown Common Stock will vote
together with holders of Crown Acquisition Preferred Stock (and any other
capital stock of Crown entitled to vote with Crown Common Stock) as a class.
At every meeting of shareholders of Crown, the
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holders of record of shares of Crown Common Stock entitled to vote at the
meeting are entitled to one vote for each share of Crown Common Stock held.
Shareholders of Crown are not entitled to cumulative voting in the election of
directors.
No Preemptive Rights. Shareholders of Crown are not entitled to any
preemptive rights to purchase or to subscribe to any additional or increased
stock of any class or any obligations convertible into any class or classes of
stock.
Liquidation Rights. In any liquidation, dissolution or winding up of Crown,
after the debts of Crown have been paid or provided for, and subject to the
rights upon liquidation of the holders of Crown Acquisition Preferred Stock
and any other preferred stock of Crown, all of the remaining assets of Crown
shall belong to and shall be distributed ratably among the holders of shares
of Crown Common Stock.
On July 28, 1995, Crown announced that the Board of Directors of Crown had
adopted a common stock purchase rights plan and declared a dividend of one
common stock purchase Right for each share of Crown Common Stock outstanding
on August 10, 1995 and authorized the issuance of one Right for each share of
Crown Common Stock that becomes outstanding pursuant to the Offer (including
shares of Crown Common Stock issued upon conversion of Crown Acquisition
Preferred Stock) and for each share of Crown Common Stock which becomes
outstanding after August 10, 1995 and prior to the earliest to occur of the
Distribution Date, Redemption Date and the Final Expiration Date (as such
terms are defined in such plan). See "--Rights Plan" below.
For additional information regarding the listing of Crown Common Stock on
the NYSE or other securities exchanges or quotation systems, see "THE OFFER--
Listing of Crown Common Stock and Crown Acquisition Preferred Stock."
See also "COMPARISON OF SHAREHOLDER RIGHTS."
RIGHTS PLAN
Pursuant to a Rights Agreement, dated as of August 10, 1995, the Board of
Directors of Crown declared a dividend distribution of one Right for each
share of Crown Common Stock outstanding on August 10, 1995 (the "Record Date")
and authorized the issuance of one Right for each share of Crown Common Stock
that becomes outstanding pursuant to the Offer (including shares of Crown
Common Stock issued upon conversion of Crown Acquisition Preferred Stock) and
for each share of Crown Common Stock that becomes outstanding between the
Record Date and the earliest of the Distribution Date, the Redemption Date and
the Final Expiration Date (as such terms are defined below). Subject to the
terms and conditions of the Rights Plan, each Right issued pursuant to the
Rights Plan entitles the registered holder to purchase from Crown one share of
Crown Common Stock (or in certain circumstances cash, property or other
securities) at a price of $200, subject to adjustment.
Until the earlier to occur of (1) ten calendar days following the date (the
"Shares Acquisition Date") of public announcement that a person or entity or
group of affiliated or associated persons or entities acquired, or obtained
the right to acquire, beneficial ownership of 15% or more of the outstanding
shares of Crown Common Stock (an "Acquiring Person") or (2) ten business days
(or such later date as is determined by the Board of Directors or, if there
has been an Adverse Change of Control, by a majority of the continuing
directors (as defined below)) following the commencement or first public
announcement of an intention of any applicable person to make a tender offer
or exchange offer if, upon consummation thereof, such person would be an
Acquiring Person (the earlier of such dates being called the "Distribution
Date"), the Rights are evidenced by the certificates evidencing the Crown
Common Stock. Until the Distribution Date, the Rights will be transferred only
with the shares of Crown Common Stock. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of shares of Crown Common
Stock as of the close of business on the Distribution Date, and such separate
Right Certificates alone will evidence the Rights.
The Rights Plan contains special provisions regarding CGIP (including its
affiliates and associates) and the shares of Crown Common Stock which may be
acquired by CGIP as part of and after the Offer. First, CGIP will not become
an "Acquiring Person" under the Rights Plan merely because it tenders into the
Offer. Second,
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during the Standstill Period and so long as CGIP has not breached certain
provisions of the Shareholders Agreement, CGIP will not become an "Acquiring
Person" when it takes any action which Crown has agreed to permit during the
Standstill Period. Finally, after the expiration of the Standstill Period, CGIP
will be an "Acquiring Person," subject to certain exceptions including with
respect to the acquisition of beneficial ownership of additional shares of
Crown Common Stock within 18 months after certain dilutive issuances by Crown,
only if CGIP acquires beneficial ownership of additional shares of Crown Common
Stock, and CGIP is thereafter the beneficial owner of 15% or more of the shares
of Crown Common Stock then outstanding, excluding securities granted by Crown
to directors of Crown who are affiliates or associates of CGIP. If, however, at
the time of the expiration of the Standstill Period, CGIP has breached its
Shareholders Agreement with Crown, then CGIP will be an "Acquiring Person" to
the extent it would otherwise be deemed as such but for the provisions noted
above. See "THE SHAREHOLDERS AGREEMENT."
The Rights are not exercisable until the Distribution Date. The Rights will
expire at the close of business on August 10, 2005 unless earlier redeemed by
Crown as described below.
In the event that a person or entity (other than certain specified persons or
entities) becomes the beneficial owner of more than 15% of the then outstanding
shares of Crown Common Stock, each holder of a Right will thereafter have the
right to receive, upon exercise, shares of Crown Common Stock (or, in certain
circumstances, cash, property or other securities of Crown) having a value
equal to two times the exercise price of the Right. Notwithstanding any of the
foregoing, following the occurrence of any of the events set forth above, all
Rights that are, or (under certain circumstances specified in the Rights Plan)
were, beneficially owned by an Acquiring Person will be null and void.
In the event that, at any time following the Shares Acquisition Date, (1)
Crown is acquired in a merger or other business combination transaction (other
than a merger described in the immediately preceding paragraph), or (2) 50% or
more of Crown's assets or earning power is sold or transferred, each holder of
a Right (except Rights which previously have been voided as set forth above)
shall thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the exercise price of the
Right. The events set forth in this paragraph and in the preceding paragraph
are referred to as the "Triggering Events."
At any time prior to the earlier of (1) 5:00 p.m. New York City time on the
tenth calendar day following the Shares Acquisition Date and (2) August 10,
2005 (the "Final Expiration Date"), Crown may redeem the Rights in whole, but
not in part, at a price of $.01 per Right (the "Redemption Price"). The date of
such redemption is the "Redemption Date." Following an Adverse Change of
Control, the decision to redeem shall require the concurrence of a majority of
the "continuing directors." "Adverse Change of Control" means a change
(resulting from a proxy or consent solicitation) in a majority of the directors
in office at the commencement of such solicitation where a participant in such
solicitation has stated (or Crown's Board of Directors determines) that such
participant has taken, intends to take or may consider taking any action that
would result in such participant becoming an Acquiring Person or causing the
occurrence of a Triggering Event, and "continuing directors" (as used in the
Rights Plan) means any member of Crown's Board of Directors who is not an
Acquiring Person and was a member prior to the Record Date or any person who
subsequently becomes a member of the Board if such person's nomination for
election or election to the Board is recommended or approved by a majority of
continuing directors. Immediately upon the action of Crown's Board of Directors
electing to redeem the Rights with, if required, the concurrence of the
continuing directors, Crown shall make announcement thereof, and upon such
action, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a shareholder of Crown, including, without limitation, the right to vote or
to receive dividends.
Any of the provisions of the Rights Plan may be amended by the Board of
Directors of Crown prior to the earliest of Distribution Date, the occurrence
of a Triggering Event or an Adverse Change of Control. After the
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Distribution Date, the occurrence of a Triggering Event or an Adverse Change
in Control, the provisions of the Rights Plan may be amended by Crown's Board
of Directors in order to cure any ambiguity, defect or inconsistency, to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person), or, with certain
limitations, to shorten or lengthen any time period under the Rights Plan. In
addition, the Board of Directors of Crown may amend the Rights Plan to provide
for the issuance of shares of Crown's preferred stock in place of shares of
Crown Common Stock.
CROWN ACQUISITION PREFERRED STOCK
General. Following approval of the CarnaudMetalbox Proposals at the Special
Meeting, Crown's authorized capital stock will also consist of 50,000,000
shares of Crown Acquisition Preferred Stock. Such shares will be newly
authorized, and there are no shares of such preferred stock currently
outstanding.
Under the Acquisition Articles Amendment, the Board of Directors of Crown
will be entitled to issue Crown Acquisition Preferred Stock solely in
connection with the CarnaudMetalbox Transaction without further shareholder
approval (except as otherwise provided under applicable law or the rules of
securities exchanges or quotation systems on which shares of Crown are at the
time listed or authorized for quotation). In addition, the Crown Board,
subject to the terms of the Exchange Offer Agreement and as further discussed
below, will have authority to determine all designations, relative rights,
preferences and limitations of Crown Acquisition Preferred Stock. This
includes, among other things, the designation of classes or series of a class
and the number of shares making up such class or series; the dividend rights,
if any; the rights upon liquidation or distribution of the assets of Crown, if
any; the conversion or exchange rights, if any; the redemption provisions, if
any; the sinking fund provisions, if any; and the voting rights, if any.
Adoption of the Acquisition Articles Amendment will permit the Crown Board to
determine the specific terms of Crown Acquisition Preferred Stock by
resolution of the Crown Board which, upon filing with the applicable state
authorities, will operate as an amendment to Crown's Articles of
Incorporation.
Under the Exchange Offer Agreement, Crown and CGIP have agreed that Crown
will issue Crown Acquisition Preferred Stock on the terms set forth in the
Exchange Offer Agreement, and the discussion below is based upon the agreed
terms set forth in the Exchange Offer Agreement. Shareholders should be aware,
however, that the Exchange Offer Agreement, including the terms of Crown
Acquisition Preferred Stock, may be amended in accordance with its terms. See
"THE EXCHANGE OFFER AGREEMENT--Termination; Amendment."
Crown Acquisition Preferred Stock will have a per share liquidation
preference calculated based on the Average Market Closing Price per share of
Crown Common Stock, determined without regard to the limitations on the
minimum and maximum Exchange Ratio (see "SUMMARY--The Offer--Exchange Ratio
and Market Value of Crown Common Stock"). The per share dividend on Crown
Acquisition Preferred Stock will be based upon its liquidation preference, and
the amount of dividends received by holders of Crown Acquisition Preferred
Stock will accordingly depend on the Market Closing Price during such period.
Crown currently anticipates that the Measurement Date will occur after the
date of the Special Meeting, and, accordingly, the amount of the liquidation
preference and dividends received by holders of Crown Acquisition Preferred
Stock will not be determined prior to the Special Meeting.
There is currently no public market for Crown Acquisition Preferred Stock,
and there can be no assurance that an active public market for Crown
Acquisition Preferred Stock will develop. Therefore, although the liquidation
preference of Crown Acquisition Preferred Stock has been based on the Average
Market Closing Price, the valuation of newly-issued securities such as Crown
Acquisition Preferred Stock is subject to uncertainties and contingencies, all
of which are difficult to predict, and the liquidation preference amount of
Crown Acquisition Preferred Stock is not necessarily indicative of the prices
at which shares of Crown Acquisition Preferred Stock will trade.
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In addition, the market value of Crown Acquisition Preferred Stock at the
time of consummation of the Offer and at the time of delivery of shares of
Crown Stock in exchange for CarnaudMetalbox Shares following consummation of
the Offer can be expected to vary from the Average Market Closing Price used
to determine the liquidation preference of Crown Acquisition Preferred Stock,
as a result of changes in the business, operations or prospects of Crown
and/or CarnaudMetalbox, market assessments of the likelihood that the Offer
will be consummated and the time thereof, general market conditions and other
factors.
The terms of Crown Acquisition Preferred Stock provide that Crown
Acquisition Preferred Stock is mandatorily convertible on the fourth
anniversary of the date of original issuance of Crown Acquisition Preferred
Stock, and, in addition, if less than 30% of the shares of Crown Acquisition
Preferred Stock initially issued pursuant to the Offer remain outstanding,
Crown will have the ability to convert the remaining shares of Crown
Acquisition Preferred Stock into shares of Crown Common Stock on the terms set
forth in Crown's Articles of Incorporation. CGIP has, pursuant to the Exchange
Offer Agreement, agreed to elect to receive Units of Crown Stock for its
CarnaudMetalbox Shares in the Offer. If the Offer is consummated, it is
possible, depending upon the number of CarnaudMetalbox Shares exchanged for
the Cash Election Price rather than Units of Crown Stock in the Offer, that
CGIP would hold more than 70% of the outstanding Crown Acquisition Preferred
Stock following the Offer. In any event, if holders of more than 70% of the
initially outstanding Crown Acquisition Preferred Stock were to elect, in the
aggregate, at any time or from time to time to convert their shares of Crown
Acquisition Preferred Stock into shares of Crown Common Stock, Crown would
have the ability to convert the remaining shares of Crown Acquisition
Preferred Stock into Crown Common Stock on the terms set forth in Crown's
Articles of Incorporation.
Because the price of Crown Common Stock is subject to market fluctuations,
the value of the shares of Crown Common Stock received by an owner of Crown
Acquisition Preferred Stock upon conversion thereof (whether mandatory or
optional) may be more or less than the liquidation preference of Crown
Acquisition Preferred Stock.
Although Crown will apply for listing of the Crown Common Stock and the
Crown Acquisition Preferred Stock to be issued in the Offer on the Official
List of the Paris Stock Exchange, there can be no assurance that such
application will be granted. In addition, it is possible, if an insufficient
number of holders of CarnaudMetalbox Shares elect Units of Crown Stock, as
opposed to cash, in the Offer, following the Offer, the NYSE or the Paris
Stock Exchange could delist Crown Acquisition Preferred Stock from the NYSE or
the Paris Stock Exchange, respectively. In the event of such delisting, or in
the event Crown Acquisition Preferred Stock is not accepted for listing on the
Official List of the Paris Stock Exchange, the liquidity and market price of
Crown Acquisition Preferred Stock could be adversely affected. See "THE
OFFER--Listing of Crown Common Stock and Crown Acquisition Preferred Stock."
The following is a summary of the terms of the new series of Crown
Acquisition Preferred Stock as set forth in the Exchange Offer Agreement.
Designation. The shares of Crown Acquisition Preferred Stock will be
designated as 4.5% Cumulative Preferred Stock and the number of shares of
Crown Acquisition Preferred Stock that will be outstanding depends on the
number of CarnaudMetalbox Shares tendered into the Offer in exchange for
Units. See "THE CARNAUDMETALBOX PROPOSALS." The par value per share of Crown
Acquisition Preferred Stock will be the Average Market Closing Price per share
of Crown Common Stock, determined without regard to the limitations on the
minimum and maximum Exchange Ratio (see "SUMMARY--The Offer--Exchange Ratio
and Market Value of Crown Common Stock").
Rank. All shares of Crown Acquisition Preferred Stock shall, with respect to
dividend rights and rights upon liquidation, dissolution and winding-up, rank
senior to all of Crown's now or hereafter issued Junior Securities (as
hereinafter defined) and on a parity with the Parity Securities (as
hereinafter defined), unless the issuance of a new class of preferred stock
that ranks senior in respect of dividend rights or rights upon liquidation,
dissolution and winding-up is specifically approved by the holders of Crown
Acquisition Preferred Stock as hereinafter provided. Crown Common Stock and
other equity securities (other than any senior securities
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specifically approved by the holders of Crown Acquisition Preferred Stock) of
Crown will be "Junior Securities" unless, with respect to any class of equity
securities other than Crown Common Stock, such securities expressly provide
that they rank on a parity with Crown Acquisition Preferred Stock with respect
to dividends and upon liquidation, dissolution or winding-up, in which case
such class of equity securities will be "Parity Securities". The terms of
Crown Acquisition Preferred Stock do not restrict the creation of Junior
Securities and Parity Securities (except as hereafter provided under "Voting
Rights").
Dividend Rights. The holders of Crown Acquisition Preferred Stock will be
entitled to receive, when, as and if declared by the Board of Directors of
Crown out of funds at the time legally available, dividends at the rate of
4.5% of the par value of Crown Acquisition Preferred Stock, which will be
based on the Average Market Closing Price of Crown Common Stock, per annum per
share (the "Preferred Dividends"), and no more, which will be fully cumulative
and will be payable in cash quarterly in arrears on February 20, May 20,
August 20 and November 20 of each year (each a "Dividend Payment Date"),
except that if such date is a Saturday, Sunday or legal holiday, then such
dividend will be payable on the next day that is not a Saturday, Sunday or
legal holiday, to holders of record on such record dates, not more than 60
days nor less than 10 days preceding the respective Dividend Payment Dates, as
are fixed by Crown's Board of Directors.
The first dividend payment period shall be from the date of initial issuance
of the Crown Acquisition Preferred Stock to, but excluding, the first Dividend
Payment Date occurring in 1996 (except that if the date of initial issuance
occurs within 20 days prior to such Dividend Payment Date, the first dividend
period shall be from the date of initial issuance to, but excluding the next
following Dividend Payment Date), and the first Dividend Payment Date in
respect of Crown Acquisition Preferred Stock will be the first Dividend
Payment Date occurring in 1996 (or, if the date of initial issuance occurs
within 20 days prior to such date, the next following Dividend Payment Date).
The first dividend period (and the actual first Dividend Payment Date) will be
known only after the Offer is consummated. Dividends on the Crown Acquisition
Preferred Stock will accrue (whether or not declared and whether or not such
amounts would be available, legally or otherwise, at that time for
distribution to holders of Crown Acquisition Preferred Stock) on a daily basis
from the date of original issuance of the Crown Acquisition Preferred Stock or
from the most recent Dividend Payment Date to which full dividends have been
paid. Dividends will cease to accrue in respect of any shares of the Crown
Acquisition Preferred Stock on the effective date of a mandatory conversion or
on the date of their earlier voluntary conversion. Dividends (or cash amounts
equal to accrued and unpaid dividends) payable on the Crown Acquisition
Preferred Stock for any period shorter than a quarterly dividend period shall
be computed on the basis of a 360-day year of twelve 30-day months. Holders of
Crown Acquisition Preferred Stock will, upon mandatory conversion of shares of
Crown Acquisition Preferred Stock, convert all accrued and unpaid dividends in
respect of Crown Acquisition Preferred Stock into Crown Common Stock at the
conversion price.
Subject to the next paragraph, payments on account of accrued and unpaid
dividends for any past dividend period may be declared and paid at any time,
without reference to any regular Dividend Payment Date. Any dividend payment
made on shares of the Crown Acquisition Preferred Stock shall first be
credited against the earliest accrued but unpaid dividend due with respect to
shares of the Crown Acquisition Preferred Stock. All dividends paid with
respect to shares of the Crown Acquisition Preferred Stock will be paid pro
rata to the holders entitled thereto. The amount of dividends payable per
share of Crown Acquisition Preferred Stock for each quarterly dividend period
will be computed by dividing the annual dividend amount by four. No interest
shall be payable in respect of any accrued and unpaid dividends on the Crown
Acquisition Preferred Stock. Holders of the shares of Crown Acquisition
Preferred Stock, as such, will not be entitled to any dividends, whether
payable in cash, property or stock, in excess of full cumulative cash
dividends as provided herein.
No dividends or other distributions will be declared, paid or set apart for
payment or otherwise made on Junior Securities (other than a dividend or
distribution paid solely in shares of, or warrants, rights or options
exercisable for or convertible into Junior Securities), unless and until all
accrued and unpaid dividends on the Crown Acquisition Preferred Stock for all
dividend payment periods ending on or before the payment date of such dividend
or other distribution on Junior Securities will have been paid or declared and
set apart for payment. In addition, no payment in cash or otherwise on account
of the purchase, redemption, retirement or other acquisition of shares of
Junior Securities will be made unless and until all accrued and unpaid
dividends on the Crown Acquisition Preferred Stock for all dividend payment
periods ending on or before such payment in respect of such Junior Securities
have been paid or declared and set apart for payment; provided, however, that
the
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restrictions set forth in this sentence shall not apply to the purchase or
other acquisition of Junior Securities (1) pursuant to any employee or director
incentive or benefit plan or arrangement (including any employment, severance
or consulting agreement) of Crown or any subsidiary of Crown heretofore or
hereafter adopted, (2) solely in exchange for or upon conversion into Junior
Securities or (3) pursuant to a redemption at the stated redemption price of
any rights granted to holders of Crown Common Stock pursuant to a shareholders
rights plan. Holders of shares of the Crown Acquisition Preferred Stock will be
entitled to receive the dividends in preference to and in priority over any
dividend upon any of the Junior Securities.
No full dividends will be declared, paid or set apart for payment on shares
of any class or series of Parity Securities for any period unless full
cumulative dividends have been, or contemporaneously are, paid or declared and
set apart for payment on Crown Acquisition Preferred Stock for all dividend
payment periods ending on or before the payment date of full dividends on
Parity Securities. No dividends may be paid on Parity Securities except on
dates on which dividends are paid on the Crown Acquisition Preferred Stock. If
dividends are not paid or set apart in full upon the shares of Crown
Acquisition Preferred Stock and any Parity Securities, all dividends paid or
declared and set apart for payment on the Crown Acquisition Preferred Stock and
the Parity Securities will be paid or declared and set apart for payment pro
rata so that the amount of dividends paid or declared and set apart for payment
per share on the Crown Acquisition Preferred Stock and the Parity Securities on
any date will in all cases bear to each other the same ratio that accrued and
unpaid dividends to the date of payment on the Crown Acquisition Preferred
Stock and the Parity Securities bear to each other. In addition, no payment on
account of the purchase, redemption, retirement or other acquisition of shares
of Parity Securities will be made, and, other than dividends to the extent
permitted by the preceding paragraph, no distributions will be declared, paid
or set apart for payment or otherwise made on shares of Parity Securities,
unless and until all accrued and unpaid dividends on the Crown Acquisition
Preferred Stock for all dividend payment periods ending on or before the
payment in respect of, or the payment date of the distribution on, the Parity
Securities will have been paid or declared and set apart for payment; provided,
however, that the restrictions set forth in this sentence will not apply to the
purchase or other acquisition of Parity Securities (1) pursuant to any employee
or director incentive or benefit plan or arrangement (including any employment,
severance or consulting agreement) of Crown or any subsidiary of Crown
hereafter adopted, (2) solely in exchange for or upon conversion into other
Parity Securities or Junior Securities or (3) pursuant to a redemption at the
stated redemption price of any rights granted to holders of Crown Common Stock
pursuant to a shareholders rights plan.
Subject to the foregoing provisions, the Board of Directors may declare, and
Crown may pay or set apart for payment, dividends and other distributions on
any Junior Securities or Parity Securities, and may redeem, purchase or
otherwise acquire any Junior Securities or Parity Securities, and the holders
of the Crown Acquisition Preferred Stock will not be entitled to share therein.
Liquidation Preference. In the event of a liquidation, dissolution or winding
up of Crown, whether voluntary or involuntary, the holders of Crown Acquisition
Preferred Stock will be entitled to receive out of the assets of Crown
available for distribution to shareholders an amount per share of Crown
Acquisition Preferred Stock equal to all dividends accrued and unpaid on such
share to (but not including) the date of final distribution to such holders,
whether or not declared, without interest, plus a sum equal to the par value of
Crown Acquisition Preferred Stock, before any payment shall be made or any
assets distributed in respect of such Junior Securities (the "Liquidation
Preference"). If the assets of Crown available for distribution to shareholders
are not sufficient to pay in full the liquidation payments payable to the
holders of outstanding shares of Crown Acquisition Preferred Stock and any
Parity Securities, then the holders of such shares will share ratably in the
distribution of assets in accordance with the amounts which would be payable on
the distribution if the amounts to which the holders of outstanding shares of
Crown Acquisition Preferred Stock and the holders of outstanding shares of the
Parity Securities are entitled were paid in full. Except as provided, holders
of Crown Acquisition Preferred Stock, as such, will not be entitled to any
distribution in the event of liquidation, dissolution or winding up of the
affairs of Crown.
For liquidation preference purposes, none of the following shall be deemed to
be a voluntary or involuntary liquidation, dissolution or winding up of Crown:
(1) the voluntary sale, conveyance, lease, exchange or transfer
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(for cash, shares of stock, securities or other consideration) of all or
substantially all of the property or assets of Crown; (2) the consolidation or
merger of Crown with or into one or more other corporations, or other
associations; (3) the consolidation or merger of one or more corporations or
other associations with or into Crown; (4) the participation by Crown in a
share exchange; or (5) the division of Crown.
Right of Conversion. At any time after the date of initial issuance of the
Crown Acquisition Preferred Stock, each share of Crown Acquisition Preferred
Stock will be convertible at the option of the holder into fully paid and
nonassessable shares of Crown Common Stock, at the rate of that number of
shares of Crown Common Stock for each full share of Crown Acquisition Preferred
Stock that is equal to the par value of such share divided by the Conversion
Price applicable per share of Crown Common Stock. The "Conversion Price"
applicable per share of Crown Common Stock will initially be an amount equal to
1.0975 times the par value of Crown Acquisition Preferred Stock and will be
adjusted from time to time as follows.
If Crown pays or makes a dividend or other distribution to all holders of its
Crown Common Stock or other Junior Securities in shares of Crown Common Stock,
the Conversion Price in effect at the opening of business on the business day
following the date fixed for the determination of shareholders entitled to
receive such dividend or other distribution will be reduced by multiplying the
Conversion Price by a fraction of which the numerator will be the number of
shares of Crown Common Stock outstanding at the close of business on the date
fixed for such determination and the denominator will be the sum of such number
of shares and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately prior to the
opening of business on the day following the date fixed for such determination.
For the purposes of this paragraph, the number of shares of Crown Common Stock
at any time outstanding will not include shares held in the treasury of Crown
but will include shares issuable in respect of scrip certificates issued in
lieu of fractions of shares of Crown Common Stock. Crown will not pay any
dividend or make any distribution on shares of Crown Common Stock held in the
treasury of Crown.
If Crown issues rights or warrants to all holders of Crown Common Stock
entitling them to subscribe for or purchase shares of Crown Common Stock at a
price per share less than the current market price per share of Crown Common
Stock on the date fixed for the determination of stockholders entitled to
receive such rights or warrants, the Conversion Price in effect at the opening
of business on the day following the date fixed for such determination will be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Crown Common Stock outstanding at
the close of business on the date fixed for such determination plus the number
of shares of Crown Common Stock which the aggregate of the offering price of
the total number of shares of Crown Common Stock so offered for subscription or
purchase would purchase at such current market price (determined by multiplying
the total number of shares by the exercise price of the rights or warrants and
dividing the product so obtained by the current market price) and the
denominator will be the number of shares of Crown Common Stock outstanding at
the close of business on the date fixed for such determination plus the number
of shares of Crown Common Stock so offered for subscription or purchase, such
reduction to become effective immediately prior to the opening of business on
the day following the date fixed for such determination. For the purposes of
this paragraph, the number of shares of Crown Common Stock at any time
outstanding will not include shares held in the treasury of Crown but will
include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Crown Common Stock. Crown will not issue any rights or
warrants in respect of shares of Crown Common Stock held in the treasury of
Crown. The foregoing provision will not apply to issuances of rights pursuant
to a shareholder rights plan provided that such rights are issued together with
the Crown Common Stock upon conversion of the Crown Acquisition Preferred
Stock. In the event that all the shares of Crown Common Stock offered for
subscription or purchase are not delivered upon the exercise of such rights or
warrants, upon the expiration of such rights or warrants the Conversion Price
will be adjusted to the Conversion Price which would have been in effect had
the numerator and the denominator of the foregoing fraction and the resulting
adjustment been made based upon the number of shares of Crown Common Stock
actually delivered upon the exercise of such rights or warrants rather than
upon the number of shares of Crown Common Stock offered for subscription or
purchase; provided, however, that no such
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readjustment upon expiration of the rights or warrants will affect the number
of shares of Crown Common Stock issued upon any conversion of Crown Acquisition
Preferred Stock prior to such readjustment.
If outstanding shares of Crown Common Stock are subdivided into a greater
number of shares of Crown Common Stock, the Conversion Price in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective will be proportionately reduced, and, conversely, in case at
any time after the date of original issuance of the Crown Acquisition Preferred
Stock outstanding shares of Crown Common Stock are combined into a smaller
number of shares of Crown Common Stock, the Conversion Price in effect at the
opening of business on the day following the day upon which such combination
becomes effective will be proportionately increased, such reduction or
increase, as the case may be, to become effective immediately prior to the
opening of business on the day following the day upon which such subdivision or
combination becomes effective.
If Crown, by dividend or otherwise, distributes to all holders of its Crown
Common Stock evidences of its indebtedness or assets (including securities, but
excluding (1) any rights or warrants as referred to previously, (2) any
dividend or distribution in cash solely out of the retained earnings of Crown
(retained earnings of Crown for this purpose being calculated at any date to
exclude the one-time impact of Crown's adopting changes in accounting
principles required by changes in (x) U.S. GAAP or (y) the application or
interpretation of U.S. GAAP by any applicable governmental or regulatory
authority, provided that only changes occurring in the fiscal year with respect
to which retained earnings is being determined will be excluded for this
purpose) and (3) any dividend or distribution of Crown Common Stock referred to
previously) then in each such case, unless Crown elects to reserve shares or
other units of such securities or assets for distribution to the holders of the
Crown Acquisition Preferred Stock upon the conversion of the shares of Crown
Acquisition Preferred Stock so that any holder of Crown Acquisition Preferred
Stock will receive upon such conversion, in addition to the shares of the Crown
Common Stock to which the holder is entitled, the kind and amount of securities
or assets which such holder would have received if the shares of Crown
Acquisition Preferred Stock had been converted into shares of Crown Common
Stock immediately prior to the date fixed for the determination of stockholders
entitled to receive the distribution, the Conversion Price will be adjusted so
that the same will equal the price determined by multiplying the Conversion
Price in effect immediately prior to the close of business on the date fixed
for the determination of stockholders entitled to receive the distribution by a
fraction of which the numerator will be the current market price per share of
the Crown Common Stock on the date fixed for such determination less the then
fair market value (as determined by the Board of Directors, whose
determination, if made in good faith, will be conclusive and described in a
resolution of the Board of Directors filed with the transfer agent for the
Crown Acquisition Preferred Stock and mailed to the holders of record of the
Crown Acquisition Preferred Stock) on the date fixed for such determination of
the portion of the assets or evidences of indebtedness so distributed
applicable to one share of Crown Common Stock and the denominator will be such
current market price per share of the Crown Common Stock, the adjustment to
become effective immediately prior to the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such distribution.
The reclassification of Crown Common Stock into securities other than Crown
Common Stock (other than any reclassification upon a consolidation or merger as
described herein) will be deemed to involve (1) a distribution of securities
other than Crown Common Stock to all holders of Crown Common Stock (and the
effective date of the reclassification will be deemed to be "the date fixed for
the determination of stockholders entitled to receive such distribution" and
"the date fixed for such determination") and (2) a subdivision or combination,
as the case may be, of the number of shares of Crown Common Stock outstanding
immediately prior to the reclassification into the number of shares of Crown
Common Stock, if any, outstanding immediately thereafter (and the effective
date of such reclassification shall be deemed to be "the day upon which such
subdivision becomes effective" or "the day upon which such combination becomes
effective", as the case may be, and "the day upon which such subdivision or
combination becomes effective").
For the purposes of any computation arising under the preceding paragraphs
regarding the issuance of rights or warrants on common stock and evidences of
indebtedness, the current market price per share of Crown
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Common Stock on any day will be deemed to be the average of the "market prices"
(as defined below) for shares of Crown Common Stock for any five consecutive
"business days" (which means any day other than a Saturday, Sunday or a day on
which banking institutions in the State of New York are authorized by law or
executive order to close) selected by Crown commencing not more than 20
business days before the date in question, provided, however, that if the "ex"
date (as defined later in this paragraph) for any event (other than the
issuance or distribution requiring such computation) that requires an
adjustment to the conversion price pursuant to the paragraphs above occurs on
or after the 20th business day prior to the day in question and prior to the
"ex" date for the issuance or distribution requiring such computation, the
market price for each business day prior to the "ex" date for such other event
will be adjusted by multiplying such market price by the same fraction by which
the conversion price is required to be adjusted as a result of such other
event. For purposes of this paragraph, the term "ex date", (1) when used with
respect to any issuance or distribution, means the first day on which the Crown
Common Stock trades regular way on the relevant exchange or in the relevant
market from which the market price was obtained without the right to receive
such issuance or distribution and (2) when used with respect to any subdivision
or combination of shares of Crown Common Stock, means the first date on which
the shares of Crown Common Stock trade regular way on such exchange or in such
market after the time at which such subdivision or combination becomes
effective. The term "market price" as used in this paragraph means, the last
reported sales price regular way or, in case no such reported sale takes place
on such day, the average of the reported closing bid and asked prices regular
way, in either case of Crown Common Stock on the NYSE or, if Crown Common Stock
is not listed or admitted to trading on such exchange, on the principal
national securities exchange on which Crown Common Stock is listed or admitted
to trading or, if not listed or admitted to trading on any national securities
exchange, on the National Association of Securities Dealers Automated
Quotations National Market System or, if Crown Common Stock is not listed or
admitted to trading on any national securities exchange or quoted on such
National Market System, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any NYSE member firm selected from time
to time by Crown for that purpose. If none of the conditions set forth above is
met, the closing price of Crown Common Stock on any day or the average of such
closing prices for any period will be the fair market value of such class of
stock as determined by a member firm of the NYSE selected by Crown.
In any case in which the foregoing paragraphs require an adjustment to be
made immediately following a record date, Crown may elect to defer the
implementation of the adjustment (but in no event until a date later than the
effective time of the event giving rise to the adjustment), in which case Crown
will, with respect to any share of Crown Acquisition Preferred Stock converted
after such record date and before such adjustment has been implemented (1)
defer paying any cash payment in respect of fractional shares or issuing to the
holder of such share of Crown Acquisition Preferred Stock the number of shares
of Crown Common Stock issuable upon such conversion in excess of the number of
shares of Crown Common Stock issuable thereupon only on the basis of the
Conversion Price prior to adjustment, and (2) not later than five business days
after such adjustment will be implemented, pay to such holder the appropriate
cash payment and issue to the holder the additional shares of Crown Common
Stock and other capital stock and securities of Crown issuable on such
conversion and deliver to such holder other assets deliverable on such
conversion. If an event otherwise requiring that an adjustment be made pursuant
to this paragraph never becomes effective, no such adjustment will be required
to be implemented.
Notwithstanding anything to the contrary herein, no adjustment in the
Conversion Price will be required unless such adjustment would require an
increase or decrease of at least 1% in such price; provided, that any
adjustments which by reason of this paragraph are not required to be made will
be carried forward and taken into account in any subsequent adjustment. All
calculations under this paragraph will be made by Crown to the nearest cent or
the nearest one-hundredth of a share, as the case may be.
Crown may make such reductions in the Conversion Price, in addition to those
required above, as it considers to be advisable in order that any event treated
for Federal income tax purposes as a dividend of stock or stock rights will not
be taxable to the recipients. Any determination by the Board of Directors of
Crown in connection with the foregoing, if made in good faith, will be
conclusive and described in a resolution of the
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Board of Directors filed with the transfer agent for Crown Acquisition
Preferred Stock and mailed to the holders of record of Crown Acquisition
Preferred Stock.
No fractional shares or scrip representing fractional shares of Crown Common
Stock will be issued upon conversion of Crown Acquisition Preferred Stock. If
more than one certificate evidencing shares of Crown Acquisition Preferred
Stock is surrendered for conversion at one time by the same holder, the number
of full shares issuable upon conversion thereof will be computed on the basis
of the aggregate number of shares of Crown Acquisition Preferred Stock so
surrendered. Instead of any fractional share of Crown Common Stock that would
otherwise be issuable to a holder upon conversion of any shares of Crown
Acquisition Preferred Stock, Crown will pay a cash adjustment without interest
in respect of such fractional share in an amount equal to the same fraction of
the market price per share of Crown Common Stock (as determined by the Board
of Directors, which, so long as Crown Common Stock is listed on the NYSE,
shall be the reported last sale price regular way on the NYSE) at the close of
business on the day of conversion.
Mandatory Conversion. On the Latest Mandatory Conversion Date, which is the
fourth anniversary of the date of original issuance of the Crown Acquisition
Preferred Stock, all of the Crown Acquisition Preferred Stock will convert
into shares of Crown Common Stock as provided below. In addition, if, at any
time prior to the Latest Mandatory Conversion Date less than 30% of the number
of shares of Crown Acquisition Preferred Stock initially issued remain
outstanding, the remaining shares of Crown Acquisition Preferred Stock will,
at the election of Crown and after notice has been provided as set forth
below, convert into shares of Crown Common Stock as provided below.
If Crown has elected to convert the Crown Acquisition Preferred Stock into
Crown Common Stock pursuant to the second sentence of the previous paragraph,
Crown will provide notice of mandatory conversion of shares of Crown
Acquisition Preferred Stock pursuant to this paragraph (other than any
conversion on the Latest Mandatory Conversion Date) to holders of record of
the Crown Acquisition Preferred Stock to be converted not less than 15 nor
more than 60 days prior to the date fixed for conversion. Such notice shall be
provided by mailing notice of such conversion first class air mail postage
prepaid, to each holder of record of the Crown Acquisition Preferred Stock to
be converted, at such holder's address as it appears on the stock register of
Crown; provided, however, that no failure to give such notice nor any defect
therein shall affect the validity of the preceding notice for the conversion
of any shares of Crown Acquisition Preferred Stock except as to the holder to
whom Crown has failed to give said notice or except as to the holder whose
notice was defective. Such notice will specify the date fixed for conversion,
the conversion price then in effect and that on and after the date fixed for
conversion dividends will cease to accrue on such shares.
Crown's obligation to deliver shares of Crown Common Stock and (only with
respect to fractional shares) provide funds in accordance with this paragraph
will be deemed fulfilled if, on the mandatory conversion date, Crown deposits,
with a bank or trust company, having an office or agency in New York, New York
and having a capital and surplus of at least $50,000,000, such number of
shares of Crown Common Stock as are required to be delivered by Crown upon the
conversion in trust for the account of the holders of the shares to be
converted (and so as to be and continue to be available therefor), with
irrevocable instructions and authority to such bank or trust company that such
shares be delivered upon conversion of the shares of Crown Acquisition
Preferred Stock so called for conversion, provided that Crown will not deposit
such shares of Crown Common Stock on any date prior to the mandatory
conversion date. Any shares of Crown Common Stock or funds so deposited and
unclaimed at the end of two years from such conversion date shall be repaid
and released to Crown, after which the holder or holders of such shares of
Crown Acquisition Preferred Stock so called for conversion shall look only to
Crown for delivery of such shares of Crown Common Stock.
Provided that Crown has fulfilled its obligations to deposit shares as
provided above, then effective on the conversion date fixed by Crown and
notified to the holders of Crown Acquisition Preferred Stock as provided in
the foregoing paragraph (or on the Latest Mandatory Conversion Date, as the
case may be), each outstanding share of Crown Acquisition Preferred Stock will
be converted into fully paid and nonassessable shares of Crown Common Stock at
the conversion price then in effect, automatically and without any action on
the part of any
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holder of shares of Crown Acquisition Preferred Stock, and such shares of Crown
Common Stock will be deemed outstanding from and after the conversion date.
There is no restriction on such mandatory conversion by reason of any arrearage
in the payment of dividends on Crown Acquisition Preferred Stock.
Upon conversion of shares of Crown Acquisition Preferred Stock, holders of
shares of Crown Acquisition Preferred Stock will convert all accrued and unpaid
dividends in respect of such shares of Crown Acquisition Preferred Stock into
Crown Common Stock at the conversion price then in effect.
Each holder of shares of Crown Acquisition Preferred Stock to be converted
will surrender the certificates evidencing such shares to Crown at the place
designated in the notice of the conversion or, if the conversion occurs on the
Latest Mandatory Conversion Date, then the conversion will, unless Crown has
notified each holder otherwise, take place at the offices of Crown's transfer
agent, and will thereupon be entitled to receive certificates evidencing shares
of Crown Common Stock following such surrender and following the date of such
conversion. If any required notice of conversion has been given or no notice is
required by the terms hereof, and if on the date fixed for conversion, shares
of Crown Common Stock have been deposited with a bank or trust company as
provided above then, notwithstanding that the certificates evidencing any
shares of Crown Acquisition Preferred Stock subject to conversion have not been
surrendered, the shares represented thereby subject to conversion will be
deemed no longer outstanding, dividends with respect to the shares subject to
conversion will cease to accrue after the date fixed for conversion and all
rights with respect to the shares subject to conversion will forthwith after
such date cease and terminate, except for the right of the holders to receive
the shares of Crown Common Stock to which they are entitled without interest
upon surrender of their certificates therefor.
Reclassification, Consolidation, Merger or Sale of Assets. In case of any
consolidation of Crown with, or merger of Crown or share exchange into, any
other "person" (as hereinafter defined), any merger of another person into
Crown (other than a merger or share exchange which does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Crown Common Stock) or any sale or transfer of all or substantially all of the
assets of Crown, lawful provision will be made as a part of the terms of such
consolidation, merger, sale or transfer whereby the holder of each share of the
Crown Acquisition Preferred Stock will have the right to convert such share
into the kind and amount of securities, cash and other property receivable upon
such consolidation, merger, sale or transfer by a holder of the number of
shares of Crown Common Stock into which a share of Crown Acquisition Preferred
Stock might have been converted at the conversion price in effect immediately
prior to such consolidation, merger, sale or transfer (including aggregation
rights with respect to fractional shares equivalent to those set forth above),
assuming the holder of Crown Common Stock of Crown (1) is not a person with
which Crown consolidated or into which Crown merged or which merged into Crown
or exchanged its shares or to which such sale or transfer was made, as the case
may be (a "constituent person"), or an "affiliate" (as hereinafter defined) of
a constituent person, and (2) failed to exercise his rights of election, if
any, as to the kind or amount of securities, cash or other property receivable
upon such consolidation, merger, sale or transfer by other than a constituent
person or an affiliate thereof and in respect of which such rights of election
have not been exercised; provided, however, that if the kind or amount of
securities, cash and other property receivable upon the consolidation, merger,
sale or transfer is not the same for each share of Crown Common Stock held
immediately prior to such consolidation, merger, sale or transfer by others
than a constituent person or an affiliate thereof and in respect of which such
rights of election shall not have been exercised ("non-electing share"), then
for the purposes of this paragraph the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, sale or transfer by
each non-electing share will be deemed to be the kind and amount so receivable
per share by a plurality of the non-electing shares. It is understood for
purposes of this paragraph that, if the shareholders of Crown have approved any
such consolidation, merger, sale or transfer which makes provision for Crown
Acquisition Preferred Stock under the terms of such consolidation, merger, sale
or transfer (such approval to include the necessary approval, if any, of the
holders of Crown Acquisition Preferred Stock), then the holders of Crown
Acquisition Preferred Stock will be deemed to have waived the benefits of this
paragraph. Such provision will also provide, as a part of the terms of such
consolidation, merger, share exchange, sale or transfer, for adjustments for
subsequent events equivalent to the adjustments provided for above. The
provisions of this paragraph will similarly apply to successive
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consolidations, mergers, share exchanges, sales or transfers. With respect to
any consolidation, merger, share exchange, sale or transfer in which Crown is
not the surviving person, the surviving person will be a person organized under
the laws of a State of the United States.
"Person", as used above, means any individual, corporation, partnership,
joint venture, trust, unincorporated organization, government or any agency or
political subdivision thereof, or any other entity and "affiliate" of any
specified person means any other person directly or indirectly controlling or
controlled by or under direct or indirect common control with such specified
person. For the purposes of this definition, "control" when used with respect
to any specified person means the power to direct the management and policies
of such person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Reservation of Shares; Etc. Crown will at all times reserve and keep
available, free from preemptive rights out of its authorized and unissued
stock, solely for the purpose of effecting the conversion of the Crown
Acquisition Preferred Stock, such number of shares of Crown Common Stock that
will from time to time be sufficient to effect the conversion of all shares of
Crown Acquisition Preferred Stock from time to time outstanding. Crown will
from time to time, in accordance with the laws of the Commonwealth of
Pennsylvania, increase the authorized number of shares of Crown Common Stock if
at any time the number of shares of authorized and unissued Crown Common Stock
will not be sufficient to permit the conversion of all the then-outstanding
shares of Crown Acquisition Preferred Stock.
If any shares of Crown Common Stock required to be reserved for purposes of
conversion of the Crown Acquisition Preferred Stock hereunder require
registration with or approval of any governmental authority under any Federal
or State law before the shares may be issued upon conversion, Crown will in
good faith and as expeditiously as possible endeavor to cause the shares to be
duly registered or approved as the case may be. If Crown Common Stock is listed
on the NYSE, the London Stock Exchange, the Paris Stock Exchange or any other
national or foreign securities exchange, Crown will, if permitted by the rules
of such exchange, list and keep listed on such exchange, upon official notice
of issuance, all shares of Crown Common Stock issuable upon conversion of the
Crown Acquisition Preferred Stock.
Prior Notice of Certain Events. In case: (1) Crown declares any dividend (or
any other distribution) on Crown Common Stock other than ordinary quarterly
dividends in accordance with Crown's dividend policy (and other than dividends
and distributions described in clauses (2) and (3)); or (2) Crown authorizes
the granting to all holders of Crown Common Stock of rights or warrants to
subscribe for or purchase any shares of stock of any class or series or of any
other rights or warrants other than pursuant to a shareholder rights plan
provided that such rights are issuable together with Crown Common Stock upon
conversion of the Crown Acquisition Preferred Stock; or (3) of any
reclassification of Crown Common Stock (other than a subdivision or combination
of the outstanding Crown Common Stock, or a change in par value, or from par
value to no par value, or from no par value to par value), or of any division
or consolidation or merger to which Crown is a party and for which approval of
any shareholders of Crown will be required, or of the sale or transfer of all
or substantially all of the assets of Crown or of any compulsory share exchange
whereby Crown Common Stock is converted into other securities, cash or other
property; or (4) of the voluntary or involuntary dissolution, liquidation or
winding up of Crown; then Crown will cause to be filed with the transfer agent
for Crown Acquisition Preferred Stock, and will cause to be mailed to the
holders of record of Crown Acquisition Preferred Stock, at their last addresses
as they will appear upon the stock transfer books of Crown, at least fifteen
days prior to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record (if any) is to be taken for the
purpose of such dividend, distribution, redemption, repurchase, rights or
warrants or, if a record is not to be taken, the date as of which the holders
of Crown Common Stock of record to be entitled to such dividend, distribution,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Crown Common Stock of record
will be entitled to exchange their shares of Crown Common Stock for securities,
cash or other property deliverable upon such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or winding up
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(but no failure to mail such notice or any defect therein or in the mailing
thereof shall affect the validity of the corporate action required to be
specified in such notice).
Voting Rights. Other than as set forth below and except as provided under
applicable law, the holders of Crown Acquisition Preferred Stock will be
entitled to vote together with the holders of Crown Common Stock on all
matters to be voted on by holders of Crown Common Stock. When voting together
with the holders of Crown Common Stock on any matter, each share of Crown
Acquisition Preferred Stock will be entitled to the number of votes equal to
the number of shares of Crown Common Stock into which such share of Crown
Acquisition Preferred Stock is convertible as provided above as of the record
date applicable to such vote. Holders of Crown Acquisition Preferred Stock as
a class will also have the additional voting rights set forth below.
Except as provided below, a vote of at least a majority of Crown Acquisition
Preferred Stock then outstanding will be sufficient to take any action
requiring the vote of the Crown Acquisition Preferred Stock as a separate
class. Holders of Crown Common Stock will not vote together with the Crown
Acquisition Preferred Stock on any such matters. At any meeting where Crown
Acquisition Preferred Stock has the right to vote as a separate class, the
presence, in person or by proxy, of a majority of the outstanding shares of
the Crown Acquisition Preferred Stock will constitute a quorum of such class.
Whenever dividends accrued on the Crown Acquisition Preferred Stock will be
in arrears and unpaid for at least six consecutive quarterly dividend periods,
(1) the number of members constituting the Board of Directors will be
increased by two, effective as of the time of election of such directors as
hereinafter provided and (2) the holders of shares of Crown Acquisition
Preferred Stock (voting separately as a class together with holders of any
Parity Securities upon which like voting rights have been conferred and are
then exercisable) will have the exclusive right to vote for and elect such two
additional directors of Crown (the "Preferred Stock Directors") to fill such
newly-created directorships. (The effect of the foregoing provision, when
taken together with the provision set forth above (see "--Dividend Rights")
stating that payments of past due dividends are credited to the earliest of
any existing unpaid dividend periods, is that holders of Crown Acquisition
Preferred Stock will have the right to vote for and elect two additional
directors of Crown in the event dividends on Crown Acquisition Preferred Stock
are in arrears and unpaid for any six quarterly dividend periods.) Such right
to elect two Preferred Stock Directors will become effective at the earlier of
(x) the next meeting of shareholders of Crown at which directors are to be
elected held after such dividends have been in arrears and unpaid for six
quarterly consecutive dividend periods and (y) the special meeting of holders
of Crown Acquisition Preferred Stock (and of Parity Securities on which
similar voting rights have been conferred) called for such purpose, and will
terminate when all accrued and unpaid dividends on Crown Acquisition Preferred
Stock have been declared and paid or set apart for payment in full, subject to
re-vesting in the event of each and every subsequent failure of Crown to pay
dividends for the requisite number of quarterly dividend periods as described
above. The right of the holders of shares of Crown Acquisition Preferred Stock
with respect to the election of the Preferred Stock Directors may be exercised
at any annual meeting of shareholders or at any special meeting of
shareholders held for such purpose. If the right to elect directors has
accrued to the holders of shares of Crown Acquisition Preferred Stock more
than 90 days preceding the date established for the next annual meeting of
shareholders, the President of Crown will, within 20 days after the delivery
to Crown at its principal office of a written request for a special meeting
signed by the holders of at least 10% of all outstanding shares of Crown
Acquisition Preferred Stock, call a special meeting of the holders of Crown
Acquisition Preferred Stock (and of any Parity Securities on which similar
voting rights have been conferred) to be held within 60 days after the
delivery of such request for the purpose of electing the Preferred Stock
Directors.
Each of the two Preferred Stock Directors will serve until the next annual
meeting of shareholders of Crown and until his or her successor has been
elected and has qualified or the earlier expiration of his or her term as
provided below. No Preferred Stock Director may be removed without the vote of
holders of a majority of the shares of Crown Acquisition Preferred Stock
voting as a class, or the holders of a majority of shares of Crown Acquisition
Preferred Stock and Parity Securities having the right to vote in the election
of the Preferred Stock Directors in case holders of shares of Parity
Securities will also have the right to elect such directors voting
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together as a single class, as the case may be. If, prior to the expiration of
the term of any Preferred Stock Director, a vacancy in the office of such
director shall occur, such vacancy will, until the expiration of such term, in
each case be filled by the vote of the holders of record of a majority of the
then outstanding shares of Crown Acquisition Preferred Stock voting as a class,
or the holders of a majority of the shares of Crown Acquisition Preferred Stock
and Parity Securities who are then entitled to participate in the election of
the Preferred Stock Directors in case holders of such Parity Securities will
also have the right to elect such directors voting together as a single class,
as the case may be.
Upon any termination of the right of the holders of Crown Acquisition
Preferred Stock voting as a class to elect the Preferred Stock Directors, the
term of office of the Preferred Stock Directors then in office will terminate
immediately. Upon such termination the number of directors constituting the
Board of Directors will, without further action, be reduced by two.
At elections for Preferred Stock Directors, each holder of Crown Acquisition
Preferred Stock will be entitled to one vote per share. In the event that the
holders of any Parity Securities are entitled to participate in the election of
the Preferred Stock Directors, the holders of such Parity Securities will be
entitled to cast one vote for each Parity Security containing a liquidation
value equal to the per share liquidation value of Crown Acquisition Preferred
Stock.
The holders of shares of Crown Acquisition Preferred Stock (together with the
holders of any Parity Securities on which similar voting rights have been
conferred), voting as a class will have the right to remove without cause at
any time and replace the Preferred Stock Directors.
So long as any Crown Acquisition Preferred Stock is outstanding (except when
notice of the mandatory conversion of all outstanding shares of Crown
Acquisition Preferred Stock has been duly given by Crown or as of the Latest
Mandatory Conversion Date and, in each case, shares of Crown Common Stock have
been deposited in trust for such conversion), Crown will not, without the
affirmative vote or consent of the holders of at least two-thirds (unless a
higher percentage will then be required by applicable law) of all outstanding
shares of Crown Acquisition Preferred Stock voting separately as a class, given
in person or by proxy, either in writing or by resolution adopted at an annual
or special meeting called for this purpose, (1) amend, alter or repeal any
provision of the Articles of Incorporation of Crown, as amended, so as to
affect, in any manner adverse to the holders of Crown Acquisition Preferred
Stock, the relative rights, preferences, qualifications, limitations or
restrictions of Crown Acquisition Preferred Stock; (2) create, authorize, or
reclassify any authorized stock of Crown into, or increase the authorized
amount of, any class or series of Crown's capital stock ranking prior to the
Crown Acquisition Preferred Stock as to dividends or as to distributions of
assets upon liquidation, dissolution or winding up of Crown, whether voluntary
or involuntary, or any security convertible into shares of such a class or
series; or (3) take any other action on which the holders of Crown Acquisition
Preferred Stock shall be entitled by law to vote separately as a class.
For purposes of the preceding paragraph, without limitation, (1) the
creation, authorization or issuance of any shares of any Junior Securities or
Parity Securities and (2) the creation of any indebtedness of Crown (other than
indebtedness convertible into or exchangeable for capital stock of Crown other
than Junior Securities or Parity Securities), will not require the consent of
the holders of Preferred Stock voting as a class.
Except as may otherwise be required by law, shares of Crown Acquisition
Preferred Stock will not have any powers, preferences or relative,
participating, optional or other special rights other than those specifically
set forth in the Articles of Incorporation of Crown (as the same may be amended
from time to time).
The holders of Crown Acquisition Preferred Stock will not be entitled to
cumulative voting in the election of directors of Crown whether voting as a
class or voting together with the holders of Crown Common Stock.
Status of Acquired Shares and Further Issuances of Preferred Stock. Shares of
Crown Acquisition Preferred Stock received upon conversion or otherwise
acquired by Crown, will be cancelled and not be reissued
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by Crown, and the number of authorized shares of Crown Acquisition Preferred
Stock will be correspondingly reduced.
Following the initial issuance of Crown Acquisition Preferred Stock, no
further shares of Crown Acquisition Preferred Stock will be issued and, in the
event that any shares of Crown Acquisition Preferred Stock are authorized but
unissued, the number of authorized shares of Crown Acquisition Preferred Stock
will be reduced accordingly.
Miscellaneous. Crown will pay any and all stock transfer and documentary
stamp taxes that may be payable in respect of any issuance or delivery of
shares of Crown Acquisition Preferred Stock or shares of Crown Common Stock or
other securities issued on account of Crown Acquisition Preferred Stock
pursuant hereto or certificates or instruments evidencing such shares or
securities. Crown will not, however, be required to pay any such tax which may
be payable in respect of any transfer involved in the issuance or delivery of
shares of Crown Acquisition Preferred Stock or Crown Common Stock or other
securities in a name other than that in which the shares of Crown Acquisition
Preferred Stock with respect to which such shares or other securities are
issued or delivered were registered, or in respect of any payment to any person
with respect to any such shares or securities other than a payment to the
registered holder thereof, and will not be required to make any such issuance,
delivery or payment unless and until the person otherwise entitled to such
issuance, delivery or payment has paid to Crown the amount of any such tax or
has established, to the satisfaction of Crown, that such tax has been paid or
is not payable.
In the event that a holder of shares of Crown Acquisition Preferred Stock
does not by written notice designate the name in which shares of Crown Common
Stock to be issued upon conversion of such shares should be registered or to
whom payment upon redemption of shares of Crown Acquisition Preferred Stock
should be made or the address to which the certificates evidencing such shares,
or such payment, should be sent, Crown will be entitled to register such
shares, and make such payment, in the name of the holder of such Crown
Acquisition Preferred Stock as shown on the records of Crown and to send the
certificates evidencing such shares, or such payment, to the address of such
holder shown on the records of Crown.
See "--Rights Plan" above with respect to the issuance of common stock
purchase rights on shares of Crown Common Stock issued pursuant to conversion
of Crown Acquisition Preferred Stock.
ADDITIONAL PREFERRED STOCK
In addition to the 50,000,000 shares of Crown Acquisition Preferred Stock
authorized under the Acquisition Articles Amendment in connection with the
CarnaudMetalbox Transaction, if the Additional Preferred Stock Proposal is
approved at the Special Meeting, Crown's Board of Directors will have the
authority to issue, at any time or from time to time, up to 30,000,000
additional shares of preferred stock in one or more classes or series of a
class as determined by Crown's Board of Directors. Unlike Crown Acquisition
Preferred Stock, such shares would not be limited to issuance in connection
with the CarnaudMetalbox Transaction. As of November 10, 1995, there were no
shares of such preferred stock outstanding. In such event, the Crown Board of
Directors will have authority, without further shareholder approval (except as
otherwise required by applicable law or rules of securities exchanges or
quotation systems on which shares of Crown are at the time listed or authorized
for quotation), to determine the designation and number of shares of any such
class or series and to determine voting rights, preferences, limitations and
special rights, if any of such class or series; provided, however, that such
shares will rank on a parity with or junior to Crown Acquisition Preferred
Stock in respect of dividend and liquidation rights and provided further that
any such shares will not be entitled to more than one vote per share when
voting as a class with holders of Crown Common Stock. The rights of the holders
of Crown Common Stock will be subject to, and may be adversely affected by, the
rights of holders of such preferred stock issued by Crown in the future. In
addition, the issuance of preferred stock could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from attempting to acquire, control of Crown. However, Crown's Board of
Directors has adopted a policy with the intention of mitigating these anti-
takeover
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effects in certain situations. See "OTHER PROPOSALS TO BE CONSIDERED AT THE
MEETING--The Additional Preferred Stock Proposal."
COMPARISON OF SHAREHOLDER RIGHTS
The rights of CarnaudMetalbox's shareholders are governed by its statuts, or
charter (the "CarnaudMetalbox Charter"), and the laws of the Republic of
France, including French company law. The rights of Crown's shareholders are
governed by its Articles of Incorporation, its bylaws (the "Crown Bylaws") and
the laws of the Commonwealth of Pennsylvania, including the Pennsylvania
Business Corporation Law of 1988, as amended, referred to herein as the PBCL.
As used herein, the "Crown Articles" refer to the Articles of Incorporation of
Crown as such Articles are proposed to be amended at the Special Meeting. See
"THE CARNAUDMETALBOX PROPOSALS--Description of the CarnaudMetalbox Proposals"
and "OTHER PROPOSALS TO BE CONSIDERED AT THE MEETING." Certain provisions of
the PBCL apply only to "registered" Pennsylvania business corporations, such as
Crown, which have a class or series of voting shares registered under the
Exchange Act.
FORM, HOLDING AND TRANSFER OF SHARES
The CarnaudMetalbox Charter provides that CarnaudMetalbox Shares may be held
either in registered or identifiable bearer, or au porteur identifiable, form
at the option of the shareholder, which for the latter means that
CarnaudMetalbox may request from SICOVAM the name, nationality and domicile of
shareholders holding shares in bearer form, as well as the number of
CarnaudMetalbox Shares they hold, their voting rights and the restrictions, if
any, affecting their CarnaudMetalbox Shares. Such identifiable bearer
CarnaudMetalbox Shares are referred to as titres au porteur identifiables.
CarnaudMetalbox Shares held in registered form are inscribed in the name of
the respective owners thereof in separate accounts (the "CarnaudMetalbox
Shareholder Accounts") maintained by Demachy acting as a registration agent on
behalf of CarnaudMetalbox. Each CarnaudMetalbox Shareholder Account shows the
name of the holder, the number of shares held and, in the case of
CarnaudMetalbox Shares held through an Intermediary, shows that they are so
held. Demachy, as a matter of course, issues or causes to be issued
attestations d'inscription en compte or confirmations as to holdings of
CarnaudMetalbox Shares inscribed in the CarnaudMetalbox Shareholder Accounts to
the persons in whose names the shareholdings are inscribed, but these
confirmations do not constitute documents of title. Demachy maintains on behalf
of CarnaudMetalbox a share account with SICOVAM in respect of all
CarnaudMetalbox Shares in registered form (the "CarnaudMetalbox Share
Account").
In the case of CarnaudMetalbox Shares issued in bearer form, the
CarnaudMetalbox Shares are held on the shareholder's behalf by an Intermediary
and are inscribed in an account maintained by an Accredited Intermediary with
SICOVAM separately from the CarnaudMetalbox Share Account. Each Intermediary
maintains a record of CarnaudMetalbox Shares held through it and will issue, at
the request of the holders thereof, certificates of inscription in respect
thereof. CarnaudMetalbox Shares held in this manner are referred to as being in
bearer form, although no bearer document of title is issued by or on behalf of
CarnaudMetalbox in respect thereof. The CarnaudMetalbox Charter permits
CarnaudMetalbox to request SICOVAM at any time to provide it with the identity
of the holders of bearer shares.
Certain accumulations and dispositions of CarnaudMetalbox Shares are subject
to a number of notification requirements under French company law and the
CarnaudMetalbox Charter. See "--Limitations on Takeovers, Business Combinations
and Share Accumulations."
CarnaudMetalbox Shares may be transferred in France only in bearer form
pursuant to transfers effected through Intermediaries. For information on
trading and settlement practices on the Paris Stock Exchange, see "THE OFFER--
Effect of Offer on Market for CarnaudMetalbox Shares."
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Certain registered CarnaudMetalbox Shares are held through a sub-register
maintained by Barclays Registrars. Certificates of Registration representing
such shares have been issued to facilitate trading of CarnaudMetalbox Shares on
the Official List of the London Stock Exchange. Quotations for such
certificates on the London Stock Exchange are expressed in British pounds and
settlement is made on customary terms of the London Stock Exchange, including
physical delivery of the Certificates of Registration. CarnaudMetalbox Shares
quoted on SEAQ International are expressed in French francs and settlement is
made on customary terms of the Paris Stock Exchange.
The Crown Bylaws provide for shares of Crown Stock in registered form.
Therefore, shares of Crown Common Stock and Crown Acquisition Preferred Stock
issued pursuant to the Offer will (if admitted to listing in France) be held
initially in the registered name of SICOVAM on Crown's register of shares.
Following consummation of the Offer, the shares of Crown Stock issued in the
Offer will be credited by book-entry transfer to the applicable accounts of the
Accredited Intermediaries which have tendered CarnaudMetalbox Shares in the
Offer and elected to receive Units for such shares. For purposes of trading in
the French market, such shares of Crown Stock will be similar to shares held in
bearer form, and no conversion or other action will be required to transfer
such shares within the SICOVAM system. Accordingly, such shares will be held on
the shareholder's behalf by an Intermediary and will be inscribed in an account
maintained by an Accredited Intermediary with SICOVAM. Each Intermediary
through which such shares are held will be responsible for maintaining a record
of shares of Crown Stock then held through it and for issuing, at the request
of the applicable holder, certificates of inscription in respect thereof.
CarnaudMetalbox shareholders who elect to receive Units in the Offer should
be aware that there are substantial variations in the settlement practices of
the various securities clearing and settlement organizations which will hold
Crown Stock following the Offer, such as SICOVAM and, in the United States, the
Depository Trust Company, among others. Trading activities involving different
clearance organizations may entail substantial delays. Persons trading shares
which are held through different clearance and settlement systems should
contact their Intermediary, broker or other advisor to confirm applicable
clearance and settlement procedures for the transaction.
In the event shares of Crown Stock are traded on SEAQ International following
the Offer, transfer and settlement procedures for such shares will be in
accordance with the rules of the NYSE.
For information regarding certain provisions of the PBCL affecting certain
accumulations of Crown Stock, see "--Limitations on Takeovers, Business
Combinations and Share Accumulations." For information regarding the effects of
certain U.S. securities laws on accumulations of Crown Stock, see "THE OFFER--
Regulations Affecting Security Holders."
VOTING RIGHTS
In accordance with French law and the CarnaudMetalbox Charter, the voting
rights of holders of CarnaudMetalbox Shares vary depending on whether such
rights are asserted at an ordinary general shareholder meeting or an
extraordinary general shareholder meeting. In order to have the right to attend
or be represented at an ordinary general meeting of shareholders and vote, a
CarnaudMetalbox shareholder must hold at least 10 CarnaudMetalbox Shares.
Shareholders holding less than the required 10 CarnaudMetalbox Shares may
combine their voting securities in order to be represented at such a meeting by
one of such shareholders. This requirement does not apply to extraordinary
general shareholder meetings. The CarnaudMetalbox Charter provides that the
right to vote at and attend ordinary general shareholder meetings rests in the
owner of the usufruit, or life interest, of a CarnaudMetalbox Share, but the
right to vote at and attend extraordinary general shareholder meetings rests in
the owner of the nue-propriete, or remainder interest, in a CarnaudMetalbox
Share.
In addition, under French law, the presence in person or by proxy of
shareholders of a societe anonyme having not less than 25% (in the case of an
ordinary general meeting) or 33. 1/3% (in the case of an extraordinary general
meeting) of the voting rights is necessary for a quorum. If such quorum is not
reached, the meeting must
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be reconvened. In such case, the presence in person or by proxy of
shareholders having not less than 25% (in the case of an extraordinary
shareholders meeting) of the voting rights is necessary for a quorum. No
quorum is required in the case of such reconvened ordinary shareholder
meeting.
Subject to the requirement that a shareholder hold at least 10
CarnaudMetalbox Shares to vote at an ordinary general shareholder meeting,
each CarnaudMetalbox Share generally represents the right to cast one vote at
shareholder meetings. However, the CarnaudMetalbox Charter provides that
double voting rights attach to CarnaudMetalbox Shares that have been fully
paid and held in registered form in the name of the same owner for at least
two years. This double voting right may be withdrawn by a two-thirds majority
of votes cast at an extraordinary meeting of CarnaudMetalbox shareholders only
after obtaining the authorization of holders of shares carrying double voting
rights. Under French law, at an ordinary general shareholder meeting, the vote
required to pass a resolution is a majority of the votes cast. At an
extraordinary shareholder general meeting, a two-thirds majority of the votes
cast is required unless the resolution involves a decision to increase the
liability of shareholders, which requires a unanimous vote by all
shareholders.
With respect to shareholder meetings of Crown, the PBCL provides that unless
otherwise provided in a bylaw adopted by the shareholders, the presence of
shareholders entitled to cast at least a majority of the votes that all
shareholders are entitled to cast on a particular matter to be acted upon
constitutes a quorum. The Crown Bylaws provide that the presence, in person or
by proxy, of shareholders entitled to cast a majority of the votes is
necessary to constitute a quorum for the transaction of business.
The PBCL further provides that unless otherwise provided in a corporation's
articles of incorporation, every shareholder of a business corporation such as
Crown will be entitled to one vote for each share standing in the holder's
name on the books of the corporation. Under the Crown Articles, holders of
Crown Common Stock are entitled to one vote for each share of Crown Common
Stock standing in the holder's name on the books of Crown, and, except as to
matters as to which holders of Crown Acquisition Preferred Stock vote
separately as a class, holders of Crown Acquisition Preferred Stock are
entitled to the number of votes equal to the number of shares of Crown Common
Stock into which the shares of Crown Acquisition Preferred Stock held by the
holder are convertible. For information on the circumstances in which a class
vote of Crown Acquisition Preferred Stock is required, see "--Class Voting"
below.
PREEMPTIVE RIGHTS
Each CarnaudMetalbox Share confers a preemptive right to subscribe to
additional CarnaudMetalbox Shares where an increase in CarnaudMetalbox's
capital is effected through the issuance of additional securities for cash, or
by capitalization of reserves, profits or issue premiums. Shares constituting
the capital increase may be subscribed for by shareholders who exercise their
preemptive rights or by third parties to whom unexercised preemptive rights
were transferred.
Under the PBCL, the shareholders of a Pennsylvania corporation do not have
preemptive rights to acquire shares, option rights or securities having
conversion or option rights, or obligations unless otherwise provided in the
corporation's articles of incorporation. The Crown Articles do not provide for
preemptive rights for Crown shareholders.
AMENDMENT OF CHARTER DOCUMENTS
The CarnaudMetalbox Charter may be amended only with the approval of
shareholders at an extraordinary general shareholder meeting. An extraordinary
general shareholder meeting is also required to increase or decrease the share
capital of CarnaudMetalbox. The share capital of CarnaudMetalbox may be
decreased only if all holders of equity securities of CarnaudMetalbox are
offered the possibility to participate in such a reduction.
To amend a Pennsylvania corporation's articles of incorporation, the PBCL
generally requires the affirmative vote of a majority of the votes cast by all
shareholders entitled to vote thereon and, if any class or
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series of shares is entitled to vote thereon as a class under the PBCL or the
corporation's articles of incorporation, the affirmative vote of a majority of
the votes cast in each such class, unless a greater vote is otherwise
specified in such corporation's articles of incorporation or the PBCL. Except
as described in "--Class Voting," the Crown Articles do not contain any such
provision requiring a greater vote. Under the PBCL, no special meeting of a
class or series entitled to vote as a class is required to amend the articles
of incorporation of a Pennsylvania corporation, although as set forth below in
"--Class Voting," there are circumstances in which a class vote is required to
amend the Crown Articles.
With respect to increases in capital stock, under the PBCL, if provided in
the articles of incorporation, the corporation may vest authority in the board
of directors to divide the authorized and unissued shares into classes or
series, or both, and to determine for any such class or series its voting
rights, designations, preferences, limitations and special rights. Assuming
approval by Crown's shareholders of the Special Meeting Proposals, the Crown
Articles will provide for 50,000,000 shares of Crown Acquisition Preferred
Stock and 30,000,000 shares of authorized preferred stock of Crown in one or
more classes or series with voting rights and such designations, preferences,
limitations and special rights as are, subject to the Crown Articles,
determined by the Board of Directors of Crown; provided, however, that such
shares will rank on a parity with or junior to Crown Acquisition Preferred
Stock in respect of dividend and liquidation rights and provided further that
any such shares will not be entitled to more than one vote per share when
voting as a class with holders of Crown Common Stock. In addition, subject to
such assumption, the Crown Articles will provide for a number of authorized
and unissued shares of Crown Common Stock which may be issued without further
shareholder approval (except as otherwise required by applicable law or rules
of securities exchanges or quotation systems on which shares of Crown are at
the time listed or authorized for quotation). See "DESCRIPTION OF CROWN
STOCK--Additional Preferred Stock" and "--Crown Common Stock."
AMENDMENT AND REPEAL OF BYLAWS
CarnaudMetalbox, like other French companies, has no bylaws, and provisions
relating to the management and affairs of CarnaudMetalbox are found in the
CarnaudMetalbox Charter.
Pennsylvania corporations have the authority under the PBCL to adopt bylaws
containing provisions for managing the business and regulating the affairs of
the corporation, including as to matters such as shareholder meetings,
director liability and indemnification by the corporation and other matters,
so long as such provisions are not inconsistent with the PBCL or the
corporation's articles of incorporation. The Crown Bylaws contain provisions,
among other things, limiting the liability of directors and mandating that,
subject to certain limitations, Crown must indemnify directors (see "--
Director Liability and Indemnification"), and requiring advance notice of
shareholder nominations or business for shareholder meetings (see "--Right to
Call Meetings of Shareholders").
Under the PBCL, shareholders generally (by a majority of the votes cast by
shareholders entitled to vote) and, where provided in the articles of
incorporation or bylaws and subject to certain limitations, the directors of
the corporation, have the power to adopt, amend and repeal the bylaws. The
Crown Bylaws provide that, except as otherwise provided by law, the Crown
Bylaws may be amended by a majority vote of the directors present at a meeting
of Crown's Board of Directors or by a majority vote of shareholders entitled
to vote thereon, provided in either case that notice of the proposed amendment
was included in the notice of meeting. If the Offer is consummated, Crown has
agreed to amend the Crown Bylaws to provide for the Strategic Committee, and
the Crown Bylaw provision establishing this committee cannot be amended by the
Crown Board without the concurring vote of a majority of the CGIP Designees
then in office. See "THE EXCHANGE OFFER AGREEMENT--Certain Comments."
MANAGEMENT OF THE CORPORATION
CarnaudMetalbox is managed by both a management board and a supervisory
board. The main purpose of the supervisory board is to oversee the management
board, which exercises all corporate powers and is responsible for the actual
management of CarnaudMetalbox. Under the CarnaudMetalbox Charter, a member of
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the supervisory board must hold at least 480 CarnaudMetalbox Shares and cannot
be a member of the management board. In accordance with French law, in addition
to the management board and supervisory board, CarnaudMetalbox has two
statutory auditors (and two substitute auditors) who are independent from the
corporation and who verify that CarnaudMetalbox complies with certain
provisions of French corporate law and certify the fairness and accuracy of the
financial data of CarnaudMetalbox.
The supervisory board of CarnaudMetalbox appoints the members of the
management board, and the term of each member of the management board is three
years. Under the CarnaudMetalbox Charter, members of the supervisory board are
appointed by the shareholders at an ordinary general shareholder meeting, and
their term of office is four years. See "--Classification of Directors" below.
Under the PBCL, the board of directors of a Pennsylvania corporation
exercises all the corporate powers and manages the business and affairs of the
corporation. The PBCL further provides that each director holds office for the
term for which he or she was selected under the corporation's bylaws, which
shall be one year unless the board is classified. See "--Classification of
Directors." Under the PBCL, there is no body, such as a Supervisory Board, to
oversee the board of directors. In addition, under the PBCL, there is no
requirement that registered corporations have an independent statutory auditor
to verify financial information or compliance with statutory requirements.
CLASSIFICATION OF DIRECTORS
French company law does not permit the classifying of members of the
management board into groups of directors with staggered terms of office. In
addition, although French company law permits French companies to provide for a
supervisory board comprised of groups with staggered terms of office, the
CarnaudMetalbox Charter does not provide for such a board structure, and
members of the supervisory board of CarnaudMetalbox serve concurrent four year
terms.
Although the PBCL permits a corporation to provide for a classified board of
directors, the Crown Articles and Crown Bylaws do not contain any such
provision, and all members of the Crown Board of Directors stand for election
each year.
REMOVAL OF DIRECTORS
Under French company law, a member of the management board may be removed
with or without cause only by the shareholders upon recommendation of the
supervisory board. Under certain conditions, a member of the supervisory board
may be deemed to have resigned (for example, when a member of the supervisory
board ceases to hold the requisite number of shares) in which case, the
supervisory board may, between ordinary general shareholder meetings, replace
the member, subject to ratification by the shareholders at the next ordinary
general shareholder meeting.
The PBCL provides that shareholders elect the members of the board of
directors, and, unless a bylaw adopted by the shareholders provides otherwise,
the entire board of directors, or any class of directors or any individual
director, may be removed, with or without cause, by the affirmative vote of a
majority of the votes cast by shareholders entitled to elect directors. The
Crown Bylaws do not contain any specific restrictions on the power of the
shareholders to remove directors.
ACTIONS REQUIRING A SHAREHOLDER MEETING OR VOTE
In accordance with French law, ordinary general meetings of CarnaudMetalbox
shareholders are required for matters such as the appointment of
CarnaudMetalbox's statutory auditors, approval of CarnaudMetalbox's accounts,
the declaration of dividends and the election of the supervisory board.
Extraordinary general meetings of shareholders are required for the approval of
any amendment of the CarnaudMetalbox Charter and the approval of certain other
extraordinary corporate actions, including an increase or decrease in share
capital, the creation of a new class of shares, mergers, the sale or transfer
of all assets and liquidation prior to the end of a statutory term.
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Under the PBCL, shareholders must elect the directors of a corporation and,
subject to certain limitations and qualifications, approve the adoption of
certain amendments to the articles of incorporation, certain mergers or
consolidations, share exchanges, sales or transfers of all or substantially
all of the assets of the corporation, and the dissolution and winding-up of
the corporation. See "--Mergers, Acquisitions and Certain Other Transactions"
below. For information as to the authority of the Crown Board of Directors to
issue capital stock of Crown without further action by the shareholders of
Crown, see "THE CARNAUDMETALBOX PROPOSALS" and "OTHER PROPOSALS TO BE
CONSIDERED AT THE MEETING."
ACTION WITHOUT A MEETING
Under French company law, any action that must be taken at a meeting of
shareholders cannot be taken without such meeting pursuant to written consent
of the shareholders.
The PBCL provides that, unless otherwise restricted by the bylaws, any
action that may be taken at a meeting of shareholders may be taken without a
meeting with the unanimous written consent of all shareholders entitled to
vote thereat. The Crown Bylaws do not restrict the ability of shareholders to
act by unanimous written consent. The PBCL also permits a registered
corporation to specify in its articles of incorporation that, under certain
circumstances, any action required or permitted to be taken at a meeting of
the shareholders may be taken without a meeting upon the written consent of
shareholders who would have been entitled to cast the minimum number of votes
that would be necessary to authorize the action at a meeting at which all
shareholders entitled to vote thereon were present and voting. However, the
Crown Articles do not provide for the taking of action by shareholders by less
than unanimous written consent.
RIGHT TO CALL MEETINGS OF SHAREHOLDERS
In accordance with French law and the CarnaudMetalbox Charter, the
management board must convene an annual ordinary general meeting of
shareholders within six months of the end of CarnaudMetalbox's fiscal year.
Other ordinary or extraordinary shareholder meetings may be convened at any
time during the year by the management board or the supervisory board or, if
the management board or the supervisory board fails to call such a meeting, by
CarnaudMetalbox's statutory auditors or by an agent appointed by a court upon
the request of shareholders holding at least 10% of CarnaudMetalbox's share
capital or by any interested party in cases of urgency. The notice calling
such meeting must state the matters to be considered at such meeting.
The PBCL provides that, except as otherwise provided in the articles of
incorporation, at least one meeting of shareholders shall be held each
calendar year for the election of directors at such time as is provided for
under the corporation's bylaws. The Crown Articles do not limit the occurrence
of regular annual shareholder meetings. The Crown Bylaws vest the Crown Board
of Directors with the authority to set the date of the regular annual meeting
of shareholders of Crown.
The PBCL further provides that shareholders of a registered corporation such
as Crown are not entitled by statute to call a special meeting of
shareholders, except as otherwise provided by the PBCL with respect to special
meetings to approve certain "control share acquisition" and "business
combination" transactions (see "--Limitations on Takeovers, Business
Combinations and Share Accumulations" below). Under the Crown Bylaws, special
shareholder meetings may be called by a majority of the Board of Directors of
Crown or by the President, and except as provided by law, shareholders of
Crown are not entitled to call special meetings of Crown.
Under the PBCL, written notice of every meeting of the shareholders must be
given to each shareholder of record entitled to vote at the meeting at least
10 days prior to the day designated for a meeting that will consider a
fundamental change or five days prior to the day named for a meeting in any
other case. In the case of a special meeting, the notice must state the
general nature of the business to be transacted as well as the place, date and
time of the meeting.
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Pursuant to Crown's Bylaws, a shareholder of record at the time that notice
of the meeting is given and who is entitled to vote at the meeting may bring
business before the meeting or, at an annual meeting, nominate a person for
election to the Board of Directors, if the shareholder gives timely notice of
such business or nomination. To be timely, and subject to certain exceptions,
notice in writing to the secretary must be delivered or mailed and received at
the principal executive offices of Crown, in the case of an annual meeting, not
less than 60 days nor more than 90 days prior to the first anniversary of the
preceding year's annual meeting and, in the case of a special meeting, not
later than the 10th day following the earlier of the day on which notice of the
date of the meeting was mailed or public disclosure was made.
CLASS VOTING
Under French law, if at any general meeting any action is taken that modifies
the rights of any class of securities, such action must be ratified by a
special meeting of holders of such class. The presence in person or by proxy of
shareholders having not less than 50% of the voting rights is necessary for a
quorum at such meeting, and a two-thirds majority of the vote cast is required
to take such action.
The PBCL generally limits the circumstances in which holders of a class of
outstanding shares vote as a class to certain amendments to a corporation's
articles of incorporation that affect the rights and preferences of that class.
Also, holders of outstanding shares of a particular class are entitled to vote
as a class if the rights of that class are affected in certain respects by
mergers, consolidations, asset sales, share exchanges, divisions or
dissolution. Under the Crown Articles, the affirmative vote or consent of the
holder of at least a two-thirds (unless a higher percentage shall then be
required by applicable law) of all outstanding shares of Crown Acquisition
Preferred Stock voting separately as a class is required to: (1) amend, alter
or repeal any provision of the articles of incorporation of Crown, as amended,
so as to affect, in any manner adverse to the holders of the Crown Acquisition
Preferred Stock, the relative rights, preferences, qualifications, limitations
or restrictions of the Crown Acquisition Preferred Stock; (2) create,
authorize, or reclassify any authorized stock of Crown into, or increase the
authorized amount of, any class or series of Crown's capital stock ranking
prior to the Crown Acquisition Preferred Stock as to dividends or as to
distributions of assets upon liquidation, dissolution or winding up of Crown,
whether voluntary or involuntary, or any security convertible into shares of
such a class or series; or (3) take any other action on which the holders of
the Crown Acquisition Preferred Stock shall be entitled by law to vote
separately as a class. For information as to certain rights of holders of Crown
Acquisition Preferred Stock to elect, as a class, additional directors of Crown
upon the occurrence of certain events, see "DESCRIPTION OF CROWN STOCK--Crown
Acquisition Preferred Stock--Voting Rights."
SPECIAL TREATMENT OF HOLDERS OF SHARES OF SAME CLASS OR SERIES
Except as described above under "--Voting Rights" and "--Class Voting,"
French company law and the CarnaudMetalbox Charter do not provide for special
treatment of holders of shares of the same class or series.
Under the PBCL, except as otherwise restricted in the articles of
incorporation and subject to certain qualifications and limitations, an
amendment to the articles of incorporation or any plan of reclassification,
merger, consolidation, exchange, asset transfer, division or conversion may
contain a provision classifying the holders of shares of a class or series into
one or more separate groups by reference to any facts or circumstances that are
not manifestly unreasonable and providing mandatory treatment for shares of the
class or series held by particular shareholders or groups of shareholders that
differs materially from the treatment accorded other shareholders or groups of
shareholders holding shares of the same class or series if (1) (a) such
provision is specifically authorized by a majority of the votes cast by all
shareholders entitled to vote on the amendment or plan, as well as by a
majority of the votes cast by any class or series of shares any of the shares
of which are so classified into groups, whether or not such class or series
would otherwise be entitled to vote on the amendment or plan; and (b) the
provision voted on specifically enumerates the type and extent of the special
treatment authorized; or (2) under all the facts and circumstances, a court
finds such special treatment is undertaken in good faith, after reasonable
deliberation and is in the best interest of the corporation. If an amendment or
plan contains a provision for special treatment, each group of holders of any
outstanding shares of a class or series
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who are to receive the same special treatment under the amendment or plan
shall be entitled to vote as a special class with respect to the plan
regardless of any limitations stated in the articles or bylaws on the voting
rights of any class or series. If any amendment or plan contains a provision
for special treatment without requiring for the adoption of the amendment or
plan the required class vote, the holder of any outstanding shares the
statutory class voting rights of which are so denied who objects to the
amendment or plan shall generally be entitled to the rights and remedies of
dissenting shareholders provided in the PBCL.
CUMULATIVE VOTING
Under French company law, holders of CarnaudMetalbox Shares have no
cumulative voting rights.
Under the PBCL, shareholders have the right to cumulate their votes in the
election of directors unless the articles of incorporation provide otherwise.
The Crown Articles provide that shareholders of Crown are not entitled to
cumulative voting in the election of directors. The elimination of cumulative
voting in the Crown Articles may restrict a minority shareholder's ability to
obtain representation on the Crown Board of Directors.
DIVIDENDS AND DISTRIBUTIONS
Under French law, dividends may be distributed from "distributable profits,"
which, in each fiscal year, consist of net profits for such year minus any
accumulated losses carried forward from previous years and deductions for
mandatory legal reserves, plus any profits carried forward from previous
years. Dividends may be declared only after the shareholders have approved the
financial statements of the corporation for the past fiscal year at the annual
ordinary general shareholder meeting and have determined the amount of
distributable profits. Under the CarnaudMetalbox Charter, if the distributable
profit shown in the accounts for the year, as approved by the CarnaudMetalbox
shareholders is sufficiently large, shareholders of CarnaudMetalbox will be
awarded an initial dividend equal to 5% of the par value of each
CarnaudMetalbox Share, less any fraction of such par value which has been paid
up but not reimbursed. Any remaining distributable profits shall be
distributed to CarnaudMetalbox shareholders or appropriated to either retained
profit or any of the reserves which may be set up and used (including for
payment of dividends) at the discretion of the shareholders. All persons who
are shareholders as of the date of the declaration of the dividend normally
have the right to receive the dividend. In the event that the corporation
fails to make timely payment of dividends duly declared, interest accrues
thereon as a matter of law. The shareholders may also authorize and direct the
corporation to offer to pay all or part of a dividend in shares of stock
instead of cash.
The PBCL provides that a corporation may make distributions in respect of
shares unless, after giving effect to such distribution, (1) the corporation
would be unable to pay its debts as they become due in the usual course of its
business; or (2) the total assets of the corporation would be less than the
sum of its total liabilities plus (unless otherwise provided in the articles)
the amount that would be needed, if the corporation were to be dissolved at
the time as of which the distribution is measured, to satisfy the preferential
rights upon dissolution of shareholders whose preferential rights are superior
to those receiving the distribution. The board of directors may base its
determination of total assets and total liabilities on one or more of the
following: the book values of the corporation's assets and liabilities as
reflected on its books and records, unrealized appreciation and depreciation
of the corporation's assets or the current value of the corporation's assets
and liabilities, either valued separately or valued in segments or as an
entirety as a going concern or any other method that is reasonable in the
circumstances. In addition, the Crown Articles provide that the capital of
Crown shall be at least equal to the aggregate par value of all issued shares
having par value. For information regarding the dividend rights of Crown
Acquisition Preferred Stock, see "DESCRIPTION OF CROWN COMMON STOCK--Crown
Acquisition Preferred Stock." For information as to Crown's intentions with
respect to payment of dividends with respect to Crown Common Stock in the
event the Offer is consummated, see "THE SHAREHOLDERS AGREEMENT--Dividend
Policy."
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SHAREHOLDER RIGHTS PLAN
French company law does not provide for the creation or issuance of options,
warrants or other rights having conditions which preclude the exercise of such
options, warrants or rights by persons acquiring more than a specified
percentage of the company's share capital.
Under the PBCL, certain registered corporations such as Crown are authorized
to create and issue securities, warrants or other rights having such terms as
are fixed by the directors of the corporation, including conditions that
preclude or limit persons owning or offering to acquire a specified number of
shares or certain other securities of the corporation or transferees of such
persons from exercising, converting or receiving such securities, warrants or
other rights. On July 28, 1995, Crown announced that it had adopted a common
stock purchase Rights Plan. The Rights Plan may prevent bidders from
accumulating shares of Crown Common Stock from shareholders of Crown unless
Crown's Board of Directors amends, redeems or takes other action to render
such plan inapplicable to the bidder. For a description of the Rights Plan,
see "DESCRIPTION OF CROWN STOCK--Rights Plan."
DIRECTOR LIABILITY AND INDEMNIFICATION
French company law does not allow companies to indemnify directors. Under
the PBCL, corporations are authorized to indemnify directors, officers,
employees, and agents within prescribed limits and must indemnify them under
certain circumstances.
Under the PBCL, Pennsylvania corporations have the power to indemnify any
person acting as a representative of the corporation against liabilities
incurred in such capacity provided certain standards are met, including good
faith and the belief that the particular action or failure to take action is
in the best interests of the corporation. In general, this power to indemnify
does not exist in the case of actions against any person by or in the right of
the corporation if the person otherwise entitled to indemnification shall have
been adjudged to be liable to the corporation unless a court determines that
despite the adjudication of liability but in view of all the circumstances of
the case, the person is fairly and reasonably entitled to indemnity for
expenses that the court deems proper. A corporation is required to indemnify
representatives of the corporation against expenses they may incur in
defending actions against them in such capacities if they are successful on
the merits or otherwise in the defense of such actions. In all other cases, if
a representative of the corporation acted, or failed to act, in good faith and
in a manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation, indemnification is discretionary, except as may
be otherwise provided by a corporation's bylaws, agreement, vote of
shareholders or disinterested directors or otherwise. Indemnification so
otherwise provided may not, however, be made if the act or failure to act
giving rise to the claim for indemnification is determined by a court to have
constituted willful misconduct or recklessness. Expenses (including attorneys'
fees) incurred in defending any such action may be paid by the corporation in
advance of the final disposition of the action upon receipt of an undertaking
by or on behalf of the representative to repay the amount if it is ultimately
determined that he or she is not entitled to be indemnified by the
corporation.
The Crown Bylaws provide that Crown shall indemnify to the fullest extent
permitted by applicable law any person who was or is a party or is threatened
to be made a party to or is otherwise involved in any threatened, pending or
completed action, suit or proceeding by reason of the fact that such person is
or was a director or officer of Crown, against all liability, loss and expense
(including attorney's fees and amounts paid in settlement) actually and
reasonably incurred by such person in connection with such proceeding, whether
or not the indemnified liability arises or arose from any proceeding by or in
the right of Crown. The Crown Bylaws also provide that expenses incurred by a
director or officer in defending (or acting as a witness in) a proceeding may
(and, in the event of a "change of control" (as defined), will) be paid by
Crown in advance of the final disposition of such proceeding, subject to the
provisions of applicable law, upon receipt of an undertaking by or on behalf
of the director or officer to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by Crown under
applicable law. To determine whether any indemnification is permissible or
advance of expenses is appropriate under the Crown Bylaws, the Board of
Directors by a majority
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vote of a quorum consisting of directors who are not parties to such proceeding
may, and on request of any person seeking indemnification or advance of
expenses shall, determine in each case whether the standards have been met or,
under certain circumstances, such determination shall be made by independent
legal counsel. The Crown Bylaws further provide that the reasonable expenses of
any director or officer in prosecuting a successful claim for indemnification,
and the fees and expenses of any independent legal counsel engaged to determine
permissibility of indemnification or advance of expenses, shall be borne by
Crown. The obligations of Crown to indemnify a director or officer under the
Crown Bylaws, including, if applicable, the advancement of expenses, is a
contract between Crown and such director or officer, and no modification or
repeal of any provision of the Crown Bylaws shall affect, to the detriment of
the director or officer, such obligations of Crown in connection with a claim
based on any act or failure to act occurring before such modification or
repeal.
The PBCL permits a Pennsylvania corporation to provide in a bylaw adopted by
its shareholders that a director shall not be personally liable for monetary
damages for any action taken (subject to certain exceptions) unless the
director has breached or failed to perform the duties of his or her office
under the PBCL and the breach or failure to perform constitutes self-dealing,
willful misconduct or recklessness. The Crown Bylaws contain such a provision.
There is no comparable provision in the PBCL limiting the liability of
officers, employees, or agents of a corporation.
RIGHTS OF DISSENTING SHAREHOLDERS
French company law does not generally grant to dissenting shareholders rights
of appraisal in the event of a merger, consolidation, share exchange, division
or sale or transfer by the company of all or substantially all of its assets.
However, one or more shareholders holding more than 10% of the registered
capital of a French company may petition a court to appoint one or more experts
to evaluate specific acts of management.
The PBCL generally grants appraisal rights to shareholders in the event,
among other things, of a merger, consolidation, share exchange, division or a
sale or transfer by a corporation of all or substantially all of its assets.
However, unless the corporation's board of directors or bylaws provide
otherwise, the holders of a class or series of shares that are listed on a
national securities exchange or held of record by more than 2,000 shareholders
(such as Crown Common Stock) do not have appraisal rights in a transaction in
which such shares are converted solely into shares of the acquiring, surviving,
new or other corporation or solely into such shares and money in lieu of
fractional shares, except that shares of a preferred or special class will have
appraisal rights unless such class is given a class vote on the transaction.
Under the PBCL, among other procedural requirements, a shareholder's written
demand for appraisal of shares must be received by the corporation before the
taking of the vote on the matter giving rise to appraisal rights and such
shareholder must refrain from voting his shares in approval of the matter
giving rise to appraisal rights.
The PBCL does not provide shareholders with a right to petition a court to
appoint one or more experts to evaluate specific acts of management.
MERGERS, ACQUISITIONS AND CERTAIN OTHER TRANSACTIONS
Under French company law, any transaction which involves a modification of
the company's charter (e.g., a merger or spin-off) must be approved at an
extraordinary shareholder meeting. Under the CarnaudMetalbox Charter,
significant acquisitions or disposals of assets require the prior approval of
the supervisory board of CarnaudMetalbox.
The PBCL generally requires approval of mergers and consolidations by a
majority of the votes cast by all shareholders entitled to vote, provided that,
unless otherwise required by the bylaws, shareholder approval is not required
under certain circumstances, including certain situations where the
shareholders of the corporation will hold at least a majority of the voting
power of the surviving corporation immediately after the effective time of
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the merger. The Crown Bylaws do not so otherwise require. The PBCL generally
requires approval of statutory share exchanges, divisions, dissolutions and
dispositions of all or substantially all of a corporation's assets (other than
in the usual and regular course of business) by a majority of the votes cast
by all shareholders entitled to vote.
DUTIES OF DIRECTORS; CONSIDERATION OF NON-ECONOMIC FACTORS
French company law generally provides that in discharging his or her duty as
a director, a director must act in the corporate interest. In addition, in
certain circumstances, directors are permitted to consider the effects of
actions on constituencies such as employees, suppliers or customers.
The PBCL and the Crown Bylaws provide that in discharging the duties of his
position, a director may, in considering the best interests of the
corporation, consider the effects of any action upon employees, suppliers and
customers of the corporation and upon communities in which offices or other
establishments of the corporation are located and all other pertinent factors.
Absent breach of fiduciary duty, lack of good faith or self-dealing, actions
taken as a director shall be presumed to be in the best interests of the
corporation. The Crown Bylaws currently provide that alternative provisions of
the PBCL which provide, among other things, that directors shall not be
required to regard any corporate interest or the interests of any particular
group affected by such action as a dominant or controlling interest and that
directors shall not have any enhanced or additional duties in the context of
an acquisition proposal, shall not apply to Crown, although the effect of
these alternative provisions has not been clarified by courts interpreting the
PBCL.
LIMITATIONS ON TAKEOVERS, BUSINESS COMBINATIONS AND SHARE ACCUMULATIONS
Pursuant to article 356-1 of the French company law of July 24, 1966, any
person or entity that, directly or indirectly or in concert with other
shareholders, becomes the owner of more than one-twentieth, one-tenth, one-
fifth, one-third, one-half or two-thirds of the voting capital stock or voting
rights of CarnaudMetalbox, or whose holding falls below any such level, must
provide CarnaudMetalbox within 15 calendar days and the CBV within five
trading days of exceeding or falling below any such level, with a written
notice that states the date of such transaction and the number of shares
(including any rights to acquire further shares) and voting rights held by it.
In the event a holder of CarnaudMetalbox Shares fails to comply with the
disclosure requirements set forth in the preceding paragraph, such holder
shall not be permitted, in accordance with, and subject to limitations
provided under French law, to exercise voting rights with respect to any
shares exceeding the above-referenced thresholds, until the end of a two-year
period following the date on which the holder thereof has complied with such
disclosure requirement. In case of violation of the notification requirements
provided for under the CarnaudMetalbox Charter, such violations may result in
diminished voting rights as specified in the CarnaudMetalbox Charter. In
addition, in both cases a French court may, under certain circumstances,
eliminate all or part of the voting rights of such holder for a period not to
exceed five years.
Under regulations of the COB, any person or persons acting in concert who
acquire shares or voting rights in excess of 20% of a French listed company
must publish a press release stating their intentions for the following 12
months with respect to such shares or voting rights. Under regulations of the
CBV, any person or persons acting in concert acquiring in excess of one-third
or 50% of the share capital or voting rights of a French listed company must
initiate a public tender offer for the balance of the share capital of such
company. This obligation is also imposed on any person or persons acting in
concert who own between one-third and 50% of the share capital or voting
rights of such company and who acquire more than 2% of the such shares or
voting rights within a 12-month period.
Pursuant to the CarnaudMetalbox Charter, any person that becomes the owner,
directly or indirectly, or in concert with other shareholders, of at least 1%
or any multiple thereof of CarnaudMetalbox's share capital and/or voting
rights or whose holding falls below any such level, must provide
CarnaudMetalbox by mail, telex or telecopy (within 15 calendar days of
exceeding or falling below any such level) with a written notice that states
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the number of shares or voting rights held by it. Such notification is required
until such shareholder's holding reaches 10% of CarnaudMetalbox's share capital
and/or voting rights.
The PBCL contains a number of provisions dealing with acquisitions of the
shares of Pennsylvania corporations and business combinations and other
extraordinary transactions.
Control Share Acquisitions and Business Combinations. Under the PBCL, subject
to certain qualifications and limitations, a person who engages in a "control
share acquisition" of shares of a registered corporation is denied the right to
vote shares acquired in the control share acquisition as well as certain other
shares beneficially owned by such person unless a resolution granting such
voting rights is approved at a meeting of shareholders by the affirmative vote
of a majority of (1) all "disinterested shares" of the corporation and (2) all
voting shares of the corporation. A "control share acquisition" is generally an
acquisition, directly or indirectly, by any person of voting power over voting
shares of a registered corporation that would, when added to all voting power
of the person over other voting shares of the corporation, entitle the person
to cast or direct the casting of such a percentage of the votes for the first
time with respect to any of the following ranges that all shareholders would be
entitled to cast in an election of the directors of the corporation: (1) at
least 20% but less than 33 1/3%; (2) at least 33 1/3% but less than 50%; or (3)
50% or more. "Disinterested shares" are generally those shares beneficially
held for certain specified periods (prior to the record date for the meeting
called to vote on the restoration of voting rights) by persons other than (1) a
person who makes or proposes to make a control share acquisition, (2) executive
officers or directors who are also officers of the corporation and (3) certain
specified employee stock plans of the corporation.
Under the PBCL, a registered corporation may, under certain circumstances and
within 24 months after the date of the control share acquisition or 24 months
after the date that a shareholder vote regarding the restoration of voting
rights of such shares (1) denies such voting rights or (2) grants such voting
rights and such rights lapse in accordance with the PBCL, redeem all shares
acquired by an acquiring person in a control share acquisition and certain
other shares beneficially owned by such person at the price at which the shares
traded on a national securities exchange. The Crown Bylaws currently provide
that the control share acquisition provisions of the PBCL described in this
paragraph and the preceding paragraph shall not be applicable to Crown.
Subject to certain qualifications and limitations, the PBCL also provides
that any person who acquires, directly or indirectly, beneficial ownership of
20% or more of a registered corporation's voting stock (thereby becoming an
"interested shareholder") may not engage in a wide range of "business
combinations" with the corporation unless (1) prior to the date on which the
person becomes an interested shareholder, the board of directors approves the
business combination or the purchase of shares that causes the person to become
an interested shareholder; (2) the business combination is approved by the
affirmative vote of all of the holders of all outstanding common shares; (3)
the business combination is approved by the affirmative vote of the holders of
a majority of all shares entitled to vote in an election of directors of the
corporation, but excluding all shares beneficially held by the interested
shareholder and its affiliates and associates, at a meeting called at least
five years after the date the person becomes an interested shareholder; (4) the
interested shareholder holds 80% or more of the votes that all shareholders
would be entitled to cast in an election of directors of the corporation and
the business combination is approved by the affirmative vote of the holders of
a majority of all shares entitled to vote in an election of directors of the
corporation, but excluding all shares beneficially held by the interested
shareholder and its affiliates and associates, at a meeting held at least three
months after the interested shareholder acquired such 80% interest, provided
that the fair price and procedural requirements set forth in the PBCL are
satisfied; or (v) the business combination is approved by the shareholders at a
meeting called at least five years after the date the person becomes an
interested shareholder, provided that the fair price and procedural
requirements set forth in the PBCL are satisfied. Crown has not taken any
corporate action to opt out of the business combination provisions of the PBCL
described in this paragraph.
The PBCL also provides that, subject to certain limitations and
qualifications, certain transactions between a registered corporation and an
"interested shareholder" (including a merger, consolidation, share exchange,
asset sale, division and certain dissolutions) shall require the affirmative
vote of a majority of the votes that all
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shareholders other than the interested shareholder are entitled to cast with
respect to the transaction, unless such transaction has been approved by a
majority vote of the board of directors (excluding certain directors (1) are
directors of, or have a material equity interest in the "interested
shareholder" or (ii) nominated for election as a director by the "interested
shareholder" and first elected as a director within 24 months of the proposed
transaction) or unless the consideration to be received by the shareholders for
shares of any class of which shares are owned by the interested shareholder is
not less than the highest amount paid by the interested shareholder in
acquiring shares of such class or the transaction is a "short-form" merger
effected under the PBCL without a shareholder vote. For this purpose, an
"interested shareholder" is generally defined as a shareholder (and its
affiliates) who is a party to the transaction or who is treated differently
from other shareholders.
Control Transactions. Subchapter E of the PBCL provides that any holder of
voting shares of a registered corporation who objects to a "control
transaction" will be entitled to make a written demand on the "controlling
person" for payment of the fair value of the voting shares of the corporation
held by the shareholder as determined pursuant to the PBCL and such controlling
person shall be required to pay that amount in cash to such shareholder. A
"control transaction" is defined as the acquisition by a person of the status
of a "controlling person". For this purpose, a "controlling person" is
generally defined as a person who has voting power over voting shares of the
registered corporation that would entitle the holder thereof to cast at least
20% of the votes that all shareholders would be entitled to cast in an election
of directors of the corporation.
Subject to approval of the CarnaudMetalbox Proposals by the shareholders of
Crown at the SpecialMeeting, the Crown Articles will provide that Subchapter E
is inapplicable to Crown. See "THE CARNAUDMETALBOX PROPOSALS--Description of
the CarnaudMetalbox Proposals--Amendment to Crown's Articles of Incorporation."
Disgorgement of Profits by Certain Shareholders. Under the PBCL, subject to
certain qualifications and limitations, any profits realized by any
"controlling person" from the disposition of any equity security of a
registered corporation belong to, and are recoverable by, the corporation if
the profit is realized from the disposition of the equity security within 18
months after the person obtained the status of a controlling person and the
equity security had been acquired by the controlling person within 24 months
prior to or 18 months subsequent to the obtaining by the person of the status
of a "controlling person". For this purpose, a "controlling person" is
generally a person who has (1) acquired, offered to acquire or, directly or
indirectly, publicly disclosed or caused to be disclosed the intention of
acquiring, at least 20% of the voting power of the corporation, or (2) publicly
disclosed or caused to be disclosed that such person may seek to acquire
control of the corporation. The Crown Bylaws currently provide that the
"disgorgement" provisions of the PBCL described in this paragraph shall not be
applicable to Crown.
LEGAL OPINIONS
The legality of the Crown Common Stock and Crown Acquisition Preferred Stock
to be issued in connection with the Offer will be passed upon by Dechert Price
& Rhoads, counsel to Crown. Chester C. Hilinski, of counsel of Dechert Price &
Rhoads, is a director of Crown and, as of October 23, 1995, owned 0.018% of the
outstanding shares of Crown Common Stock. In addition, certain U.S. federal
income tax matters will be passed upon for Crown by Dechert Price & Rhoads,
certain United Kingdom tax matters will be passed upon for Crown by Titmuss
Sainer Dechert, special United Kingdom counsel to Crown, and certain French tax
matters will be passed upon for Crown by Jeantet et Associes, special French
counsel to Crown.
EXPERTS
The financial statements incorporated in this Proxy Statement/Prospectus by
reference to the Annual Report on Crown's Form 10-K for the year ended December
31, 1994, have been so incorporated in reliance on the
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report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
With respect to the unaudited consolidated financial information of Crown
Cork & Seal Company, Inc. for the six month period ended June 30, 1995
incorporated by reference herein, Price Waterhouse LLP reported that they have
applied limited procedures in accordance with professional standards for a
review of such information. However, their separate report dated October 20,
1995 incorporated by reference herein states that they did not audit and they
do not express an opinion on the unaudited consolidated financial information
for the six month period ended June 30, 1995. Price Waterhouse LLP has not
carried out any significant or additional audit tests beyond those which would
have been necessary if such report had not been included. Accordingly, the
degree of reliance on such report with respect to such information should be
restricted in light of the limited nature of the review procedures applied.
Price Waterhouse LLP is not subject to the liability provisions of Section 11
of the Securities Act for their report on the unaudited consolidated financial
information for the six month period ended June 30, 1995 because that report
is not a "report" or a "part" of the Registration Statement prepared or
certified by Price Waterhouse LLP within the meaning of Sections 7 and 11 of
the Securities Act.
The consolidated financial statements of CarnaudMetalbox, as of December 31,
1994 and 1993 and for each of the three years in the three year period ended
December 31, 1994, included in this Proxy Statement/Prospectus have been
audited by Arthur Andersen LLP, independent public accountants, and by Befec-
Price Waterhouse and Claude Chevallier, statutory auditors, as stated in their
opinion included therein and are included herein in reliance upon the
authority of said firms as experts in auditing and accounting.
With respect to the unaudited consolidated financial information of
CarnaudMetalbox for the six month period ended June 30, 1995 included herein,
Arthur Andersen LLP, independent public accountants, and Befec-Price
Waterhouse and Salustro Reydel, statutory auditors, reported that they have
applied limited procedures in accordance with professional standards for a
review of such information. However, their separate report, dated October 6,
1995, included herein states that they did not audit and they do not express
an opinion on the unaudited consolidated financial information for the six
month period ended June 30, 1995. Arthur Andersen LLP, Befec-Price Waterhouse
and Salustro Reydel have not carried out any significant or additional audit
tests beyond those which would have been necessary if such report had not been
included. Accordingly, the degree of reliance on such report with respect to
such information should be restricted in light of the limited nature of the
review procedures applied. None of Arthur Andersen LLP, Befec-Price Waterhouse
or Salustro Reydel are subject to the liability provisions of Section 11 of
the Securities Act for their report on the unaudited consolidated financial
information for the six month period ended June 30, 1995 because that report
is not a "report" or a "part" of the Registration Statement prepared or
certified by Arthur Andersen LLP, Befec-Price Waterhouse or Salustro Reydel
within the meaning of Sections 7 and 11 of the Securities Act.
SHAREHOLDER PROPOSALS
In order to be considered for inclusion in the proxy statement for the 1996
Annual Meeting of Crown, any shareholder proposal intended to be presented at
the meeting must, in addition to meeting the shareholder eligibility and other
requirements of the SEC's rules governing such proposals, be received in
writing, via certified mail--return receipt requested, by the Office of the
Secretary, Crown Cork & Seal Company, Inc., 9300 Ashton Road, Philadelphia,
Pennsylvania 19136 not later than November 27, 1995. For information on
provisions of Crown's Bylaws requiring advance notice of shareholder business
at Crown shareholder meetings, see "COMPARISON OF SHAREHOLDER RIGHTS--Right to
Call Meetings of Shareholders."
166
<PAGE>
GLOSSARY OF SELECTED DEFINED TERMS
Accredited An Intermediary which is an accredited Intermediary authorized
Intermediary to deal directly through the SICOVAM clearance system.
Additional The proposed adoption of an amendment to Crown's Articles of
Preferred Incorporation to authorize 30,000,000 shares of preferred stock
Stock of Crown, which may be issued at any time or from time to time,
Proposal in one or more classes or series of a class with voting rights
and such designations, preferences, limitations and special
rights as are, subject to the terms of the Articles of
Incorporation of Crown, determined by the Board of Directors of
Crown; provided, however, that any such shares will rank on a
parity with or junior to Crown Acquisition Preferred Stock and
provided futher that any such shares will not be entitled to
more than one vote per share when voting as a class with
holders of Crown Common Stock
Acquisition The proposed amendment to Crown's Articles of Incorporation to
Articles be considered at the Special Meeting (1) to authorize
Amendment 50,000,000 shares of Crown Acquisition Preferred Stock solely
in connection with the proposed CarnaudMetalbox Transaction,
(2) to authorize 380,000,000 additional shares of Crown Common
Stock in connection with the proposed CarnaudMetalbox
Transaction and for other general corporate purposes and (3) to
render Subchapter E of the PBCL inapplicable to Crown
Articles The proposed adoption of an amendment to Crown's Articles of
Modernization Incorporation to be considered at the Special Meeting to remove
Proposal a provision which provides that shareholder approval is
specifically not required in connection with the authorization
of secured bond indebtedness of not more than $5,500,000 of
Crown
Average The average Market Closing Price of Crown Common Stock, in U.S.
Market dollars, for the 20 NYSE trading days prior to the Measurement
Closing Price Date
CarnaudMetalbox CarnaudMetalbox, a societe anonyme organized under the laws of
the Republic of France
CarnaudMetalbox The acquisition of CarnaudMetalbox in accordance with the terms
Transaction and conditions of the Exchange Offer Agreement
CBV Conseil des bourses de valeurs, the self-regulatory
organization that has general supervisory authority over French
stock exchanges
CGIP Compagnie Generale d'Industrie et de Participations, a societe
anonyme organized under the laws of the Republic of France
CGIP The designees of CGIP to the Board of Directors of Crown
Designees pursuant to the Shareholders Agreement
Closing Date The date the SBF publishes the avis de resultat, or closing
notice, confirming the success of the Offer
COB Commission des operations de bourse, the administrative agency
of the Republic of France responsible for overseeing the French
securities markets
Compulsory A Retrait obligatoire conducted under French law to acquire
Acquisition 100% of the outstanding shares of CarnaudMetalbox
Conversion The amount equal to 1.0975 times the par value of Crown
Price Acquisition Preferred Stock, subject to adjustment from time to
time as provided in the Proxy Statement/Prospectus
Crown Crown Cork & Seal Company, Inc., a Pennsylvania corporation
Crown Common Common stock, par value $5.00 per share, of Crown
Stock
Crown A new series of convertible preferred stock of Crown having the
Acquisition terms set forth in the Exchange Offer Agreement (as such terms
Preferred may be modified or amended by Crown's Board of Directors)
Stock
Crown Stock Crown Common Stock and Crown Acquisition Preferred Stock
CS First CS First Boston Corporation
Boston
EC Regulation Council Regulation (EEC) No. 4064/89
4064/89
167
<PAGE>
Exchange Act The Securities Exchange Act of 1934, as amended
Exchange The Exchange Offer Agreement, dated as of May 22, 1995, as
Offer amended, between Crown and CGIP
Agreement
Exchange The ratio of Units exchangeable for each CarnaudMetalbox Share
Ratio pursuant to the Offer, initially set at 1.065 but subject to
adjustment in accordance with the Exchange Offer Agreement
Expiration 11:59 p.m., Paris time, 10:59 p.m., London time, and 5:59 p.m.,
Date New York City time, on the date set forth in the avis
d'ouverture, the opening notice, of the Offer or in any
subsequent SBF notice as the expiration date of the Offer
Filing Date The date applicable documents committing to launch the Offer
are filed with the CBV
Final The NYSE trading day immediately preceding the Filing Date
Determination
Date
French Franc For any particular business day, the product of (x) the Market
Crown Common Closing Price per share of Crown Common Stock, in U.S. dollars,
Stock Price and (y) the Noon Buying Rate for such business day (or, if
there was no trading on such business day, the most recent
trading day on which trading of the French franc and U.S.
dollar has occurred)
Intermediary A bank, financial institution,broker or other intermediary
through which CarnaudMetalbox Shares are held
Latest The fourth anniversary of the date of initial issuance of Crown
Mandatory Acquisition Preferred Stock
Conversion
Date
London Stock The International Stock Exchange of the United Kingdom and the
Exchange Republic of Ireland Limited
Marine-Wendel Marine-Wendel, a societe anonyme organized under the laws of
the Republic of France and owner of a majority of the capital
stock of CGIP
Market The closing price per share as reported by the NYSE for
Closing Price composite transactions
Measurement The business day before the Filing Date
Date
Minimum The condition that the number of CarnaudMetalbox Shares validly
Condition tendered into the Offer is at least equal to a majority of the
Voting Power of CarnaudMetalbox based on the number of
outstanding CarnaudMetalbox Shares on the date prior to the
Filing Date and assuming loss of all double voting rights of
the CarnaudMetalbox Shares to be acquired by Crown (or its
subsidiaries)
New Options Options on up to 200,000 CarnaudMetalbox Shares granted to
management of CarnaudMetalbox after execution of the Exchange
Offer Agreement
1994 Options Options for up to 44,000 CarnaudMetalbox Shares to be granted
pursuant to stock options authorized in 1994 by holders of
CarnaudMetalbox Shares
Noon Buying The noon buying rate in The City of New York for cable
Rate transfers payable in French francs as announced by the Federal
Reserve Bank of New York for customs purposes expressed in
French francs per one U.S. dollar or U.S. dollars per one
French franc, as the context requires
NYSE New York Stock Exchange, Inc.
Offer The Offre publique d'echange a titre principal et d'achat a
titre subsidiaire, or public exchange offer with a secondary
cash offer, being conducted by Crown for outstanding
CarnaudMetalbox Shares subject to the terms and conditions of
the Exchange Offer Agreement
Offer Collectively, the Units of Crown Stock (together with cash in
Consideration lieu of fractional share interests) and Cash Election Price
offered for each CarnaudMetalbox Share validly tendered
pursuant to the Offer
Official List The cote officielle of the Paris Stock Exchange
OPR Offre publique de retrait
Outstanding The New Options and the 1994 Options
Options
Paris Stock The Bourse de Paris, the Paris stock exchange
Exchange
168
<PAGE>
PBCL The Pennsylvania Business Corporation Law of 1988, as amended
Record Date October 23, 1995
Reference The document de reference to be filed by Crown with the COB
Document with respect to the Offer and the anticipated listing of Crown
Common Stock and Crown Acquisition Preferred Stock on the
Official List of the Paris Stock Exchange
Registration The Registration Statement on Form S-4 of which this Proxy
Statement Statement/Prospectus is a part
SBF Societe des bourses francaises, the financial institution
responsible for the supervision of trading in listed shares on
French stock exchanges
SEC The Securities and Exchange Commission
Securities The Securities Act of 1933, as amended
Act
SGVM Societe de Gerance de Valeurs Mobilieres, the ultimate parent
of CGIP
Shareholders The Shareholders Agreement which Crown and CGIP have agreed to
Agreement execute on the Closing Date pursuant to the Exchange Offer
Agreement
SICOVAM Societe interprofessionnelle pour la compensation des valeurs
mobilieres, the central depository and transfer agent for
listed securities in France
Special The Special Meeting of Shareholders of Crown to be held on
Meeting December 19, 1995 at 10:00 a.m., Philadelphia time, at the
offices of Crown at 9300 Ashton Road, Philadelphia, PA 19136
(including any adjournment or postponement thereof)
Special The CarnaudMetalbox Proposals, the Articles Modernization
Meeting Proposal and the Additional Preferred Stock Proposal
Proposals
Standstill The period commencing on the Closing Date and ending on the
Period earliest of certain specified events described in "THE
SHAREHOLDERS AGREEMENT--General"
Strategic A strategic committee of Crown directors to be formed pursuant
Committee to the Exchange Offer Agreement, one-half the member of which
will be designees of CGIP
Subchapter E Subchapter E of Chapter 25 of the PBCL
U.S. GAAP United States generally accepted accounting principles
U.S. Holder Individuals or entities who are U.S. citizens or are taxed as
residents of the United States or that otherwise will be
subject to U.S. federal income tax on a net basis in respect of
CarnaudMetalbox Shares or Crown Stock
Units Units, each consisting of (x) .75 shares of Crown Common Stock
and (y) .25 shares of Crown Acquisition Preferred Stock
U.S. person A "U.S. person" as defined in Regulation S under the Securities
Act
Voting Power The voting power in the general election of members of the
supervisory board of CarnaudMetalbox, calculated for options to
acquire CarnaudMetalbox Shares by reference to the votes
attributable to the number of CarnaudMetalbox Shares for which
such options are exercisable
169
<PAGE>
CARNAUDMETALBOX
INDEX TO GROUP CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CarnaudMetalbox 1994 Group Consolidated Financial Statements.............. F-2
Independent Auditors' Report............................................ F-3
Consolidated Statements of Income--three years ended December 31, 1994.. F-4
Consolidated Balance Sheets--December 31, 1994 and 1993................. F-5
Consolidated Statements of Cash Flows--three years ended December 31,
1994................................................................... F-6
Consolidated Statements of Changes in Shareholders' Equity--three years
ended December 31, 1994................................................ F-7
Notes to Consolidated Financial Statements.............................. F-8
CarnaudMetalbox June 30, 1995 Group Consolidated Financial Statements..... G-1
Independent Auditors' Report............................................ G-2
Consolidated Statements of Income--six months ended June 30, 1995 and
1994................................................................... G-3
Consolidated Balance Sheets--June 30, 1995 and 1994..................... G-4
Consolidated Statements of Cash Flows--six months ended June 30, 1995
and 1994............................................................... G-5
Consolidated Statements of Changes in Shareholders' Equity--six months
ended June 30, 1995 and 1994........................................... G-6
Notes to the Consolidated Financial Statements.......................... G-7
</TABLE>
F-1
<PAGE>
CARNAUDMETALBOX
1994
GROUP CONSOLIDATED FINANCIAL STATEMENTS
F-2
<PAGE>
AUDITORS' REPORT
To the Shareholders of CarnaudMetalbox,
We have audited the accompanying consolidated balance sheets of
CarnaudMetalbox and its subsidiaries (the "Company") as of December 31, 1994
and 1993 and the related consolidated statements of income, cash flows and
changes in shareholders' equity for each of the three years in the period
ended December 31, 1994. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of CarnaudMetalbox and its
subsidiaries as of December 31, 1994 and 1993 and the results of their
operations, their cash flows and changes in shareholders' equity for each of
the three years in the period ended December 31, 1994 in conformity with
International Accounting Standards issued by the IASC.
Certain accounting practices of the Company used in preparing the
accompanying consolidated financial statements conform with International
Accounting Standards, but do not conform with accounting principles generally
accepted in the United States. A description of these differences and the
adjustments required to conform net income and shareholders' equity with
accounting principles generally accepted in the United States are set forth in
Note 2.
Chicago and Paris,March 29, 1995
Arthur Andersen LLP The Statutory Auditors
Members of the Compagnie Regionale
de Paris
Befec-Price Waterhouse C.
Chevalier(formerly PSAudit)
M.S. Moralee
F-3
<PAGE>
CARNAUDMETALBOX
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------
NOTES 1994 1993 1992
----- ------- ------- -------
(IN MILLIONS OF FF)
<S> <C> <C> <C> <C>
Net sales..................................... 26 24,890 24,340 24,830
Cost of sales (excluding depreciation and
amortization), selling and administrative
expense, and research and development
expense...................................... 18 (21,538) (21,157) (21,353)
Depreciation and amortization................. (1,355) (1,294) (1,189)
Provision for restructuring................... (288) (306) (262)
------- ------- -------
Operating income.............................. 26 1,709 1,583 2,026
Gain on disposals (net)....................... 19 242 193 235
Financial expense (net)....................... 16 (530) (575) (642)
------- ------- -------
Income before income tax...................... 1,421 1,201 1,619
Provision for income tax...................... 20 (245) (283) (444)
------- ------- -------
Income from operations........................ 1,176 918 1,175
Share in income of associated companies....... -- 14 16
Minority interests in consolidated
subsidiaries................................. (226) (97) (215)
------- ------- -------
Net income.................................... 950 835 976
======= ======= =======
Earnings per share (in French Francs)......... 21 11.6 10.3 12.1
</TABLE>
The Notes on pages F-8 to F-46 are an integral part of the consolidated
financial statements.
F-4
<PAGE>
CARNAUDMETALBOX
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------
NOTES 1994 1993
----- --------- ---------
(IN MILLIONS OF FF)
<S> <C> <C> <C>
ASSETS
------
Intangible assets........................... 4 4,792 4,803
Goodwill.................................... 5 4,073 4,002
Property, plant and equipment............... 6 8,633 8,512
Investments................................. 7 266 367
--------- ---------
Total non-current assets.................. 17,764 17,684
--------- ---------
Inventories................................. 8 3,948 3,699
Trade and other receivables................. 9 4,467 4,302
Cash and cash equivalents................... 2,293 1,764
--------- ---------
Total current assets...................... 10,708 9,765
--------- ---------
Total assets.............................. 28,472 27,449
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Common Stock................................ 10 823 813
Paid-in capital............................. 6,570 6,396
Retained earnings........................... 5,443 4,863
Cumulative translation adjustment........... (1,157) (954)
--------- ---------
Shareholders' equity........................ 11,679 11,118
--------- ---------
Minority interests.......................... 11 1,829 1,720
--------- ---------
Perpetual notes (TSDI)...................... 12-1 1,146 1,199
--------- ---------
Preference shares........................... 12-2 and 14 627 1,307
--------- ---------
Provisions for liabilities and accruals..... 13 1,645 1,631
Long-term debt (not including TSDI and
Preference shares)......................... 14 2,723 2,118
--------- ---------
Provisions and long-term liabilities........ 4,368 3,749
--------- ---------
Short-term debt............................. 14 1,388 1,473
Accounts payable and other current
liabilities................................ 15 7,435 6,883
--------- ---------
Current liabilities......................... 8,823 8,356
--------- ---------
Total liabilities and shareholders'
equity................................... 28,472 27,449
========= =========
Net balance sheet debt (including TSDI and
Preference shares)......................... 14 3,591 4,333
</TABLE>
The Notes on pages F-8 to F-46 are an integral part of the consolidated
financial statements.
F-5
<PAGE>
CARNAUDMETALBOX
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
----------------------
NOTES 1994 1993 1992
----- ------ ------ ------
(IN MILLIONS OF FF)
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net income...................................... 950 835 976
Adjustments to reconcile income from operations
to operating cash flows:
Minority interests and share in income of
associated companies......................... 226 83 199
Depreciation of property, plant and
equipment.................................... 6 1,240 1,190 1,114
Amortization of goodwill...................... 115 104 75
Gain on sale of businesses.................... 19 (23) (178) (201)
Gain on sale of property, plant and
equipment.................................... 19 (219) (15) (34)
Change in operating assets and liabilities.... 22-1 68 126 (62)
Restructuring and other provisions............ 56 29 (109)
Other changes, net............................ 34 (5) (101)
------ ------ ------
Cash flows from operating activities............ 2,447 2,169 1,857
====== ====== ======
Cash flows from investing activities
Purchase of intangible assets................... (16) (13) (25)
Purchase of property, plant and equipment....... (1,896) (1,643) (1,707)
Acquisition of businesses, net of cash
acquired....................................... (394) (2,478) (462)
Proceeds from sale of businesses................ 83 881 360
Proceeds from sale of property, plant and
equipment...................................... 546 103 117
------ ------ ------
Cash flows from investing activities............ (1,677) (3,150) (1,717)
====== ====== ======
Cash flows from financing activities
Proceeds from issuance of shares................ 184 54 11
Proceeds from CarnaudMetalbox Asia Ltd.
(Singapore) issuance of shares................. -- 444 --
Redemption of Preference shares................. (627) -- (418)
Dividends paid on Ordinary shares............... (370) (340) (299)
Net increase/(decrease) in financial debt....... 22-2 597 491 (230)
------ ------ ------
Cash flows from financing activities............ (216) 649 (936)
====== ====== ======
Effect of changes in exchange rates on cash and
cash equivalents............................... (25) 2 (91)
Increase/(decrease) in cash and cash
equivalents.................................... 554 (332) (796)
Cash and cash equivalents at beginning of year.. 1,764 2,094 2,981
------ ------ ------
Cash and cash equivalents at end of year........ 2,293 1,764 2,094
====== ====== ======
</TABLE>
The Notes on pages F-8 to F-46 are an integral part of the consolidated
financial statements.
F-6
<PAGE>
CARNAUDMETALBOX
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
CUMULATIVE
COMMON PAID-IN RETAINED TRANSLATION
STOCK CAPITAL EARNINGS ADJUSTMENT TOTAL
------ ------- -------- ----------- ------
(IN MILLIONS OF FF)
<S> <C> <C> <C> <C> <C> <C>
At January 1, 1992...... 808 6,336 3,813 (445) 10,512
=== ===== ===== ====== ======
Translation adjustment.. (343) (343)
Stock issued............ 1 10 11
Dividends paid (FF 3.70
per share)(1).......... (299) (299)
Net income for the
year................... 976 976
--- ----- ----- ------ ------
At December 31, 1992.... 809 6,346 4,490 (788) 10,857
=== ===== ===== ====== ======
Translation adjustment.. (166) (166)
Postretirement benefit
obligation............. Note 13.1 (122) (122)
Stock issued............ 4 50 54
Dividends paid (FF 4.00
per share)(1).......... (340) (340)
Net income for the
year................... 835 835
--- ----- ----- ------ ------
At December 31, 1993.... 813 6,396 4,863 (954) 11,118
=== ===== ===== ====== ======
Translation adjustment.. (203) (203)
Stock issued............ 10 174 184
Dividends paid (FF 4.00
per share)(1).......... (370) (370)
Net income for the
year................... 950 950
--- ----- ----- ------ ------
At December 31, 1994.... 823 6,570 5,443 (1,157) 11,679
=== ===== ===== ====== ======
</TABLE>
- --------
The dividend relating to the 1994 income payable in 1995 after resolution by
the Ordinary General Meeting, which should represent FF 4.40 per share
excluding a tax credit ("avoir fiscal") of FF 2.20, has not been deducted from
the shareholders' equity as of December 31, 1994.
(1) The tax credit ("avoir fiscal") attached to dividends paid in 1992, 1993
and 1994, relating to 1991, 1992 and 1993 income respectively, amounted to
the respective sums of FF 1.85, FF 2.0 and FF 2.0.
The Notes on pages F-8 to F-46 are an integral part of the consolidated
financial statements.
F-7
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(MILLIONS OF FRENCH FRANCS UNLESS OTHERWISE INDICATED)
ACCOUNTING PRINCIPLES AND POLICIES
The consolidated financial statements of CarnaudMetalbox (the "Group" or the
"Company") have been prepared in accordance with the French law of January 3,
1985 and its Application Decree of February 17, 1986. The accounting
principles applied by the Group are also in accordance with international
accounting standards formulated by the International Accounting Standards
Committee.
Certain reclassifications of items from the previously published
consolidated financial statements have been made in these consolidated
financial statements in order to conform to a presentation format which is
more understandable to a United States reader.
BASIS OF CONSOLIDATION
The Group financial statements include the accounts of all significant
subsidiaries in which CarnaudMetalbox holds, directly or indirectly, a
controlling interest.
The results from operations of significant subsidiaries acquired or sold
during the year are consolidated as from or up to their respective dates of
acquisition or disposal.
Companies in which the Group exercises a significant influence in financial
and operating policy decisions without having a majority control are accounted
for under the equity method of accounting.
Significant subsidiaries consolidated in 1994 are listed in Note 29.
Intangible Assets
The difference arising between the cost of shares and the net assets
acquired following the merger in 1989 between Carnaud and MB Packaging has
been allocated to the value of the Eurosteel Segment due to the significant
European market position thus acquired in Food Cans, Speciality Packaging,
Food Closures and Aerosols.
This intangible asset is not amortized; its value is reviewed each year on
the basis of the evolution of indices of volume of activity and the
productivity of personnel, any deterioration of which over a cumulated period
of three years would give rise to the creation of a valuation allowance.
Other "intangible assets" are comprised of start-up costs, goodwill,
patents, licenses and trademarks which are amortized over their useful life.
Goodwill
On the acquisition of a subsidiary, goodwill representing the difference
between the purchase price and the fair value of the identifiable underlying
net assets acquired is carried as an asset in the balance sheet and amortized
on a straight-line basis against income over a period not exceeding 40 years.
Property, Plant and Equipment
Property, plant and equipment are shown at historical cost. Depreciation is
provided, except on freehold land, on a straight-line basis over the estimated
useful lives of the assets, as follows:
<TABLE>
<S> <C>
Buildings..................................................... 10 to 50 years
Industrial plant and machinery................................ 3 to 10 years
Other tangible assets......................................... 3 to 15 years
</TABLE>
F-8
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Capital grants received are classified in Provisions for Liabilities and
Accruals and credited to income over the estimated useful life of the related
asset.
Capitalization of Interest Costs
The interest cost incurred during the period of time required to bring an
asset to the condition and location necessary for its intended use is
capitalized as part of the historical cost of acquiring the asset and
depreciated over the estimated life of the related asset.
Capital Leases
Assets held under capital leases are included within Property, Plant &
Equipment and depreciated over the expected useful life of the asset. The
corresponding liability is recorded under financial debt, and the interest
element of the lease rental is charged to income over the period of the lease.
Investments in Unconsolidated Companies
Investments are carried at cost after deducting appropriate allowances for
permanent impairment in value.
Inventories
Inventories, including work in progress, are valued at the lower of cost and
estimated net realizable value. Cost is determined on a first in, first out
basis. The cost of work in progress and finished goods comprises materials,
labor and attributable manufacturing overheads.
Start-Up Costs
Qualifying start-up costs include: (i) costs incurred during the start-up
period which are of a non-recurring nature and (ii) costs which will continue
after the end of the start-up period but are expected to decrease
significantly.
These costs are amortized over 3 years from the end of the start-up period.
Cash and Cash Equivalents
Cash and cash equivalents are made up of cash held in banks and in hand and
short-term investments generally having a maturity of three months or less
(mainly debt securities, short-term loans and accrued interest).
Pensions and Retirement Benefits
Retirement benefit obligations are valued using the projected benefit
valuation method.
In France, the Group has accorded to certain of its employees pension
benefits complementary to the state pension scheme. Furthermore, French
legislation also requires the Group to provide for employees' lump sum
termination benefits depending upon the length of employee service.
The employer is required to meet the full cost of both forms of retirement
benefits, and provision is made in the Group balance sheet under Provisions
for Liabilities and Accruals in respect of those liabilities. Regular
actuarial valuations are carried out in order to determine the Group's
obligation in respect of those retirement benefits.
In the United Kingdom, retirement benefit obligations are financed by
contributions to a separate independently administered fund which is subject
to regular actuarial valuation. Contributions to the fund are charged to the
statements of income so as to spread the cost of pensions over the expected
service lives of employees.
F-9
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In other countries amounts are set aside in accordance with local
legislation to provide fully for termination and retirement benefit
obligations relating to employees.
Differences arising from changes in actuarial assumptions are spread over
the average remaining service lives of the employees.
Postretirement benefits other than pensions mainly relating to United States
and United Kingdom subsidiaries have been reflected in the Group balance
sheet, as of January 1, 1993. The accumulated net postretirement benefit
obligations as of that date (FF 122 million) have been deducted from retained
earnings.
Deferred Tax
Deferred tax is provided using the liability method on all timing
differences for items of income and expense which are recognized for
accounting purposes in different periods than those used for the determination
of corporation tax currently payable. Deferred tax assets are normally not
recognized in respect of tax losses.
Research and Development Expense
Such expenditure is charged to the statements of income in the year in which
it is incurred. Fixed assets related to research and development are
depreciated over the expected useful life of the asset.
Foreign Currency Translation
Balance sheet items denominated in foreign currencies are translated into
French Francs at the year end exchange rate.
Statement of income items denominated in foreign currencies are translated
into French Francs at the average rate for the relevant accounting period.
Translation differences arising from the application of those rates are
treated as movements in shareholders' equity.
The financial statements of subsidiaries operating in a hyperinflationary
environment are translated using the US dollar as the functional currency.
Under this method, non-monetary assets and liabilities and income statement
items are translated at the historical exchange rate, while monetary items are
translated at year end exchange rate. Translation differences are recorded in
the income statement.
Financial Instruments
The Group is exposed to exchange rate and interest rate fluctuations as a
result of both international trade and the use of diversified financing.
The Group's policy is to concentrate these exposures at the main holding
companies and to manage them at Group level.
Both foreign exchange and interest rates risks are covered using forward
transactions and options entered into with the Group's primary relationship
banks.
a. Foreign currency transactions
Foreign exchange assets, liabilities and forward contracts including
currency swaps outstanding at the balance sheet date are converted at spot
rate at closing date.
F-10
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Gains and losses on foreign exchange forward contracts covering sales or
purchase commitments are deferred and accounted for when the related hedged
transactions are realized.
Exchange differences arising on foreign currency borrowings (including
contracts) used to finance foreign investments, are included in shareholders'
equity.
All other exchange differences arising from foreign currency transactions
are included in the consolidated statements of income.
b. Interest rate swaps
Interest rate swaps are accounted for under the accrual method.
Earnings Per Share
Primary earnings per share are calculated by dividing net income by the
average number of shares outstanding during the year.
Diluted earnings per share are calculated by dividing net income restated
for the interest income that would be derived from the cash proceeds on the
exercise of stock options and conversion of bonds, net of tax, by the average
number of shares after full dilution.
Revenue Recognition
Sales are primarily recorded as products are shipped and services rendered.
NOTE 1--ACQUISITIONS AND DIVESTITURES
1992
At the beginning of 1992, the Group acquired Italcaps, an Italian company
specializing in food closures with annual net sales of FF 303 million.
During the first half year the Group disposed of its cartons business in
Asia Pacific through the sale of its 50% equity interest in AMB Packaging. At
the end of June 1992 CMB Packaging Italia Srl sold its equity interest in CMB
Capsule Srl, its food closures operation in Italy. These transactions gave
rise to income before tax of FF 201 million included in gain on disposals
(net). The results for the year respectively include net sales of FF 76 and 89
million and operating income of FF 5 and 18 million from these operations up
to the date of disposal.
CMB Sonoco Composites Ltd. was consolidated for the first time as of January
1, 1992 (The company was previously treated as an associated company). Net
sales of this company were FF 171 million in 1992.
1993
Acquisitions
In January 1993, the Group acquired Anchor Hocking Packaging Co., a leading
North American closures business with 1993 net sales of FF 935 million.
In March, the Group also acquired the packaging activities of Fima Metal Box
Bhd, a company listed on the Malaysian stock exchange. CarnaudMetalbox had
been a minority shareholder for many years in this company which was treated
as an associated company up to December 31, 1992. Net sales made during 1993
since the acquisition date were FF 370 million.
F-11
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In September 1993, the Group announced the acquisition of the German Zeller
Plastik group, a worldwide manufacturer of speciality closures and dispensing
systems for the health and beauty and household products industry, with 1993
net sales of about FF 650 million.
At the end of the year, the Group took a majority stake in the Finnish metal
packaging business of G.W. Sohlberg through a newly formed company, GWS
Metallipakkaus OY. The company, with annual net sales of FF 150 million, is
the leading Finnish supplier of metal cans for food, paint and industrial
products.
These transactions gave rise to goodwill of FF 1,575 million as at December
31, 1993, based on the initial valuation of the net assets acquired as of that
date. The effect on goodwill of the completion in 1994 of the full valuation
exercise carried out on the net assets acquired was an increase of FF 188
million.
During the year, the Group also invested in and signed joint venture
agreements in Egypt, Vietnam and China.
Disposals
At the end of the half year, the Group disposed of Impetus Packaging,
specializing in PET (Polyethylene terephtalate) bottles and preforms for the
beverage industry, and its Spanish subsidiary Bioplast, with net sales of FF
780 million. Impetus became a wholly owned subsidiary of the Group in February
1993 following the acquisition of 50% of the shares held by Lawson Mardon
group. The sale had no impact on net sales of the Group since Impetus has
always been consolidated by the equity method.
At the end of June 1993, Pharmaflex Ltd., a UK pharmaceutical packaging
foils printer was sold.
At the end of November 1993, the Group sold its High Performance Plastics
division, which manufactured multilayer thermoform plastics packaging for the
food industry with net sales of about FF 600 million.
These transactions generated an income before tax of FF 178 million which
was included in gain on disposals (net). The Group results for the year
include net sales of FF 645 million and operating income of FF 40 million from
these businesses up to the date of disposal.
The interests of the Group in the Tunisian market through its subsidiaries
Stumetal and EMS were deconsolidated as of July 1, 1993. Net sales and
operating income for the first half year were FF 103 million and FF 8 million,
respectively.
1994
Acquisitions
During the first quarter of 1994, the Group's stake in AMS Packaging
increased from 79.6% to 94.99%. Given the lack of liquidity in the shares and
the unlikelihood of any improvement in the future, the decision was made to
delist AMS Packaging. With the agreement of the other major shareholders,
Clinvest and the Banque Arjil, who together controlled 14.69% of the shares, a
Public Exchange Offer was launched on December 27, 1993, on the basis of 2
CarnaudMetalbox shares for 9 AMS Packaging shares. A FF 42 per share cash
offer was made for holders of less than 9 shares. Following the Public
Exchange Offer, the Group and the Banque Demachy together controlled 99.70% of
the shares.
On March 1994 AMS Packaging was transferred onto the over-the-counter
market. Given the lack of liquidity of the remaining shares, a "Squeeze-out"
procedure was launched on October 4, 1994 and AMS Packaging was delisted from
the over-the-counter market on October 18, 1994. Following these offers, the
Group and the Banque Demachy together control 100% of the shares.
F-12
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Early in 1994 the Group also acquired the remaining 20% minority interest in
the Zuchner group.
These transactions gave rise to goodwill of FF 78 million as of December 31,
1994.
Disposals
At the end of June 1994, the Group disposed of its interest in Secura
Singapore Private Ltd. The principal activity of Secura is security printing.
At the end of December, Plasticon (Malaysia) Sdn Bhd, which was engaged in the
plastics business, was sold. These disposals are in line with the Group's
strategy to focus on its core businesses in the Asia Pacific region. In
December 1994, the Group sold Speedprint, a company engaged in the flexible
business. These transactions generated income before tax of FF 23 million
included in gain on disposals (net) with a positive net impact on net income
of FF 7 million. Group results for the year include net sales of FF 113
million and net operating loss of FF 11 million relating to these businesses
up to the date of disposal.
On June 24, 1994, CarnaudMetalbox Asia Ltd., which is listed on the stock
exchange of Singapore, signed a sale and purchase contract with Centrepoint
Properties Ltd. for the freehold on its factory site at Woodlands in
Singapore. Centrepoint Properties Ltd. is the listed property development arm
of Fraser and Neave which has a 49% interest in CarnaudMetalbox (Asia Pacific)
Holding Pte Ltd., which in turn owns 70% of CarnaudMetalbox Asia Ltd. The
Woodlands factory is to be replaced by a state-of-the-art plant in Tuas,
Singapore, where the Group will move its manufacturing operations in stages.
Thus, simultaneous with the completion of the sale, the Woodlands property was
leased to CarnaudMetalbox Asia Ltd. for a period of up to five years by
Centrepoint Properties Ltd. This sale generated income before tax of FF 196
million included in gain on disposals (net) with a positive net impact on net
income of FF 80 million.
The following represents the non-cash impact of the acquisitions noted
above:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------- ------
(IN MILLIONS OF FF)
<S> <C> <C> <C>
Fair value of assets acquired....................... 567 2,988 520
Liabilities assumed................................. (173) (510) (58)
------ ------- -----
Cash paid........................................... 394 2,478 462
====== ======= =====
</TABLE>
NOTE 2--SUMMARY OF DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED BY THE
COMPANY AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The accompanying consolidated financial statements have been prepared in
accordance with the accounting policies described in Accounting Principles and
Policies above ("IAS") which differ in certain significant respects from those
applicable in the United States ("US GAAP").
These differences have been reflected in the financial information given in
paragraph (j) below and mainly relate to the following items.
(a) Income taxes
For US GAAP purposes, SFAS No. 109 has been applied effective January 1,
1993. Accordingly, the cumulative effect of the change ("Accounting for Income
Taxes") would have been reported in the 1993 consolidated statement of income
prepared on a US GAAP basis.
F-13
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Provision for income tax on a US GAAP basis is as follows:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Current
Domestic............................................. 97 27
US................................................... (4) (4)
Foreign.............................................. (346) (204)
Deferred
Domestic............................................. (13) (31)
US................................................... 21 (5)
Foreign.............................................. 121 (73)
--------- ---------
(124) (290)
========= =========
</TABLE>
The provision for income tax differs from the amount computed by applying the
French statutory income tax rate of 33 1/3% in 1994 and 1993 because of the
effect of the following items:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Net income per US GAAP............................... 1,001 714
Provision for income tax............................. 124 290
Minority interests................................... 226 97
Cumulative effect of initially applying SFAS No.
109................................................. -- (137)
Share in income of associated companies.............. -- (14)
--------- ---------
Pretax income before cumulative effect of SFAS No.
109................................................. 1,351 950
French statutory tax rate............................ 33 1/3% 33 1/3%
========= =========
Computed income tax at French statutory tax rate..... 450 317
Foreign subsidiaries at different tax rates.......... (37) (28)
Capital gains and dividends taxed at lower rates..... (76) (20)
Reversal of tax provisions........................... (112) (152)
Permanent differences................................ 70 53
Change in valuation allowance........................ (162) 106
Other, net........................................... (9) 14
--------- ---------
Provision for income tax............................. 124 290
========= =========
</TABLE>
F-14
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Deferred tax assets/(liabilities) consist of the following:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
GROSS DEFERRED TAX ASSETS
Net operating losses (NOLs) and tax credit
carryforwards....................................... 926 1,105
Valuation allowances and accruals not currently
deductible for tax purposes......................... 158 170
Retirement benefit plans............................. 229 187
Other................................................ 426 288
--------- ---------
1,739 1,750
Valuation allowance.................................. (531) (705)
--------- ---------
Deferred tax assets................................ 1,208 1,045
========= =========
GROSS DEFERRED TAX LIABILITIES
Excess tax over book depreciation.................... (550) (712)
Undistributed earnings of equity investees........... (18) (18)
Other................................................ (499) (293)
--------- ---------
Deferred tax liabilities........................... (1,067) (1,023)
--------- ---------
Net deferred tax asset............................... 141 22
========= =========
</TABLE>
As of December 31, 1994, the Company has NOLs and tax credit carryforwards
expiring in the following years:
<TABLE>
<CAPTION>
NOLS TAX CREDITS
(TAX EFFECT) (TAX EFFECT)
------------ ------------
(IN MILLIONS OF FF)
<S> <C> <C>
1995............................................... 36 6
1996............................................... 53 3
1997............................................... 49 25
1998............................................... 61 3
1999............................................... 28 3
2000 and after..................................... 246 5
Unlimited.......................................... 258 150
--- ---
731 195
=== ===
</TABLE>
Distribution to shareholders of the FF 2,888 million retained earnings of
the parent company available for distribution as of December 31, 1994 would
trigger a taxation ("precompte") of a total amount of approximately FF 600
million which would be withheld from the amount distributed.
(b) Intangible assets
The Company does not systematically amortize its intangible assets (which
comprise mainly the goodwill resulting from the 1989 merger between Carnaud
and MB Packaging--see Note 4).
Under US GAAP, intangible assets should be amortized over the estimated
useful economic life, up to a maximum of 40 years. For reconciliation purposes
the amortization period used is 40 years.
F-15
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(c) Early redemption of preference shares
In 1992, the Company redeemed British pounds 50 million (FF 418 million) of
the British pounds 200 million redeemable preference shares issued by its
wholly-owned subsidiary, CarnaudMetalbox Holdings (UK) Ltd. and maturing in
1997.
As part of the settlement, the Company entered into an interest rate swap
agreement which under US GAAP should have been marked to market, and which is
presently accounted for under the accrual method.
In 1994 the Company redeemed British pounds 75 million (FF 627 million) of
the remaining British pounds 150 million redeemable preference shares. The
loss on extinguishment has been deferred and is being amortized over the
remaining life of the shares. Under US GAAP this loss would have been charged
to income.
(d) Accrued restructuring costs
Certain provisions made by the Company, relating to reorganizations or as a
result of business combinations accounted for under the purchase method, would
not be allowed under US GAAP. In addition, certain accrued restructuring costs
have been eliminated to comply with the requirements of Emerging Issue Task
Force issue No. 94-3. The adjustments to pretax income related to these
provisions are the following:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Purchase accounting provisions....................... (33) (34)
Reorganization provisions:
--Termination and redundancy provisions............ 42 --
--Exit and other restructuring costs............... 35 --
--------- ---------
Increase (decrease).................................. 44 (34)
========= =========
</TABLE>
(e) Pension plans
In order to comply with US GAAP, the Company has applied SFAS No. 87
"Employers' Accounting for Pensions" and SFAS No. 88 "Employers' Accounting
for Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits" as follows:
--the transition obligation or fund excess has been determined as of
January 1, 1987 for United States, January 1, 1989 for United Kingdom and
January 1, 1993 for other countries as being the difference between the
liabilities accounted for under prior years' accounting policies and the
funded status of the plans resulting from actuarial calculations;
transition obligation or fund excess for other countries have been reduced
to their amortized value as if SFAS No. 87 had been applied from 1989. The
amortization period used in most cases is the greater of 15 years and the
average residual active life of the population covered by each plan;
--severance indemnities payable to employees on leaving the Company for any
reason are estimated on the basis of their vested value which is higher
than their actuarial value;
--special termination benefits are recorded on an accrual basis at the time
the offer is accepted by the employees or their representatives and the
amount can be reasonably estimated;
--the actuarial method used is the projected unit credit method. However,
when the benefit formulas attribute more benefits to senior employees or
when the plans are integrated with social security systems or
multiemployer plans, the Company has elected to apply the projected unit
credit service pro-rata method to avoid delayed recognition of pension
costs;
F-16
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
--the market-related value of assets is computed with a spread of
investment gains and losses over three years;
--prior service cost and experience gains and losses are amortized over the
average residual active life of participants.
The funded status of pension plans determined in accordance with US GAAP is
as follows:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation.......................... (7,023) (7,976)
Non-vested benefit obligation...................... (497) (428)
--------- ---------
Accumulated benefit obligation....................... (7,520) (8,404)
Excess of projected benefit obligation over
accumulated benefit obligation...................... (106) (97)
--------- ---------
Projected benefit obligation......................... (7,626) (8,501)
Plan assets at fair value............................ 7,829 9,036
--------- ---------
Plan assets in excess of projected benefit
obligation.......................................... 203 535
Unrecognized net transition asset.................... 56 64
Unrecognized net actuarial gain...................... 221 --
--------- ---------
Net pension asset recognized......................... 480 599
========= =========
</TABLE>
The net pension liability is analysed as follows:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Accrual................................................ (545) (521)
Prepaid................................................ 1,025 1,120
--------- ---------
Net pension asset under US GAAP........................ 480 599
========= =========
</TABLE>
The net periodic pension cost of the Company's pension plans determined in
accordance with US GAAP includes the following components:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Service cost--benefits earned during the year.......... 281 223
Interest cost on projected benefit obligation.......... 612 568
Actual return on plan assets........................... 628 (2,001)
Net amortization and deferral.......................... (1,296) 1,424
--------- ---------
Net pension cost....................................... 225 214
========= =========
</TABLE>
Average assumptions used in accounting for the Company's pension plans under
US GAAP were:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Discount rate............................................ 8.50% 7.50%
Rate of increase in compensation levels.................. 5.80% 5.80%
Expected long-term rate of return on plan assets......... 9.50% 9.50%
</TABLE>
F-17
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(f) Postretirement benefits
Under IAS, the Accumulated Postretirement Benefit Obligation (APBO) for
United States and United Kingdom subsidiaries has been measured as of January
1, 1993 and was recorded as an adjustment to shareholders' equity.
Under US GAAP ("SFAS No. 106; Employer's Accounting for Postretirement
Benefits Other Than Pensions"), the APBO for United States and United Kingdom
subsidiaries would have been measured as of January 1, 1993 and would not have
been deducted from shareholders equity. For US GAAP reconciliation, the
deduction of shareholders' equity has been reversed and APBO as of January 1,
1993 has been amortized over a 20-year period. Also, the projected future cost
of providing postretirement benefits, such as health care and life insurance,
is accrued over the period earned.
The effect of adopting SFAS No. 106 for other countries is deemed to be
immaterial.
The actuarial and recorded liabilities under US GAAP for these
postretirement benefits are as follows:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees........................................... (64) (71)
Eligible active plan participants.................. (88) (97)
Other active plan participants..................... (18) (20)
--------- ---------
Total................................................ (170) (188)
========= =========
Plan assets at fair value............................ 3 2
--------- ---------
Accumulated postretirement benefit obligation in ex-
cess of plan assets................................. (167) (186)
Unrecognized net actuarial loss...................... (10) --
Unrecognized transition obligation................... 134 152
--------- ---------
Postretirement benefit liability..................... (43) (34)
========= =========
</TABLE>
Net periodic postretirement benefit cost includes the following components:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Service cost for benefits earned...................... 6 4
Interest cost on accumulated postretirement benefit
obligation........................................... 13 14
Actual return on plan assets.......................... -- --
Amortization of the transition obligation............. 8 8
--------- ---------
Net postretirement benefit cost....................... 27 26
========= =========
</TABLE>
The accumulated postretirement benefit obligation was determined using an
average discount rate of 8.25% and an average health care cost trend rate of
approximately 8.25%.
Increasing the assumed health care cost trend rates by one percentage point
in each year and holding all other assumptions constant would increase the
accumulated postretirement benefit obligation as of December 31, 1994 by
approximately FF 19.9 million and increase the aggregate of the service and
interest cost components of the net periodic postretirement benefit cost for
1994 by approximately FF 2.4 million.
F-18
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(g) Accounting for stock options
The Company generally grants to eligible employees and executives a discount
from the market price for shares purchased pursuant to stock option plans. The
accounting for such discounts is not addressed by IAS and these transactions
have no effect on the statement of income.
Under US GAAP, the discount, measured at the date of grant, is considered
compensation to employees and executives and, accordingly, is charged to the
statement of income.
The effect of applying US GAAP is not material and therefore is not included
in the reconciliation presented below in paragraph (j).
(h) Investments in debt and marketable equity securities
In accordance with IAS, the Company's policy is to record any impairment in
value on an individual basis for its investments and short-term equity
securities. Unrealized gains are not recognized.
For US GAAP purposes, the Company has adopted the provisions of SFAS No.
115, "Accounting for Certain Investments in Debt and Equity Securities," as of
January 1, 1994. In accordance with SFAS No. 115, and except for debt
securities classified as "held-to-maturity securities," unrealized holding
gains and losses for "trading" and "available for sale" debt and marketable
securities should be included in the statement of income or directly in
shareholders' equity respectively until realized.
The effect of applying SFAS No. 115 is not material and, therefore, no
adjustment is made for this difference in the net income and shareholders'
equity reconciliations in paragraph (j) below.
(i) Consolidation of non-subsidiaries
The Company had a 50% holding in FA.BA. and its subsidiaries which has been
accounted for under the full consolidation method.
Under US GAAP, this investment would have been accounted for under the
equity method. This difference does not impact net income or shareholders'
equity.
The main balance sheet and income statement data relating to FA.BA. and its
subsidiaries are set forth below:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Non-current assets (including goodwill)................ 415 419
Current assets......................................... 993 930
Provisions and long-term liabilities................... (105) (95)
Current liabilities.................................... (607) (610)
Minority Interests..................................... (341) (312)
--------- ---------
Equity in FA.BA. and its subsidiaries.................. 355 332
--------- ---------
Net sales.............................................. 1,511 1,444
Operating income....................................... 187 180
Income before taxes.................................... 187 174
Net Income............................................. 45 36
========= =========
</TABLE>
F-19
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(j) Conversion to US GAAP
Net income and shareholders' equity
The following is a summary of the estimated adjustments to net income and
shareholders' equity for the years ended December 31, 1994 and 1993 which
would be required if US GAAP had been applied instead of IAS.
<TABLE>
<CAPTION>
NET INCOME
---------------------
1994 1995
---------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Amounts per accompanying consolidated financial
statements........................................ 950 835
US GAAP adjustments
Increase/(decrease) due to:
Income taxes (a)................................. 108 (64)
Cumulative effect of adopting SFAS No. 109 (a)... -- 137
Intangible assets (b)............................ (64) (64)
Early redemption of preference shares (c)........ 31 (31)
Accrued restructuring costs (d).................. 44 (34)
Pension plans (e)................................ (66) (105)
Postretirement benefits (f)...................... (15) (17)
Tax effect of reconciling items.................. 13 57
---------- ---------
Approximate amounts under US GAAP.................. 1,001 714
========== =========
Primary earnings per share (in FF) (Note 2(k))..... 12.32 8.94
Fully diluted earnings per share (in FF) (Note
2(k))............................................. 12.30 8.93
========== =========
</TABLE>
<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY
AS OF DECEMBER 31,
----------------------
1994 1995
---------- ----------
(IN MILLIONS OF FF)
<S> <C> <C>
Amounts per accompanying consolidated financial
statements....................................... 11,679 11,118
US GAAP adjustments
Increase/(decrease) due to:
Income taxes (a)................................ 172 (65)
Cumulative effect of adopting SFAS No. 109 (a).. -- 137
Intangible assets (b)*.......................... (1,637) (1,639)
Early redemption of preference shares (c)....... (58) (89)
Accrued restructuring costs (d)................. 12 (35)
Pension plans (e)............................... (197) (137)
Postretirement benefits (f)..................... 82 104
Tax effect of reconciling items................. 121 108
---------- ----------
Approximate amounts under US GAAP................. 10,174 9,502
========== ==========
</TABLE>
- --------
* The gross amount of intangible assets subject to amortization after US GAAP
adjustments amounts to FF 2,494 million at December 31, 1994 (FF 2,596
million at December 31, 1993).
F-20
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(k) Earnings per share
Earnings per share under IAS is calculated by dividing net income by the
weighted average number of common shares equivalents (see Note 21). Under US
GAAP, stock options are considered as common stock equivalents and their
amount is determined according to the treasury method. Earnings per share are
calculated under US GAAP on a weighted average of 82.4 million shares in issue
during the year (1993--81.6 million).
Earnings per share data prepared in accordance with AP15 are as follows:
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Primary earnings per share (in FF)............................. 12.32 8.94
Number of shares (in thousands)................................ 82,394 81,568
Fully diluted earnings per share (in FF)....................... 12.30 8.93
Number of shares (in thousands fully diluted).................. 82,601 82,518
</TABLE>
The net effect of options has been determined using the treasury method.
<TABLE>
<CAPTION>
1994 1993
---------- ----------
(IN NUMBER OF SHARES)
<S> <C> <C>
Common shares.......................................... 82,048,458 81,119,881
Stock options.......................................... 345,699 447,961
---------- ----------
82,394,157 81,567,842
========== ==========
</TABLE>
<TABLE>
<CAPTION>
1994 1993
---------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Net income............................................ 1,001 714
Interest on stock options............................. 21 23
Related tax effect.................................... (7) (8)
---------- ---------
Net income restated................................... 1,015 729
========== =========
Earnings per share (in FF)............................ 12.32 8.94
</TABLE>
The effect of a full conversion of outstanding shares would be as follows:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
(IN NUMBER OF SHARES)
<S> <C> <C>
Common shares.......................................... 82,048,458 81,119,881
Stock options.......................................... 345,699 447,961
Bonds.................................................. 207,086 950,133
---------- ----------
82,601,243 82,517,975
========== ==========
</TABLE>
<TABLE>
<CAPTION>
1994 1993
---------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Net income........................................... 1,001 714
Interest on stock options............................ 21 23
Interest on convertible bonds ....................... 1 11
Related tax effect................................... (7) (11)
---------- ---------
Net income restated.................................. 1,016 737
========== =========
Earnings per share on fully diluted basis (in FF).... 12.30 8.93
</TABLE>
F-21
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(l) Additional US GAAP Information
Recently issued US accounting standards
Impairment of long-lived assets
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." SFAS No. 121
provides guidance on when to assess and how to measure impairment of long-
lived assets, certain identifiable intangibles, and goodwill related to those
assets to be held and used and for long-lived assets and certain identifiable
intangibles to be disposed of. This Statement is effective for financial
statements for fiscal years beginning after December 15, 1995. The Company has
not yet assessed the impact of adopting SFAS No. 121.
NOTE 3--EXCHANGE RATE IMPACT ON STATEMENTS OF INCOME
Had the 1994 average exchange rates been applied in 1993 and the 1993
average exchange rates in 1992, the Group results would have been as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ --------------- ---------------
AT 1994 AT 1993
EXCHANGE EXCHANGE
ACTUAL RATES ACTUAL RATES ACTUAL
------ -------- ------ -------- ------
(IN MILLIONS OF FF)
<S> <C> <C> <C> <C> <C>
Net sales............................. 24,890 23,834 24,340 23,479 24,830
Operating income...................... 1,709 1,543 1,583 1,869 2,026
Income before income taxes............ 1,421 1,167 1,201 1,486 1,619
Income from operations................ 1,176 898 918 1,096 1,175
Net income............................ 950 821 835 915 976
</TABLE>
NOTE 4--INTANGIBLE ASSETS
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Eurosteel segment........................................ 4,691 4,691
Other intangible assets.................................. 101 112
--------- ---------
4,792 4,803
========= =========
</TABLE>
Intangible assets comprise principally the value of the Eurosteel segment
which arose on the merger of the Carnaud and the MB Packaging businesses in
1989. Other Intangible assets at December 31, 1994 include principally start-
up costs (FF 35 million), goodwill (FF 27 million), patents, licenses and
trademarks (FF 11 million).
F-22
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5--GOODWILL
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Net book value at January 1,........................... 4,002 2,577
Translation adjustment................................. (182) 90
Additions.............................................. 317 1,601
Disposals.............................................. (29) (140)
Reclassification....................................... 80 (22)
--------- ---------
4,188 4,106
--------- ---------
Amortization provided during the year.................. (115) (104)
--------- ---------
Net book value at December 31,......................... 4,073 4,002
========= =========
</TABLE>
The net book value at December 31, 1994 is made up of cost of FF 4,547
million and accumulated amortization of FF 474 million. An amount of FF 1,073
million net relates to the merger of the Carnaud and MB Packaging groups in
1989.
Additions to goodwill included FF 78 million resulting from the acquisitions
described in Note 1 as well as the effect on goodwill of the completion in
1994 of the full valuation exercise carried out on the net assets acquired in
1993 of the Anchor Hocking, Zeller Plastik and Fima Metal Box Bhd groups (FF
188 million). The reclassification in 1994 mainly relates to Impalsa which was
previously accounted for as an equity investment but which has been fully
consolidated as from July 1, 1994.
NOTE 6--PROPERTY, PLANT AND EQUIPMENT
Movements in property, plant and equipment
<TABLE>
<CAPTION>
PLANT, CAPITAL
LAND AND MACHINERY WORK IN
BUILDINGS AND TOOLS PROGRESS OTHER TOTAL
--------- --------- -------- ----- ------
(IN MILLIONS OF FF)
<S> <C> <C> <C> <C> <C>
GROSS
At January 1, 1993.............. 2,729 10,273 534 1,390 14,926
===== ====== ==== ===== ======
Translation adjustment.......... (17) (65) 6 (12) (88)
Businesses acquired............. 342 1,013 45 104 1,504
Capital expenditure............. 184 816 414 153 1,567
Other movements................. 142 377 (476) 21 64
Disposals....................... (137) (521) (40) (97) (795)
----- ------ ---- ----- ------
At December 31, 1993............ 3,243 11,893 483 1,559 17,178
===== ====== ==== ===== ======
Translation adjustment.......... (117) (413) (6) (48) (584)
Businesses acquired............. 16 51 -- 5 72
Capital expenditure............. 219 940 683 146 1,988
Other movements................. 44 302 (312) (8) 26
Disposals....................... (259) (437) (33) (85) (814)
----- ------ ---- ----- ------
At December 31, 1994............ 3,146 12,336 815 1,569 17,866
===== ====== ==== ===== ======
</TABLE>
F-23
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
PLANT, CAPITAL
LAND AND MACHINERY WORK IN
BUILDINGS AND TOOLS PROGRESS OTHER TOTAL
--------- --------- -------- ----- -----
(IN MILLIONS OF FF)
<S> <C> <C> <C> <C> <C>
DEPRECIATION
At January 1, 1993................ 852 5,734 -- 854 7,440
===== ===== === ===== =====
Translation adjustment............ (8) (42) -- (6) (56)
Businesses acquired............... 29 504 -- 61 594
Provided during the year.......... 111 931 2 146 1,190
Other movements................... (12) 6 -- (5) (11)
Disposals......................... (59) (359) -- (73) (491)
----- ----- --- ----- -----
At December 31, 1993.............. 913 6,774 2 977 8,666
===== ===== === ===== =====
Translation adjustment............ (23) (230) -- (33) (286)
Businesses acquired............... 10 24 -- 2 36
Provided during the year.......... 111 972 1 156 1,240
Other movements................... 8 26 -- (26) 8
Disposals......................... (40) (326) (1) (64) (431)
----- ----- --- ----- -----
At December 31, 1994.............. 979 7,240 2 1,012 9,233
===== ===== === ===== =====
NET BOOK VALUE
At January 1, 1993................ 1,877 4,539 534 536 7,486
===== ===== === ===== =====
At December 31, 1993.............. 2,330 5,119 481 582 8,512
===== ===== === ===== =====
At December 31, 1994.............. 2,167 5,096 813 557 8,633
===== ===== === ===== =====
</TABLE>
The net book value of property, plant and equipment as of December 31, 1994
includes an amount of FF 354 million in respect of assets held under capital
leases (FF 434 million in 1993).
NOTE 7--INVESTMENTS
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Equity in associated companies......................... 103 80
Investments in unconsolidated companies................ 97 140
Loans receivable....................................... 56 128
Other investments...................................... 10 19
--------- ---------
266 367
========= =========
</TABLE>
The movement in equity in associated companies is as follows:
<TABLE>
<CAPTION>
1994 1993
--------- ----------
(IN MILLIONS OF FF)
<S> <C> <C>
At January 1,........................................ 80 279
Share in income for the year......................... -- 14
Dividends............................................ (8) (38)
Acquisitions......................................... -- --
Disposals............................................ -- (117)
Other................................................ 31 (58)
--------- ----------
At December 31,...................................... 103 80
========= ==========
</TABLE>
F-24
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Other movements are mainly due to Dufalco which was accounted for under the
equity method of accounting for the first time in 1994 and Impalsa which has
been fully consolidated as from July 1, 1994. In 1993, the other movements of
FF 58 million are mainly due to the full consolidation, following the
acquisition of 100% of the packaging activities, of Fima MetalBox Berhad and
Italgraf (a subsidiary of FA.B.A.). The disposals in 1993 relate to Impetus
and Plastono (High Performance Plastics division).
The movement in investments in unconsolidated companies is as follows:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
At January 1,......................................... 140 165
Change in structure................................... (50) 14
Acquisitions.......................................... 9 42
Disposals............................................. (7) (82)
Other................................................. 5 1
--------- ---------
At December 31,....................................... 97 140
========= =========
</TABLE>
The change in structure in 1994 relates to Dufalco which has been accounted
for under the equity method of accounting and to S.M.P.M. which has been fully
consolidated as from January 1, 1994. In 1993, the disposals mainly relate to
the 16.6% stake in Gault et Fremont which was sold for FF 76 million.
The main unconsolidated companies are as follows:
<TABLE>
<CAPTION>
BOOK VALUE PERCENTAGE BUSINESS NET SALES COUNTRY
---------- ---------- --------- --------- ------------
(IN MILLIONS OF FF)
<S> <C> <C> <C> <C> <C>
Stumetal and EMS..... 47 49.9% Packaging 250 Tunisia
Nafcel............... 21 16.0% Packaging 567 Saudi Arabia
Other................ 29
---
97
===
</TABLE>
NOTE 8--INVENTORIES
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Goods purchased for resale............................. 139 104
Raw materials and consumables.......................... 2,150 2,038
Work in progress....................................... 624 606
Finished Goods......................................... 1,413 1,317
--------- ---------
4,326 4,065
--------- ---------
Less: valuation allowance.............................. (378) (366)
--------- ---------
3,948 3,699
========= =========
</TABLE>
F-25
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 9--TRADE AND OTHER RECEIVABLES
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Trade receivables...................................... 3,953 3,842
Other receivables...................................... 680 570
Prepayments and deferred income........................ 186 215
--------- ---------
4,819 4,627
--------- ---------
Less: allowance for doubtful accounts.................. (352) (325)
--------- ---------
4,467 4,302
========= =========
</TABLE>
It is the Group's practice to sell part of its trade receivables to finance
the business. At December 31, 1994, such disposals with limited recourse
amounted to FF 534 million (1993--FF 638 million) which have been deducted
from trade receivables accordingly. Discounted bills with recourse are
disclosed in Note 25-2.
NOTE 10--COMMON STOCK
The common stock (FF 823 million at December 31, 1994) comprises fully paid
shares with a nominal value of FF 10. Movements in the number of shares are as
follows:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
(IN NUMBER OF SHARES)
<S> <C> <C>
At January 1........................................... 81,288,141 80,918,630
Exercise of stock options.............................. 66,466 306,895
Conversion of bonds.................................... 559,410 62,616
Issued in exchange for AMS Packaging shares............ 382,734 --
---------- ----------
At December 31......................................... 82,296,751 81,288,141
========== ==========
</TABLE>
At December 31, outstanding shares that might be issued are as follows
(according to origin):
<TABLE>
<CAPTION>
1994 1993
---------- ----------
(IN NUMBER OF SHARES)
<S> <C> <C>
Convertible bonds 1988............................... -- 893,802
Stock options........................................ 2,100,980 2,011,946
---------- ----------
2,100,980 2,905,748
========== ==========
</TABLE>
Depending on the option date, the issue price may range from FF 69.67 to FF
191.30.
The average number of shares for the earnings per share calculation (see
Note 21) is as follows:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
(IN NUMBER OF SHARES)
<S> <C> <C>
Average outstanding.................................... 82,048,458 81,119,881
Average fully diluted.................................. 84,196,385 84,048,225
========== ==========
</TABLE>
F-26
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 11--MINORITY INTERESTS
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
At January 1........................................... 1,720 1,246
Translation adjustment................................. (64) (5)
Dividends paid by consolidated subsidiaries............ (41) (38)
Changes in Group structure............................. (12) 420
Share in net income for the year....................... 226 97
--------- ---------
At December 31......................................... 1,829 1,720
========= =========
</TABLE>
The changes in Group structure are mainly due to the rights issue undertaken
by CarnaudMetalbox Asia Ltd. (Singapore) for FF 444 million at the end of 1993
and the acquisition of minority interests in the Zuchner Group and AMS
Packaging in 1994.
NOTE 12--PERPETUAL NOTES (TSDI) AND PREFERENCE SHARES
12-1 Perpetual notes (TSDI)
In December 1990, CarnaudMetalbox issued FF 1,700 million Perpetual Notes or
Titres Subordonnes a Duree Indeterminee (TSDI), which pay interest at a
floating rate of PIBOR plus 0.6% per annum.
The Group's liability to pay interest on the notes is for fifteen years;
thereafter, the continuing interest liability will contractually pass to a
third party in consideration for a FF 373 million payment made by the Group
when the notes were issued. As part of the repackaging arrangements, the third
party has invested this FF 373 million in a 15-year zero coupon bond issued by
the Republic of Austria.
For accounting purposes the TSDI is treated as a borrowing and consequently
the financial charge and the amortization of the principal are included in the
statement of income determined under the interest rate method.
The tax treatment of the TSDI has been approved by the Service de la
Legislation Fiscale in France, with the effect that CarnaudMetalbox will be
entitled to claim tax deductions on interest payments calculated on the net
proceeds of the issue (FF 1,327 million).
12-2 Cumulative Redeemable Preference Shares
In 1990, CarnaudMetalbox Holdings (UK) Ltd., a subsidiary of the parent
company, CarnaudMetalbox, issued British pounds 200 million of non-voting,
non-convertible Preference Shares by way of a Private Placement with two major
United Kingdom banks. The issue was guaranteed by CarnaudMetalbox.
British pounds 50 million (FF 418 million) of those Preference Shares were
redeemed in December 1992 and British pounds 75 million (FF 627 million) in
December 1994. The Preference Shares carry a preference dividend entitlement
at an average fixed rate of 8.6% per annum, net of tax and are redeemable at
par value in 1997. The par value of these shares is shown as a liability in
the Group's balance sheet. The dividend payable to the Preference shareholders
is included in the statement of income under Financial expense (net) (see Note
16).
F-27
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 13--PROVISIONS FOR LIABILITIES AND ACCRUALS
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Pensions and retirement benefits......................... 616 671
Deferred tax, net........................................ 232 229
Restructuring............................................ 446 435
Other.................................................... 351 296
--------- ---------
1,645 1,631
========= =========
</TABLE>
Movements in provisions are analyzed as follows:
<TABLE>
<CAPTION>
PENSIONS
&
RETIREMENT DEFERRED OTHER
BENEFITS TAX, NET RESTRUCTURING PROVISIONS TOTAL
---------- -------- ------------- ---------- -----
(IN MILLIONS OF FF)
<S> <C> <C> <C> <C> <C>
At January 1, 1993...... 464 321 141 295 1,221
--- ---- ---- --- -----
Translation adjustment.. (8) -- 11 (4) (1)
Deductions made against
expenses incurred...... (35) -- (306) (75) (416)
Additions............... 61 -- 306 78 445
Postretirement obliga-
tions.................. 137 (15) -- -- 122
Income tax expense for
the period............. -- 102 -- -- 102
Purchase accounting and
other movements........ 52 (179) 283 2 158
--- ---- ---- --- -----
At December 31, 1993.... 671 229 435 296 1,631
--- ---- ---- --- -----
Translation adjustment.. (18) (8) (18) (6) (50)
Deductions made against
expenses incurred...... (55) -- (336) (60) (451)
Additions............... 87 -- 288 132 507
Income tax expense for
the period............. -- (8) -- -- (8)
Purchase accounting and
other movements........ (69) 19 77 (11) 16
--- ---- ---- --- -----
At December 31, 1994.... 616 232 446 351 1,645
=== ==== ==== === =====
</TABLE>
13-1 Pensions and retirement benefits
Other movements in 1994 mainly result from the reclassification of a FF 62
million prepaid pension for Risdon from other receivables to pensions and
retirement benefits. In 1993, the increase in provisions of FF 137 million
relates to the postretirement benefit obligations for the United States
subsidiaries (FF 92 million) and the United Kingdom subsidiaries (FF 45
million). In 1993, included in other movements are provisions relating to
businesses acquired, principally Zeller Plastik (FF 49 million) and Fima Metal
Box Bhd (FF 2 million). Additions refer to increases in accruals for the year.
No charge in income is recognized for countries such as the United Kingdom
where excess funding of schemes is currently used to cover normal pension
costs.
13-2 Deferred tax, net
The major elements of the deferred tax provision relate to timing
differences in respect of excess tax over book depreciation and provisions.
Other movements mainly relate to transfers to and from current income taxes.
13-3 Restructuring
As part of the Group's continuing program of reorganization and
rationalization, decisions have been taken to close certain locations,
discontinue certain production lines, relocate production and reduce the labor
force.
F-28
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Details of restructuring are as follows:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Redundancy.............................................. 146 145
Reorganization.......................................... 69 52
Purchase accounting..................................... 231 238
--------- ---------
446 435
========= =========
</TABLE>
Redundancy and reorganization
Redundancy costs primarily include severance costs to be paid to terminated
employees. These benefits mainly comprise severance payments and payments in
lieu of notice whether arising as a business reorganization or as an ongoing
redundancy program.
Reorganization costs include expenses relating to the removal of production
line, cost of equipment and production plant disassembly and reassembly,
losses on net assets disposals, committed costs during the period preceding
the termination of an activity and personnel relocation expenses.
Redundancy and reorganization provisions which amount to FF 146 million and
FF 69 million, respectively, at December 31, 1994 should be substantially
expensed in the later part of 1995.
Purchase accounting provisions
Purchase accounting provisions relating to the acquisition of Anchor Hocking
(FF 132 million at December 31, 1994 and FF 163 million at December 31, 1993)
mainly cover the closure of the Glassboro manufacturing facility in the United
States which will be substantially completed by the end of 1995.
Also included in the purchase accounting provisions is an amount of FF 99
million at December 31, 1994 (FF 75 million at December 31, 1993) relating to
the acquisition of the German Zeller Plastik group. The provisions mainly
relate to exit and employee termination costs to be incurred in connection
with the integration of the acquired activities into the Plastics packaging
operations of the Group which is expected to be substantially completed by the
end of 1996.
13-4 Other provisions
The main elements of other provisions are grants received, reinsurance
reserves, warranty obligations, termination indemnities and accruals for
risks, litigation and claims. The Company has recorded its best estimate of
the probable exposure which might result from legal proceedings, environmental
compliance and other matters arising out of the past and present conduct of
the Company's business, and does not expect that amounts, if any, which may be
required to be paid as a result, will materially affect its financial position
or results from operations.
13-5 Environmental
The Group's operations are subject to extensive environmental laws and
regulations relating to air emissions, wastewater discharges, hazardous
substances, the remediation of contamination and employee health and safety.
Internal compliance examinations and other events have from time to time
resulted in the identification of contamination or the absence of required
permits at particular facilities. However, the Group does not expect that any
of these circumstances identified to date are likely to have a material effect
on the Group.
Reserves for environmental costs included in "Other provisions" amounted to
FF 10 million as of December 31, 1994.
F-29
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 14--SENIOR DEBT
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Debenture loans........................................ 2,248 1,505
Capital lease obligations.............................. 286 356
Banks and other........................................ 189 257
--------- ---------
2,723 2,118
Preference shares...................................... 627 1,307
--------- ---------
Total long-term debt................................... 3,350 3,425
========= =========
Short-term debt (including current portion of long-term
debt)................................................. 1,388 1,473
========= =========
</TABLE>
Loans (excluding capital lease obligations) are secured by assets amounting
to FF 193 million (1993: FF 298 million).
Loan repayment schedule (excluding short-term portion):
<TABLE>
<CAPTION>
YEAR 1994 % 1993 %
---- ----- --- ----- ---
(IN MILLIONS OF FF)
<S> <C> <C> <C> <C>
1995................................................... -- -- 397 12%
1996................................................... 305 9% 174 5%
1997................................................... 796 24% 1,386 40%
1998................................................... 141 4% 95 3%
1999 (and after)....................................... 115 3% 1,373 40%
2000 and after......................................... 1,993 60% -- --
----- --- ----- ---
TOTAL.................................................. 3,350 100% 3,425 100%
===== === ===== ===
</TABLE>
Analysis of long-term debt by currency:
<TABLE>
<CAPTION>
1994 % 1993 %
----- --- ----- ---
(IN MILLIONS OF FF)
<S> <C> <C> <C> <C>
French Franc........................................... 1,320 39% 617 18%
US Dollar.............................................. 1,103 33% 1,227 36%
Pound Sterling......................................... 725 22% 1,370 40%
Deutsch Mark........................................... 55 2% 116 3%
Italian Lira........................................... 36 1% 44 1%
Other currencies....................................... 111 3% 51 2%
----- --- ----- ---
TOTAL.................................................. 3,350 100% 3,425 100%
===== === ===== ===
</TABLE>
Analysis of long-term debt by interest rate:
These analyses take into account interest rate swap operations.
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Fixed rates
--below 6%............................................. 135 122
--6 to 8.5%............................................ 228 359
--8.5% and over........................................ 382 2,008
Floating rates*.......................................... 2,605 936
--------- ---------
TOTAL.................................................... 3,350 3,425
========= =========
</TABLE>
- --------
* Floating rates are principally based on 6 months LIBOR.
F-30
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
As of December 31, 1994, the parent company had an amount of FF 3,000
million of lines of credit, of which FF 2,750 million was not used (at
December 31, 1993 there was FF 3,600 million of available credit, none of
which was being used). These facilities are primarily with international banks
and initially extend for periods up to 5 years (with an average maturity of
approximately 3.5 years).
Net balance sheet debt
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Long-term debt (including preference shares)........... 3,350 3,425
Short-term debt........................................ 1,388 1,473
--------- ---------
Total debt (including preference shares)............... 4,738 4,898
Cash and cash equivalents.............................. (2,293) (1,764)
TSDI................................................... 1,146 1,199
--------- ---------
3,591 4,333
========= =========
</TABLE>
Convertible and other bonds
In 1988, the Group issued 1,445,000 bonds of FF 550 each, convertible into
ordinary shares on a one for three basis. The 297,934 bonds outstanding at 31
December 1993 matured within the first quarter 1994.
Other bonds:
<TABLE>
<CAPTION>
LESS BETWEEN
THAN 1 AND 5 INTEREST
1 YEAR YEARS ACCRUED TOTAL
------ ------- -------- -----
(IN MILLIONS OF FF)
<S> <C> <C> <C> <C>
6.20% 1986..................................... 100 100 6 206
</TABLE>
Private placement
To finance the acquisition of Anchor Hocking, CarnaudMetalbox Investments
(USA), Inc. issued in May 1993 a Private Placement of US$205 million with two
tranches maturing respectively in 2000 for US$100 million, and 2005 for US$105
million, subscribed by US investors (Insurance companies) and guaranteed by
CarnaudMetalbox. The average interest rate is 7.3%.
NOTE 15--ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Trade accounts payable................................... 4,931 4,277
Current income tax liability............................. 438 523
Other taxes and social security.......................... 503 452
Other payables and accruals.............................. 1,563 1,631
--------- ---------
7,435 6,883
========= =========
</TABLE>
F-31
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 16--FINANCIAL EXPENSE (NET)
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(IN MILLIONS OF FF)
<S> <C> <C> <C>
Net interest income................................. 94 138 191
Gain on sale of marketable securities............... 1 8 20
------ ------ ------
Total financial income.............................. 95 146 211
====== ====== ======
Interest on TSDI.................................... (101) (139) (147)
Preference share dividends.......................... (137) (164) (214)
Interest on debt.................................... (363) (404) (481)
------ ------ ------
Total financial expense............................. (601) (707) (842)
====== ====== ======
Dividends received.................................. 28 37 32
Translation and exchange adjustments................ (14)* 6* (20)
Other, net.......................................... (38) (57) (23)
------ ------ ------
(530) (575) (642)
====== ====== ======
</TABLE>
- --------
* Includes the effect (FF (22) million and FF (12) million in 1994 and 1993
respectively) of translating the financial statements of subsidiaries
operating in hyperinflationary economies.
NOTE 17--STAFF COSTS
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(IN MILLIONS OF FF)
<S> <C> <C> <C>
Wages and salaries including social security and
other related costs................................. 5,625 5,632 5,307
Average number of employees during the year.......... 31,100 31,910 30,850
Number of employees at year end...................... 30,290 31,880 30,270
</TABLE>
NOTE 18--COST OF SALES (EXCLUDING DEPRECIATION AND AMORTIZATION), SELLING AND
ADMINISTRATIVE EXPENSE, AND RESEARCH AND DEVELOPMENT EXPENSE
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
(IN MILLIONS OF FF)
<S> <C> <C> <C>
Cost of sales (excluding depreciation and
amortization)................................ (19,315) (19,035)
(21,057)*
Selling and administrative expense............ (1,883) (1,831)
Research and development expense.............. (340) (291) (296)
------- ------- -------
(21,538) (21,157) (21,353)
======= ======= =======
</TABLE>
- --------
* The breakdown between cost of sales and selling and administrative expense
is not available for 1992.
NOTE 19--GAIN ON DISPOSALS (NET)
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(IN MILLIONS OF FF)
<S> <C> <C> <C>
Net gain on sale of property, plant and equipment.. 219 15 34
Net gain on sale of businesses..................... 23 178 201
------ ------ ------
242 193 235
====== ====== ======
</TABLE>
F-32
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The FF 219 million gain from sale of property, plant and equipment in 1994
is mainly attributable to the sale of the factory site at Woodlands in
Singapore (FF 196 million). The FF 23 million net gain from the disposal of
businesses mainly relates to the sale of Secura Singapore Private Ltd. and
Speedprint.
In 1993, the FF 178 million gain from the disposal of businesses relates
mainly to the sale of Pharmaflex, High Performance Plastics division and
Bioplast/Impetus.
In 1992, the FF 201 million gain from disposal of businesses relates mainly
to the sale of a cartons business in Asia Pacific and the disposal of CMB
Capsule Srl, an Italian closures operation.
NOTE 20--PROVISION FOR INCOME TAX
The provision for income tax consists of the following:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(IN MILLIONS OF FF)
<S> <C> <C> <C>
Current income tax................................... (253) (181) (436)
Deferred income tax.................................. 8 (102) (8)
------ ------ ------
(245) (283) (444)
====== ====== ======
</TABLE>
The overall effective tax rate is 16.0% (1993--21.7% and 1992--26.2%) and is
primarily due to the combination of reduced taxation on capital gains and the
re-evaluation of provision requirements. As of December 31, 1994, the Group
had worldwide tax losses totalling FF 1,750 million, of which FF 1,550 million
have an expiry date after 1997.
NOTE 21--EARNINGS PER SHARE
Earnings per share are calculated on a weighted average of 82.0 million
shares outstanding during the year (1993--81.1 million and 1992--80.9
million).
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
(IN FF)
<S> <C> <C> <C>
Earnings per share............................................ 11.6 10.3 12.1
==== ==== ====
</TABLE>
The effect of a full conversion of outstanding shares would be as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ -------
(IN MILLIONS OF FF)
<S> <C> <C> <C>
Net income........................................ 950 835 976
Interest on convertible bonds 1988................ 1 11 12
Interest on stock options......................... 21 23 29
Related tax effect................................ (7) (11) (14)
------ ------ -------
Net income restated............................... 965 858 1,003
Average number of shares (fully diluted) (in
millions)........................................ 84.2 84.1 83.8
Earnings per share on fully diluted basis (in
FF).............................................. 11.5 10.2 12.0
====== ====== =======
</TABLE>
F-33
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 22--CONSOLIDATED STATEMENTS OF CASH FLOWS
22-1 Change in operating assets and liabilities
The table below sets out a reconciliation between the balance sheet
movements related to working capital and the decrease/(increase) in working
capital in the cash flow statements.
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(IN MILLIONS OF FF)
<S> <C> <C> <C>
(Increase)/decrease in inventories................. (249) (165) 272
(Increase)/decrease in trade and other
receivables....................................... (165) 37 288
Increase/(decrease) in trade and other payables.... 552 277 (477)
------ ------ ------
Decrease in working capital per balance sheet...... 138 149 83
Working capital of newly consolidated
subsidiaries...................................... (89) 247 80
Working capital of subsidiaries sold............... (18) (91) (64)
Currency conversion................................ (74) (162) (165)
Movement in payables for capital expenditure....... (102) 76 4
Decrease in current income tax liability........... 85 7 --
Payment of acquisition liability of GWS
Metallipakkaus OY................................. 128 -- --
Working capital of subsidiaries deconsolidated..... -- (117) --
Other, net......................................... -- 17 --
------ ------ ------
Change in working capital per cash flow
statements........................................ 68 126 (62)
====== ====== ======
</TABLE>
22-2 Increase/(decrease) in financial debt*
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Increase in long-term debt............................. 1,696 1,834
Decrease in long-term debt............................. (1,054) (1,369)
Net variation in short-term debt....................... (45) 26
--------- ---------
Net increase in financial debt......................... 597 491
========= =========
</TABLE>
- --------
* Information not available for 1992.
NOTE 23--SUBSEQUENT EVENTS
Early in January 1995, the Group's 50% stake in CMB Sonoco (with net sales
of FF 152 million in 1994) was sold as part of the ongoing process of focusing
on the Group's core metal and packaging businesses. This transaction gave rise
to a net gain in Group results of FF 59 million.
In February 1995, the Group acquired a Swiss company, BMW Vogel AG, a
leading supplier of speciality metal and plastic pails and drums to many of
the blue-chip companies in the chemical, paints and food sectors, with net
sales of FF 85 million in 1994.
In March 1995, the Group entered into an agreement to acquire the remaining
50% stake in the FA.BA. Group in exchange for CarnaudMetalbox shares. This
transaction is subject to the approval of the Extraordinary General Meeting,
to be held on June 2, 1995.
F-34
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 24--FINANCIAL INSTRUMENTS
Financial instruments with off-balance sheet risk and concentration of
credit risk.
The Group uses financial instruments with off-balance sheet risks primarily
to manage its exposure to fluctuations in interest rates and foreign currency
exchange rates. The Group controls the credit risks associated with these
financial instruments through credit approvals, investment limits and
centralized monitoring procedures but does not normally give or require
collateral or other security to or from the parties to the financial
instruments with off-balance sheet risk. In addition, the Group conducts its
operations with customers located throughout the world. Management believes
that receivables are well diversified, thereby reducing potential risk to the
Group. As a consequence, the Group does not anticipate non-performance by
counterparts which could have a significant impact on its financial position
or results of operations. As far as financial instruments are concerned, the
Group uses liquid instruments with creditworthy financial institutions. The
Group does not enter into leveraged, tiered or illiquid contracts.
24-1 Hedging strategy
Hedging of trade transactions in foreign currencies
The policy of the Group is to hedge its transactional exposure involving
cash flows in foreign currencies. Cover is executed centrally by the Group
Treasury Department which seeks to match a net exposure across the Group and
then to cover the net position externally. The Group Treasury Department
exercises limited discretion over the timing of such cover activity within
well defined and tightly controlled limits.
Balance sheet hedging
In terms of balance sheet exposure, the policy is implemented by matching
foreign currency assets and liabilities wherever possible. This is achieved
through the individual capital structure of overseas subsidiaries complemented
by Group central hedging activity. Such hedging activity includes interest
rate and currency swaps, interest rate options and forward rate agreements.
Commodities
In terms of commodity price risk, the Group's policy is to hedge known
commitments in order to reduce adverse price fluctuations. This is achieved
through a combination of commercial supply contracts and financial
instruments, including forward swaps and options.
F-35
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
24-2 Summary of financial instruments
<TABLE>
<CAPTION>
1994
------------------------------------------
INSTRUMENT MATURITY
---------- ------------------------------------------
INTEREST RATE HEDGING ACTIVITY TOTAL 1995 1996 1997 1998 1999 BEYOND
------------------------------ ------ ------ ---- ----- ---- ---- ------
(IN MILLIONS OF FF)
<S> <C> <C> <C> <C> <C> <C> <C>
Long-term interest rate swap
--Receive-fixed swap
Notional amount (a).................. 2,895 -- -- 835 -- -- 2,060
Received rate........................ 8.15%
Paid rate (as of 12.31.94)........... 8.38%
--Pay-fixed swap
Notional amount (a).................. 3,814 321 34 2,384 267 -- 808
Paid rate............................ 8.03%
Received rate (as of 12.31.94)..........6.22%
------ ------ ---- ----- ---- ---- -----
FRA contract
Notional amount bought............... 411 411 -- -- -- -- --
Guaranteed rate...................... 5.86%
Notional amount sold................. 536 536 -- -- -- -- --
Guaranteed rate...................... 6.00%
------ ------ ---- ----- ---- ---- -----
CAP(b)
Notional amount bought............... 1,484 1,484 -- -- -- -- --
Guaranteed rate...................... 6.40%
------ ------ ---- ----- ---- ---- -----
FLOOR(b)
Notional amount bought............... 418 418 -- -- -- -- --
Guaranteed rate...................... 5.00%
====== ====== ==== ===== ==== ==== =====
<CAPTION>
FOREIGN CURRENCY HEDGING ACTIVITY TOTAL 1995 1996 1997 1998 1999 BEYOND
--------------------------------- ------ ------ ---- ----- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Forward exchange contract
Notional amount...................... 1,123 1,085 26 12 -- -- --
Short-term currency swaps
Notional amount...................... 11,551 11,551 -- -- -- -- --
====== ====== ==== ===== ==== ==== =====
</TABLE>
- --------
(a) Notional amount includes different swaps denominated in foreign currencies
and translated into French Francs using the consolidation closing rate.
(b) These CAPS and FLOORS cover 1994 operations and mature in January 1995.
F-36
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
1993
---------------------------------------------
INSTRUMENT MATURITY
---------- ---------------------------------------------
INTEREST RATE HEDGING ACTIVITY TOTAL 1994 1995 1996 1997 1998 1999 BEYOND
------------------------------ ----- ----- ----- ---- ---- ---- ---- ------
(IN MILLIONS OF FF)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long-term interest rate swap
--Receive-fixed swap
Notional amount (a)............. 1,209 -- -- -- -- -- -- 1,209
Received rate................... 7.28%
Paid rate (as of 12.31.93)...... 5.37%
--Pay-fixed swap
Notional amount (a)............. 2,422 295 354 295 436 295 -- 747
Paid rate....................... 8.33%
Received rate (as of 12.31.93).. 4.37%
Swaption
--Pay-fixed swap
Notional amount................. 884 884 -- -- -- -- -- --
Paid rate....................... 7.36%
Received rate (as of 12.31.93).....5.25%
----- ----- ----- ---- ---- ---- ---- -----
FRA contract
Notional amount bought.......... 1,192 1,192 -- -- -- -- -- --
Guaranteed rate................. 7.26%
Notional amount sold............ 1,024 1,024 -- -- -- -- -- --
Guaranteed rate................. 6.64%
----- ----- ----- ---- ---- ---- ---- -----
CAP(b)
Notional amount bought.......... 2,256 737 1,519 -- -- -- -- --
Guaranteed rate................. 5.49%
----- ----- ----- ---- ---- ---- ---- -----
FLOOR(b)
Notional amount bought.......... 436 -- 436 -- -- -- -- --
Guaranteed rate................. 5.00%
===== ===== ===== ==== ==== ==== ==== =====
<CAPTION>
FOREIGN CURRENCY HEDGING ACTIVITY TOTAL 1994 1995 1996 1997 1998 1999 BEYOND
--------------------------------- ----- ----- ----- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Forward exchange contract
Notional amount................. 856 845 11 -- -- -- -- --
Short-term currency swaps
Notional amount................. 674 674 -- -- -- -- -- --
===== ===== ===== ==== ==== ==== ==== =====
</TABLE>
- --------
(a) Notional amount includes different swaps denominated in foreign currencies
and translated into French Francs using the consolidation closing rate.
(b) These CAPS and FLOORS cover 1994 operations and mature in January 1995.
24-3 Concentration of credit risk
The financial instruments discussed above contain an element of risk that
the counterparts may be unable to meet the terms of the agreements. However,
the Group minimizes such risk exposure by limiting the counterparts to major
international banks and financial institutions. Management does not expect to
record any significant losses as a result of counterpart default. The Group
has business activities with customers and associates around the world, and
its receivables from and guarantees to such parties are well diversified.
Consequently, in management's opinion, no significant concentration of credit
risk exists for the Group.
F-37
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
24-4 Fair value of financial instruments
In December 1991, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 107 ("SFAS 107") "Disclosures about Fair
Value of Financial Instruments," which was subsequently amended in 1994 by
Statement of Financial Accounting Standards No. 119 ("SFAS 119") "Disclosure
about Derivative Financial Instruments and Fair Value of Financial
Instruments." SFAS 107 and SFAS 119 require disclosures of the estimated fair
value of all financial instruments other than specified items such as lease
contracts, subsidiary and affiliate investments and employers' pension and
benefit obligations. Except for publicly traded equity and marketable debt
securities for which market prices have been used, these values have been
estimated for the majority of the Group's financial instruments. Accordingly,
fair values are based on estimates using various valuation techniques, such as
present value of future cash flows. However, methods and assumptions used to
disclose data presented herein are inherently judgmental and involve various
limitations, including the following:
--fair values presented do not take into consideration the effects of
future interest rate and currency fluctuations,
--estimates as of December 31, 1994 are not necessarily indicative of the
amounts that the Group would realize upon subsequent disposal or
termination of a financial instrument.
As a consequence, the use of different estimations, methodologies and
assumptions may have a material effect on the estimated fair value amounts.
The methodologies used are as follows:
Non-current assets, investments and loans to non-consolidated companies
The fair values of these financial instruments were determined by estimating
future cash flows on an item-by-item basis and discounting these future cash
flows using the Group's incremental rates at year-end for similar types of
financial instruments.
Cash and cash equivalents, accounts and notes receivable, bank overdrafts,
short-term borrowings, accounts and notes payable
The carrying amounts reflected in the consolidated financial statements are
reasonable estimates of fair value because of the relatively short period of
time between the origination of the instruments and their expected
realization.
Long-term debt
The fair values of these financial instruments were determined by estimating
future cash flows on a borrowing-by-borrowing basis and discounting these
future cash flows using the Group's incremental borrowing rates at year-end
for similar types of borrowing arrangements. Interest rates on floating long-
term debt are set for short periods. As a consequence, the fair value is
approximated by the carrying value.
F-38
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Interest rate swaps, currency swaps, FRAs, swaptions, options and forward
exchange contracts
The fair value of these instruments is the estimated amount that the Group
would receive or pay to settle the related agreements as of December 31, 1994
and 1993 based upon current interest rates.
<TABLE>
<CAPTION>
1994 1993
------------------ ------------------
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- --------- -------- ---------
(IN MILLIONS OF FF)
<S> <C> <C> <C> <C>
BALANCE SHEET
Equity Securities for which it is:
--Practicable to estimate fair
value.............................. 97 97 140 140
--Not practicable................... 10 10 19 19
Loans and advances.................... 56 52 128 125
Perpetual notes....................... 1,146 769 1,199 735
Debenture loans....................... 2,248 2,117 1,505 1,612
Bank loans............................ 816 811 1,564 1,630
Current portion of long-term debt
(excluding current portion of capital
lease obligation).................... 1,318 1,318 1,399 1,399
OFF-BALANCE SHEET
Long-term interest rate swaps......... -- (455) -- (772)
Short-term currency swaps............. -- (b) -- (b)
Caps/Floor contracts.................. -- (a) -- (a)
FRA contracts......................... -- (a) -- (a)
Swaptions............................. -- (a) -- (a)
Forward exchange contracts............ -- (a) -- (a)
Financial guarantees.................. -- (a) -- (a)
</TABLE>
- --------
(a) estimated fair value is immaterial.
(b) in view of the short average remaining maturity of the currency swaps, the
effect of discount premiums on the fair value was considered immaterial.
NOTE 25--OTHER COMMITMENTS
25-1 Capital commitments
At December 31, 1994, total capital commitments (authorized and committed)
amounted to FF 471 million.
25-2 Other commitments
Commitments not otherwise disclosed amount to:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(IN MILLIONS OF FF)
<S> <C> <C> <C>
Retirement indemnities(1)............................ 107 96 --
Discounted bills with recourse....................... 155 191 318
Other commitments.................................... 302 237 258
</TABLE>
- --------
(1) net amount of differences arising from changes in actuarial assumptions
spread over the average remaining service lives of the employees
F-39
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 26--INFORMATION BY BUSINESS SEGMENT AND GEOGRAPHICAL AREA
The tables below set out an analysis of net sales, operating income, capital
expenditure, number of employees, identifiable assets, corporate assets and
total assets at year end by business segment and geographical area (country of
production):
26-1 Business segment
<TABLE>
<CAPTION>
ENGINEERING
METAL PLASTICS & OTHER INTERSEGMENT
PACKAGING PACKAGING ACTIVITIES SALES TOTAL
--------- --------- ----------- ------------ ------
(IN MILLIONS OF FF)
<S> <C> <C> <C> <C> <C>
1992
Net sales................ 17,842 5,598 1,513 (123) 24,830
Operating income......... 1,658 379 (11) 2,026
Capital expenditure...... 1,179 420 104 1,703
Number of employees...... 19,670 7,770 2,830 30,270
Identifiable assets*..... 10,951 3,844 1,196 15,991
Corporate assets*........ -- -- 2,116 2,116
Goodwill................. 1,609 904 64 2,577
Merger intangible........ 4,691 -- -- 4,691
Total assets............. 17,251 4,748 3,376 25,375
====== ===== ===== ==== ======
1993
Net sales................ 17,899 5,341 1,232 (132) 24,340
Operating income......... 1,288 316 (21) 1,583
Capital expenditure...... 1,125 385 57 1,567
Number of employees...... 21,010 7,940 2,930 31,880
Identifiable assets*..... 11,574 3,593 2,435 17,602
Corporate assets*........ -- -- 1,154 1,154
Goodwill................. 2,692 1,250 60 4,002
Merger intangible........ 4,691 -- -- 4,691
Total assets............. 18,957 4,843 3,649 27,449
====== ===== ===== ==== ======
1994
Net sales................ 18,615 5,055 1,334 (114) 24,890
Operating income......... 1,451 245 13 1,709
Capital expenditure...... 1,540 382 66 1,988
Number of employees...... 20,240 7,350 2,700 30,290
Identifiable assets*..... 11,408 3,937 2,873 18,218
Corporate assets*........ -- -- 1,490 1,490
Goodwill................. 2,593 1,409 71 4,073
Merger intangible........ 4,691 -- -- 4,691
Total assets............. 18,692 5,346 4,434 28,472
====== ===== ===== ==== ======
</TABLE>
- --------
* excluding goodwill and merger intangible
F-40
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
26-2 Geographical area
<TABLE>
<CAPTION>
EUROPEAN
UNION OTHER TOTAL
-------- ------ ------
(IN MILLIONS OF FF)
<S> <C> <C> <C>
1992
Net Sales..................................... 21,244 3,586 24,830
Operating income.............................. 1,610 416 2,026
Capital expenditure........................... 1,428 275 1,703
Number of employees........................... 22,600 7,670 30,270
Identifiable assets*.......................... 12,609 3,382 15,991
Corporate assets*............................. 2,100 16 2,116
Goodwill...................................... 2,010 567 2,577
Merger intangible............................. 4,691 -- 4,691
Total assets.................................. 21,410 3,965 25,375
====== ====== ======
1993
Net Sales..................................... 19,317 5,023 24,340
Operating income.............................. 1,189 394 1,583
Capital expenditure........................... 1,010 557 1,567
Number of employees........................... 21,460 10,420 31,880
Identifiable assets*.......................... 11,961 5,641 17,602
Corporate assets*............................. 1,137 17 1,154
Goodwill...................................... 2,206 1,796 4,002
Merger intangible............................. 4,691 -- 4,691
Total assets.................................. 19,995 7,454 27,449
====== ====== ======
1994
Net Sales..................................... 19,478 5,412 24,890
Operating income.............................. 1,409 300 1,709
Capital expenditure........................... 1,128 860 1,988
Number of employees........................... 20,480 9,810 30,290
Identifiable assets*.......................... 12,178 6,040 18,218
Corporate assets*............................. 1,279 211 1,490
Goodwill...................................... 2,559 1,514 4,073
Merger intangible............................. 4,691 -- 4,691
Total assets.................................. 20,707 7,765 28,472
====== ====== ======
</TABLE>
- --------
* excluding goodwill and merger intangible
NOTE 27--RELATED PARTIES
Transactions with equity investees
Net sales, receivables and payables with related parties (equity investees)
were not material for both 1993 and 1994.
F-41
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 28--LEASES
<TABLE>
<CAPTION>
OPERATING
CAPITAL LEASES LEASES
--------------- ---------------
RENTALS PAYABLE RENTALS PAYABLE
--------------- ---------------
(IN MILLIONS OF FF)
<S> <C> <C>
1995......................................... 89 142
1996......................................... 72 136
1997......................................... 65 45
1998......................................... 49 16
1999......................................... 45 15
After 1999................................... 105 49
--- ---
Total minimum rentals........................ 425 403
===
Less amounts representing interest........... (69)
---
Capital lease obligations.................... 356
===
</TABLE>
NOTE 29--LIST OF THE MAIN GROUP ENTITIES AT DECEMBER 31, 1994
<TABLE>
<CAPTION>
GROUP PERCENTAGE
GROUP ENTITIES COUNTRIES INTEREST OF CONTROL
-------------- -------------- -------- ----------
<S> <C> <C> <C>
EUROSTEEL
Food Europe
CarnaudMetalbox Alimentaire SA.............. France 100.00 100.00
CarnaudMetalbox BMI......................... France 100.00 100.00
CarnaudMetalbox Cofem/MBA................... France 100.00 100.00
Eurocan Food NV............................. Belgium 100.00 100.00
CarnaudMetalbox Magyarorszag KFT............ Hungary 100.00 100.00
CarnaudMetalbox Slovakia Sro................ Slovakia 75.00 75.00
CarnaudMetalbox Plc(1)...................... United Kingdom 100.00 100.00
Zuchner Verpackungen GmbH & Co. KG.......... Germany 100.00 100.00
Blechpackungswerk Eberswalde/Britz GmbH..... Germany 100.00 100.00
CarnaudMetalbox Nahrungsmitteldosen GmbH.... Germany 100.00 100.00
Eberswalde Verpackungen GmbH................ Germany 100.00 100.00
Fr. Wehrstedt und Sohne GmbH & Co. KG....... Germany 100.00 100.00
GWS Metallipakkaus OY....................... Finland 80.00 80.00
Envases CarnaudMetalbox SA(1)............... Spain 99.86 99.86
CMB Envases Alimentarios SA................. Spain 99.86 99.86
Envases Murcianos SA........................ Spain 100.00 100.00
CMB Colep Embalagens SA..................... Portugal 54.92 54.92
Faba Spa.................................... Italy 50.00 50.00
Faba Sud Spa................................ Italy 37.50 75.00
Nuova Sirma Spa............................. Italy 48.44 100.00
Baroni Srl.................................. Italy 50.00 100.00
Italgraf Spa................................ Italy 45.00 100.00
Hellas Can SA(1)............................ Greece 72.79 72.79
Food Closures
CarnaudMetalbox Closures Plc................ United Kingdom 100.00 100.00
CMB Italcaps Srl............................ Italy 100.00 100.00
</TABLE>
F-42
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
GROUP PERCENTAGE
GROUP ENTITIES COUNTRIES INTEREST OF CONTROL
-------------- --------------- -------- ----------
<S> <C> <C> <C>
Zuchner Verschlusse GmbH.................. Germany 100.00 100.00
Envases CarnaudMetalbox SA(1)............. Spain 99.86 99.86
CMB Closures Benelux BV................... The Netherlands 100.00 100.00
CarnaudMetalbox Capsules SA............... France 100.00 100.00
Anchor Hocking Packaging Co............... United States 100.00 100.00
Anchor Cap and Closures................... Canada 100.00 100.00
Speciality Packaging Europe
CarnaudMetalbox Industries SA............. France 100.00 100.00
SMG....................................... France 100.00 100.00
CMB Sonoco Composites Ltd................. United Kingdom 50.00 50.00
CarnaudMetalbox Speciality Packaging (UK)
Plc...................................... United Kingdom 100.00 100.00
Gruss Metallverpackungen GmbH & Co. KG.... Germany 100.00 100.00
Zuchner Metallverpackungen GmbH........... Germany 100.00 100.00
CMB Promotional Packaging BV.............. The Netherlands 100.00 100.00
Speciality Packaging Nederland BV......... The Netherlands 100.00 100.00
Envases Metalner SA....................... Spain 100.00 100.00
Speciality Packaging Belgium NV........... Belgium 100.00 100.00
CarnaudMetalbox Enterprises, Inc.(1)...... United States 100.00 100.00
Quitmann Ltd.............................. Ireland 100.00 100.00
Stephan & Hoffman......................... Germany 100.00 100.00
Aerosols Europe
CarnaudMetalbox Aerosols (UK) Plc......... United Kingdom 100.00 100.00
Superbox Aerosols Srl..................... Italy 100.00 100.00
CarnaudMetalbox Aerosols France SA........ France 100.00 100.00
CarnaudMetalbox Aerosoles SA.............. Spain 99.86 100.00
CMB Aerosoldosen Deutschland GmbH......... Germany 100.00 100.00
CarnaudMetalbox Enterprises, Inc.(1)...... United States 100.00 100.00
BEVERAGE
CarnaudMetalbox Bevcan Plc................ United Kingdom 100.00 100.00
Envases de bebidas SA..................... Spain 99.86 100.00
Eurocan Dranken NV........................ Belgium 100.00 100.00
Eurodeksels NV............................ Belgium 100.00 100.00
Hellas Can SA(1).......................... Greece 72.79 72.79
Sofreb.................................... France 100.00 100.00
Superbox contenitori per bevande Srl...... Italy 100.00 100.00
CarnaudMetalbox Ambalaj Sanayi ve Ticaret
AS....................................... Turkey 100.00 100.00
Dufalco(2)................................ Belgium 50.00 50.00
ENGINEERING
CarnaudMetalbox Engineering Plc........... United Kingdom 100.00 100.00
CarnaudMetalbox Enterprises, Inc.(1)...... United States 100.00 100.00
Simplimatic Engineering Company........... United States 100.00 100.00
</TABLE>
F-43
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
GROUP PERCENTAGE
GROUP ENTITIES COUNTRIES INTEREST OF CONTROL
-------------- -------------- -------- ----------
<S> <C> <C> <C>
PLASTICS
AMS Europe
AMS Packaging SA............................ France 94.99 94.99
AMS Europe.................................. France 94.99 100.00
EMA......................................... France 94.99 100.00
Kerplas SNC................................. France 94.99 100.00
Plastigold.................................. France 94.99 100.00
Reggiani.................................... Italy 94.99 100.00
Kerplas Neuenburg........................... Germany 94.99 100.00
Momiplast................................... Belgium 71.72 75.50
Momitube.................................... Belgium 83.12 100.00
Risdon Ltd.................................. United Kingdom 94.99 100.00
AMS America, Inc............................ United States 100.00 100.00
Risdon (USA)
Risdon Corporation.......................... United States 100.00 100.00
Bottles & Closures Europe
CarnaudMetalbox Plastique SA................ France 100.00 100.00
Astraplastique.............................. France 96.33 96.33
CMB Plastique............................... France 100.00 100.00
Polyflex.................................... France 94.99 100.00
BAP......................................... France 100.00 100.00
CMB Plastique SNC France.................... France 100.00 100.00
CMB Bottles & Closures Plc.................. United Kingdom 100.00 100.00
Massmould Holdings Ltd...................... United Kingdom 100.00 100.00
United Closures and Plastics Plc............ United Kingdom 100.00 100.00
Raku........................................ Germany 100.00 100.00
Intaplas SA................................. Spain 98.98 99.12
Rexpak SA................................... Spain 98.68 100.00
CMB Plaspak Plastik Ambalaj Sanayi AS....... Turkey 100.00 100.00
Zeller Plastik GmbH......................... Germany 100.00 100.00
Spraysol GmbH............................... Germany 100.00 100.00
Zeller France SA............................ France 100.00 100.00
Zeller Plastik UK Ltd....................... United Kingdom 100.00 100.00
Zeller Plastik Italia Spa................... Italy 49.00 49.00
Zeller Plastik Espana....................... Spain 98.98 100.00
Zeller Closures Inc. (USA).................. United States 100.00 100.00
Zeller Plastic SEA Pte Ltd.................. Singapore 100.00 100.00
Flexible
CMB Flexible SA............................. France 100.00 100.00
Seala SA.................................... France 100.00 100.00
Noltemeyer GmbH............................. Germany 100.00 100.00
Neocel Ltda................................. Portugal 65.40 65.40
Impalsa SA.................................. Spain 100.00 100.00
</TABLE>
F-44
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE
GROUP ENTITIES COUNTRIES GROUP INTEREST OF CONTROL
-------------- --------------- -------------- ----------
<S> <C> <C> <C>
ASIA-PACIFIC
CarnaudMetalbox (Asia-Pacific)
Holdings Pte Ltd................... Singapore 51.00 51.00
CarnaudMetalbox Asia Ltd............ Singapore 40.85 75.20
Pet Containers Pte Ltd.............. Singapore 29.82 73.00
CarnaudMetalbox Bevcan Ltd.......... Thailand 40.33 100.00
CarnaudMetalbox (Thailand) Ltd...... Thailand 24.33 59.57
CarnaudMetalbox (Hong Kong) Ltd..... Hong Kong 48.46 100.00
CarnaudMetalbox (HK) Holdings Ltd... Hong Kong 48.46 100.00
CarnaudMetalbox (Shenzhen) Ltd...... China 48.46 100.00
CarnaudMetalbox (Guangzhou) Ltd..... China 34.72 85.00
Shanghai CarnaudMetalbox Co. Ltd.... China 26.55 65.00
Beijing CarnaudMetalbox Co. Ltd..... China 24.51 60.00
CarnaudMetalbox Packaging Pte Ltd... Singapore 40.85 100.00
CarnaudMetalbox Technical Services
Pte Ltd............................ Singapore 40.85 100.00
CarnaudMetalbox Bevcan Sdn Bhd...... Malaysia 100.00 100.00
CarnaudMetalbox Packaging Sdn Bhd... Malaysia 100.00 100.00
CarnaudMetalbox (Saigon) Ltd........ Vietnam 28.60 70.00
AFRICA--MIDDLE EAST--CARIBBEAN
CarnaudMetalbox Overseas Ltd........ United Kingdom 100.00 100.00
CarnaudMetalbox Nigeria Plc......... Nigeria 56.14 56.14
CarnaudMetalbox Toyo Glass Nigeria
Plc................................ Nigeria 53.48 53.48
CarnaudMetalbox Kenya Ltd........... Kenya 74.48 74.48
Allpack............................. Ivory Coast 59.78 70.54
CarnaudMetalbox Siem................ Ivory Coast 84.75 84.75
Sisep............................... Ivory Coast 52.26 61.66
CarnaudMetalbox (Zimbabwe) Ltd...... Zimbabwe 70.00 70.00
CarnaudMetalbox Senegal............. Senegal 72.47 72.47
CarnaudMetalbox Jamaica Ltd......... Jamaica 100.00 100.00
CarnaudMetalbox Barbados Ltd........ Barbados 100.00 100.00
CMB Packaging Trinidad Ltd.......... Trinidad 100.00 100.00
CarnaudMetalbox Tanzania Ltd........ Tanzania 57.00 57.00
Carnaud Maroc(2).................... Morocco 44.67 44.67
TECHNOLOGY
CarnaudMetalbox Technology Plc...... United Kingdom 100.00 100.00
HOLDINGS
CarnaudMetalbox..................... France Parent Company
Societe de Participations
CarnaudMetalbox (SPC).............. France 100.00 100.00
CarnaudMetalbox Group Services
(GEIE)............................. France 100.00 100.00
CMB Packaging International NV...... Belgium 100.00 100.00
CarnaudMetalbox NV.................. The Netherlands 100.00 100.00
CarnaudMetalbox Group UK Ltd........ United Kingdom 100.00 100.00
CarnaudMetalbox Holdings (UK) Ltd... United Kingdom 100.00 100.00
CarnaudMetalbox Plc(1).............. United Kingdom 100.00 100.00
CarnaudMetalbox Deutschland GmbH.... Germany 100.00 100.00
</TABLE>
F-45
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
GROUP PERCENTAGE
GROUP ENTITIES COUNTRIES INTEREST OF CONTROL
-------------- ------------- -------- ----------
<S> <C> <C> <C>
CarnaudMetalbox Plastik Holding GmbH......... Germany 100.00 100.00
CarnaudMetalbox Italia Srl................... Italy 100.00 100.00
Envases CarnaudMetalbox SA(1)................ Spain 99.86 99.86
CarnaudMetalbox Investments (USA), Inc....... United States 100.00 100.00
Standfast Reinsurance........................ Luxembourg 100.00 100.00
</TABLE>
- --------
(1) Companies operating in several segments/operations.
(2) Associated companies.
F-46
<PAGE>
CARNAUDMETALBOX
JUNE 30, 1995
GROUP CONSOLIDATED FINANCIAL STATEMENTS
G-1
<PAGE>
AUDITORS' REPORT
We have reviewed the accompanying consolidated condensed balance sheets of
CarnaudMetalbox as of June 30, 1995 and June 30, 1994, and the related
consolidated condensed statements of income and cash flows for the six-month
periods then ended. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
As discussed in Note 1, the Company has deferred the application of the IAS
rules revised in November 1993 (the "New Rules") normally effective January 1,
1995. The main difference between the accounting principles currently used by
the Company in the preparation of the accompanying consolidated financial
statements and the new rules concerns the period of amortization of goodwill.
Had the change been applied as of January 1, 1995, according to the
prospective method, on the basis of a maximum twenty-year amortization period,
there would have been no impact on opening shareholders' equity and net income
for the six-month period ended June 30, 1995 would have been reduced by FF 46
millions.
Based on our review, except for the effect on the 1995 financial statements
of the matter described in the preceding paragraph, we are not aware of any
material modifications that should be made to the financial statements
referred to above for them to be in conformity with International Accounting
Standards.
Certain accounting practices of the Company used in preparing the
accompanying consolidated financial statements conform with International
Accounting Standards, but do not conform with accounting principles generally
accepted in the United States. A description of these differences and the
adjustments required to conform net income and shareholders' equity with
accounting principles generally accepted in the United States are set forth in
Note 2.
October 6, 1995
Arthur Andersen LLP The Statutory Auditors
Befec-Price Waterhouse Salustro Reydel
MS Moralee JP Crouzet
G-2
<PAGE>
CARNAUDMETALBOX
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
<TABLE>
<CAPTION>
FOR THE SIX MONTH
PERIODS
ENDED JUNE 30,
--------------------
1995 1994
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
Net sales............... 12,282 12,317
Cost of sales (excluding
depreciation and
amortization).......... (9,583) (9,481)
Selling and
administrative
expense................ (988) (999)
Research and development
expense................ (180) (174)
Goodwill amortization... (56) (57)
Depreciation............ (631) (624)
Provision for
restructuring.......... (90) (86)
--------- ---------
Operating income........ 754 896
Gain on disposals
(net).................. 82 243
Financial expense
(net).................. (220) (303)
--------- ---------
Income before income
tax.................... 616 836
Provision for income
tax.................... (81) (118)
--------- ---------
Income from Operations.. 535 718
Share in income of
associated companies... 8 (8)
Minority interests in
consolidated
subsidiaries........... (3) (200)
--------- ---------
Net income.............. 540 510
========= =========
Earnings per share (in
FF).................... 6.4 6.2
</TABLE>
The notes on pages G-7 to G-13 are an integral part of the consolidated
financial statements.
G-3
<PAGE>
CARNAUDMETALBOX
CONSOLIDATED BALANCE SHEETS
UNAUDITED
<TABLE>
<CAPTION>
AS OF JUNE 30,
--------------------
1995 1994
--------- ---------
(IN MILLIONS OF FF)
<S> <C> <C>
ASSETS
------
Intangible assets....................................... 4,812 4,811
Goodwill................................................ 4,241 4,016
Property, plant and equipment........................... 8,517 8,176
Investments............................................. 293 254
--------- ---------
Total non-current assets.............................. 17,863 17,257
--------- ---------
Inventories............................................. 4,542 3,987
Trade and other receivables............................. 5,134 5,624
Cash and cash equivalents............................... 2,301 1,627
--------- ---------
Total current assets.................................. 11,977 11,238
--------- ---------
Total assets.......................................... 29,840 28,495
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Common stock............................................ 858 823
Paid-in capital......................................... 7,169 6,563
Retained earnings....................................... 5,481 5,008
Cumulative translation adjustment....................... (1,501) (1,125)
--------- ---------
Shareholders' equity.................................... 12,007 11,269
--------- ---------
Minority interests...................................... 1,396 1,770
Perpetual notes (TSDI).................................. 1,117 1,173
Preference shares....................................... 581 1,264
Provisions for liabilities and accruals................. 1,605 1,622
Long-term debt (not including TSDI or Preference
shares)................................................ 3,422 2,928
Provisions and long-term liabilities.................... 5,027 4,550
Short-term debt......................................... 2,758 1,601
Accounts payable and other current liabilities.......... 6,954 6,868
Current liabilities..................................... 9,712 8,469
--------- ---------
Total liabilities and shareholders' equity............ 29,840 28,495
========= =========
Net balance sheet debt (including TSDI and Preference
shares)................................................ 5,577 5,339
</TABLE>
The notes on pages G-7 to G-13 are an integral part of the consolidated
financial statements.
G-4
<PAGE>
CARNAUDMETALBOX
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
FOR THE SIX MONTH
PERIODS ENDED JUNE 30,
------------------------
1995 1994
----------- -----------
(IN MILLIONS OF FF)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.......................................... 540 510
Adjustments to reconcile income from operations to
operating cash flows:
Minority interests and share in income of
associated companies............................. (5) 208
Depreciation of property, plant and equipment..... 631 628
Amortization of goodwill.......................... 56 57
Gain on sale of businesses........................ (73) (26)
Gain on sale of property, plant and equipment..... (12) (219)
Change in operating assets and liabilities........ (1,634) (1,134)
Restructuring and other provisions................ (10) 21
Other changes, net................................ 42 (11)
----------- -----------
Cash flows from operating activities................ (465) 34
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of intangible assets....................... (14) (18)
Purchase of property, plant and equipment........... (989) (877)
Acquisition of businesses, net of cash acquired..... (897) (308)
Proceeds from sale of businesses.................... 77 6
Proceeds from sale of property, plant and
equipment.......................................... 42 82
----------- -----------
Cash flows from investing activities................ (1,781) (1,115)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of shares.................... 634 177
Dividends paid and withholding tax ("precompte").... (502) (370)
Increase in long term debt.......................... 2,703 1,421
Decrease in long term debt.......................... (462) (625)
Net variation in short term debt.................... (6) 391
----------- -----------
Cash flows from financing activities................ 2,367 994
----------- -----------
Effect of changes in exchange rates on cash and cash
equivalents........................................ (113) (50)
Increase/(decrease) in cash and cash equivalents.... 121 (87)
Cash and cash equivalents at beginning of period.... 2,293 1,764
----------- -----------
Cash and cash equivalents at end of period.......... 2,301 1,627
=========== ===========
</TABLE>
The notes on pages G-7 to G-13 are an integral part of the consolidated
financial statements.
G-5
<PAGE>
CARNAUDMETALBOX
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
CUMULATIVE
COMMON PAID-IN RETAINED TRANSLATION
STOCK CAPITAL EARNINGS ADJUSTMENT TOTAL
------ ------- -------- ----------- ------
(IN MILLIONS OF FF)
<S> <C> <C> <C> <C> <C>
At December 31, 1993.............. 813 6,396 4,863 (954) 11,118
=== ===== ===== ====== ======
Translation adjustment............ (203) (203)
Stock issued...................... 10 174 184
Dividends paid (FF 4.00 per
share)(1)........................ (370) (370)
Net income for the year........... 950 950
--- ----- ----- ------ ------
At December 31, 1994.............. 823 6,570 5,443 (1,157) 11,679
=== ===== ===== ====== ======
<CAPTION>
UNAUDITED
<S> <C> <C> <C> <C> <C>
At December 31, 1994.............. 823 6,570 5,443 (1,157) 11,679
=== ===== ===== ====== ======
Translation adjustment............ (344) (344)
Stock issued...................... 35 599 634
Dividends paid (FF 4.40 per
share)(1)........................ (502) (502)
Net income for the period......... 540 540
--- ----- ----- ------ ------
At June 30, 1995.................. 858 7,169 5,481 (1,501) 12,007
=== ===== ===== ====== ======
</TABLE>
- --------
(1) Including "Precompte mobilier" (withholding tax) in an amount of FF 140
million and FF 43 million in respect of dividends paid in 1995 and 1994,
respectively.
The notes on pages G-7 to G-13 are an integral part of the consolidated
financial statements.
G-6
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(MILLIONS OF FRENCH FRANCS UNLESS OTHERWISE INDICATED)
The financial information provided in these consolidated financial
statements should be read along with the December 31, 1994 consolidated
financial statements and notes thereto presented in the 1994 Annual Report.
ACCOUNTING PRINCIPLES AND POLICIES
The consolidated accounts of CarnaudMetalbox have been prepared in
accordance with the French law of January 3, 1985 and its application decree
of February 17, 1986. The accounting principles applied by the Group are
comparable to those applied in the previous period and are disclosed in the
1994 Annual Report.
These principles are also in accordance with international accounting
principles formulated by the International Accounting Standards Committee with
the exception of the IAS rules revised in November 1993 effective January 1,
1995, the application of which has been deferred as permitted by the
Commission des Operations de Bourse. The only significant impact of the
application of the revised IAS rules on the consolidated accounts of the Group
relates to IAS No. 22 "Business Combinations" which requires that the
amortization period of goodwill should not exceed five years unless a longer
period, not exceeding twenty years from the date of acquisition, can be
justified. Had the change been applied as of January 1, 1995, according to the
prospective method, on the basis of a maximum twenty year amortization period,
there would have been no impact on opening shareholders' equity and net income
for the six month period ended June 30, 1995 would have been reduced by FF 46
million.
Certain reclassifications of items from the previously published
consolidated financial statements have been made in these consolidated
financial statements in order to conform to a presentation format which is
more understandable to a United States reader.
NOTE 1--SIGNIFICANT EVENTS
Early in January 1995, the Group's 50% stake in CMB Sonoco (net sales of FF
152 million in 1994) was sold as part of the ongoing process of focusing on
the Group's core metal and packaging businesses. This transaction gave rise to
a net gain in the Group's net income of FF 59 million.
In February 1995, the Group acquired the Swiss company, BMW Vogel AG, a
leading supplier of specialty metal and plastic pails and drums to many of the
blue-chip companies in the chemical, paints and food sectors, with net sales
of FF 85 million in 1994.
In March 1995, the Group entered into an agreement to acquire the remaining
50% stake in the FA.BA group in exchange for CarnaudMetalbox shares and cash
consideration of FF 62 million. This transaction was approved by the
Extraordinary General Meeting held on June 2, 1995 and generated goodwill of
FF 423 million.
On May 22, 1995, Crown Cork & Seal Company, Inc. (CCK) and Compagnie
Generale d'Industrie et de Participations (CGIP), principal shareholder in
CarnaudMetalbox with 46% of voting rights, announced the signing of a
definitive agreement calling for the combination of CCK and CarnaudMetalbox,
to create the world's largest packaging company. This agreement is subject to
approval by shareholders and by certain US and European authorities. This
agreement has no impact on the accounts for the first half of 1995.
G-7
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 2--SUMMARY OF DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED BY THE
COMPANY AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The accompanying consolidated financial statements have been prepared in
accordance with the accounting policies described in Accounting Principles and
Policies above ("IAS") which differ in certain significant respects from those
applicable in the United States ("US GAAP").
These differences have been reflected in the financial information given in
paragraph (k) below and mainly relate to the following items.
(a) Income taxes
For US GAAP purposes, SFAS No. 109 ("Accounting for Income Taxes") has been
applied effective January 1, 1993.
<TABLE>
<CAPTION>
UNAUDITED
-----------------
JUNE 30, JUNE 30,
1995 1994
-------- --------
(IN MILLIONS OF
FF)
<S> <C> <C>
Income before tax expense.................................. 616 836
Provision for income tax under IASC........................ (81) (118)
Provision for income tax under US GAAP..................... (81) (51)
Effective tax rate under US GAAP........................... 13.1% 6.1%
==== ====
</TABLE>
(b) Intangible assets
The Company does not systematically amortize its intangible assets (which
comprise mainly the goodwill resulting from the 1989 merger between Carnaud
and MB Packaging).
Under US GAAP, intangible assets should be amortized over the estimated
useful economic life, up to a maximum of 40 years. For reconciliation purposes
the amortization period used is 40 years.
(c) Early redemption of preference shares
In 1992, the Company redeemed British pounds 50 million (FF 418 million) of
the British pounds 200 million redeemable preference shares issued by its
wholly-owned subsidiary, CarnaudMetalbox Holdings (UK) Ltd. and maturing in
1997. As part of the settlement, the Company entered into an interest rate
swap agreement which under US GAAP should have been marked to market, and
which is presently accounted for under the accrual method.
In December 1994 the Company redeemed British pounds 75 million (FF 627
million) of the remaining British pounds 150 million redeemable preference
shares. The loss on extinguishment has been deferred and is being amortized
over the remaining life of the shares. Under US GAAP this loss would have been
charged to income.
(d) Accrued restructuring costs
Certain provisions made by the Company, as a result of business combinations
accounted for under the purchase method, would not be allowed under US GAAP.
The adjustments to pretax income relating to these provisions are the
following:
<TABLE>
<CAPTION>
UNAUDITED
-----------------
JUNE 30, JUNE 30,
1995 1994
-------- --------
(IN MILLIONS OF
FF)
<S> <C> <C>
Purchase accounting provisions (decrease).................. (15) (16)
=== ===
</TABLE>
G-8
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(e) Pension plans & post retirement benefits
In order to comply with US GAAP, the Company has applied SFAS No. 87
"Employers' Accounting Pensions" and SFAS No. 88 "Employers' Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits" as follows:
--the transition obligation or fund excess has been determined as of
January 1, 1987 for United States, January 1, 1989 for United Kingdom and
January 1, 1993 for other countries as being the difference between the
liabilities accounted for under prior years' accounting policies and the
funded status of the plans resulting from actuarial calculations;
transition obligation or fund excess for other countries have been reduced
to their amortized value as if SFAS No. 87 had been applied from 1989. The
amortization period used in most cases is the greater of 15 years and the
average residual active life of the population covered by each plan;
--severance indemnities payable to employees on leaving the Company for any
reason are estimated on the basis of their vested value which is higher
than their actuarial value;
--special termination benefits are recorded on an accrual basis at the time
the offer is accepted by the employees or their representatives and the
amount can be reasonably estimated;
--the actuarial method used is the projected unit credit method. However,
when the benefit formulas attribute more benefits to senior employees or
when the plans are integrated with social security systems or
multiemployer plans, the Company has elected to apply the projected unit
credit service pro-rata method to avoid delayed recognition of pension
costs;
--the market-related value of assets is computed with a spread of
investments gains and losses over three years;
--prior service cost and experience gains and losses are amortized over the
average residual active life of participants.
(f) Postretirement benefits
Under IAS, the Accumulated Postretirement Benefit Obligation (APBO) for
United States and United Kingdom subsidiaries has been measured as of January
1, 1993 and was recorded as an adjustment to shareholders' equity.
Under US GAAP ("SFAS No. 106; Employer's Accounting for Postretirement
Benefits Other Than Pensions"), the APBO for United States and United Kingdom
subsidiaries would have been measured as of January 1, 1993 and would not have
been deducted from shareholders' equity. For US GAAP reconciliation, the
deduction of shareholders' equity has been reversed and the APBO as of January
1, 1993 has been amortized over a 20 year period. Also, the projected future
cost of providing postretirement benefits, such as health care and life
insurance, is accrued over the period earned.
The effect of adopting SFAS No. 106 for other countries is deemed to be
immaterial.
(g) Gain on sale of real estate
On June 24, 1994, CarnaudMetalbox Asia Ltd signed a sale and purchase
agreement with Centrepoint Properties Ltd for the freehold on its factory site
at Woodlands in Singapore. This sale generated a profit before tax of FF 196
million included in gain on disposals (net) (net income effect of FF 80
million after minority interests of FF 116 million). At June 30, 1994 the gain
recognition criteria of SFAS66 were not met.
G-9
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(h) Accounting for stock options
The Company generally grants to eligible employees and executives a discount
from the market price for shares purchased pursuant to stock option plans. The
accounting for such discounts is not addressed by IAS and these transactions
have no effect on the statement of income.
Under US GAAP, the discount, measured at the date of grant, is considered
compensation to employees and executives and, accordingly, is charged to the
statement of income.
The effect of applying US GAAP is not material and therefore is not included
in the reconciliation presented below in paragraph (k).
(i) Investments in debt and marketable equity securities
In accordance with IAS, the Company's policy is to record any impairment in
value on an individual basis for its investments and short-term equity
securities. Unrealized gains are not recognized.
For US GAAP purposes, the Company has adopted the provisions of SFAS No.
115, "Accounting for Certain Investments in Debt and Equity Securities", as of
January 1, 1994. In accordance with SFAS No. 115, and with the exception of
debt securities classified as "held-to-maturity securities", unrealized
holding gains and losses for "trading" and "available for sale" debt and
marketable securities should be included in the statement of income or
directly in shareholders' equity respectively until realized.
The effect of applying SFAS No. 115 is not material and, therefore, no
adjustment is made for this difference in the net income and shareholders'
equity reconciliations in paragraph (k) below.
(j) Consolidation of non-subsidiaries
The Company had a 50% holding in FA.BA. and its subsidiaries which has been
accounted for under the full consolidation method.
Under US GAAP, this investment would have been accounted for under the
equity method up to June 2, 1995 as the Group entered into an agreement
(approved by the June 2, 1995 Extraordinary General Meeting) to acquire the
remaining 50% stake in the FA.BA. group.
This difference does not impact net income nor shareholders' equity.
The main income statement data relating to FA.BA. and its subsidiaries are
set out below:
<TABLE>
<CAPTION>
UNAUDITED
------------------------------------
JUNE 30, JUNE 30,
1995 1994
(UP TO JUNE 2, 1995)(*) (SIX MONTHS)
----------------------- ------------
(IN MILLIONS OF FF)
<S> <C> <C>
Net sales............................... 588 703
Operating income........................ 66 88
Income before taxes..................... 65 86
Net income.............................. 14 19
=== ===
</TABLE>
- --------
(*) Date of approval of the transaction by the shareholders' Extraordinary
General Meeting.
G-10
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(k) Conversion to US GAAP
Net income and shareholders' equity
The following is a summary of the estimated adjustments to net income and
shareholders' equity for the six month periods ended June 30, 1995 and 1994
which would be required if US GAAP had been applied instead of IAS.
<TABLE>
<CAPTION>
UNAUDITED
-----------------------
NET INCOME
-----------------------
JUNE 30, JUNE 30,
1995 1994
---------- ----------
(IN MILLIONS OF FF)
<S> <C> <C>
Amounts per accompanying consolidated financial
statements...................................... 540 510
US GAAP ADJUSTMENTS
Increase/(decrease) due to:
Income taxes (a)............................... -- 67
Intangible assets (b).......................... (30) (35)
Early redemption of preference shares (c)...... 3 47
Accrued restructuring costs (d)................ (15) (16)
Pension (e).................................... 13 (34)
Post retirement benefits plans (f)............. (6) (7)
Gain on sale of real estate (g)................ -- (196)
Effect on minority interests of reconciling
item (g) above................................ -- 116
Tax effect of reconciling items................ -- 16
---------- ----------
Approximate amounts under US GAAP................ 505 468
========== ==========
<CAPTION>
UNAUDITED
-----------------------
SHAREHOLDERS' EQUITY
AS OF JUNE 30,
-----------------------
JUNE 30, JUNE 30,
1995 1994
---------- ----------
(IN MILLIONS OF FF)
<S> <C> <C>
Amounts per accompanying consolidated financial
statements...................................... 12,007 11,269
US GAAP ADJUSTMENTS
Increase/(decrease) due to:
Income taxes (a)............................... 172 139
Intangible assets (b).......................... (2,065) (1,771)
Early redemption of preference shares (c)...... (55) (42)
Accrued restructuring costs (d)................ 3 (50)
Pension plans (e).............................. (184) (171)
Post retirement benefits (f)................... 76 93
Gain on sale of real estate (g)................ -- (196)
Effect on minority interests of reconciling
item (g) above................................ -- 116
Tax effect of reconciling items................ 121 124
---------- ----------
Approximate amounts under US GAAP................ 10,075 9,511
========== ==========
</TABLE>
G-11
<PAGE>
CARNAUDMETALBOX
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(l) Earnings per share
Earnings per share under IAS is calculated by dividing net income by the
weighted average number of common stock equivalents. Under US GAAP, stock
options are considered as common stock equivalents and their amount is
determined according to the treasury method. Earnings per share are calculated
under US GAAP on a weighted average of 84.9 million shares outstanding during
the period (1994--82.2 million).
Earnings per share prepared in accordance with AP15 are as follows:
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1995 JUNE 30, 1994
------------- -------------
(IN MILLIONS OF FF, EXCEPT
SHARE AND OPTION DATA AND
PER SHARE DATA WHICH DATA
IS IN FF)
<S> <C> <C>
Primary net income per share............................................ 6.01 5.77
Number of shares (in thousands)......................................... 84,906 82,216
Fully diluted net income per share...................................... 5.99 5.76
Number of shares (in thousands, fully diluted).......................... 85,127 82,631
========== ==========
The net effect of options has been determined using the treasury method.
<CAPTION>
JUNE 30, JUNE 30,
1995 1994
----------- -----------
<S> <C> <C>
Common shares........................................................... 84,605,561 81,832,045
Stock options........................................................... 300,119 384,549
---------- ----------
84,905,680 82,216,594
========== ==========
Net income.............................................................. 505 468
Interest on stock options............................................... 7 9
Related tax effect...................................................... (2) (3)
---------- ----------
Net income restated..................................................... 510 474
---------- ----------
Net income per share.................................................... 6.01 5.77
========== ==========
The effect of a full conversion of outstanding shares would be as follows:
Common shares........................................................... 84,605,561 81,832,045
Stock options........................................................... 521,500 384,549
Bonds................................................................... -- 414,173
---------- ----------
85,127,161 82,630,766
========== ==========
Net income.............................................................. 505 468
Interest on stock options............................................... 7 9
Interest on convertible bonds .......................................... -- 3
Related tax effect...................................................... (2) (4)
---------- ----------
Net income restated..................................................... 510 476
---------- ----------
Net income per share on fully diluted basis............................. 5.99 5.76
========== ==========
</TABLE>
G-12
<PAGE>
ANNEX A
---------------------------------------------------------------
CROWN CORK & SEAL COMPANY, INC.
AND
COMPAGNIE GENERALE D'INDUSTRIE ET DE PARTICIPATIONS
----------------
EXCHANGE OFFER AGREEMENT
DATED AS OF MAY 22, 1995, AS AMENDED AS OF NOVEMBER 13, 1995
----------------
---------------------------------------------------------------
A-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Background................................................................. 6
TERMS...................................................................... 7
1. Agreement to Make Offer............................................... 7
(a) Agreement to Make Offer......................................... 7
(b) Terms; Exchange Ratio........................................... 7
(c) Conduct of the Offer; Amendment; Waiver......................... 7
(d) Restrictions on Amendment or Waiver of Offer.................... 8
(e) Fractional Shares............................................... 8
(f) Adjustments to Exchange Ratio, etc.............................. 8
(g) The U.K. Exchange Offer......................................... 8
(h) Company Options................................................. 9
2. Agreement to Tender................................................... 9
(a) Tender.......................................................... 9
(b) Third-Party Bids................................................ 9
3. Voting................................................................ 9
4. Expiration............................................................ 10
5. Warranties of Crown................................................... 10
(a) Organization and Qualification.................................. 10
(b) Capitalization.................................................. 10
(c) SEC Filings..................................................... 10
(d) Financial Statements............................................ 11
(e) Absence of Certain Changes or Events............................ 11
(f) Absence of Litigation........................................... 11
(g) Employee Benefit Plans.......................................... 11
(h) Articles of Incorporation and By-laws........................... 12
(i) Taxes and Social Obligations.................................... 12
(j) Authority Relative to this Agreement............................ 12
(k) Consents and Approvals; No Violation............................ 13
(l) Financial Advisors.............................................. 13
(m) Delivery of Crown Common Stock and Crown Preferred Stock........ 13
(n) Registration Statement; Proxy Statement......................... 14
(o) Note d'Information, U.K. Filing; etc............................ 14
6. Warranties of Shareholder............................................. 14
(a) Ownership of Shares............................................. 14
(b) Authority Relative to this Agreement............................ 15
(c) Consents and Approvals; No Violation............................ 15
(d) Ownership of Crown Common Stock................................. 15
(e) Investment Intent............................................... 15
(f) Financial Advisors.............................................. 16
(g) Note d'Information, U.K. Filing; etc............................ 16
(h) Registration Statement; Proxy Statement......................... 16
(i) Organizational Documents........................................ 16
(j) Agreements...................................................... 16
7. Additional Covenants of Shareholder................................... 16
(a) Restriction on Transfer, Proxies and Non-Interference........... 16
(b) Additional Shares............................................... 16
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
(c) Dividends or Distributions.................................... 16
(d) Proxy; Registration Statement; Note d'Information; Etc........ 17
(e) Conduct of Company's Business................................. 17
(f) Access to Information Confidentiality......................... 18
(g) Tax Position; Restructuring................................... 18
(h) Accountants................................................... 18
(i) Supervisory Board............................................. 18
(j) Public Filings................................................ 18
8. Additional Covenants of Crown....................................... 19
(a) Crown Shareholder Meeting..................................... 19
(b) Listing....................................................... 19
(c) Conduct of Crown's Business................................... 19
(d) Access to Information; Confidentiality........................ 20
(e) CBV Filing.................................................... 20
(f) Proxy Statement and Registration Statement.................... 20
(g) Note d'Information............................................ 20
(h) U.K. Exchange Offer........................................... 20
(i) Amendments.................................................... 20
(j) By-Law Amendment.............................................. 21
(k) Accountants................................................... 21
9. Additional Covenants of Shareholder and Crown....................... 21
(a) No Solicitation............................................... 21
(b) Filings....................................................... 21
(c) Consents; Approvals........................................... 22
(d) Cooperation................................................... 22
(e) Disclosure.................................................... 22
(f) Shareholders Agreement........................................ 22
(g) Notification.................................................. 22
10. Conditions to Obligations of Crown.................................. 23
10.1 Conditions to Obligation of Crown to Make the Exchange Offers....... 23
(a) Warranties.................................................... 23
(b) Agreements and Covenants...................................... 23
(c) Consents Obtained............................................. 23
(d) Shareholder Approval.......................................... 23
(e) Registration Statement; Securities Laws....................... 23
(f) No Injunctions or Restraints; Illegality...................... 23
(g) Due Diligence................................................. 24
(h) Status of the Company......................................... 24
(i) Access to Information; Confidentiality........................ 24
(j) Dividends and Other Distributions............................. 24
(k) Market Matters................................................ 24
(l) Listing....................................................... 24
(m) Change of Control............................................. 24
10.2 Conditions to the Obligations of Crown to Acquire the Common Stock
Tendered Pursuant to the Exchange Offers.......................... 25
11. Conditions to Obligations of Shareholder............................ 25
(a) Warranties.................................................... 25
(b) Agreements and Covenants...................................... 25
(c) Consents Obtained............................................. 25
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
(d)Shareholder Approval................................................. 25
(e)Registration Statement; Securities Laws.............................. 25
(f)No Injunctions or Restraints; Illegality............................. 26
(g)Due Diligence........................................................ 26
(h)Access to Information; Confidentiality............................... 26
(i)Rating............................................................... 26
(j)Miscellaneous........................................................ 26
(k)Listing.............................................................. 26
(l)SLF.................................................................. 26
(m)Change of Control.................................................... 27
12. Further Assurances........................................................ 27
13. Termination............................................................... 27
14. Expenses.................................................................. 30
15. Miscellaneous............................................................. 30
(a)Entire Agreement; Assignment; No Third-Party Beneficiaries........... 30
(b)Amendments........................................................... 30
(c)Governing Law........................................................ 30
(d)Specific Performance................................................. 31
(e)Counterparts......................................................... 31
(f)Descriptive Headings................................................. 31
(g)Severability......................................................... 31
(h)Notices.............................................................. 31
(i)No Waiver............................................................ 32
(j)Nonsurvival of Warranties............................................ 32
(k)Consent to Jurisdiction and Service of Process....................... 32
16. Definitions............................................................... 32
(a)Additional Crown Information......................................... 32
(b)Additional Company Information....................................... 33
(c)Affiliate............................................................ 33
(d)BALO Announcement.................................................... 33
(e)Beneficial Owner..................................................... 33
(f)Business Day......................................................... 33
(g)CBV.................................................................. 33
(h)Closing.............................................................. 33
(i)Closing Date......................................................... 33
(j)COB.................................................................. 33
(k)Commencement Date.................................................... 33
(l)Company Disclosure Information....................................... 33
(m)Due Diligence Period................................................. 33
(n)Exchange Act......................................................... 33
(o)Filing Date.......................................................... 33
(p)London Stock Exchange................................................ 33
(q)French Market Day.................................................... 34
(r)Group................................................................ 34
(s)Market Closing Price................................................. 34
(t)Material Adverse Effect.............................................. 34
(u)Noon Buying Rate..................................................... 34
(v)NYSE................................................................. 34
</TABLE>
A-4
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
(w) Outstanding Common Stock........................................ 34
(x) Paris Stock Exchange............................................ 34
(y) Person.......................................................... 34
(z) SBF............................................................. 34
(aa) SEC............................................................. 34
(ab) Securities Act.................................................. 34
(ac) Subsidiaries.................................................... 34
(ad) SLF............................................................. 34
(ae) United States GAAP.............................................. 34
(af) Voting Power.................................................... 34
(ag) $ ............................................................ 34
</TABLE>
A-5
<PAGE>
EXCHANGE OFFER AGREEMENT
This is an EXCHANGE OFFER AGREEMENT (this "Agreement"), dated as of May 22,
1995 and amended as of November 13, 1995, between Crown Cork & Seal Company,
Inc., a corporation organized under the laws of the Commonwealth of
Pennsylvania, U.S.A. ("Crown"), and Compagnie Generale d'Industrie et de
Participations, a societe anonyme (Registre du Commerce et des Societes No. B
308 389 519) organized under the laws of the Republic of France
("Shareholder").
BACKGROUND
A. Shareholder, directly and through its Subsidiaries, is the record and
beneficial owner of 26,188,956 shares of common stock, FF10 par value per
share (the "Common Stock") of CarnaudMetalbox, a societe anonyme (Registre du
Commerce et des Societes No. B 775 721 996) organized under the laws of the
Republic of France (the "Company"). Crown and Shareholder desire that, as part
of a business combination of Crown and the Company, Crown (or a wholly-owned
Subsidiary of Crown) make a public exchange offer with a secondary cash offer
as an Offre Publique d'Echange a Titre Principal et d'Achat a Titre
Subsidiaire (jointly, the "Offer", which term shall include any subsequent
public exchange offer made by Crown (or such Subsidiary) on the same terms as
the original Offer or such modified terms as would be permitted pursuant to
this Agreement in the case of a modification of the terms of the original
Offer), for all of the Outstanding Common Stock. Shareholders of the Company
will be offered a choice in the Offer for each then outstanding share of
Common Stock between (i) 1.065 units (each, a "Unit"), each consisting of (x)
.75 shares of Crown's Common Stock, $5.00 par value per share (the "Crown
Common Stock"), and (y) .25 shares of Crown's 4.5% Cumulative Convertible
Preferred Stock, with a par value per share equal to the average of the Market
Closing Price per share of Crown Common Stock for the most recent 20 business
days on which trading of Crown Common Stock has occurred prior to the
Measurement Date (in each case, as defined below), the terms of which are set
forth in Annex 1 hereto and authorized as set forth in Annex 2 hereto (the
"Crown Preferred Stock"), and (ii) cash in an amount of FF 225 per share of
Common Stock (the "Cash Election Price"). The Crown Common Stock and the Crown
Preferred Stock making up each Unit will be separately transferrable. The
ratio of 1.065 Units for each share of Common Stock, as such ratio shall be
adjusted pursuant to the terms of this Agreement, is hereinafter referred to
as the "Exchange Ratio".
B. In addition to the Offer, Crown has undertaken, subject to the terms of
this Agreement, to launch an exchange offer in the United Kingdom (the "U.K.
Exchange Offer") which, to the extent permitted by law, shall be on terms
identical to the Offer (the Offer and the U.K. Exchange Offer are together
referred to as the "Exchange Offers").
C. As of the date hereof, Shareholder beneficially owns, directly and
through its indirectly wholly-owned Subsidiary Camebo B.V. ("Camebo"), the
number of shares of Common Stock set forth in Section A above (such shares of
Common Stock together with any other shares of Common Stock acquired after the
date hereof and prior to the termination hereof, whether arising from exercise
of options, receipt of dividends, conversion of convertible securities or
otherwise, and as adjusted by any stock split or similar event, being
collectively referred to herein as the "Shares").
D. As a condition to its willingness to make the Offer, Crown has asked that
Shareholder agree, and Shareholder has agreed, all as more fully set forth
herein and subject to the terms and conditions hereof, to (i) validly tender
its Shares, and cause its Subsidiaries to validly tender their shares, in the
Offer and elect to receive only Units and (ii) enter into a Shareholders'
Agreement with Crown with respect to Shareholder's relationship with Crown.
A-6
<PAGE>
TERMS
In consideration of the mutual covenants and agreements contained herein,
and intending to be legally bound hereby, Crown and Shareholder agree as
follows:
1. Agreement to Make Offer.
(a) Agreement to Make Offer. Subject to the satisfaction or waiver of the
conditions set forth in Section 10.1 hereof, Crown or a wholly-owned
Subsidiary of Crown shall undertake the Offer in accordance with articles
5-1-1 to 5-2-27 of the Reglement General of the Conseil des Bourses de
Valeurs and all other applicable provisions of French and United States law
and regulation for all of the Outstanding Common Stock. The Offer shall
remain open for the minimum number of days required by applicable French
law and regulation. The Offer shall provide that the acceptance by Crown of
Common Stock tendered in the Offer shall be conditioned only upon the
number of shares of Common Stock validly tendered and not withdrawn prior
to the expiration of the Offer being at least equal to a majority of the
Voting Power based on the number of shares of Outstanding Common Stock on
the date prior to the Filing Date, assuming loss of all double voting
rights with respect to the shares of Common Stock acquired by Crown or its
Subsidiaries (the "Minimum Condition").
(b) Terms; Exchange Ratio. (i) The terms of the Offer shall provide that
all of the Outstanding Common Stock may be tendered by the holder thereof
and, subject to the terms and conditions set forth in the Offer, shall
entitle such tendering holder to receive for each share of Common Stock
validly tendered and not withdrawn, at such holder's election, (x) a number
of Units equal to the Exchange Ratio as adjusted pursuant to this Section
1(b) or (y) the Cash Election Price in cash, in French francs and without
interest.
(ii) If the Average Crown Common Stock Price is greater than FF 211.27
per share (the "Initial Price") but less than FF 232.39 per share (110% of
the Initial Price), then the Exchange Ratio will be adjusted downward
accordingly. If the Average Crown Common Stock Price is greater than or
equal to FF 232.39 per share (110% of the Initial Price), the Exchange
Ratio will be adjusted as though the Average Crown Common Stock Price were
equal to FF 232.39 (110% of the Initial Price).
(iii) If the Average Crown Common Stock Price is less than the Initial
Price but greater than FF 190.14 per share (90% of the Initial Price), then
the Exchange Ratio will be adjusted upward accordingly. If the Average
Crown Common Stock Price is equal to or less than FF 190.14 per share (90%
of the Initial Price), the Exchange Ratio will be adjusted as though the
Average Crown Common Stock Price were equal to FF 190.14 (90% of the
Initial Price).
(iv) In any case where the Exchange Ratio is to be adjusted pursuant to
subparagraph (ii) or (iii) of this paragraph (b), the adjusted Exchange
Ratio will be calculated by applying the following formula (rounded to the
nearest one-thousandth): the adjusted Exchange Ratio equals the Exchange
Ratio multiplied by the fraction of which the numerator is the Initial
Price and the denominator of which is the Average Crown Common Stock Price.
(v) For purposes of this Agreement: the "Average Crown Common Stock
Price" shall be the average French Franc Crown Common Stock Price (as
defined below) for the most recent 20 business days on which trading of
Crown Common Stock has occurred prior to the Measurement Date; and the
"Measurement Date" shall be the business day before the Filing Date. The
"French Franc Crown Common Stock Price", for any particular business day,
shall be the product of (x) the Market Closing Price per share of Crown
Common Stock, in U.S. dollars, and (y) the Noon Buying Rate for such
business day (or if there was no trading in such currencies on such
business day, the most recent day on which trading of the French franc and
U.S. dollar has occurred).
(c) Conduct of the Offer; Amendment; Waiver. Subject to the applicable
securities and takeover laws and the regulations of the SEC, COB, CBV, SBF
and any other administrative, governmental or regulatory authority with
jurisdiction over the subject matter hereof, Crown expressly reserves the
right, in its sole discretion, at any time and from time to time, and
regardless of whether or not any of the conditions set forth in Sections
10.1 and 10.2 hereof shall have been satisfied or waived by Crown, to (i)
extend the period
A-7
<PAGE>
of time during which the Offer is open and thereby delay acceptance for
payment of, and the payment for, any Common Stock validly tendered and not
withdrawn, and (ii) subject to Section 1(d) below, amend the Offer
(including the Exchange Ratio and the Minimum Condition) in any respect by
surenchere or otherwise. In any case where the terms of the Offer are
modified, any such modification shall be effected such that the implied
value of the number of Units offered in exchange for one share of Common
Stock remains equal to the Cash Election Price per share of Common Stock
under terms of the Offer as so modified. Subject to the provisions of this
Agreement, if by the expiration of the Offer any or all of the conditions
to the Offer have not been satisfied, Crown reserves the right (but shall
not be obligated) to (i) terminate the Offer and return all tendered Common
Stock to tendering shareholders, (ii) extend the Offer and, subject to the
terms of the Offer (including the rights of shareholders to withdraw their
Common Stock), retain the Common Stock which has been tendered and is not
subsequently withdrawn until the termination of the Offer, as extended, or
(iii) commence another Offer. Crown shall have no obligation to pay
interest on the purchase price of tendered Common Stock.
(d) Restrictions on Amendment or Waiver of Offer. Without the prior
written consent of Shareholder, Crown will not decrease the Cash Election
Price or the Exchange Ratio as adjusted pursuant to Sections 1(b)(ii) or
(iii), decrease the number of shares of Common Stock being sought in the
Offer, change the form of consideration payable in the Offer or make any
other change in the terms or conditions of the Offer which is adverse to
the holders of Common Stock (including, without limitation, any change that
would cause Shareholder or Camebo to recognize taxable gain or loss in the
Offer or in any subsequent conversion of the Crown Preferred Stock into
Crown Common Stock); provided, that an increase in the value of the
consideration offered in the Offer shall not be deemed to constitute an
adverse change solely because it increases the gain or diminishes the loss
that holders of Common Stock would otherwise be required to recognize for
tax purposes irrespective of such increase in consideration. Except as
provided below with respect to the Minimum Condition, the parties agree
that a waiver by Crown of any condition to the Offer in whole or in part at
any time and from time to time in its discretion shall not be deemed to be
adverse to any holder of Common Stock. Notwithstanding anything in
paragraph (c) above or this paragraph (d) to the contrary, Crown shall not
reduce or waive the Minimum Condition.
(e) Fractional Shares. No fraction of a share of Crown Common Stock or
Crown Preferred Stock will be issued in the Offer, but, in lieu thereof,
each holder of Common Stock who would otherwise be entitled to a fraction
of a share of Crown Common Stock or Crown Preferred Stock (after
aggregating all fractional shares of Crown Common Stock or Crown Preferred
Stock to be received by the holder), as the case may be, will be entitled
to receive from Crown an amount of cash in French francs (rounded to the
nearest whole French franc) equal to the product of (i) such fraction and
(ii) the Average Crown Common Stock Price.
(f) Adjustments to Exchange Ratio, etc. The Exchange Ratio, the
components of a Unit, the Cash Election Price and the other terms of the
Offer will be adjusted to reflect the effect of any stock split, reverse
stock split, stock dividend (including any dividend or distribution to
shareholders of securities convertible into Crown Common Stock or Crown
Preferred Stock or Common Stock), recapitalization, or other like change
with respect to Crown Common Stock or Crown Preferred Stock or Common Stock
occurring after the date of this Agreement and prior to the Filing Date.
(g) The U.K. Exchange Offer. Crown or a wholly-owned Subsidiary of Crown
shall launch the U.K. Exchange Offer on, or as promptly as practicable
after, the Commencement Date (unless Crown shall have determined in its
good faith judgment that such U.K. Exchange Offer is not necessary after
consultation with Shareholder). The U.K. Exchange Offer shall be made, to
the extent legally permissible, on the same terms as the Offer, provided
that the Cash Election Price in the U.K. Exchange Offer shall be payable in
French francs or, at Crown's option, in pounds sterling (translated from
French francs at the exchange rate in effect on the Closing Date (as
published in the Dow Jones Telerate Inc. currency cross-rates published in
the Wall Street Journal (U.S. edition)). Crown shall cause the U.K.
Exchange Offer to be carried out in accordance with all applicable
requirements of United Kingdom law and regulation. In the event that it is
determined that a U.K. Exchange Offer is not required, all references to
the U.K. Exchange Offer in this Agreement shall be null and void.
A-8
<PAGE>
(h) Company Options. Subject to applicable law and regulation, and
subject to the terms of the Company's employee stock options, Crown shall
make an offer to each holder of the Company's employee stock options
outstanding on the date of this Agreement, and each holder of the New
Options and the 1994 Options to the extent issued in accordance with this
Agreement (the outstanding options, the New Options and the 1994 Options
are collectively referred to as the "Outstanding Options") in respect of
the Common Stock for which such Outstanding Options have not been exercised
as of the Closing Date, to settle such holder's options, at the sole
discretion of Crown, (i) for cash at a price per share of Common Stock
equal to the Cash Election Price to the extent such options are "in the
money", provided that Crown shall indemnify the holder against all tax
claims and liabilities resulting from such settlement, (ii) by issuing
options on Crown Common Stock that are exercisable at such price as Crown
determines not in excess of the then current market price for Crown Common
Stock that preserve, to the fullest extent practical, the provisions of
such holder's options as to the duration of such options, the conditions
for vesting of such options and the conditions for exercise of such options
or (iii) by offering a choice to the holder of (i) or (ii), or a
combination of (i) and (ii) in a proportion to be agreed between Crown and
the option holder, provided that in the cases described in this clause
(iii) Crown shall have no obligation to indemnify a holder who elects cash
from any tax claims and liabilities resulting from such settlement. In
addition, subject to applicable law and regulation, to the extent any
employee or former employee of the Company is prohibited under applicable
law or regulation from transferring Common Stock received upon exercise of
options, Crown shall, on the date such employee or former employee is
permitted to transfer such Common Stock, offer such employee or former
employee the right to tender such Common Stock to Crown for Units (in an
amount determined by applying the Exchange Ratio as adjusted on the
Measurement Date, and provided Crown Preferred Stock is then outstanding)
or cash in an amount equal to the Cash Election Price, in each case on the
same basis offered in the Offer. Subject to compliance with the foregoing,
nothing herein shall limit Crown with respect to restricting or terminating
such options as agreed between Crown and the holders of such options.
2. Agreement to Tender.
(a) Tender. Subject to the satisfaction or waiver on or prior to the
Filing Date of the conditions set forth in Section 11 hereof, Shareholder
will validly tender, and will cause Camebo to validly tender, and not
withdraw all Shares beneficially owned by Shareholder and Camebo (and any
other Subsidiary of Shareholder) pursuant to the Offer on or before the
second French Market Day after the Commencement Date and will irrevocably
elect, and cause Camebo (and any other Subsidiary of Shareholder) to
irrevocably elect (pursuant to the procedures specified in the Offer and
described in Section 1(b) hereof), to receive only Units in consideration
for such Shares. Notwithstanding the foregoing, Shareholder agrees that, at
the direction of Crown, it will elect pursuant to the Offer to receive the
Cash Election Price in consideration for one Share validly tendered and not
withdrawn and to receive Units in consideration for the remainder of the
Shares validly tendered and not withdrawn.
(b) Third-Party Bids. Notwithstanding anything to the contrary contained
herein, Shareholder shall at all times prior to expiration of the Offer
retain the right to withdraw its shares previously tendered into the Offer
and to tender its Shares, and to cause Camebo to tender their Shares, into
a tender offer or exchange offer launched by a third party for all of the
outstanding Common Stock (a "Third Party Bid") provided that (i) the Third
Party Bid has a greater value than the value of the Offer and Crown has not
increased the Offer, as permitted under Sections 1(c) and 1(d) above, to
match the Third Party Bid; and (ii) Crown is unable to demonstrate to
Shareholder that, immediately prior to the scheduled expiration of the
Offer, the Minimum Condition will be satisfied (assuming the Shares are
tendered in the Offer).
3. Voting. At any annual or special, ordinary or extraordinary meeting of
the shareholders of the Company however called, Shareholder shall vote the
Shares against (i) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or any of
its Subsidiaries; (ii) a sale or transfer of a material amount of assets of
the Company or any of its Subsidiaries or a reorganization, recapitalization
or liquidation of the Company or any of its Subsidiaries; (iii) any change in
a majority of the
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directors or the Supervisory Board of the Company, except as otherwise agreed
to in writing by Crown; (iv) any material change in the present capitalization
of the Company (other than (x) relating to the Faba transaction, (y) the
issuance of New Options and the 1994 Options in accordance with this Agreement
and (z) the amendment to the statuts, in each case described in the BALO
Announcement) or any material change in the dividend policy of the Company;
(v) any action which would cause any of Shareholder's representations and
warranties to become untrue in any material respect or any condition to the
obligations of Shareholder or Crown to remain unsatisfied; and (vi) any other
material change in the Company's corporate structure or business, in each case
(i) to (vi) to the extent such action or agreement would impede, interfere
with, delay, postpone or attempt to discourage the Offer or the consummation
of the transactions contemplated by this Agreement.
4. Expiration. This Agreement, Crown's obligation to make the Exchange
Offers pursuant hereto, and Shareholder's obligation to tender its Shares and
to cause Camebo (and any other Subsidiary of Shareholder) to tender its Shares
pursuant to the Offer, shall terminate on the Expiration Date. As used herein,
the term "Expiration Date" means the first to occur of (i) the first date on
which the Offer has been successfully consummated (and the Closing Date with
respect thereto shall have occurred) or has expired without being successfully
consummated, and (ii) termination in accordance with Section 13.
5. Warranties of Crown. Crown hereby warrants to Shareholder as follows:
(a) Organization and Qualification. Crown is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority to carry on its business as it is now being conducted. Crown is
duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned
or leased or the nature of its activities make such qualification
necessary, except where the failure to be so qualified would not,
individually or in the aggregate, result in a Material Adverse Effect on
Crown.
(b) Capitalization. As of the date of this Agreement, the authorized
capital stock of Crown consists of 120,000,000 shares of Crown Common
Stock. As of the date of this Agreement, (i) 90,220,924 shares of Crown
Common Stock were issued and outstanding, all of which are duly authorized,
validly issued, fully paid, and nonassessable, (ii) 28,269,890 shares of
Crown Common Stock were held in the treasury of Crown or owned by
Subsidiaries of Crown, and (iii) 2,119,900 options to acquire shares of
Crown Common Stock have been granted and are outstanding under Crown's
various employee stock option plans. Except as set forth in this paragraph
(b), as of the date hereof, there are no subscriptions, options, warrants,
or other rights, convertible securities, agreements, arrangements, or
commitments of any character relating to the issued or unissued capital
stock of Crown to which Crown or any of its material Subsidiaries is a
party, or by which any of their properties are bound or affected, or
obligating Crown or any of its Subsidiaries to issue or sell any shares of
capital stock of, or other equity interests in, Crown.
(c) SEC Filings. Crown has filed all forms, reports, and documents
required to be filed with the SEC since December 31, 1993, and has made
available to Shareholder (i) its Annual Reports on Form 10-K for the fiscal
years ended December 31, 1993 and 1994, (ii) all proxy statements relating
to meetings of Crown's shareholders (whether annual or special) held since
December 31, 1993, (iii) all quarterly reports on Form 10-Q and current
reports on Form 8-K filed by Crown with the SEC since December 31, 1993,
(iv) all registration statements filed by Crown with the SEC since December
31, 1993 (other than registration statements on Form S-8 relating to
employee benefit plans of Crown and Form S-3 Registration Statements
relating solely to the issuance of non-convertible debt securities), and
(v) all amendments and supplements to these reports and registration
statements filed by Crown with the SEC. Crown will file with the SEC and
make available to the Company all forms, reports, and documents required to
be filed with the SEC between the date of this Agreement and the Expiration
Date. The forms, reports, and documents referred to in this paragraph are
referred to collectively as the "Crown SEC Reports". The Crown SEC Reports
(including, without limitation, any financial statements or schedules
included therein) (i) were and will be prepared in compliance, in all
material respects, with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not and will not at the time
of filing (or, if amended, supplemented, or superseded by a filing prior to
the date of this Agreement, on the date of that filing) contain
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any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. As of the date hereof, none of Crown's Subsidiaries is required
to file any forms, reports, or other documents with the SEC.
(d) Financial Statements. Each of the consolidated financial statements
(including, in each case, any related notes and schedules thereto)
contained in the Crown SEC Reports was or will be prepared in accordance
with United States GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto), and
each of them does or will present fairly in all material respects the
consolidated financial position of Crown and its Subsidiaries at their
respective dates and the consolidated results of their operations and cash
flows for the periods indicated, except that the unaudited interim
financial statements included in any Quarterly Reports on Form 10-Q were or
are subject to normal and recurring year-end adjustments that were not or
are not expected to be material in amount.
(e) Absence of Certain Changes or Events. Except as disclosed in the
Crown SEC Reports filed with the SEC prior to the date of this Agreement,
disclosed in the Additional Crown Information or as contemplated by this
Agreement, since December 31, 1994, (i) there has been no Material Adverse
Effect on Crown, (ii) the businesses of Crown and each of its Subsidiaries
have been conducted only in the ordinary course, consistent with past
practice; (iii) neither Crown nor any of its Subsidiaries has incurred any
material liabilities (direct, contingent or otherwise) or engaged in any
material transaction or entered into any material agreement outside the
ordinary course of business; (iv) Crown and its Subsidiaries have not
increased in any material respect the compensation of any officer or
granted any general salary or benefits increase to their employees other
than in the ordinary course of business; and (v) there has been no
declaration, setting aside or payment of any dividend or other distribution
with respect to the capital stock of Crown.
(f) Absence of Litigation. There are no civil, criminal, or
administrative claims, actions, suits, proceedings, or investigations
pending or, to the knowledge of Crown, threatened against Crown or any of
its Subsidiaries, or involving any properties or rights of Crown or any of
its Subsidiaries, before any court, arbitrator, or administrative,
governmental, or regulatory authority, domestic or foreign, that,
individually or in the aggregate, have had or are likely to have a Material
Adverse Effect on Crown. There are no judgments, decrees, injunctions,
rules, or orders of any governmental entity or arbitrator outstanding
against Crown or any of its Subsidiaries that have had or are likely to
have a Material Adverse Effect on Crown.
(g) Employee Benefit Plans.
(i) The obligations and liabilities of Crown and its Subsidiaries under
retirement, pension, profit sharing, savings, deferred compensation,
supplemental retirement, bonus, incentive, stock purchase, stock ownership,
stock option, severance, health, life insurance, disability, fringe benefit
and other material employee benefit plans, programs, or arrangements, and
any current or former executive employment, compensation, severance,
consulting, noncompetition, or indemnification agreements, whether written
or unwritten, funded or unfunded (x) maintained, sponsored, administered or
contributed to by Crown or any of its Subsidiaries, or (y) with respect to
which Crown or any of its Subsidiaries has any liability (together, the
"Crown Employee Plans") have been properly accrued and reflected in the
financial statements of Crown and its consolidated Subsidiaries for the
fiscal year ended December 31, 1994 (the "1994 Financial Statements") in
accordance with United States GAAP in all material respects.
(ii) Except for the liabilities accrued and reflected in the 1994
Financial Statements, there are no material unfunded liabilities existing
with respect to any Crown Employee Plan.
(iii) All of the Crown Employee Plans have been operated and administered
in material compliance with their terms and are in material compliance with
the laws and governmental rules and regulations applicable to them
(including all applicable requirements for notification to participants and
governmental or regulatory authorities), and Crown and each of its
Subsidiaries have performed all material obligations required to be
performed by them under, are not in any material respect in default under
or in violation of, any of the Crown Employee Plans.
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(iv) All contributions to, and payments from, any Crown Employee Plan
required pursuant to applicable laws, rules and regulations, the terms of
the Crown Employee Plan, or any collective bargaining agreement have been
made on or before their due dates. All such contributions to, and all
payments from, the Crown Employee Plans have been properly accrued in
accordance with United States GAAP.
(v) Neither Crown nor any of its Subsidiaries has taken any action with
respect to any Crown Employee Plan that will increase materially the
expense of maintaining such Crown Employee Plan above the level of expense
reflected in the 1994 Financial Statements.
(vi) Except for claims for benefits in the normal operation of the Crown
Employee Plans, there is no litigation, proceeding, investigation, audit,
assessment, complaint or proceeding of any kind in any court or
governmental agency with respect to any Crown Employee Plan which is
reasonably likely to have a Material Adverse Effect on Crown and its
Subsidiaries, taken as a whole.
(vii) Neither Crown nor any of its Subsidiaries has taken any action with
respect to any Crown Employee Plan (including but not limited to the
recognition of the transaction contemplated by this Agreement as a change
of control) that will cause a material discretionary acceleration or
increase in the vesting, exercisability, or benefits provided by any such
Crown Employee Plan.
(h) Articles of Incorporation and By-laws. Crown has heretofore delivered
to Shareholder a complete and correct copy of its Articles of Incorporation
and of its By-laws, each as amended to the date hereof. Crown is not in
violation of any of the provisions of its Articles of Incorporation or By-
laws, and its Articles of Incorporation and By-laws as so delivered have
not been amended, modified, or rescinded and remain in full force and
effect; provided that Crown's Articles of Incorporation will have been
amended as set forth on Annex 1 and Annex 2 hereto and to include an "opt
out" from the provisions of Chapter 25, Subchapter E of the Pennsylvania
Business Corporation Law in a form to be mutually agreed between the
parties to this Agreement (the "New Articles") prior to the successful
consummation of the Offer and Crown's By-laws will be amended on and as of
the Closing Date as set forth in Annex 3 hereto (the "By-law Amendment"),
and except as contemplated pursuant to Section 8(c) hereof.
(i) Taxes and Social Obligations. Crown and each of its material
Subsidiaries (i) has timely and correctly filed all material returns and
reports relating to Taxes (as defined below) required to be filed by it in
the manner required by the relevant taxing authorities (collectively,
"Returns") and (ii) has timely paid all Taxes shown to be due on such
Returns and all material Taxes for which no return was required to be
filed. The financial statements included in the Crown SEC Reports and the
1994 Financial Statements, to the extent required by United States GAAP,
each reflect an adequate reserve for all Taxes payable by Crown and its
Subsidiaries for all taxable periods and portions thereof through the date
of such financial statements. No material deficiencies for any Taxes have
been proposed, asserted or assessed against Crown or any of its
Subsidiaries and no requests for waivers of the time to assess such Taxes
are pending. "Taxes" shall include, but not be limited to, all income,
property, sales, excise, social security and other taxes, tariffs or
governmental charges of any nature whatsoever.
Neither Crown nor any of its material Subsidiaries (i) is, as of the date
of this Agreement, the subject of any inquiry, investigation or audit
relating to Taxes or (ii) has received notice of any proposed inquiry,
investigation or audit relating to Taxes which is reasonably likely to have
a Material Adverse Effect on Crown.
(j) Authority Relative to this Agreement. Crown has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
by Crown of this Agreement and the consummation by Crown of the
transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of Crown (including the approval
by the Board of Directors of Crown of the transactions contemplated by this
Agreement and all subsequent conversions of the Preferred Stock such that
Shareholder shall not be subject to Subchapter F of Chapter 25 of the
Pennsylvania Business Corporation Law) subject to obtaining the requisite
shareholder approvals and, except for such shareholder approvals, no other
corporate proceedings on the part of Crown are necessary to authorize this
Agreement or to consummate the transactions so
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contemplated by this Agreement. This Agreement has been duly and validly
executed and delivered by Crown and, assuming this Agreement constitutes a
valid and binding obligation of Shareholder, this Agreement constitutes a
valid and binding agreement of Crown enforceable against Crown in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditor's rights
and to general equity principles.
(k) Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by Crown nor the performance by Crown of its
obligations hereunder will (i) conflict with or result in any breach of any
provision of the Articles of Incorporation or By-laws of Crown, except that
the transactions contemplated hereby may not be consummated without receipt
of the Crown Shareholder Approvals (as defined below); (ii) require any
consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, except (v) such
articles of amendment (or statement under Section 1522 of the Pennsylvania
Business Corporation Law) as may be required to be filed with the Secretary
of State of the Commonwealth of Pennsylvania in connection with the
adoption of the New Articles at the Crown Shareholder Meeting (as defined
below), (w) in connection with the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), EC Council Regulation 4064/89 and
such other filings as may be required by the antitrust or competition laws,
rules or regulations of the United States, France, the European Union and
any other applicable jurisdiction, (x) as may be required to be filed with
the Direction du Tresor in connection with the approval of Crown's
acquisition of the Shares or the Common Stock or as may be required to be
filed by the investment laws, rules or regulations of any other applicable
jurisdiction, (y) such filings and approvals as may be required under the
"blue sky", takeover, company or securities and stock exchange laws, rules
or regulations of the United States, France (including the regulations of
the COB, CBV and SBF), the United Kingdom, the European Union, and any
other applicable jurisdiction, or (z) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, would not (A) prevent or delay consummation of the
transactions contemplated by this Agreement, (B) otherwise prevent or delay
Crown from performing its obligations under this Agreement, or (C)
individually or in the aggregate, have a Material Adverse Effect on Crown;
(iii) except as disclosed in writing by Crown to Shareholder prior to the
execution of this Agreement, result in a default (or give rise to any right
of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise, or other instrument or
obligation to which Crown or any of its Subsidiaries is a party or by which
any of its Subsidiaries or any of their respective assets may be bound,
except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained
or which, in the aggregate, would not result in a Material Adverse Effect
on Crown or materially impair or delay Crown's ability to perform its
obligations hereunder; or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Crown, any of its Subsidiaries or
any of their respective assets, except for violations which would not
result in a Material Adverse Effect on Crown or materially impair or delay
Crown's ability to perform its obligations hereunder.
(l) Financial Advisors. Except for customary brokerage fees which Crown
elects to pay pursuant to the Offer, no investment banker, broker, finder,
or financial advisor other than CS First Boston Inc., Societe Generale or
their respective affiliates is entitled to any brokerage, finder's, or
other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Crown and,
except as provided in Section 14(c)(2), such fees or commissions of CS
First Boston Inc., Societe Generale and their respective affiliates shall
be paid by Crown.
(m) Delivery of Crown Common Stock and Crown Preferred Stock. The issue
and delivery to Shareholder of shares of Crown Common Stock and Crown
Preferred Stock in connection with the transactions contemplated hereby
have been duly authorized by all requisite corporate action of Crown,
subject to the receipt by Crown of the requisite approvals of its
shareholders. The shares of Crown Common Stock and Crown Preferred Stock,
as and when issued and delivered to Shareholder pursuant to this Agreement,
and upon receipt by Crown of the Common Stock tendered and exchanged
therefor, will be validly issued and outstanding, fully paid and non-
assessable, and the holders of Common Stock who tender
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for Units will receive good and marketable title to such shares of Crown
Common Stock and Crown Preferred Stock, free and clear of all security
interests, liens, claims, pledges, agreements, limitations on voting
rights, charges, preemptive rights or other encumbrances of any nature
whatsoever, except such as may have been created by such tendering holder.
(n) Registration Statement; Proxy Statement. The information to be
supplied by or on behalf of Crown for inclusion in the Registration
Statement will not, at the time the Registration Statement is declared
effective, at the Filing Date, the Commencement Date or the Closing Date,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. The information to be supplied by or on behalf
of Crown for inclusion in the Proxy Statement will not, on the date the
Proxy Statement (or any amendment thereof or supplement thereto) is first
mailed to shareholders, at the time of the Crown Shareholder Meeting, at
the Filing Date, the Commencement Date and the Closing Date, contain any
statement that, in light of the circumstances under which it is made, is
false or misleading with respect to any material fact, omits to state any
material fact necessary in order to make the statements made therein not
false or misleading, or omits to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Crown Shareholder Meeting that has become
false or misleading. If any event relating to Crown or any of its
affiliates, officers, or directors is discovered by Crown that should be
set forth in an amendment to the Registration Statement or a supplement to
the Proxy Statement, Crown will promptly inform Shareholder.
(o) Note d'Information, U.K. Filing; etc. The information supplied by or
on behalf of Crown for inclusion in the Note d'Information to be filed in
connection with the Exchange Offers (the "Note d'Information"), the CBV
Filing, the U.K. Filing and all other filings made in connection with the
Exchange Offers will not, at the time such filings receive the regulatory
approval or clearance required by applicable law, at the Filing Date, the
Commencement Date or the Closing Date, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
6. Warranties of Shareholder. Shareholder hereby warrants to Crown as
follows:
(a) Ownership of Shares. The Shares are owned, directly and through
Camebo, of record and beneficially by Shareholder, free and clear of all
security interests, liens, claims, pledges, agreements, limitations on
voting rights, charges, or other encumbrances of any nature whatsoever;
provided, however, that 2,464,000 Shares held of record through Camebo are
pledged (the "Pledge") to secure outstanding indebtedness of Shareholder's
Subsidiaries; provided, further, that the Pledge will not exist on the
Closing Date. The Shares constitute all of the shares of Common Stock owned
of record or beneficially by Shareholder and its affiliates. The transfer
of the Shares to Crown against payment therefor on the Closing Date
pursuant to the Offer as provided in this Agreement, will pass good and
marketable title to such Shares, free and clear of all security interests,
liens, claims, pledges, agreements, limitations on voting rights, charges,
or other encumbrances of any nature whatsoever other than those created by
Crown. Shareholder has sole voting power and sole power of disposition, in
each case directly or through its Subsidiaries, with respect to all of the
Shares, and there are no restrictions on Shareholder's rights of
disposition pertaining thereto, other than in the shareholders' agreement,
dated April 1, 1993, with Parfinance, a copy of which has been provided to
Crown prior to the date of this Agreement. The transactions contemplated by
this Agreement will not affect the voting rights of any of the Shares;
provided, however, that Crown shall not be entitled to double voting rights
with respect to the Shares. Shareholder is not a party to or otherwise
bound by any voting agreement or restriction which affects the voting
rights of the Shares. Shareholder has entered into an amendment agreement
with Parfinance amending their agreement of April 1, 1993, whereunder
Shareholder has obtained from Parfinance a waiver from any right of first
refusal with respect to, or other right to purchase, the Shares which may
arise as a result of the execution of this Agreement or the consummation of
the transactions contemplated hereby, and has agreed with Parfinance to a
termination of their shareholders' agreement dated April 1, 1993, upon the
successful completion of the Offer as
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indicated by the publication of the avis of the SBF. A copy of such
amendment agreement has been provided to Crown prior to the date of this
Agreement.
(b) Authority Relative to this Agreement. Shareholder is a societe
anonyme duly organized, validly existing and in good standing under the
laws of the Republic of France and has the requisite corporate power and
authority to carry on its business as it is now being conducted.
Shareholder has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery by Shareholder of this Agreement and the
consummation by Shareholder of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the
part of Shareholder and no other corporate proceedings on the part of
Shareholder are necessary to authorize this Agreement or to consummate the
transactions so contemplated by this Agreement. This Agreement has been
duly and validly executed and delivered by Shareholder and, assuming this
Agreement constitutes a valid and binding obligation of Crown, this
Agreement constitutes a valid and binding agreement of Shareholder
enforceable against Shareholder in accordance with its terms, subject, as
to enforcement, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditor's rights and to general equity
principles.
(c) Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by Shareholder nor the performance by
Shareholder of its obligations hereunder will (i) conflict with or result
in any breach of any provision of the statuts or similar organizational
documents of Shareholder, (ii) require any consent, approval, authorization
or permit of, or filing with or notification to, any governmental or
regulatory authority, except (w) in connection with the HSR Act, EC Council
Regulation 4064/89 and such other filings as may be required by the
antitrust or competition laws, rules or regulations of the United States,
France, the European Union and any other applicable jurisdiction, (x) as
may be required to be filed by the investment laws, rules or regulations of
any applicable jurisdiction, (y) such filings and approvals as may be
required under the "blue sky", takeover, company or securities and stock
exchange laws, rules or regulations of the United States, France (including
the regulations of the COB, CBV and SBF), the United Kingdom, the European
Union, and any other applicable jurisdiction, or (z) where the failure to
obtain such consent, approval, authorization or permit, or to make such
filing or notification, would not (A) prevent or delay consummation of the
transactions contemplated by this Agreement, (B) otherwise prevent or delay
Shareholder from performing its obligations under this Agreement, and (C)
individually or in the aggregate, have a Material Adverse Effect on
Shareholder; (iii) except as disclosed in writing by Shareholder to Crown
prior to the execution of this Agreement result in a default (or give rise
to any right of termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise, or other instrument
or obligation to which Shareholder or any of its Subsidiaries is a party or
by which any of its Subsidiaries or any of their respective assets may be
bound, except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained
or which, in the aggregate, would not result in a Material Adverse Effect
on Shareholder or materially impair or delay Shareholder's ability to
perform its obligations hereunder; (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Shareholder,
any of its Subsidiaries or any of their respective assets, except for
violations which would not result in a Material Adverse Effect on
Shareholder or the Company or materially impair or delay Shareholder's
ability to perform its obligations hereunder or (v) result in Shareholder
being required to commence a tender offer for any shares of Common Stock.
(d) Ownership of Crown Common Stock. None of Shareholder, its controlled
affiliates or Subsidiaries beneficially owns any shares of Crown Common
Stock (other than any beneficial ownership thereof that results from the
execution and performance of this Agreement).
(e) Investment Intent. Shareholder is acquiring the Crown Common Stock,
Crown Preferred Stock (and the underlying Crown Common Stock into which
such Crown Preferred Stock may be converted) for investment, and not with a
view to any distribution that would violate the Securities Act or any
applicable state securities law. Shareholder is not a "U.S. person" as such
term is used in Regulation S under the Securities Act.
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(f) Financial Advisors. No investment banker, broker, finder, or
financial advisor other than Lazard Freres & Co. LLC and Lazard Freres &
Cie. is entitled to any brokerage, finder's, or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Shareholder. Except as provided in
Sections 14(a) and 14(c)(i), such fees or commissions of Lazard Freres &
Co. LLC and Lazard Freres & Cie. shall be paid by Shareholder.
(g) Note d'Information, U.K. Filing; etc. The information to be supplied
by or on behalf of Shareholder for inclusion in the Note d'Information, the
CBV Filing, the U.K. Filing and all other filings to be made in connection
with the Exchange Offers will not, at the time such filings receive the
regulatory approval or clearance required by applicable law, at the Filing
Date, the Commencement Date or the Closing Date, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(h) Registration Statement; Proxy Statement. The information to be
supplied by or on behalf of Shareholder for inclusion in the Registration
Statement will not, at the time the Registration Statement is declared
effective, at the Filing Date, the Commencement Date or the Closing Date,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. The information to be supplied by or on behalf
of Shareholder for inclusion in the Proxy Statement will not, on the date
the Proxy Statement (or any amendment thereof or supplement thereto) is
first mailed to shareholders, at the time of the Crown Shareholder Meeting
or at the Filing Date, the Commencement Date or the Closing Date, contain
any statement that, in light of the circumstances under which it is made,
is false or misleading with respect to any material fact, omits to state
any material fact necessary in order to make the statements made therein
not false or misleading, or omits to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Crown Shareholder Meeting that has become
false or misleading. If any event relating to the Company or any of its
affiliates, officers, or directors is discovered by Shareholder that should
be set forth in an amendment to the Registration Statement or a supplement
to the Proxy Statement, Shareholder will promptly inform Crown.
(i) Organizational Documents. Shareholder has heretofore delivered to
Crown a complete and correct copy of the statuts, and other organizational
documents of the Company, each as amended to the date of this Agreement.
(j) Agreements. There are no material agreements between Shareholder, on
the one hand, and the Company and its Subsidiaries, on the other hand,
other than the letter agreement from Shareholder to the Company, dated May
20, 1995, relating to the payment of fees for services provided to the
Company by Shareholder, a copy of which has been provided to Crown prior to
the date of this Agreement.
7. Additional Covenants of Shareholder. Except in accordance with the terms
of this Agreement, Shareholder hereby covenants and agrees as follows:
(a) Restriction on Transfer, Proxies and Non-Interference. While this
Agreement is in effect, and except as permitted hereby, Shareholder will
not (i) sell, transfer, pledge, encumber, assign or otherwise dispose of,
or enter into any contract, option or other arrangement or understanding
with respect to the sale, transfer, pledge, encumbrance, assignment or
other disposition of any of the Shares or (ii) grant any proxies, deposit
any Shares into a voting trust or enter into a voting agreement with
respect to any Shares.
(b) Additional Shares. While this Agreement is in effect, Shareholder
will promptly notify Crown of the number of any new shares of Common Stock
or any other equity interests in the Company acquired by Shareholder, if
any, after the date hereof. Any such shares of Common Stock shall become
Shares for purposes of this Agreement.
(c) Dividends or Distributions. In the event that Shareholder receives
any dividend or other distribution in respect of the Shares after the date
hereof (other than the Company's regular dividend of
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FF 4.40 per share proposed to be paid after approval thereof at the
Company's annual general meeting of shareholders to be held on June 2,
1995) and the Shares are subsequently acquired by Crown in the Offer,
Shareholder agrees that any such dividend or other distribution shall be
deemed to be included in the Shares and shall be transferred or paid over
to Crown at the time of Closing or, in the event such dividend or
distribution is received by Shareholder after such Closing, immediately
upon receipt by Shareholder.
(d) Proxy; Registration Statement; Note d'Information; Etc. Shareholder
shall provide, and shall use its reasonable best efforts, to the extent
practicable and to the extent permitted under French law and regulation, to
cause the Company to provide, to Crown all information relating to
Shareholder and the Company, respectively, required in order for Crown to
prepare the Proxy Statement, the Registration Statement, the Note
d'Information, the CBV Filing, the U.K. Filing and all other filings
required to be made in connection with the Exchange Offers and the laws and
regulations applicable thereto, including the requirements of any stock
exchange or similar self-regulatory body. If, at any time prior to the date
of closing of each of the Exchange Offers or such later date as shall be
necessary to consummate the transactions contemplated hereby, Shareholder
shall become aware that any event has occurred as a result of which the
Registration Statement (including the Prospectus contained therein), the
Proxy Statement, the Note d'Information, the CBV Filing, the U.K. Filing or
any other filing required in connection with the Exchange Offers, in each
case as then amended or supplemented, would include an untrue statement of
a material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, in each case relating to the information
provided by or on behalf of Shareholder or the Company, or, if for any
other reason it shall be necessary during such period to amend or
supplement any such document relating to Shareholder or the Company in
order to comply with applicable law or regulation, Shareholder shall
notify, and shall use its reasonable best efforts, to the extent
practicable and to the extent permitted under French law and regulation, to
cause the Company to notify Crown and shall provide or cause to be provided
to Crown the information necessary to prepare such amendments or
supplements which will correct such statement or omission or effect such
compliance. Shareholder shall cause its designees for the Board of Crown to
deliver consents to be named in the Registration Statement and the Proxy
Statement.
(e) Conduct of Company's Business. Shareholder shall use its reasonable
best efforts, to the extent practicable and to the extent permitted under
French law and regulation, to cause the Company and its Subsidiaries to
conduct their respective businesses in the ordinary course, consistent with
past practice; provided, however, that this paragraph shall not in any way
require Shareholder to restrict or prohibit the Company from taking any
action (x) which will not result in a Material Adverse Effect on the
Company or (y) contemplated by this Agreement or the Shareholders
Agreement. Between the date of this Agreement and the Closing Date,
Shareholder shall use its reasonable best efforts, to the extent
practicable and to the extent permitted under French law and regulation
(and except as Crown shall agree in writing), to cause the Company not to:
(i) except as described in the BALO Announcement, amend or otherwise change
the statuts (or similar organizational documents) of the Company or any of
its material Subsidiaries; (ii) sell, encumber, pledge, or otherwise
dispose of any material operating assets of the Company or any of its
Subsidiaries, except for sales of assets in the ordinary course of business
consistent with past practices; (iii) issue, sell, pledge, dispose of, or
encumber, or authorize the issuance, sale, pledge, disposition, or
encumbrance of, any shares of capital stock of, any options (including
employee stock options), warrants, convertible securities, or other rights
to acquire any shares of capital stock of, or any other ownership interest
in, the Company or any of its Subsidiaries, or otherwise alter its capital
structure, except for the issuance of shares of Common Stock upon exercise
of options that were authorized to be granted under the Company's stock
option plans prior to the date of this Agreement and are outstanding on the
date of this Agreement, the issuance of shares of Common Stock in
connection with the Faba transaction described in the BALO Announcement and
the issuance of additional options referred to in the BALO Announcement;
(iv) amend the terms of, split, combine, or reclassify any of its capital
stock or issue, or authorize or propose the issuance of, any other
securities in respect of, in lieu of, or in substitution for shares of its
capital stock, except the issuance of shares of Common Stock in connection
with the Faba transaction described in the BALO Announcement and the
issuance of additional shares of Common Stock resulting from the exercise
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of the options referred to in the BALO Announcement; (v) acquire (by
merger, purchase of stock or assets, joint venture, or otherwise) any
corporation, partnership, or other business organization or division
thereof; (vi) materially change its method of accounting as in effect at
December 31, 1994 except as may be required by International Accounting
Standards and as is concurred to by the Company's independent auditors,
other than to convert the Company's accounts to United States GAAP or to
modify the Company's accounts to comply with modifications to International
Accounting Standards; and (vii) change the annual accounting period.
(f) Access to Information Confidentiality. Prior to the Expiration Date,
Shareholder shall use its reasonable best efforts, to the extent
practicable and to the extent permitted under French law and regulation, to
cause the Company and its Subsidiaries to, (i) give the officers,
employees, accountants, counsel, and other representatives of Crown
reasonable access to the properties, books, contracts, and records of the
Company and its Subsidiaries, (ii) furnish promptly to Crown all
information concerning the business, properties, and personnel of the
Company and its Subsidiaries as Crown may reasonably request, and
(iii) make available to Crown appropriate individuals for the discussion of
the business, properties, and personnel of the Company and its Subsidiaries
as Crown may reasonably request. Information obtained by Crown pursuant to
this paragraph shall be subject to the provisions of the letter agreement
dated May 18, 1995 addressed to Crown by the Company (the "Company
Confidentiality Agreement").
(g) Tax Position; Restructuring. Shareholder shall use its reasonable
best efforts, to the extent practicable and to the extent permitted under
French law and regulation, to cause the Company and its Subsidiaries to (i)
provide such information to Crown as Crown shall request relating to the
tax position of the Company and its Subsidiaries and (ii) engage in such
internal corporate restructuring transactions immediately prior to the
Closing, including but not limited to mergers or liquidations of
Subsidiaries and distributions or sales of the stock of Subsidiaries, as
Crown shall identify in order to minimize Taxes payable by Crown and its
affiliates (including the Company and its Subsidiaries) following
completion of the Offer, provided that such transactions shall not have an
adverse effect on the Company or Shareholder. Shareholder shall use its
reasonable best efforts, to the extent practicable and to the extent
permitted under French law and regulation, to cause the Company and its
Subsidiaries to cooperate with Crown in connection with the restructuring
or refinancing of, or the obtaining of required waivers or consents in
connection with, any indebtedness or material contracts or agreements of
the Company and its Subsidiaries which may be in default or which may
become in default as a result of the consummation of the transactions
contemplated hereby.
(h) Accountants. Shareholder shall use its reasonable best efforts, to
the extent practicable and to the extent permitted under French law and
regulation, to cause the Company to cause to be delivered to Crown (i) a
report of the Company's independent accountants that complies in form and
substance with the requirements for such a report included in a
registration statement on Form S-4, (ii) the consent of such accountants to
include such report in the Registration Statement and Proxy Statement and
(iii) a comfort letter from such accountants with respect to the financial
information regarding the Company included in the Proxy Statement and the
Registration Statement.
(i) Supervisory Board. Promptly following the purchase by Crown of Common
Stock pursuant to the Exchange Offers, Shareholder shall cooperate fully in
assisting Crown to cause such number of persons designated by Crown,
rounded up to the next whole number, to be elected to the Supervisory Board
of the Company as will give Crown representation on the Supervisory Board
(giving effect to the persons designated and elected pursuant to this
paragraph) multiplied by the percentage that the aggregate number of shares
of Common Stock beneficially owned by Crown and its affiliates bears to the
total number of shares of Common Stock then outstanding. Shareholder shall
use its best efforts to obtain the resignation of the number of members of
the Supervisory Board as are necessary to permit the Crown designees to be
elected.
(j) Public Filings. Shareholder shall use its reasonable best efforts to
the extent practicable and to the extent permitted under French law and
regulation to cause the Company to file with the French and U.K. Securities
Authorities and make available to Crown all forms, reports, and documents
required to be
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filed with the French and U.K. Securities Authorities between the date of
this Agreement and the Expiration Date. The forms, reports and documents
referred to in this paragraph or otherwise filed with the French and U.K.
Authorities since December 31, 1993 are referred to collectively as the
"Company Public Reports".
8. Additional Covenants of Crown.
(a) Crown Shareholder Meeting. Crown will take all action necessary in
accordance with applicable law and its Articles of Incorporation and By-
laws to convene a meeting of its shareholders (the "Crown Shareholder
Meeting") as promptly as practicable to consider and vote upon the approval
of the transactions contemplated hereby and the adoption of the New
Articles (including the increase in the number of authorized shares of
Crown Common Stock, the authorization of shares of Crown Preferred Stock
and the "opt-out" from the provisions of Chapter 25, Subchapter E of the
Pennsylvania Business Corporation Law thereby rendering such provisions
inapplicable to the transactions contemplated hereby) and the issuance of
the Crown Common Stock and Crown Preferred Stock pursuant to the Exchange
Offers and the issuance of the Crown Common Stock upon conversion of the
Crown Preferred Stock. The Board of Directors of Crown shall recommend the
approval by the Crown Shareholders of the transactions contemplated hereby
and the adoption of the New Articles and shall take all lawful action to
solicit, and use its reasonable best efforts to obtain, such approvals. The
Board of Directors acting on behalf of Crown may at any time prior to the
adjournment of the Crown Shareholder Meeting withdraw, modify, or change
any recommendation if the Board of Directors determines that the failure to
so withdraw, modify, or change its recommendation and declaration would
cause the Board of Directors to breach its fiduciary duties to Crown's
shareholders under applicable law and, notwithstanding anything contained
in this Agreement to the contrary, any such withdrawal, modification, or
change of recommendation shall not constitute a breach of this Agreement by
Crown.
(b) Listing. Crown will file listing applications (subject to applicable
listing rules), (i) as promptly as practicable, with the NYSE and (ii) in
connection with the CBV Filing with the Paris Stock Exchange, with respect
to, and Crown shall use its reasonable best efforts to cause the NYSE and
the Paris Stock Exchange to list, the Crown Common Stock and Crown
Preferred Stock issuable in connection with the Exchange Offers and the
Crown Common Stock issuable upon conversion of the Crown Preferred Stock.
(c) Conduct of Crown's Business. Crown shall conduct and shall cause its
Subsidiaries to conduct their respective businesses in the ordinary course
of business, consistent with past practice; provided, however, that this
paragraph shall not in any way restrict or prohibit Crown from taking any
action (x) which will not result in a Material Adverse Effect on Crown or
adversely affect Crown's ability to comply with its obligations under this
Agreement or the Shareholders' Agreement, or (y) contemplated by this
Agreement or the Shareholders' Agreement. Between the date of this
Agreement and the Closing Date, Crown shall not, without the prior written
consent of Shareholder: (i) amend or otherwise change the Articles of
Incorporation or By-laws (or similar organizational documents) of Crown or
any of its material Subsidiaries (except for the amendment to the By-laws
effected July 27, 1995, the amendment to the Articles of Incorporation to
be effected by the New Articles and the amendment to the By-laws to be
effected by the By-law Amendment), provided that Crown may amend the
provisions of its By-laws relating to (x) indemnification of directors and
(y) the percentage vote of the Board of Directors of Crown required to
approve any amendment to the By-laws previously provided to Shareholder and
provided, further, that Crown and Shareholder will discuss in good faith
any other amendments to the By-laws Crown may wish to effect on or prior to
the Closing Date (including those provided to Shareholder prior to the date
hereof), or (ii) issue, sell, pledge, dispose of, or encumber, or authorize
the issuance, sale, pledge, disposition, or encumbrance, or authorize the
issuance of, any shares of capital stock of, any options (including
employee stock options), warrants, convertible securities, or other rights
to acquire any shares of capital stock of, or any other ownership interest
in, Crown or otherwise alter its capital structure, except for the issuance
of shares pursuant to options that were granted under Crown's stock option
plans prior to the date of this Agreement and are outstanding on the date
of this Agreement, it being understood that Crown intends to adopt a
shareholder protection rights plan (possibly including the authorization of
a series of junior preferred stock in connection therewith, which junior
preferred stock shall be junior to the Crown Preferred Stock),
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in a form reasonably acceptable to Shareholder. Shareholder consents to any
amendment of Crown's Articles of Incorporation to authorize the issuance of
shares of preferred stock junior to, or on a parity with, the Crown
Preferred Stock (in a form reasonably acceptable to Shareholder) to be
submitted to the shareholders of Crown at the Crown Shareholder Meeting.
(d) Access to Information; Confidentiality. Prior to the Expiration Date,
Crown will, and will cause each of its Subsidiaries to (i) give the
officers, employees, accountants, counsel, and other representatives of
Shareholder and the Company reasonable access to the properties, books,
contracts, and records of Crown and its Subsidiaries, (ii) furnish promptly
to Shareholder and the Company all information concerning the business,
properties, and personnel of Crown and its Subsidiaries as Shareholder or
the Company may reasonably request, and (iii) make available to Shareholder
and the Company appropriate individuals for the discussion of the business,
properties and personnel of Crown and its Subsidiaries as Shareholder or
the Company may reasonably request. Information obtained by Shareholder or
the Company pursuant to this paragraph shall be subject to the provisions
of the letter agreement dated April 18, 1995 addressed to Shareholder by
Crown (the "Crown Confidentiality Agreement") and the Company
Confidentiality Agreement.
(e) CBV Filing. Upon the terms and subject to the conditions set forth in
this Agreement, Crown will prepare and file a dossier and projet d'offre
with the CBV (the "CBV Filing") which complies with applicable French law
and regulation. The CBV Filing shall be made at the earliest practicable
time following satisfaction of the conditions set forth in Section 10.1 and
in no event later than five French Market Days after Shareholder notifies
Crown in writing that, to the best of Shareholder's knowledge, such
conditions and its conditions in Section 11 have been satisfied unless
within such period of time Crown notifies Shareholder in writing that, to
the best of its knowledge, such conditions have not been satisfied. After
the date of the CBV Filing, Crown will use its reasonable best efforts to
cause the dossier and projet d'offre to be approved as promptly as
practicable; provided, however, that it shall not be deemed "reasonable" to
require Crown to amend the terms of, or increase the consideration payable
in, the Offer.
(f) Proxy Statement and Registration Statement. Crown will prepare and
file with the SEC a proxy statement (the "Proxy Statement") complying with
Regulation 14A under the Exchange Act ("Regulation 14A") for use in
connection with the Crown Shareholder Meeting and a registration statement
(the "Registration Statement") in connection with the registration under
the Securities Act of the Crown Common Stock and Crown Preferred Stock
issuable in connection with the Exchange Offers and the Crown Common Stock
issuable upon conversion or exchange of the Crown Preferred Stock. Crown
will use its reasonable best efforts to cause the Registration Statement to
be declared effective, and to maintain effectiveness through the date of
closing of each of the Exchange Offers and also will take any other action
required to be taken under United States federal or state securities laws,
and to cause the Proxy Statement to be mailed to shareholders of Crown.
(g) Note d'Information. Upon the terms and subject to the conditions set
forth in this Agreement, Crown will prepare and file a Note d'Information
with the COB which complies with applicable French law. After the date of
the CBV Filing, Crown will use its reasonable best efforts to cause the
Note d'Information to be approved as promptly as practicable, and also will
take any other action required to be taken under French and other
securities laws with respect to the Offer; provided, however, that it shall
not be deemed "reasonable" to require Crown to amend the terms of, or
increase the consideration payable in, the Offer.
(h) U.K. Exchange Offer. Crown will make all filings required with the
London Stock Exchange (the "U.K. Filing") and take such other actions in
the United Kingdom as are required under applicable laws, rules and
regulations in the U.K. in connection with the U.K. Exchange Offer.
(i) Amendments. If, at any time prior to the date of closing of each of
the Exchange Offers or such later date as shall be necessary to consummate
the transactions contemplated hereby, Shareholder shall become aware that
any event has occurred as a result of which the Registration Statement
(including the Prospectus contained therein), the Proxy Statement, the Note
d'Information, the CBV Filing, the U.K. Filing or any other filing required
in connection with the Exchange Offers, in each case as then amended or
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supplemented, would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or, if for any other reason it shall be necessary during such
period to amend or supplement any such document in order to comply with
applicable law or regulation, Crown shall notify the Company and
Shareholder and shall prepare and, if required, file such amendments or
supplements which will correct such statement or omission or effect such
compliance.
(j) By-Law Amendment. Effective as of the Closing, the Board of Directors
of Crown shall adopt the By-law Amendment.
(k) Accountants. Crown shall use its reasonable best efforts to cause
Crown's independent accountants to deliver to Shareholder and each of its
designees for election to the Board of Directors of Crown a comfort letter
in customary form from such accountants with respect to the financial
information regarding Crown included in the Registration Statement,
provided that if any such letter is delivered to Crown or a director of
Crown, Crown shall cause Crown's Independent Accountants to deliver such
letter to Shareholder and each of its designees and authorize Shareholder
and each of such designees to rely thereon.
9. Additional Covenants of Shareholder and Crown.
(a) No Solicitation. Shareholder will not, and will use its reasonable
best efforts, to the extent practicable and to the extent permitted under
French law and regulation, to cause the Company not to, directly or
indirectly, solicit (including by way of furnishing information) any
inquiries or the making of any proposal by any person or entity (other than
Crown or any affiliate of Crown) or enter into any agreement, arrangement
or understanding, or any negotiations or discussions which might lead to
such agreement, arrangement or understanding, which constitutes, or may
reasonably be expected to lead to, any direct or indirect sale or other
transfer of the Shares (or other equity interests in the Company) or any
other extraordinary transaction involving the Shares (or other equity
interests in the Company) or the Company, including without limitation the
acquisition or sale of a material amount of assets, the sale, issuance or
transfer of any equity securities (other than pursuant to employee benefit
arrangements in the ordinary course of business and other than as disclosed
by the Company in the Company Disclosure Information), or any tender or
exchange offer, merger or other business combination, involving the Company
or any of its Subsidiaries. If Shareholder or the Company receives an
inquiry or proposal with respect to any such sale of Shares or other
extraordinary transaction involving the Shares or the Company, then
Shareholder or the Company, as the case may be, shall promptly inform Crown
of the terms and conditions, if any, of such inquiry or proposal and the
identity of the person making it. Shareholder will immediately cease, and
will use its reasonable best efforts, to the extent practicable and to the
extent permitted under French law and regulation, will cause the Company to
terminate any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing.
(b) Filings. Upon the terms and subject to the conditions set forth in
this Agreement, each of Shareholder and Crown will, and Shareholder will
use its reasonable best efforts to the extent practicable and to the extent
permitted under French law to cause the Company to, make all necessary
filings with respect to the Exchange Offers and the transactions
contemplated by this Agreement under the applicable United States, French,
United Kingdom and European Union or other foreign securities laws, rules
and regulations and will use their reasonable best efforts to obtain any
required approvals and clearances with respect thereto under such
securities laws, rules and regulations. Notwithstanding the preceding
sentence, if an exemption from the registration requirements under the
Securities Act is available on a basis that would not (A) impede, impair or
delay the Exchange Offers, (B) prevent the listing of the Crown Common
Stock and Crown Preferred Stock to be delivered in the Exchange Offers on
the NYSE, or (C) adversely affect the value of the Crown Common Stock and
Crown Preferred Stock to be received by Shareholder and its Subsidiaries
pursuant to the Exchange Offers due to restrictions on transfer, lack of
liquidity, limitations on marginability and similar limitations, there
shall be no requirement to prepare or file a Registration Statement with
respect to the Crown Common Stock or Crown Preferred Stock under this
Agreement (and
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the warranties, covenants and conditions contained herein with respect to
the Registration Statement shall be deemed to be modified accordingly).
(c) Consents; Approvals. Upon the terms and subject to the conditions set
forth in this Agreement, Shareholder and Crown will, and Shareholder will
use its reasonable best efforts to the extent practicable and to the extent
permitted under French law and regulation to cause the Company to, use
their respective reasonable best efforts to obtain all consents, waivers,
approvals, authorizations, or orders (including, without limitation, all
approvals and orders by governmental and regulatory authorities, domestic
or foreign) and Crown and Shareholder will make or cause to be made all
filings (including, without limitation, all filings required under the HSR
Act and EC Council Regulation 4064/89 and under any other antitrust or
competition laws and all other filings with governmental or regulatory
authorities, domestic and foreign) required in connection with the
authorization, execution, and delivery of this Agreement by Crown and
Shareholder and the consummation by them of the transactions contemplated
by it. Notwithstanding the foregoing, and provided Crown has complied fully
with its obligations in the next succeeding sentence of this Section 9(c),
nothing contained in this Agreement will require or obligate Crown (i) to
agree to or otherwise become subject to any material limitations on (A) the
right of Crown, or its affiliates effectively to control or operate the
business, assets or operations of Crown, the Company or any of their
respective Subsidiaries as a result of any consent, waiver, approval,
authorization or order of a governmental or regulatory authority obtained
in order to satisfy a condition set forth in Section 10.1 hereof, (B) the
right of Crown or its affiliates to acquire or hold the business, assets or
operations of the Company, (C) the right of Crown to exercise full rights
of ownership of the Common Stock acquired by Crown including, without
limitation, the right to vote any Common Stock held by Crown on all matters
properly presented to the Company's shareholders, or (ii) to agree to
divest itself of any Common Stock. Notwithstanding the foregoing, if
required by any such governmental or regulatory authorities in order to
obtain a necessary consent, waiver, approval, authorization or order
thereof, Crown shall agree to sell or otherwise dispose of, hold separate
(through the establishment of a trust or otherwise), or divest itself of
all or any portion of the business, assets, or operations of the Company or
Crown (or its affiliates) as shall be required to obtain such consent,
waiver, approval, authorization or order; provided, however, that Crown
shall not be required so to agree, if such action will result in a material
diminution in the value of Crown and the Company as a combined entity.
(d) Cooperation. Upon the terms and subject to the conditions set forth
in this Agreement, each of the parties agrees to use its reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, and to assist and cooperate with the other party in doing, all
things necessary, proper or advisable to consummate, in the most
expeditious manner practicable, the transactions contemplated by this
Agreement. Crown and Shareholder will use their best efforts and cooperate
with one another (i) in promptly determining whether any additional filings
are required to be made or consents, approvals, waivers, permits or
authorizations are required to be obtained (or, which if not obtained,
would result in an event of default, termination or acceleration of any
agreement or any put right under any agreement) under any applicable law or
regulation or from any governmental authorities or third parties, and (ii)
in promptly making any such filings, in furnishing information required in
connection therewith and in timely seeking to obtain any such consents,
approvals, permits or authorizations.
(e) Disclosure. Crown and Shareholder will consult with each other before
issuing any press release or making any public filing relating to this
Agreement or the transactions contemplated hereby and shall not issue any
such press release prior to such consultation.
(f) Shareholders Agreement. On the Closing Date, Crown and Shareholder
shall execute and deliver the Shareholders Agreement in the form attached
hereto as Annex 4 with such changes therein as shall be mutually agreed by
Crown and Shareholder (the "Shareholders Agreement").
(g) Notification. Each of Crown and Shareholder will, in the event of, or
promptly after obtaining knowledge of the occurrence (or non-occurrence) or
threatened occurrence (or non-occurrence) of, any fact or event which would
cause or constitute a material breach of any of its representations and
warranties or covenants set forth herein or the failure of the conditions
to the other party's obligations set forth herein,
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would constitute or result in a Material Adverse Effect on it or could
result in a delay in carrying out the transactions contemplated hereby,
give notice thereof to the other party hereto and will use its reasonable
best efforts to prevent or promptly to remedy such breach or satisfy such
conditions; provided, however, that the delivery of, or failure to deliver,
any notice pursuant to this Section 9(g) shall not limit or otherwise
affect the remedies available hereunder.
10. Conditions to Obligations of Crown.
10.1. Conditions to Obligation of Crown to Make the Exchange Offers.
The obligation of Crown to make the Exchange Offers is subject to the
satisfaction or waiver of the following conditions:
(a) Warranties. The warranties of Shareholder contained in this Agreement
that are not qualified by materiality shall be true and correct in all
material respects, and the warranties of Shareholder contained in this
Agreement that are qualified by materiality shall be true and correct, in
each case on and as of the Filing Date with the same force and effect as if
made on and as of the Filing Date, except for (i) changes contemplated by
this Agreement, (ii) those warranties that address matters only as of a
particular date (which will remain true and correct as of that date), and
(iii) breaches or inaccuracies of warranties contained in Section 6(a) and
6(b) which shall be absolutely true and correct; and Crown shall have
received a certificate to this effect signed by the President of
Shareholder.
(b) Agreements and Covenants. Shareholder shall have performed or
complied in all material respects with all of its obligations under this
Agreement to be performed or complied with on or prior to the Filing Date;
and Crown shall have received a certificate to this effect signed by the
President of Shareholder.
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations, or orders required to be obtained by Shareholder or the
Company, and all filings required to be made by Shareholder or the Company,
for the authorization, execution, and delivery of this Agreement by
Shareholder, the performance of Shareholder's and the Company's obligations
under this Agreement and the consummation by the Company and Shareholder of
the transactions contemplated hereby shall have been obtained and made by
Shareholder or the Company, as the case may be.
(d) Shareholder Approval. The transactions contemplated hereby and the
New Articles (including the increase in the number of authorized shares of
Crown Common Stock, the authorization of shares of Crown Preferred Stock
and the "opt-out" from the provisions of Chapter 25, Subchapter E of the
Pennsylvania Business Corporation Law thereby rendering such provisions
inapplicable to the transactions contemplated hereby) and the issuance of
the Crown Common Stock and the Crown Preferred Stock (and any Crown Common
Stock into which such Crown Preferred Stock is convertible) pursuant to
this Agreement shall have been adopted and approved by the requisite vote
of the shareholders of Crown in accordance with applicable law, the
Pennsylvania Business Corporation Law, Crown's Articles of Incorporation
and By-laws and any applicable rules or regulations of the NYSE
(collectively, the "Crown Shareholder Approvals").
(e) Registration Statement; Securities Laws. Subject to Section 9(b)
hereof, the Registration Statement shall have been declared effective and
no stop order suspending effectiveness shall have been issued, no action,
suit, proceeding or investigation by the SEC to suspend the effectiveness
thereof shall have been threatened or initiated, and all necessary
approvals under United States federal or state securities laws (including
the Securities Act or Exchange Act) or French securities laws (including
all required approvals of the COB, CBV or SBF) relating to the Offer or the
issuance or trading of the Crown Common Stock, Crown Preferred Stock or the
Crown Common Stock to be issued upon the conversion of the Crown Preferred
Stock shall have been received (it being understood that the approvals of
the U.K. Exchange Offer and the listing of the Crown Common Stock and Crown
Preferred Stock on the London Stock Exchange shall not be a condition to
Crown's obligation to launch the Offer).
(f) No Injunctions or Restraints; Illegality. There shall not exist any
temporary restraining order, preliminary or permanent injunction, other
order issued by any court of competent jurisdiction, or other legal
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restraint or prohibition (including any antitrust authority with
jurisdiction over the Offer) prohibiting Crown from launching the Offer.
(g) Due Diligence. The due diligence and other procedures set forth in
Section 13(j) shall not be pending.
(h) Status of the Company. Except with respect to matters disclosed in
the Company's annual reports for fiscal years ended December 31, 1993 and
December 31, 1994, copies of which were provided to Crown prior to the
execution of this Agreement, the statements regarding the Company contained
in Annex 5 hereto that are not qualified by materiality shall be true and
correct in all material respects and the statements regarding the Company
contained in Annex 5 hereto that are qualified by materiality shall be true
and correct, on and as of the date hereof and the Filing Date, except for
(i) changes contemplated by this Agreement, and (ii) those statements that
address matters only as of a particular date (which will remain true and
correct as of that date). For purposes of determining whether this
condition is satisfied as to any statement included in Annex 5, Additional
Company Information shall not be taken into account unless further
information that is not Additional Company Information when considered
together with such Additional Company Information (taking into account any
materiality standards included in such statement) results in a breach of
such statement; and Shareholder shall use its reasonable best efforts, to
the extent practicable and to the extent permitted under French law and
regulations, to cause the Company to provide a certificate to this effect
(if true) signed by the President or a Vice President of the Company.
(i) Access to Information; Confidentiality. During the Due Diligence
Period, the Company and its Subsidiaries shall have, (i) given the
officers, employees, accountants, counsel, and other representatives of
Crown reasonable access to the properties, books, contracts, and records of
the Company and its Subsidiaries, (ii) furnished promptly to Crown all
information concerning the business, properties, and personnel of the
Company and its Subsidiaries as Crown may reasonably request, and (iii)
made available to Crown appropriate individuals for the discussion of the
business, properties, and personnel of the Company and its Subsidiaries as
Crown may reasonably request. Information obtained by Crown as described in
the prior sentence shall be subject to the provisions of the Company
Confidentiality Agreement.
(j) Dividends and Other Distributions. The Company shall not have (x)
declared, set aside, or paid any dividend or other distribution (whether in
cash, stock, property, or any combination thereof) in respect of any of its
capital stock between the date hereof and the Filing Date, or indicated its
intention to do so within three months of the Filing Date, except that (A)
the Company may pay its regular dividend of FF 4.40 per share of Common
Stock proposed to be paid after approval thereof at the Company's annual
general meeting of Shareholders to be held on June 2, 1995, (B) a direct or
indirect wholly-owned subsidiary of the Company may declare and pay a
dividend to its parent, and (C) other Subsidiaries may declare and pay
customary, regular dividends in the ordinary course, consistent with past
practice or (y) amended the terms of, repurchased, redeemed, or otherwise
acquired, or permitted any subsidiary to amend the terms of, repurchase,
redeem, or otherwise acquire, any of its capital stock.
(k) Market Matters. There shall not have occurred (i) any general
suspension of trading in, or limitation on prices for, securities on the
NYSE or Paris Stock Exchange, (ii) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States or
France, or (iii) any material limitation by any French or United States
governmental, administrative or regulatory authority or agency on the
extension of credit by banks or other lending institutions.
(l) Listing. The shares of Crown Common Stock and Crown Preferred Stock
issuable in connection with the Offer and the Crown Common Stock issuable
upon conversion of the Crown Preferred Stock shall have been accepted for
listing on the NYSE subject to official notice of issuance (provided Crown
has complied with its obligations in Section 8(b)).
(m) Change of Control. (i) Shareholder shall not have been a party to any
merger, consolidation or share exchange, and shall not have sold all or
substantially all of its assets, under circumstances in which Persons who
were members of the Shareholder's Board of Directors at the date of this
Agreement do not constitute a majority of Shareholder's Board of Directors
(or body performing similar functions) of the
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corporation or other entity surviving such transaction, and (ii) it shall
not have been publicly disclosed that 25% or more of the outstanding shares
of Shareholder's Common Stock have been acquired by any Person or Group
(other than Crown and its Affiliates).
10.2. Conditions to the Obligations of Crown to Acquire the Common Stock
Tendered Pursuant to the Exchange Offers.
The obligation of Crown to acquire the Common Stock tendered pursuant to the
Exchange Offers is subject to the satisfaction or waiver of the following
conditions:
(a) Upon completion of the Offer, the SBF shall have published a notice
(avis de resultat) confirming that the number of shares of Common Stock
validly tendered to the Offer, when added together with the Common Stock
acquired by Crown in the U.K. Exchange Offer and any other contemporaneous
exchange offer made by Crown or one of its subsidiaries in another
jurisdiction, equals or exceeds the Minimum Condition.
(b) With respect to the U.K. Exchange Offer, the Closing of the Offer
shall have occurred or shall occur contemporaneously with the closing
thereof.
11. Conditions to Obligations of Shareholder. The obligation of Shareholder
to tender its Shares pursuant to the Offer is subject to the satisfaction or
waiver of the following conditions on or prior to the Filing Date:
(a) Warranties. Except to the extent disclosed in writing by Crown to
Shareholder prior to the date of the Agreement, the warranties of Crown
contained in this Agreement that are not qualified by materiality shall be
true and correct in all material respects, and the warranties of Crown
contained in this Agreement that are qualified by materiality are true and
correct, on and as of the Filing Date with the same force and effect as if
made on and as of the Filing Date, except for (i) changes contemplated by
this Agreement, (ii) those warranties that address matters only as of a
particular date (which will remain true and correct as of that date), and
(iii) breaches or inaccuracies of warranties contained in Section 5(j) and
5(m) which shall be absolutely true and correct; and Shareholder shall have
received a certificate to this effect signed by the President or any vice
president of Crown. For purposes of determining whether this condition is
satisfied as to any warranty, Additional Crown Information shall not be
taken into account unless further information that is not Additional Crown
Information when considered together with such Additional Crown Information
(taking into account any materiality standards included in such warranty)
results in a breach of such warranty.
(b) Agreements and Covenants. Crown shall have performed or complied in
all material respects with all of the obligations under this Agreement to
be performed or complied with by it on or prior to the Filing Date; and
Shareholder shall have received a certificate to this effect signed by the
President or any vice president of Crown.
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations, or orders required to be obtained under, and all filings
required to be made, by Crown for the authorization, execution, and
delivery of this Agreement by Crown, the performance of Crown's obligations
under this Agreement and the consummation by Crown of the transactions
contemplated hereby shall have been obtained and made by Crown.
(d) Shareholder Approval. The Crown Shareholder Approvals shall have been
obtained.
(e) Registration Statement; Securities Laws. Subject to Section 9(b)
hereof, the Registration Statement shall have been declared effective and
no stop order suspending effectiveness shall have been issued, no action,
suit, proceeding or investigation by the SEC to suspend the effectiveness
thereof shall have been threatened or initiated, and all necessary
approvals under United States federal or state securities laws (including
the Securities Act or Exchange Act) or French securities laws (including
all required approvals of the COB, CBV or SBF) relating to the Offer or the
issuance or trading of the Crown Common Stock, Crown Preferred Stock or the
Crown Common Stock to be issued upon the conversion of the Crown Preferred
Stock shall have been received (it being understood that the approvals of
the U.K. Exchange Offer
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and the listing of the Crown Common Stock and Crown Preferred Stock on the
London Stock Exchange shall not be a condition to Shareholder's obligation
to tender its Shares pursuant to the Offer).
(f) No Injunctions or Restraints; Illegality. There shall not exist any
temporary restraining order, preliminary or permanent injunction, other
order issued by any court of competent jurisdiction, or other legal
restraint or prohibition (including any antitrust authority with
jurisdiction over the Offer) prohibiting Shareholder from tendering into
the Offer.
(g) Due Diligence. The due diligence and other procedures set forth in
Section 13(j) shall not be pending.
(h) Access to Information; Confidentiality. During the Due Diligence
Period, Crown and its Subsidiaries shall have caused each of its
Subsidiaries to have, (i) given the officers, employees, accountants,
counsel, and other representatives of Shareholder reasonable access to the
properties, books, contracts, and records of Crown and its Subsidiaries,
(ii) furnished promptly to Shareholder all information concerning the
business, properties, and personnel of Crown and its Subsidiaries as
Shareholder may reasonably request, and (iii) made available to Shareholder
appropriate individuals for the discussion of the business, properties, and
personnel of Crown and its Subsidiaries as Shareholder may reasonably
request. Information obtained by Shareholder as described in the prior
sentence shall be subject to the provisions of the Crown Confidentiality
Agreement.
(i) Rating. The long-term unsecured senior debt securities of Crown shall
not have been downgraded (a "Downgrade") by either Moody's Investors
Services Inc. or Standard and Poor's to a rating below "investment grade",
provided that Shareholder shall not be entitled to rely on this condition
unless it shall, prior to such reliance, have entered into good faith
negotiations with Crown for a reasonable period of time in an effort to
modify the terms of the transaction in a manner sufficient to alleviate
such Downgrade. "Investment grade" shall mean either Moody's Investors
Services Inc. or Standard and Poor's shall have rated the security in one
of its generic rating categories which signifies investment grade
(typically the four highest categories).
(j) Miscellaneous. There shall not have occurred (i) any general
suspension of trading in, or limitation on prices for, securities on the
NYSE or Paris Stock Exchange, (ii) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States or
France, or (iii) any material limitation by any French or United States
governmental, administrative or regulatory authority or agency on the
extension of credit by banks or other lending institutions.
(k) Listing. The shares of Crown Common Stock and Crown Preferred Stock
issuable in connection with the Offer and the Crown Common Stock issuable
upon conversion of the Crown Preferred Stock shall have been accepted for
listing on the NYSE subject to official notice of official issuance, and
Crown shall have applied for the listing thereof on the Paris Stock
Exchange.
(l) SLF. Prior to October 1, 1995, the SLF shall have confirmed that
French corporate shareholders of the Common Stock, including Shareholder,
(i) shall be entitled to defer recognition of any gain or loss on the
Common Stock upon tendering the Common Stock into the Offer and electing to
receive Units until the sale by such corporate shareholders of the Crown
Common Stock and the Crown Preferred Stock received in the Offer and (ii)
shall be entitled to defer recognition of any gain or loss on any such
Crown Preferred Stock upon conversion of the Crown Preferred Stock into
Crown Common Stock until the sale by such corporate holders of such Crown
Common Stock. Promptly following the date of this Agreement, and in any
case within 15 calendar days, Shareholder shall make a submission to the
SLF seeking the foregoing confirmation and shall use its reasonable best
efforts to secure the requested confirmation as soon thereafter as
practicable. Shareholder shall furnish to Crown copies of its submission
and, promptly upon receipt thereof, any response received from the SLF. In
the event that Shareholder shall be notified by the SLF that the requested
confirmation will not be forthcoming, such that the condition provided for
in this paragraph (l) cannot be satisfied, Shareholder shall notify Crown
as promptly as practicable. If requested by Crown in writing, Shareholder
shall advise Crown within 10 calendar days after receipt of such request
whether Shareholder is willing to waive the condition provided for in this
paragraph (l) and, if Shareholder is not willing to waive such condition,
Shareholder shall terminate this Agreement pursuant to Section 13(f).
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(m) Change of Control. (i) Crown shall not have been a party to any
merger, consolidation or share exchange, and shall not have sold all or
substantially all of its assets, under circumstances in which Persons who
were members of the Crown's Board of Directors at the date of this
Agreement do not constitute a majority of Crown's Board of Directors (or
body performing similar functions) of the corporation or other entity
surviving such transaction, and (ii) it shall not have been publicly
disclosed that 25% or more of the outstanding shares of Crown Common Stock
have been acquired by any Person or Group (other than Shareholder and its
Affiliates).
12. Further Assurances. From time to time, at any other party's request and
without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further action as may be necessary
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
13. Termination. This Agreement may be terminated, by written notice to the
other party hereto, at any time:
(a) Prior to the Filing Date by Crown if there has been (i) a breach of
any covenant or agreement herein on the part of Shareholder that would
result in a failure of the conditions set forth in Section 10.1(a) or
Section 10.1(b) and which has not been cured within 30 calendar days
following receipt of notice of such breach or (ii) a material breach of a
warranty herein on the part of Shareholder that would result in a failure
of the condition set forth in Section 10.1(a) which breach by its nature is
not reasonably likely to be cured prior to March 31, 1996; Shareholder,
Camebo, the Company or any of the Company's material Subsidiaries makes a
general assignment for the benefit of creditors, or any proceeding shall be
instituted by or against Shareholder, Camebo, the Company or any of its
material Subsidiaries seeking to adjudicate any of them a bankrupt or
insolvent, or seeking liquidation, winding up or reorganization,
arrangement, adjustment, protection, relief or composition of its debts
under any law relating to bankruptcy, insolvency or reorganization (and if
such proceeding is against Shareholder, Camebo, the Company or any of the
Company's material Subsidiaries, it remains unstayed and in effect for
sixty consecutive days after institution of such proceeding).
(b) By Crown if (i) Crown has commenced the Offer and the Offer is
terminated or expires in accordance with its terms without Crown having
purchased any Common Stock thereunder due to a failure of the conditions of
the Offer (including the Minimum Condition) to be satisfied or (ii)
Shareholder tenders any of its Shares to a Third Party Bid.
(c) Prior to the Filing Date by Shareholder if (i) there has been (A) a
breach of any covenant or agreement herein on the part of Crown that would
result in a failure of the condition set forth in Section 11(a) or Section
11(b) and which has not been cured within 30 calendar days following
receipt of notice of such breach or (B) a material breach of a warranty
herein on the part of Crown that would result in a failure of the condition
set forth in Section 11(a) which breach by its nature cannot be cured prior
to March 31, 1996; or (ii) Crown or any of its material Subsidiaries makes
a general assignment for the benefit of creditors, or any proceeding shall
be instituted by or against Crown or any of its material Subsidiaries
seeking to adjudicate any of them a bankrupt or insolvent, or seeking
liquidation, winding up or reorganization, arrangement, adjustment,
protection, relief or composition of its debts under any law relating to
bankruptcy, insolvency or reorganization (and if such proceeding is against
Crown or any such material Subsidiary, it remains unstayed and in effect
for sixty consecutive days after the institution of such proceeding).
(d) By Shareholder if Crown has commenced the Offer and the Offer (as the
same may have been modified or extended in accordance with this Agreement
or replaced by a New Offer) is terminated or expires in accordance with its
terms without Crown having purchased any Common Stock thereunder due to a
failure of the conditions of the Offer (including the Minimum Condition) to
be satisfied.
(e) By either Shareholder or Crown if (i) the Closing Date shall not have
occurred on or prior to March 31, 1996 (the "Final Termination Date");
provided, however, that if Crown shall have commenced the
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Offer prior to the Final Termination Date and the Offer shall not have
terminated or expired prior to the Final Termination Date, then the Final
Termination Date shall be extended until the termination or expiration of
the Offer in accordance with its terms, provided that Crown shall not have
voluntarily extended the time period of the Offer if the Final Termination
Date would occur prior to such extension (unless such extension is in
connection with an increase in the amount of consideration payable to
shareholders of the Company (including Shareholder) tendering in the Offer
in response to a Third Party Bid provided that the Final Termination Date
shall not be later than the termination date of such Third Party Bid), and,
provided, further that the right to terminate this Agreement under this
paragraph (e)(i) shall not be available to any party whose failure to
fulfill any obligation or condition under this Agreement shall have been
the cause of, or shall have resulted in, the failure of the Closing Date to
occur on or prior to such date, or (ii) the Crown Shareholder Approvals
have not been obtained by reason of the failure to obtain the required
votes upon the vote of Crown's shareholders at the Crown Shareholder
Meeting, provided that, with respect to any termination by Crown under this
paragraph (e)(ii) that Crown shall have complied with its obligations under
Section 8(a) hereof.
(f) Prior to the Filing Date by either Shareholder or Crown in the event
that any governmental, regulatory or judicial authority or tribunal shall
have issued a final, non-appealable order, decree or ruling or taken any
other final, non-appealable action restraining, enjoining or otherwise
prohibiting the Offer by Crown or the tender by Shareholder of the Shares
into the Offer.
(g) By the mutual written consent of Shareholder and Crown.
(h) On the date immediately prior to the Filing Date by Crown if, on the
preceding NYSE trading day (the "Final Determination Date"), the Average
Crown Common Stock Price (computed with the Final Determination Date being
deemed the Measurement Date) is greater than FF 242.96 (115% of the Initial
Price).
(i) On the date immediately prior to the Filing Date by Shareholder if,
on the Final Determination Date, the Average Crown Common Stock Price
(computed with the Final Determination Date being deemed the Measurement
Date) is less than FF 179.58 and Crown shall not by 12:00 Midnight, New
York City time, on the date prior to the Filing Date have delivered to
Shareholder a written agreement by Crown to amend the Exchange Ratio such
that the implied value of the number of shares of Crown Common Stock and
the number of shares of Crown Preferred Stock deliverable in exchange for
one share of Common Stock is not less than FF 212.50. For this purpose,
such implied value shall be computed on the basis of the Average Crown
Common Stock Price, with the Final Determination Date being deemed to be
the Measurement Date, and the ratio of the number of shares of Crown Common
Stock to the number of shares of Crown Preferred Stock per Unit shall
remain constant at .75 to .25.
(j)(i) By Shareholder on the last day of the Due Diligence Period if
Shareholder's outside accountants (the "Shareholder Accountants") have
advised Shareholder that, based solely upon such accountants' analysis (the
"Shareholder Accountants Analysis") of the total mix of Additional Crown
Information, which shall be reflected in such accountants' written opinion
delivered to Crown and to Shareholder, and after having reviewed its
analysis and evaluation with Crown's outside accountants (the "Crown
Accountants"), the Shareholder Accountants are of the good faith judgment
(the "Shareholder Accountants Judgment") that the net adverse effect on the
value of Crown attributable to the Additional Crown Information, after
giving effect to any increases in value attributable to positive aspects of
the Additional Crown Information, exceeds $250 million; provided that
within five days after receipt of notice of termination, Crown may deliver
to Shareholder notice that Crown disagrees with the Shareholder Accountants
Judgment (in which case the provisions of subparagraph (iv) below shall
apply) and provided, further, that if Crown does not deliver such notice of
disagreement within five days after receipt of the notice of termination,
this Agreement shall terminate.
(ii) By Crown on the last day of the Due Diligence Period if the Crown
Accountants have advised Crown that, based solely upon such accountants'
analysis (the "Crown Accountants Analysis") of the total mix of Additional
Company Information, which shall be reflected in such accountants' written
opinion delivered to Shareholder and Crown, and after having reviewed its
analysis and evaluation with the
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Shareholder Accountants, the Crown Accountants are of the good faith
judgment (the "Crown Accountants Judgment") that the net adverse effect on
the value of the Company attributable to the Additional Company
Information, after giving effect to any increases in value attributable to
positive aspects of the Additional Company Information, exceeds $250
million; provided that within five days after receipt of notice,
Shareholder may deliver to Crown notice that Shareholder disagrees with the
Crown Accountants Judgment (in which case the provisions of subparagraph
(iv) below shall apply) and provided, further, that if Shareholder does not
deliver such notice of disagreement within five days after receipt of the
notice of termination, this Agreement shall terminate.
(iii) For purposes of this Section 13(j), it is the intention of the
parties that the differences between book value and fair market value and
between United States GAAP and International Accounting Standards shall
not, in and of themselves, give rise to increases or decreases in value of
Crown or the Company, as the case may be.
(iv) If Crown or Shareholder delivers notice that it disagrees with the
Shareholder Accountants Judgment or the Crown Accountants Judgment,
respectively, within the five day period specified above, Crown and
Shareholder shall mutually select an independent accounting firm of
recognized international standing to act as arbitrator (such firm, the
"Independent Accountant") and shall provide to the Independent Accountant
all information which the Independent Accountant may reasonably request and
which is available to Crown and Shareholder. The Independent Accountant
shall, within 10 Business Days thereof, advise Crown and Shareholder
whether the Independent Accountant agrees with the Shareholder Accountants
Judgment or the Crown Accountants Judgment, as the case may be. In
expressing such judgment, the Independent Accountant shall not consider any
differences in the businesses of Crown, the Company and their respective
Subsidiaries resulting from public dissemination of the termination notice
or changes, whether actual or prospective, in general conditions applicable
to the industry in which Crown, the Company and their respective
Subsidiaries are involved or general economic conditions. If the
Independent Accountant agrees that the net adverse effect on the value of
Crown arising from the Additional Crown Information or on the value of the
Company arising from the Additional Company Information, after giving
effect to any increases in value that are attributable to positive aspects
of the Additional Crown Information or Additional Company Information, as
the case may be, exceeds $250 million, this Agreement shall terminate. If
the Independent Accountant does not agree that the net adverse effect on
value of Crown arising from the Additional Crown Information or on the
value of the Company arising from the Additional Company Information, after
giving effect to any increases in value that are attributable to positive
aspects of the Additional Crown Information or the Additional Company
Information, as the case may be, exceeds $250 million, the termination
right of Crown or Shareholder, as the case may be, pursuant to this
paragraph (j) shall expire. The expiration of the termination right
provided by this paragraph (j) shall be without prejudice to any other
right of termination provided to any party pursuant to this Section 13.
(v) The fees and expenses of the Independent Accountant shall be borne
one-half by Crown and one-half by Shareholder.
(vi) In acting under this Agreement, the Independent Accountant shall be
entitled to the privileges and immunities of arbitrators.
(k) By Shareholder if the Board of Directors of Crown shall withdraw, or
adversely modify or adversely change its recommendation as contemplated by
the last sentence of Section 8(a) hereof and, thereafter, the Crown
Shareholder Approvals are not obtained at the Crown Shareholder Meeting
provided that this Agreement is not terminable at such time by Crown for a
reason other than the failure to obtain such Crown Shareholder Approvals.
(l) Effect of Termination. In the event of termination of this Agreement
as provided in this Section 13, this Agreement shall forthwith become void
and there shall be no liability on the part of either party hereto except
that nothing herein shall relieve either party from liability for any
willful breach of this Agreement.
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14. Expenses.
(a) Each of Crown, on the one hand, and Shareholder and the Company, on
the other hand, shall bear and pay all costs and expenses incurred by it or
them or on its or their behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial or
other consultants, investment bankers, accountants and counsel, except as
set forth in Section 13(j)(v) hereof and except that, to the fullest extent
permitted under law, in the event the Offer is successful Crown or its
designee shall reimburse Shareholder for 80% of the total amount of the
documented fees and expenses of Shareholder's legal and financial advisers
with respect to the transactions contemplated by this Agreement, up to a
maximum reimbursement amount of $15 million.
(b) Each of the parties has represented and warranted that neither it nor
any of its officers, directors, employees, affiliates, or Subsidiaries has
employed any broker or finder or incurred any liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions, or
finders' fees in connection with this Agreement or the transactions
contemplated hereby, except as expressly provided in such representations
and warranties. In the event of a claim by any broker or finder based upon
his or its representing or being retained by or allegedly representing or
being retained by either Crown or Shareholder, each party agrees to
indemnify and hold the other party harmless of and from any such claim.
(c)(i) Upon any termination by Shareholder under Section 13(k), Crown
shall pay Shareholder $10 million (in recognition of the expenses and
effort devoted to the proposed transaction), provided that Shareholder
shall give notice of such termination within ten business days following
the date of the Crown Shareholder Meeting.
(ii) In the event that, pursuant to Section 2(b) hereof, Shareholder
tenders any of its Shares to a Third Party Bid, Shareholder shall pay Crown
$10 million (in recognition of the expenses and effort devoted to the
proposed transaction).
(iii) Section 14(c)(i) and 14(c)(ii) above are subject to prior approval
of the COB. In the event that obtaining such COB approval requires
modification to one or both of such Sections, Crown and Shareholder may
mutually agree to modify the obligations set forth herein.
(iv) The dollar amount set forth in Section 14(c)(i) and 14(c)(ii) above
shall not be construed to be liquidated damages, and, in the event of a
breach of this Agreement by either party hereto, the other party shall be
entitled to such damages and remedies as are available under this Agreement
and applicable law.
15. Miscellaneous.
(a) Entire Agreement; Assignment; No Third-Party Beneficiaries. This
Agreement, together with the Shareholders Agreement, the Crown
Confidentiality Agreement, the Company Confidentiality Agreement and the
Shareholder Confidentiality Agreement, (i) constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes
all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof, provided
that on the Closing Date each of the Crown Confidentiality Agreement, the
Company Confidentiality Agreement and the Shareholder Confidentiality
Agreement shall be superseded by the provisions of the Shareholders
Agreement (except that the confidentiality provisions of such agreements
shall survive) and (ii) shall not be assigned by operation of law or
otherwise, provided that Crown may assign any of its rights and obligations
hereunder to any direct or indirect wholly-owned Subsidiary of Crown that
agrees in writing to assume such rights and obligations and to be bound by
this Agreement; provided that Crown shall remain jointly and severally
liable for the performance of all obligations so assigned. This Agreement
shall not confer upon any person other than the parties hereto any rights
or remedies hereunder.
(b) Amendments. This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
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(d) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained
in this Agreement will cause the other party to sustain damages for which
it would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such
breach the aggrieved party shall be entitled to the remedy of specific
performance of such covenants and agreements and injunctive and other
equitable relief in addition to any other remedy to which it may be
entitled, at law or in equity.
(e) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument.
(f) Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
(g) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion
of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law, rule or regulation
in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or portion of any provision in such
jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision
or portion of any provision shall have been replaced with a provision which
shall, to the maximum extent permissible under such applicable law, rule or
regulation, give effect to the intention of the parties as expressed in
such invalid, illegal or unenforceable provision.
(h) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered in writing and shall be deemed to have been
duly given when delivered in person, by cable, telegram, facsimile
transmission with confirmation of receipt, or telex, or by registered or
certified mail (postage prepaid, return receipt requested) to the
respective parties as follows:
if to Crown:
Crown Cork & Seal Company, Inc.
9300 Ashton Road
Philadelphia, Pennsylvania 19136
Attention:William J. Avery
Chairman, President and Chief Executive Officer
Telecopy: (215) 698.5206
with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103
Attention:Thomas A. Ralph and
William G. Lawlor
Telecopy:(215) 994.2222
if to Shareholder:
CGIP
89, rue Taitbout
75009 Paris, France
Attention:Michel Renault
Telecopy:(011) 33.1.42.80.68.67
A-31
<PAGE>
with a copy to:
Sullivan & Cromwell
250 Park Avenue
New York, New York 10177
Attention:Allan M. Chapin
Telecopy:(212) 558.4915
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
(i) No Waiver. Any waiver by any party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any
other breach of such provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon strict adherence to
any term of this Agreement on one or more occasions shall not be considered
a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.
(j) Nonsurvival of Warranties. Except for Sections 5(j), 5(m), 6(a) and
6(b), none of the representations and warranties contained in this
Agreement shall survive the Expiration Date. This paragraph shall not limit
any covenant or agreement of the parties which by its terms contemplates
performance after the Expiration Date. It being understood that the
inclusion of the warranties of Crown set forth in Sections 5(c), 5(d),
5(e), 5(f), 5(g) and 5(i) are for the purpose of establishing the condition
to Shareholder's obligation to tender set forth in Section 11.1(a), Crown
shall have no liability for any breach of such warranties in the event that
this Agreement is terminated due to the non-occurrence of the Offer as a
result of a failure to satisfy such condition, provided that the foregoing
shall not limit any liability of Crown for breach of its other obligations
hereunder (including its obligations under Section 9(d)).
(k) Consent to Jurisdiction and Service of Process. Any legal action or
proceeding with respect to this Agreement or any matters arising out of or
in connection with this Agreement (other than the Shareholders Agreement,
which shall be governed solely by the analogous provisions thereof), and
any action for enforcement of any judgment in respect thereof shall be
brought exclusively in the courts of the State of New York or of the United
States of America for the Southern District of New York, unless such court
shall not have jurisdiction in which case it shall be brought in the
Supreme Court of the State of New York sitting in New York County and, by
execution and delivery of this Agreement, Crown and Shareholder each
irrevocably consent to service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, or by recognized
international express carrier or delivery service, to Crown or Shareholder
at their respective addresses referred to herein. Crown and Shareholder
each hereby irrevocably waives any objection which it may now or hereafter
have to the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Agreement (other than the
Shareholders Agreement, which shall be governed solely by the analogous
provisions thereof) brought in the courts referred to above and hereby
further irrevocably waives and agrees, to the extent permitted by
applicable law, not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought in an
inconvenient forum. Nothing herein shall affect the right of any party
hereto to serve process in any other manner permitted by law.
16. Definitions. Unless otherwise specified all references to "days" shall
be deemed to be references to calendar days. For purposes of this Agreement,
the following terms shall have the following meanings:
(a) Additional Crown Information. "Additional Crown Information" shall
mean information affecting the consolidated shareholders' equity and
contingencies related to assets or contingent liabilities of Crown and its
Subsidiaries (whether or not required to be recorded or reserved against
under United States GAAP) of Crown and its Subsidiaries, measured in
accordance with United States GAAP, provided to Shareholder by or on behalf
of Crown after the date of this Agreement and which is not publicly
available prior to the date of this Agreement.
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(b) Additional Company Information. "Additional Company Information"
shall mean information affecting the consolidated shareholders' equity and
contingencies related to assets or contingent liabilities (whether or not
required to be recorded or reserved against under International Accounting
Standards) of the Company and its Subsidiaries, in each case measured in
accordance with International Accounting Standards, provided to Crown by or
on behalf of Shareholder or the Company after the date of this Agreement
and which is not publicly available prior to the date of this Agreement;
provided, however, that Additional Company Information shall not include
Company Disclosure Information.
(c) Affiliate. An "affiliate" of a person shall have the meaning set
forth in Rule 12b-2 of the Exchange Act as in effect on the date hereof
and, in addition, shall include "associates" (as defined in Rule 12b-2 of
the Exchange Act as in effect on the date hereof) of such person and its
affiliates.
(d) BALO Announcement. "BALO Announcement" shall mean the announcement
regarding the Company published in the Bulletin des Annonces Legales
Obligatoires on April 12, 1995.
(e) Beneficial Owner. A person shall be deemed to "beneficially own," or
to have "beneficial ownership" of any securities in accordance with the
term "beneficial ownership" as defined in Rule 13d-3 under the Exchange Act
as in effect on the date hereof and, in addition, such terms shall include
securities which such person has the right to acquire (irrespective of
whether such right is exercisable immediately or only after the passage of
time, including the passage of time in excess of sixty (60) days) pursuant
to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise.
(f) Business Day. "Business Day" shall mean any date on which banking
institutions in the City of New York are not authorized or obligated by law
or executive order to close.
(g) CBV. "CBV" shall mean the French Conseil des Bourses de Valeurs.
(h) Closing. "Closing" shall mean the closing of the Offer.
(i) Closing Date. "Closing Date" shall mean the date on which the Offer
is successfully consummated as evidenced in the avis de resultat issued by
the CBV.
(j) COB. "COB" shall mean the French Commission des Operations de Bourse.
(k) Commencement Date. "Commencement Date" shall mean the date on which
the SBF has released an opening notice (avis d'ouverture) relating to the
Offer.
(l) Company Disclosure Information. "Company Disclosure Information"
shall mean the information contained in the following documents, copies of
all of which were delivered to Crown prior to the signature of the
Agreement: (i) the Company's annual reports for the fiscal years ended
December 31, 1993 and December 31, 1994 and (ii) the matters disclosed at
the meeting on May 20, 1995 with Bernard Rolley, Chief Financial Officer of
the Company, Alan Rutherford, Chief Financial Officer of Crown, James
Clancy, partner of Price Waterhouse LLP, independent accountants to Crown,
and Christian Christiani, partner of Arthur Andersen, independent
accountants to the Company, as memorialized in the Notes, dated May 22,
1995 provided to Crown prior to the execution of this Agreement. In
determining the extent to which particular issues were disclosed as part of
the Company Disclosure Information, consideration shall be given to the
degree of detail of the description of the issues (including the specific
amounts actually furnished) summarized therein and the extent to which
Crown was able to form a view with respect to such issues in discussions
with representatives of the Company and its accountants.
(m) Due Diligence Period. "Due Diligence Period" shall mean the period of
30 days commencing on June 12, 1995 or such later date as the parties shall
agree.
(n) Exchange Act. "Exchange Act" shall mean the U.S. Securities Exchange
Act of 1934, as amended.
(o) Filing Date. "Filing Date" shall mean the date on which the CBV
Filing is filed with the CBV.
(p) London Stock Exchange. "London Stock Exchange" shall mean the
International Stock Exchange of Great Britain and the Republic of Ireland,
Limited.
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<PAGE>
(q) French Market Day. "French Market Day" shall mean a day on which the
Paris Stock Exchange is open for trading.
(r) Group. "Group" shall mean a group (as such term is used in Section
13(d)(3) of the Exchange Act as in effect on the date hereof).
(s) Market Closing Price. "Market Closing Price" shall mean, for shares
of Crown Common Stock, the closing price per share on the trading day in
question as reported by the NYSE for composite transactions.
(t) Material Adverse Effect. "Material Adverse Effect", when used in
connection with Shareholder, the Company, or Crown, means any significant
and substantial adverse effect on the business, operations, or financial
condition, or results of operations of Shareholder, the Company or Crown,
as the case may be, and its consolidated Subsidiaries, taken as a whole, or
on the ability of Shareholder or Crown, as the case may be, to perform its
obligations hereunder or to consummate the transactions contemplated
hereby; provided, however, that "Material Adverse Effect" does not include
events caused by general changes in the economy or in the industries served
by Shareholder, the Company or Crown, as the case may be.
(u) Noon Buying Rate. "Noon Buying Rate" shall mean the noon buying rate
in the City of New York for cable transfers payable in French francs
(expressed in French francs per U.S. $1.00) as announced by the Federal
Reserve Bank of New York for customs purposes.
(v) NYSE. "NYSE" shall mean the New York Stock Exchange, Inc.
(w) Outstanding Common Stock. "Outstanding Common Stock" shall mean all
the shares of Common Stock currently outstanding, together with all shares
under option from time to time on the date of this Agreement plus all
shares to be issued in the Faba transaction as described in the BALO
Announcement and shares issued pursuant to the New Options and the 1994
Options.
(x) Paris Stock Exchange. "Paris Stock Exchange" shall mean the Bourse de
Paris.
(y) Person. "Person" shall mean any individual, Group, corporation,
partnership, firm, government or agency or political subdivision thereof,
or other entity of whatever nature.
(z) SBF. "SBF" shall mean the French Societe des Bourses Francaises.
(aa) SEC. "SEC" shall mean the U.S. Securities and Exchange Commission.
(ab) Securities Act. "Securities Act" shall mean the U.S. Securities Act
of 1933, as amended.
(ac) Subsidiaries. "Subsidiaries" shall mean all direct and indirect
subsidiaries as the context requires.
(ad) SLF. "SLF" shall mean the French Service de la Legislation Fiscale.
(ae) United States GAAP. "United States GAAP" shall mean United States
generally accepted accounting principles.
(af) Voting Power. "Voting Power" shall mean the voting power in the
general election of members of the Conseil de Surveillance, and shall be
calculated for options to acquire shares of Common Stock and for securities
convertible into (or exercisable or exchangeable for) shares of Common
Stock by reference to the votes attributable to the number of shares of
Common Stock for which such options are exercisable or into which or for
which such other securities are convertible, exercisable or exchangeable.
(ag) $. "$" and "dollars" shall mean U.S. dollars.
A-34
<PAGE>
In addition, the following terms have the definitions specified in the
Sections noted:
<TABLE>
<CAPTION>
TERM SECTION
---- ----------------
<S> <C>
1994 Financial Statements..................................... Section 5(g)
1994 Options.................................................. Annex 5(c)
Agreement..................................................... Preamble
Average Crown Common Stock Price.............................. Section 1(b)
BALO Announcement............................................. Section 16(d)
By-law Amendment.............................................. Section 5(h)
Camebo........................................................ Section C.
Cash Election Price........................................... Section A.
CBV Filing.................................................... Section 8(e)
Common Stock.................................................. Section A.
Company....................................................... Section A.
Company Confidentiality Agreement............................. Section 7(f)
Company Employee Plans........................................ Annex 5(j)
Company Public Reports........................................ Section 7(j)
Crown......................................................... Preamble
Crown Accountants............................................. Section 13(j)(i)
Crown Accountants Analysis.................................... Section 13(j)(ii)
Crown Accountants Judgment.................................... Section 13(j)(ii)
Crown Common Stock............................................ Section A.
Crown Confidentiality Agreement............................... Section 8(d)
Crown Employee Plans.......................................... Section 5(g)
Crown Preferred Stock......................................... Section A.
Crown SEC Reports............................................. Section 5(c)
Crown Shareholder Approvals................................... Section 10.1(d)
Crown Shareholder Meeting..................................... Section 8(a)
days.......................................................... Section 16
Downgrade..................................................... Section 11(i)
Exchange Offers............................................... Section B.
Exchange Ratio................................................ Section A.
Expiration Date............................................... Section 4
Final Determination Date...................................... Section 13(h)
Final Termination Date........................................ Section 13(e)
Financial Statements.......................................... Annex 5(e)
French and U.K. Securities Authorities........................ Annex 5(d)
French Franc Crown Common Stock Price......................... Section 1(b)
Group......................................................... Section 16(r)
HSR Act....................................................... Section 5(k)
Independent Accountant........................................ Section 13(j)(iv)
International Accounting Standards............................ Annex 5(e)
Investment Grade.............................................. Section 11(i)
Measurement Date.............................................. Section 1(b)
Minimum Condition............................................. Section 1(a)
New Articles.................................................. Section 5(h)
New Options................................................... Annex 5(c)
Note d'Information............................................ Section 5(o)
Offer......................................................... Section A.
Outstanding Options........................................... Section 1(h)
Pledge........................................................ Section 6(a)
</TABLE>
A-35
<PAGE>
<TABLE>
<CAPTION>
TERM SECTION
---- ------------------
<S> <C>
Proxy Statement.............................................. Section 8(f)
Registration Statement....................................... Section 8(f)
Regulation 14A............................................... Section 8(f)
Returns...................................................... Section 5(i)
Shareholder.................................................. Preamble
Shareholder Accountants...................................... Section 13(j)(i)
Shareholder Accountants Analysis............................. Section 13(j)(i)
Shareholder Accountants Judgment............................. Section 13(j)(i)
Shareholder Designee......................................... Exh. 1, Section 13
Shareholders Agreement....................................... Section 9(f)
Shares....................................................... Section C.
Strategic Committee.......................................... Exh. 1, Section 13
Subsidiaries................................................. Section 16(x)
Taxes........................................................ Section 5(i)
Third Party Bid.............................................. Section 2(b)
U.K. Exchange Offer.......................................... Section B.
U.K. Filing.................................................. Section 8(h)
Unit......................................................... Section A.
</TABLE>
A-36
<PAGE>
IN WITNESS WHEREOF, CROWN AND SHAREHOLDER HAVE CAUSED THIS AGREEMENT TO BE
DULY EXECUTED AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN.
Crown Cork & Seal Company, Inc.
/s/ Alan W. Rutherford
By: _________________________________
Alan W. Rutherford
Executive Vice President and
Chief Financial Officer
Compagnie Generale D'Industrie Et De
Participations
/s/ Ernest-Antoine Seilliere
By: _________________________________
Ernest-Antoine Seilliere
Chairman and Chief Executive Officer
A-37
<PAGE>
ANNEX 1
Annex 1 to the Exchange Offer Agreement contains the Proposed Resolution of
Crown's Board of Directors setting forth the terms of the Crown 4.5% Preferred
Stock, which is attached as part of Annex B to this Proxy
Statement/Prospectus.
A-1-1
<PAGE>
ANNEX 2
Annex 2 to the Exchange Offer Agreement contains the Articles of Amendment to
Crown's Articles of Incorporation referred to as the Acquisition Articles
Amendment, which is attached as part of Annex B to this Proxy
Statement/Prospectus.
A-2-1
<PAGE>
ANNEX 3
AMENDMENTS TO BY-LAWS
The following Sections of Article II of the Corporation's By-laws are
amended to insert a new Section 13 as follows:
Section 13: Strategic Committee; Numbers; Qualifications. The Board of
Directors shall by resolution appoint a committee (the "Strategic Committee")
consisting of a number of directors, one-half of whom are designated (each a
"Shareholder Designee") by Compagnie Generale d'Industrie et de Participations
("CGIP") pursuant to a Shareholders Agreement dated , 199 between the
Corporation and CGIP (the "Shareholders Agreement"). The Strategic Committee
shall initially consist of six members, three of whom shall be Shareholder
Designees.
Section 13.1: Powers. The Strategic Committee shall consider all issues
regarding: (i) changes in the dividend and debt rating policies of the
Corporation as such policies are set forth in Sections 3.7 and 3.8 of the
Shareholders Agreement; (ii) the approval of any merger, consolidation or
similar transaction of the Corporation or any material subsidiary of the
Corporation (other than pursuant to internal reorganizations); (iii) any
recapitalization or any share exchange involving the Corporation; (iv) the
sale by the Corporation or any subsidiary of the Corporation of a material
amount of assets; (v) the issuance of Common Stock or other securities or
the incurrence of indebtedness in any transaction in which a vote of the
Corporation's shareholders is required under New York Stock Exchange Rules
or Pennsylvania law or which involves a material amount of securities or
indebtedness; (vi) an acquisition by the Corporation of a material amount
of assets; and (vii) succession planning. Unless the Strategic Committee
decides not to consider any such issues, no such issue may be voted on by
the Board of Directors until the Strategic Committee has voted to recommend
passage or rejection by the Board of Directors or the Strategic Committee
deadlocks on such issue and can make no recommendation to the Board of
Directors; and provided that if a meeting of the Strategic Committee is not
held to consider any such issue within seven days of notice being given
pursuant to Section 13.2, the Board of Directors shall be free to vote on
any such issue without having received the vote of the Strategic Committee.
The Board of Directors shall consider the vote of the Strategic Committee
in determining whether to pass or reject any such item but shall not be
bound to follow the vote of the Strategic Committee. The validity,
authorization or enforceability of any contract, agreement or instrument
entered into by the Corporation or any of its subsidiaries shall not be
affected by the operation of this Section 13.
The Board of Directors shall call a meeting of the Strategic Committee to
review the Corporation's response to any third party action or proposal
described in Section 2.1 of the Shareholders Agreement, if such section is
then currently in effect. The Strategic Committee shall consider and
evaluate the appropriate response to such proposal and make a
recommendation to the full Board of Directors.
Section 13.1: Chairman of Strategic Committee. A chairman of the Strategic
Committee shall be appointed from among the Shareholder Designees who serve
on such committee. The Chairman of the Strategic Committee shall preside at
all meetings of the Strategic Committee at which he or she shall be present
and shall have and may exercise such powers as may, from time to time, be
assigned to him or her by the Board of Directors or as may be provided by
law.
Section 13.2: Meetings. Meetings of the Strategic Committee may be held at
any time, in Philadelphia or Paris or any other place within or without the
State of Pennsylvania as the Chairman of the Board of Directors and
Chairman of the Strategic Committee shall mutually agree from time to time,
whenever called by the Chairman of the Strategic Committee, or by any two
members serving on the Strategic Committee. Reasonable notice thereof shall
be given by the person or persons calling the meeting.
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<PAGE>
Section 13.3: Participation in Meetings by Conference Telephone
Permitted. Members of the Strategic Committee may participate in a meeting
of such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to
this By-law shall constitute presence in person at such meeting.
Section 13.4: Quorum; Vote Required for Action. At all meetings of the
Strategic Committee a majority of the entire Strategic Committee shall
constitute a quorum for the transaction of business. The vote of a majority
of the members of the Strategic Committee present at a meeting at which a
quorum is present and at which at least one half of the members present are
Shareholder Designees shall be the act of the Strategic Committee. In case
at any meeting of the Strategic Committee a quorum shall not be present,
the members of the Strategic Committee present may adjourn the meeting from
time to time until a quorum shall attend.
Section 13.5: Organization. Meetings of the Strategic Committee shall be
presided over by the Chairman of the Strategic Committee or in the absence
of the Chairman by a chairman chosen from among the other Shareholder
Designees at the meeting. The Secretary of the meeting shall be a liaison
officer of CGIP who shall be subject to the appropriate confidentiality
provisions. If no such officer is available to attend a meeting, the
Strategic Committee Chairman or any acting chairman of the meeting may
appoint any person to act as secretary of such meeting.
Section 13.6: Action by Strategic Committee Without a Meeting. Unless
otherwise restricted by the Articles of Incorporation or these Bylaws, any
action required or permitted to be taken at any meeting of the Strategic
Committee may be taken without a meeting if all members of the Strategic
Committee consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Strategic Committee.
Article IX of the Corporation's By-Laws shall be amended and restated in its
entirety as set forth below:
ARTICLE IX
AMENDMENTS
Section 1: Except as otherwise provided by law, these By-Laws may be amended
at any meeting of the Board of Directors at which a quorum is present by a
majority vote of the Directors present (and which majority vote shall, in
respect of an amendment to Section 13 of Article II or to this parenthetical,
include the majority vote of the Shareholder Designees then in office), or
they may be amended by a majority vote at any meeting of shareholders entitled
to vote thereon, provided, in either case, notice of the proposed amendment
was included in the notice of the meeting.
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<PAGE>
ANNEX 4
This Shareholders Agreement (the "Agreement"), dated as of , 199 , is
between Crown Cork & Seal Company, Inc. a corporation organized under the laws
of the Commonwealth of Pennsylvania (the "Company"), and Compagnie Generale
d'Industrie et de Participations, a societe anonyme organized under the laws
of the Republic of France ("Shareholder").
Whereas, simultaneously with the execution of this Agreement, Shareholder is
acquiring shares of the Company's 4.5% Cumulative Convertible Preferred
Stock, par value $ per share (the "Preferred Shares"), and shares of
the Company's common stock, par value $5.00 per share (the "Common Stock"),
pursuant to an Exchange Offer Agreement, dated as of May 22, 1995 and amended
as of November 13, 1995 (the "Exchange Offer Agreement"), between the Company
and Shareholder;
Whereas, Shareholder recognizes the significant contributions of the current
management of the Company in creating shareholder value;
Whereas, in recognition of Shareholder's significant share ownership in the
Company, the Company has determined to grant to Shareholder the right to
designate three persons for election to the Board of Directors of the Company;
Whereas, the Company has determined to form a new Strategic Committee of the
Board of Directors, which will be chaired initially by the chairman and chief
executive officer of Shareholder;
Whereas, in view of the foregoing and the parties' intention that
Shareholder shall influence, but not control, the business and affairs of the
Company, Shareholder has agreed to certain restrictions on the acquisition and
disposition of the Preferred Shares and the Common Stock and the conduct of
Shareholder with respect to the Company.
Now, Therefore, in consideration of the mutual covenants and agreements
contained herein and in the Exchange Offer Agreement and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS; REPRESENTATIONS AND WARRANTIES
Section 1.1 Definitions. Except as otherwise specified herein, defined terms
used in this Agreement shall have the respective meanings assigned to such
terms in the Exchange Offer Agreement. Unless otherwise specified all
references to "days" shall be deemed to be references to calendar days. For
purposes of this Agreement, the following terms shall have the following
meanings:
(a) Affiliate. An "Affiliate" of a Person shall have the meaning set
forth in Rule 12b-2 of the Exchange Act as in effect on the date hereof.
(b) Bankruptcy Event. A "Bankruptcy Event" shall mean (i) the entry by a
court having jurisdiction in the premises of (x) a decree or order for
relief in respect of the Company in an involuntary case or proceeding under
any applicable United States or state bankruptcy, insolvency,
reorganization or other similar law or (y) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable United States or state law or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any of the
Company's property, or ordering the winding-up or liquidation of the
Company's affairs; and the continuance of any such decree or order of
relief or any such other decree or order unstayed and in effect for a
period of ninety (90) consecutive days; or (ii) the commencement by the
Company of a voluntary case or proceeding under any applicable United
States or state bankruptcy, insolvency, reorganization or other similar law
or any case or
A-4-1
<PAGE>
proceeding to be adjudicated a bankrupt or insolvent, or the consent by the
Company to the entry of a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any applicable United
States or state bankruptcy, insolvency, reorganization or other similar law
or to the commencement of any bankruptcy or insolvency case or proceeding
against the Company or the filing by the Company of a petition or answer or
consent seeking reorganization or relief under any applicable United States
or state law, or the consent by the Company to the filing of such a
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of the Company's
property, the making by the Company of a general assignment for the benefit
of creditors or the admission by the Company of the Company's inability to
pay its debts generally as they become due, or the taking of corporate
action by the Company with the intent of causing any of the foregoing.
(c) Beneficial Owner. A Person shall be deemed to "beneficially own," or
to have "beneficial ownership" of, any Voting Securities in accordance with
the term "beneficial ownership" as defined in Rule 13d-3 under the Exchange
Act as in effect on the date hereof and, in addition, such terms shall
include securities which such Person has the right to acquire (irrespective
of whether such right is exercisable immediately or only after the passage
of time, including the passage of time in excess of sixty (60) days)
pursuant to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants or options, or
otherwise. For purposes of this Agreement, Shareholder shall be deemed to
beneficially own any Voting Securities beneficially owned by its Controlled
Affiliates or any Group of which Shareholder or any such Controlled
Affiliate is a member.
(d) Board of Directors. "Board of Directors" shall mean the Board of
Directors of the Company.
(e) Closing Date. "Closing Date" shall mean the date of the consummation
of the OPE.
(f) Company Stock. "Company Stock" shall mean the Preferred Shares and
the Common Stock.
(g) Commission. "Commission" shall mean the Securities and Exchange
Commission.
(h) Controlled Affiliate. "Controlled Affiliate" shall mean, with respect
to any Person, any other Person more than fifty percent (50%) of the
outstanding Voting Securities of which is beneficially owned, and any other
Person which is actually controlled, directly or indirectly, by such Person
or one or more of its Controlled Affiliates. For purposes of this
Agreement, each of MW and Ernest-Antoine Seilliere shall be deemed to be
Controlled Affiliates of Shareholder.
(i) Exchange Act. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(j) Group. "Group" shall mean a "group" as such term is used in Section
13(d)(3) of the Exchange Act as in effect on the date hereof.
(k) MW. "MW" shall mean Marine-Wendel, a societe anonyme organized under
the laws of the Republic of France.
(l) NYSE. "NYSE" shall mean the New York Stock Exchange, Inc.
(m) OPE. "OPE" shall mean the offre publique d'echange undertaken by the
Company as provided in the Exchange Offer Agreement.
(n) Person. "Person" shall mean any individual, Group, corporation,
general or limited partnership, limited liability company, governmental
entity, joint venture, estate, trust, association, organization or other
entity of any kind or nature.
(o) Securities Act. "Securities Act" shall mean the Securities Act of
1933, as amended.
(p) Shareholder Designee. "Shareholder Designee" shall mean a person
designated for election to the Board of Directors by Shareholder as
provided in Section 3.2.
(q) Strategic Committee. "Strategic Committee" shall mean the Strategic
Committee of the Board of Directors to be formed as provided in the
Exchange Offer Agreement.
(r) Specified Event. "Specified Event" shall mean any unsolicited tender
or exchange offer commenced by a Person (other than Shareholder or its
Controlled Affiliates or any Group of which
A-4-2
<PAGE>
Shareholder or any such Controlled Affiliate is a member) for Voting
Securities representing more of the Total Voting Power of the Company than
the amount beneficially owned by Shareholder (but in any event for Voting
Securities representing not less than twenty percent (20%) of the Total
Voting Power of the Company), or an unsolicited proxy or consent
solicitation by any such Person in order to replace at least a majority of
the Continuing Directors, or any unsolicited tender or exchange offer for
voting securities representing at least twenty percent (20%) of the Total
Voting power of any material subsidiary of the Company.
(s) Takeover Proposal. "Takeover Proposal" shall mean (i) any Specified
Event, (ii) any other proposal to take-over control of the Company or a
merger, share exchange, other business combination, recapitalization,
restructuring, liquidation or similar transaction involving the Company or
any of its material subsidiaries, or any proposal or offer to acquire in
any manner Voting Securities representing more than twenty percent (20%) of
the Total Voting Power of the Company or any of its material subsidiaries,
a substantial equity interest in any of the Company's material subsidiaries
or a substantial portion of the assets of the Company or any of its
material subsidiaries, (iii) any request to invite any Person to effect any
of the actions specified in Section 3.1 or any request to challenge the
validity of, waive the benefit of, opt out of, or amend any provision of,
the shareholder rights plan of the Company described in by Section 3.6 or
any rights plan approved by the Strategic Committee or any anti-takeover
statutes or other anti-takeover provisions applicable to the Company, or
(iv) a proposal having similar effect.
(t) Total Voting Power. The term "Total Voting Power" shall mean the
total combined Voting Power, on a fully diluted basis, of all the Voting
Securities then outstanding.
(u) Voting Power. The term "Voting Power" shall mean the voting power in
the general election of directors of the Company, and shall be calculated
for each Voting Security by reference to the maximum number of votes such
Voting Security is or would be entitled to cast in the general election of
directors, and, in the case of convertible (or exercisable or exchangeable)
securities, by reference to the maximum number of votes such Voting
Security is entitled to cast in unconverted or converted (or exercised,
unexercised, exchanged or unexchanged) status. For purposes of determining
Voting Power under this Agreement, a Voting Security which is convertible
into or exchangeable for a Voting Security shall be counted as having the
greater of (i) the number of votes to which such Voting Security is
entitled prior to conversion or exchange and (ii) the number of votes to
which the Voting Security into which such Voting Security is convertible or
exchangeable is entitled. Notwithstanding anything else to the contrary
contained herein, there shall not be included in calculating Voting Power
any votes which a Person shall have upon the non-payment of dividends on
the Preferred Shares in accordance with the terms of the Preferred Shares.
(v) Voting Securities. "Voting Securities" shall mean, without
duplication, (x) any securities entitled, or which may be entitled, to vote
generally in the election of directors of the Company, (y) any securities
convertible or exercisable into or exchangeable for such securities
(whether or not the right to convert, exercise or exchange is subject to
the passage of time or contingencies or both) (including the Preferred
Shares), or (z) any direct or indirect rights or options to acquire any
such securities; provided that unexercised options granted pursuant to any
employment benefit or similar plan and rights issued pursuant to any
shareholder rights plan (including that described in Section 3.6) shall be
deemed not to be "Voting Securities" (or to have Voting Power).
In addition, the following terms have the definitions specified in the
Sections noted:
<TABLE>
<CAPTION>
TERM SECTION
---- -------
<S> <C>
Acquire............................................................ 3.1(a)
Agreement.......................................................... recitals
Beneficial Ownership Thresholds.................................... 3.2(a)
Cap................................................................ 4.5(a)
Company............................................................ recitals
Common Stock....................................................... recitals
Designated Company Breach.......................................... 2.1(v)
</TABLE>
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<TABLE>
<CAPTION>
TERM SECTION
---- -------
<S> <C>
Designated Shareholder Breach..................................... 2.1
Continuing Director............................................... 4.1(f)
Disposition....................................................... 4.1
Exchange Offer Agreement.......................................... recitals
Exercise Notice................................................... 4.2(a)
Losses............................................................ 5.5
Market Price...................................................... 4.2(b)(i)
Moving Party...................................................... 7.4
NASD.............................................................. 4.2(b)(i)
Preferred Shares.................................................. recitals
Preliminary Transfer Notice....................................... 4.2(a)
Private Sale...................................................... 4.1(d)
Purchase Price.................................................... 4.2(b)
Purchasing Person................................................. 4.1(b)
Required Disposition.............................................. 4.5(a)
Rule 144 Sale..................................................... 4.1(c)
Section 4.2 Closing............................................... 4.2(a)
Shareholder....................................................... recitals
Standstill Period................................................. 2.1
Subject Stock..................................................... 5.1
Third Party Offeror............................................... 4.1(f)
Transfer Notice................................................... 4.2(a)
Underwritten Offering............................................. 4.1(b)
</TABLE>
Section 1.2 Representations and Warranties of the Company. The Company
represents and warrants to Shareholder as follows:
(a) The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions
contemplated by this Agreement are within its corporate powers and have
been duly authorized by all necessary corporate action on its part. This
Agreement constitutes a legal, valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, subject, as
to enforcement, to bankruptcy, and insolvency, fraudulent transfer
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditor's rights and to general equity principles
(it being understood that such exception shall not in itself be construed
to mean that the Agreement is not enforceable in accordance with its
terms).
(b) The execution, delivery and performance of this Agreement by the
Company does not and will not contravene or conflict with or constitute a
default under the Company's Articles of Incorporation or Bylaws.
Section 1.3 Representations and Warranties of Shareholder. Shareholder
represents and warrants to the Company as follows:
(a) The execution, delivery and performance by Shareholder of this
Agreement and the consummation by Shareholder of the transactions
contemplated by this Agreement are within its corporate powers and have
been duly authorized by all necessary corporate action on its part. This
Agreement constitutes a legal, valid and binding agreement of Shareholder
enforceable against Shareholder in accordance with its terms, subject, as
to enforcement, to bankruptcy, and insolvency, fraudulent transfer
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditor's rights and to general equity principles
(it being understood that such exception shall not in itself be construed
to mean that the Agreement is not enforceable in accordance with its
terms).
(b) The execution, delivery and performance of this Agreement by
Shareholder does not and will not contravene or conflict with or constitute
a default under Shareholder's statuts or similar governing documents.
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(c) As of the date hereof, Shareholder beneficially owns Preferred
Shares and shares of Common Stock and Shareholder does not
beneficially own any other Voting Securities.
ARTICLE 2
STANDSTILL PERIOD
Section 2.1 Standstill Period. The "Standstill Period" shall be the period
commencing on the date hereof and ending on the earliest of:
(i) the date that is the later of (i) three (3) years after the date
hereof and (ii) the date on which Shareholder beneficially owns Voting
Securities (whether now owned or hereafter acquired) having Voting Power
representing, in the aggregate, less than three and one-half percent (3.5%)
of the Total Voting Power of the Company;
(ii) the date the Board of Directors agrees to recommend (or ceases to
oppose) the consummation of a Specified Event, or takes any action designed
to induce or materially facilitate such Specified Event, such as redeeming
any rights issued under a shareholder rights plan outstanding on the date a
third party initiates a Specified Event (provided that the sharing of
confidential information with, or discussing the possible sale of the
Company to, or the merger or consolidation with, a potential "white knight"
shall not constitute taking action designed to induce or materially
facilitate a Specified Event or result in a termination of the Standstill
Period, but provided further, that in order to permit Shareholder to have a
reasonable period of time to pursue other opportunities before such sale,
merger or consolidation, if the Board of Directors resolves to proceed with
such sale, merger or consolidation opposed by a majority of the Shareholder
Designees, then such Standstill Period may be terminated by Shareholder);
(iii) the date that Voting Securities representing twenty-five percent
(25%) of the Total Voting Power of the Company have been acquired by any
Person or Group other than Shareholder, its Controlled Affiliates or any
Group of which Shareholder or any such Controlled Affiliate is a member;
(iv) the date that the Company has entered into an agreement with respect
to the merger or consolidation of the Company or the sale of all or
substantially all of the assets of the Company, or any tender or exchange
offer for Voting Securities representing twenty-five percent (25%) or more
of the Total Voting Power of the Company, after which the surviving company
in any such transaction would have a board of directors of which the
majority of its members would not be Continuing Directors (and, in
addition, in respect of an asset sale, in which the shareholders of the
Company do not receive capital stock of the successor company), or the
Company takes material steps to solicit any such transaction;
(v) the date that the Company materially breaches the provisions of
Sections 3.2 or 5.1 hereof, and such breach remains uncured for fifteen
(15) days, in the case of breaches of Section 3.2, and thirty (30) days, in
the case of breaches of Section 5.1 after written notice of such breach has
been given by Shareholder to the Company (a "Designated Company Breach");
(vi) the date that any Shareholder Designee fails to be elected in any
election to the Board of Directors, unless the Company shall not have taken
appropriate action within thirty (30) days thereafter to cause another
Shareholder Designee to become a member of the Board of Directors, or to
otherwise adjust the size of the Board of Directors to preserve the
proportionate representation on the Board of Directors to which Shareholder
is then entitled as specified in Section 3.2;
(vii) the date that the Company breaches the dividend payment requirement
of Section 3.7(a) hereof (if such payment is not excused by the provisions
of Section 3.7(b) hereof), unless the Company shall have elected to its
Board of Directors one (1) Shareholder Designee in excess of the number of
such Shareholder Designees provided for in Section 3.2(a) hereof, in which
case the Company shall have an additional period of one (1) year to cure
such dividend payment breach (it being understood that Shareholder shall
cause such
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Shareholder Designee to resign from the Board of Directors promptly after
the earlier of (x) the date of such cure and (y) the date of termination of
the Standstill Period); or
(viii) the date that the Company breaches the debt rating maintenance
provisions of Section 3.8 hereof.
Notwithstanding the foregoing, the Standstill Period shall not terminate if,
at the time the Standstill Period would otherwise have terminated in
accordance with clause (i) through (viii) above, Shareholder is in material
breach of the provisions of Sections 3.1, 3.2, 3.3 or 4.1 of this Agreement (a
"Designated Shareholder Breach").
ARTICLE 3
STANDSTILL AND VOTING PROVISIONS
Section 3.1 Restrictions of Certain Actions by Shareholder. During the
Standstill Period, Shareholder agrees that none of Shareholder, any of its
Controlled Affiliates, or any Group of which Shareholder or any such
Controlled Affiliate is a member, will in any manner, directly or indirectly,
effect or seek, initiate or propose (whether publicly or otherwise) to effect,
or cause or participate in, or in any way induce, assist or encourage any
other Person to effect, seek, offer, initiate or propose (whether publicly or
otherwise) to effect or participate in, any Takeover Proposal, or including
without limitation any action described in (a) through (c) below, unless in
any such case invited in writing to do so by the Board of Directors as
specifically expressed in a resolution adopted by a majority of the Continuing
Directors who are not Shareholder Designees:
(a) acquire, offer or propose to acquire, or agree to acquire, whether by
purchase, tender or exchange offer, gift or otherwise (any such act, to
"acquire"), beneficial ownership of any Voting Securities or any rights to
acquire (whether currently, upon lapse of time, following the satisfaction
of any conditions, upon the occurrence of any event or any combination of
the foregoing) any Voting Securities except for (x) the acquisition of
Voting Securities (provided that there is not a Designated Shareholder
Breach in existence at the time of such acquisition) which would not, after
giving effect to such acquisition, result in beneficial ownership of Voting
Securities representing Voting Power in excess of [Shareholder's Voting
Power percentage at execution hereof] % of the Total Voting Power of the
Company, (y) pursuant to a stock split, stock dividend, rights offering,
recapitalization, reclassification or similar transaction made available to
holders of any Voting Securities generally or (z) upon conversion of the
Preferred Shares in accordance with their terms; provided, that any such
Voting Securities shall be subject to the restrictions of this Agreement
(it being understood that if Shareholder beneficially owns or acquires any
Voting Securities in violation of this Agreement, such Voting Securities
shall immediately be disposed of to Persons who are not Affiliates thereof
but only in compliance with the provisions of this Agreement; provided
however, that the Company may also pursue any other available remedy to
which it may be entitled as a result of such violation); provided further
that the provisions of this Section 3.1(a) shall not prohibit any
Shareholder Designee from acquiring Voting Securities pursuant to any
Company restricted stock plan, option plan or similar plan available to
directors of the Company,
(b) form, join, participate in or encourage the formation of, any Group
with respect to any Voting Securities or deposit any Voting Securities into
a voting trust or subject any such Voting Securities to a voting agreement
or any other arrangement or agreement with respect to the voting thereof;
provided however that, subject to Section 4.1 hereof, Shareholder may enter
into one or more bona fide pledges of Voting Securities with major
brokerage firms and financial institutions; or
(c) request the Company (or its directors, officers, employees or agents)
to amend or waive any provision of this Agreement (including this
paragraph);
Notwithstanding the foregoing, Shareholder's ability to vote its shares
shall be governed exclusively by the provisions of Section 3.3 hereof and the
provisions of this Agreement shall not restrict the Shareholder Designees from
acting in their capacity as directors of the Company.
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<PAGE>
Section 3.2 Board Representations. (a) The Company will cause Ernest-Antoine
Seilliere, Guy de Wouters and Felix G. Rohatyn or, subject to Section 3.2(e),
such other substitute persons as may be designated by Shareholder, to be
elected to the Board of Directors on the Closing Date. Thereafter, during the
Standstill Period and subject to the further provisions hereof, the Company
agrees to support the nomination of, and the Company's nominating committee
(or any other committee exercising a similar function) shall recommend to the
Board of Directors that (i) one Shareholder Designee, so long as Shareholder
beneficially owns Voting Securities having Voting Power equal to or greater
than five percent (5%) of the Total Voting Power and less than ten percent
(10%) of the Total Voting Power, (ii) two Shareholder Designees, so long as
Shareholder beneficially owns Voting Securities having Voting Power equal to
or greater than ten percent (10%) of the Total Voting Power and less than
fifteen percent (15%) of the Total Voting Power, and (iii) three Shareholder
Designees, so long as Shareholder beneficially owns Voting Securities having
Voting Power equal to or greater than fifteen percent (15%) of the Total
Voting Power (collectively the "Beneficial Ownership Thresholds"), be included
in the slate of nominees recommended by the Board of Directors to shareholders
for election as directors at each annual meeting of shareholders of the
Company commencing with the next annual meeting of shareholders. In the event
that any of such designees shall cease to serve as a director for any reason,
the Board of Directors shall fill the vacancy resulting thereby, subject to
the terms of this Agreement, with a person designated by Shareholder (and such
person shall be a "Shareholder Designee" for purposes hereof). Notwithstanding
the foregoing, the Company shall not have any obligation to support the
nomination, recommendation or election of any Shareholder Designee pursuant to
this Section 3.2(a) to the extent any of the Beneficial Ownership Thresholds
is met or exceeded by Shareholder as a result of its acquisition of beneficial
ownership of Voting Securities after the date hereof (except for such
acquisitions to the extent necessary to maintain Shareholder's beneficial
ownership of Voting Securities solely to the extent such ownership has
decreased as a result of the primary issuance of Voting Securities by the
Company or sale by the Company of Voting Securities held in treasury prior to
any such acquisition of Voting Securities by Shareholder).
(b) During such time as Shareholder is entitled pursuant to Section 3.2(a)
above to have at least one Shareholder Designee on the Board of Directors,
Shareholder shall also be entitled to have one Shareholder Designee appointed
to serve on each committee of the Board of Directors, including any special
committee, and the Company agrees to cause one such Shareholder Designee to be
so appointed. Notwithstanding the foregoing, if none of the Shareholder
Designees would be considered "independent" of the Company or "disinterested"
(i) for purposes of any applicable rule of the NYSE, the Paris Stock Exchange,
the London Stock Exchange or any other securities exchange or other self
regulating organization (such as the NASD) requiring that members of the Audit
Committee be independent of the Company, (ii) for purposes of any law or
regulation that requires, in order to obtain or maintain favorable tax,
securities, corporate law or other material legal benefits with respect to any
plan or arrangement for employee compensation or benefits, that the members of
the committee of the Board of Directors charged with responsibility for such
plan or arrangement be "independent" of the Company or "disinterested", or
(iii) for purposes of any special committee formed in connection with any
transaction or potential transaction involving the Company and any of
Shareholder, its Controlled Affiliates or any Group of which Shareholder is a
member or such other transaction or potential transaction which would involve
a conflict of interest on the part of the Shareholder Designees, then a
Shareholder Designee shall not be required to be appointed to any such
committee; provided that, the committees of the Board shall be organized such
that, to the extent practicable, the only items to be considered by any
committee on which no Shareholder Designee may serve will be those items which
prevent the Shareholder Designee from serving on such committee.
(c) Upon expiration of the Standstill Period pursuant to Section 2.1(i)
hereof or in the event of a Designated Shareholder Breach, Shareholder shall
have no further rights under this Section 3.2 and shall cause its designees on
the Board of Directors to resign promptly from the Board of Directors and any
committees thereof. In addition, if at any time Shareholder beneficially owns
Voting Securities in an amount not sufficient to entitle Shareholder to
designate the number of Shareholder Designees then currently serving on the
Board of Directors pursuant to Section 3.2(a), then Shareholder shall cause to
resign promptly from the Board of Directors that number of Shareholder
Designees as shall exceed the number of directors that Shareholder would then
be entitled to designate pursuant to Section 3.2(a); provided, however, that
to the extent Shareholder's beneficial ownership
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<PAGE>
of Voting Securities has decreased as a result of the primary issuance of
Voting Securities by the Company or sale by the Company of Voting Securities
held in treasury, Shareholder shall not be required to cause any Shareholder
Designee to resign for a period of eighteen (18) months after the date of the
primary issuance or sale of Voting Securities which triggered the resignation
requirement set forth in this sentence and, in the event that at the end of
such eighteen (18) month period Shareholder then beneficially owns sufficient
Voting Securities to entitle Shareholder to designate a number of Shareholder
Designees then sitting on the Board of Directors, Shareholder shall cause only
the Shareholder Designees in excess of that number to resign from the Board of
Directors.
(d) As of the Closing Date, the Board of Directors shall consist of no more
than eighteen (18) directors and shall be reduced to sixteen (16) directors by
no later than immediately after the time of the Company's next annual meeting
of Shareholders. In the event that the size of the Board of Directors is
thereafter increased or decreased, the number of directors Shareholder shall
be entitled to designate shall be adjusted ratably. In the event the increase
in the number of directors was approved by a majority of the Shareholder
Designees serving on the Board of Directors, any fraction shall be rounded
down to the nearest whole number. In the event the increase in the number of
directors was not approved by a majority of such Shareholder Designees, any
fraction shall be rounded up to the nearest whole number. When required by
this paragraph, Shareholder shall promptly cause the appropriate number of
Shareholder Designees to resign from the Board of Directors and any committees
thereof, or the Company shall promptly cause to be elected the appropriate
number of Shareholder Designees to give effect to this paragraph, as the case
may be.
(e) Notwithstanding the provisions of this Section 3.2, Shareholder shall
not be entitled to designate any person to the Company's Board of Directors
(or any committee thereof) in the event that the Company receives a written
opinion of its outside counsel that a Shareholder Designee would not be
qualified under any applicable law, rule or regulation to serve as a director
of the Company or if the Company objects to a Shareholder Designee because
such Shareholder Designee has engaged in any adverse conduct that would
require disclosure under Item 7 of Schedule 14A (promulgated under the
Exchange Act) or if the Board of Directors determines in good faith in its
reasonable judgment that nomination or election of a Shareholder Designee
would be a breach of the fiduciary duties of the Board of Directors, and, in
any such event, the Shareholder shall withdraw the designation of such
proposed Shareholder Designee and designate a replacement therefor (which
replacement Shareholder Designee shall also be subject to the requirements of
this Section). The Company shall use its reasonable best efforts to notify the
Shareholder of any objection to a Shareholder Designee sufficiently in advance
of the date on which proxy materials are mailed by the Company in connection
with such election of directors to enable the Shareholder to propose a
replacement Shareholder Designee in accordance with the terms of this
Agreement.
Section 3.3 Voting. (a) Shareholder agrees that, during the Standstill
Period, Shareholder shall, and shall cause its Controlled Affiliates and any
Person which is a member of any Group of which Shareholder or any of its
Controlled Affiliates is a member, to be present, in person or represented by
proxy, at all shareholder meetings of the Company so that all Voting
Securities beneficially owned by Shareholder shall be counted for the purpose
of determining the presence of a quorum at such meetings. Shareholder shall be
free to vote or cause to be voted such Voting Securities in its discretion;
provided that Shareholder shall vote or cause to be voted, or consent with
respect to, all Voting Securities beneficially owned by Shareholder in the
manner recommended by the Company's Board of Directors in connection with the
following actions to be taken by holders of Voting Securities:
(i) the election of directors of the Company; provided that Shareholder
shall not be obliged to vote in such manner for any nominee for election as
a director who is, pursuant to an arrangement or agreement between the
Company and a Person or Group (other than Shareholder, its Controlled
Affiliates or any Group of which the Shareholder or any of its Controlled
Affiliates is a member) holding Voting Power equal to or in excess of the
Voting Power of Shareholder at the record date for voting in such election,
designated as a nominee by such Person or Group, and
(ii) any question, resolution or proposal relating to a Takeover Proposal
which is submitted to a vote of the shareholders of the Company.
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Section 3.4 Third Party Contacts. (a) If at any time during the Standstill
Period, Shareholder or any of its Controlled Affiliates is approached by any
party concerning (i) a Takeover Proposal which Shareholder determines in its
good faith judgment is so significant as to be considered by the Board of
Directors, or (ii) a proposal to acquire all or a substantial portion of the
Voting Securities beneficially owned by Shareholder which Shareholder
determines in its good faith judgment is so significant as to be considered by
its supervisory board or directorate, Shareholder will promptly inform the
Company of the Takeover Proposal or other such proposal, as the case may be,
and in the case of a Takeover Proposal, the Strategic Committee shall consider
and evaluate a response to such Takeover Proposal and make a recommendation to
the Board of Directors.
(b) If at any time during the Standstill Period, the Company is approached
by any party concerning a Takeover Proposal which the Chairman of the Board of
the Company determines in his good faith judgment is so significant as to be
considered by the Board of Directors, the Chairman of the Board of the Company
will promptly inform the Chairman of the Strategic Committee of the Takeover
Proposal and the Committee shall consider and evaluate a response to such
Takeover Proposal and make a recommendation to the Board of Directors.
Section 3.5 Notices of Dispositions of Voting Securities. Not later than the
tenth day following the end of any calendar month during the Standstill Period
in which one or more Dispositions of Voting Securities by Shareholder or any
of its Controlled Affiliates shall have occurred, Shareholder shall use its
reasonable best efforts to give written notice to the Company of all such
Dispositions (in the case of Dispositions by Controlled Affiliates, to the
extent it has knowledge) unless any such Disposition has been reflected in a
filing on Schedule 13D or Form 4 (or any successor to such forms) under the
Exchange Act or an amendment thereto that was delivered to the Company on or
in advance of the date upon which notice thereof under this Section 3.5 would
have been due. Such notice shall state the date upon which each such
Disposition was effected, the number and type of Voting Securities involved in
each such Disposition, the means by which each such Disposition was effected
and, to the extent known, the identity of the Person acquiring Voting
Securities.
Section 3.6 Shareholder Rights Plan. The Company has adopted a shareholder
rights plan on terms and conditions set forth in the Rights Agreement dated as
of August 7, 1995 between the Company and First Chicago Trust Company of New
York as Rights Agent.
Section 3.7 Dividend Policy. (a) The Company has indicated that it is the
present intention of the Board of Directors to commence regularly paying
dividends on the Common Stock on a quarterly basis, starting with the calendar
quarter in which the Closing Date occurs (and, with respect to dividends paid
in the calendar quarter in which the Closing occurs, such dividends shall be
paid to holders of record of the Common Stock as of a date after the Closing
Date). With respect to dividends paid in 1995, if any, such dividends will be
paid in an annualized amount equal to $ 0.80 per share of Common Stock ($ 0.20
per quarter). With respect to dividends paid in 1996, such dividends will be
paid in an annualized amount of $ 1.00 per share ($ 0.25 per quarter). All
such dividend rates shall be subject to adjustment for any stock splits,
reverse stock splits, stock dividends and similar events after the date of the
Exchange Offer Agreement. The Company has indicated that it is the present
intention of the Board of Directors to increase the amount of such dividends
over time based on the financial condition of the Company. The amount of
dividends paid to Shareholder during the four full quarters following the
Latest Mandatory Conversion Date (as defined in the terms of the Preferred
Shares included as Annex 1 to the Exchange Offer Agreement) shall be not less
than the amount of dividends paid to Shareholder on the Common Stock and
Preferred Shares that Shareholder receives in the OPE during the four full
fiscal quarters following the OPE (assuming for these purposes that
Shareholder has neither purchased nor disposed of any securities of the
Company after the OPE is consummated), and thereafter the Company shall
maintain the policy of paying dividends generally consistent with prior
policy, it being understood that if the provisions of this sentence are not
complied with, Shareholder shall be entitled solely to the remedies set forth
in Section 2.1 (vii) hereof.
(b) Any change in the dividend payments actually made or any failure by the
Company to maintain the policy of paying dividends from that set forth in the
third sentence of Section 3.7(a) hereof that is recommended
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to the Board of Directors by the Strategic Committee shall be deemed to
replace the dividend payment or policy condition in such sentence of Section
3.7(a) hereof for all purposes under this Agreement. The Company shall be
excused from its failure to pay any dividends in such dividend payment
condition and to maintain such dividend policy condition to the extent that
the Company's cash needs in connection with the conduct of its operations are
such that the Board of Directors in its good faith judgment determines that
the payment of such dividends or the maintenance of such policy would, under
the circumstances, be materially detrimental to the Company.
Section 3.8 Debt Rating. The Company intends to conduct its business in a
manner consistent with its maintaining an "investment grade" rating for its
long-term unsecured debt securities, and agrees that any failure to maintain
such rating with at least one "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Securities
Act) for a period of longer than one year shall constitute a breach of the
foregoing requirement, provided such failure does not result from changes in
general economic or industry conditions or other circumstances that could not
have been reasonably avoided by the management of the Company or from
transactions, policies or activities approved by the Strategic Committee (it
being understood that if the provisions of this sentence are not complied
with, Shareholder shall be entitled solely to the remedies set forth in
Section 2.1 (viii) hereof).
ARTICLE 4
TRANSFER RESTRICTIONS
Section 4.1 Restrictions on Dispositions. During the Standstill Period,
Shareholder shall not, and shall cause its Controlled Affiliates not to,
directly or indirectly (including, without limitation, through the disposition
or transfer of control of another Person), sell, assign, donate, transfer,
pledge, hypothecate, grant any option with respect to or otherwise dispose of
any interest in (or enter into an agreement or understanding with respect to
the foregoing) any Voting Securities (a "Disposition"), except as set forth
below in this Section 4.1; provided, however, that the restrictions set forth
in Sections 4.1 through 4.4 shall not apply to Shareholder if a Bankruptcy
Event has occurred during the Standstill Period. Without limiting the
generality of the foregoing, any sale of securities of Shareholder or any of
its Controlled Affiliates which is currently (or following the passage of
time, the occurrence of any event or the giving of notice), directly or
indirectly, exchangeable or exercisable for, or convertible into, any Voting
Securities shall constitute a Disposition of such Voting Securities.
(a) Dispositions may be made to a Controlled Affiliate of Shareholder;
provided, that such Controlled Affiliate agrees in writing to be bound by
this Agreement to the same extent as Shareholder.
(b) Dispositions of Voting Securities may be made pursuant to a bona fide
public offering in a firm commitment or best efforts underwriting managed
by a United States nationally recognized underwriter, effected in
accordance with the registration rights provisions in Article 5 and which
provides for a widely distributed public offering in accordance therewith
(an "Underwritten Offering"); provided, that, prior to any such
Disposition, Shareholder and its Controlled Affiliates shall have complied
with the provisions of Section 4.2 or Section 4.3 hereof, as the case may
be; provided, further, that such Dispositions shall not be made to any
Person who or which, together with such Person's Affiliates and the members
of any Group existing with respect to Voting Securities of which such
Person is a part (any such Person and its Affiliates and Group members
being collectively referred to herein as a "Purchasing Person"), would
immediately thereafter, to the knowledge of Shareholder, any of its
Controlled Affiliates, or the managing underwriter(s) beneficially own
Voting Securities representing three and one-half percent (3.5%) or more of
the Total Voting Power.
(c) Dispositions of Voting Securities may be made pursuant to sales
effected in accordance with Rule 144 under the Securities Act (or any
successor rule) (a "Rule 144 Sale"); provided that, prior to any such
Disposition, Shareholder and its Controlled Affiliates shall have complied
with the provisions of Section 4.2 or Section 4.3 hereof, as the case may
be; provided, further, that such Dispositions shall not be made to any
Purchasing Person who or which would immediately thereafter, to the
knowledge of Shareholder, any
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of its Controlled Affiliates, or Shareholder's broker, beneficially own
Voting Securities representing three and one-half percent (3.5%) or more of
the Total Voting Power.
(d) Dispositions may be made to any Purchasing Person (other than
pursuant to a tender or exchange offer) that would, following such sale,
beneficially own no more than three and one-half percent (3.5%) of the
Total Voting Power (a "Private Sale") (and such Purchasing Person shall
have provided a certificate to such effect); provided that prior to such
Disposition, Shareholder shall have complied with the provisions of Section
4.2 or Section 4.3 hereof, as the case may be.
(e) Dispositions may be made to the Company in accordance with Sections
4.2 and 4.3 hereof.
(f) Dispositions may be made pursuant to a tender offer or exchange offer
or any other transaction with a third party (a "Third Party Offeror") which
is recommended to the shareholders of the Company generally by at least a
majority of the Continuing Directors of the Company. "Continuing Director"
shall mean a member of the Board of Directors of the Company who is not a
Third Party Offeror or an Affiliate of a Third Party Offeror (or a
representative or nominee of a Third Party Offeror or any such Affiliate)
and who either (i) was a member of the Board of Directors prior to the date
hereof or (ii) subsequently became a director of the Company and whose
election or nomination for election was approved or recommended by a vote
of a majority of the Board of Directors of the Company, which majority
included a majority of the Continuing Directors then on the Board of
Directors.
(g) With respect to Voting Securities which are, by their terms,
convertible into or exercisable or exchangeable for other Voting Securities
(including the Preferred Shares) such conversion, exercise or exchange
shall not be deemed a Disposition.
(h) Dispositions may be made pursuant to one or more bona fide pledges or
grants of a security interest in Voting Securities to a major brokerage
firm or financial institution to secure bona fide indebtedness, or the sale
of such Voting Securities by foreclosure on such pledge; provided that such
lender is not an Affiliate of Shareholder and such lender agrees that (i)
in the case of any such pledge of Voting Securities or grant in respect of
Voting Securities representing three and one half percent (3.5%) or less of
the Total Voting Power, it will abide by the provisions of Sections 4.2 or
4.3, as the case may be, in the event of such foreclosure and (ii) in the
case of any such pledge of Voting Securities or grant in respect of Voting
Securities representing more than three and one half percent (3.5%) of the
Total Voting Power, such lender shall be bound by all of the provisions of
this Agreement in the event of such foreclosure (except that such lender
and its transferees shall not be entitled to the benefits of Section 3.2).
(i) Shareholder agrees, without the consent of the managing
underwriter(s) in an underwritten offering in respect of the Company's
securities, not to effect any sale or distribution of Voting Securities
(other than in connection with Shareholder's own registration pursuant to
paragraph (b) hereof), including a Rule 144 Sale, during the ten (10) day
period prior to, and during the ninety (90) day period beginning on, the
effective date of the registration statement filed by the Company in
respect of such underwritten offering.
Section 4.2 Company's Right to Purchase Preferred Shares. Prior to any
Disposition of Preferred Shares pursuant to Section 4.1(b), 4.1(c) or Section
4.1(d) hereof, the Company shall have the right, exercisable in accordance
with this Section 4.2, to purchase any or all of the Preferred Shares intended
to be subject to such Disposition by Shareholder or any of its Controlled
Affiliates.
(a) If Shareholder or any of its Controlled Affiliates wishes to effect
any Disposition of Preferred Shares pursuant to Section 4.1(b), Section
4.1(c) or Section 4.1(d) hereof, Shareholder shall give written notice (a
"Preliminary Transfer Notice") to the Company of such intended Disposition,
specifying the Preferred Shares to be subject to Disposition and the
intended method of Disposition (and including, to the extent known, the
identity of any prospective purchasers and, in respect of a proposed
Private Sale, the price at which, and the material terms upon which
(including the identity of any prospective purchaser), such sale is
proposed to be made); provided that any request for registration of Subject
Stock constituting Preferred Shares shall be deemed a Preliminary Transfer
Notice with respect to the Registrable Securities requested to be
registered. The Preliminary Transfer Notice shall be given not less than
twenty (20) nor more than thirty (30) trading days in advance of the
Transfer Notice. If Shareholder determines that it wishes to
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proceed with its proposed Underwritten Offering, Rule 144 Sale or Private
Sale, Shareholder shall deliver to the Company a written notice to that
effect containing the same scope of information as in the Preliminary
Transfer Notice (the "Transfer Notice") within the time period prescribed
in the preceding sentence. If the Company wishes to purchase the Preferred
Shares specified in the Transfer Notice, then in the case of a proposed
Private Sale within five (5) trading days, and in the case of other such
Dispositions within twenty (20) trading days, following receipt of the
Transfer Notice, the Company shall deliver a written notice (an "Exercise
Notice") to Shareholder indicating that the Company wishes to exercise its
rights hereunder to purchase such number of such Preferred Shares as
designated in the Exercise Notice, a date for the closing of such purchase,
which shall not be more than ten (10) trading days after delivery of such
Exercise Notice (subject to extension as provided herein), and a place for
the closing of such purchase (a "Section 4.2 Closing"). Upon delivery of an
Exercise Notice, a binding agreement shall be deemed to exist providing for
the purchase by the Company of the Preferred Shares to which such Exercise
Notice relates, upon the terms and subject to the conditions set forth in
this Section 4.2; provided that, other than with respect to a Private Sale,
the Company may rescind its Exercise Notice (in which event it will not
have obligation to purchase such Preferred Shares) at any time within five
(5) trading days following any determination of the value of any untraded
securities pursuant to Section 4.2(b)(ii) hereof.
(b) The purchase price for any such Preferred Shares (the "Purchase
Price") shall be determined as set forth below.
(i) With respect to Preferred Shares proposed to be sold pursuant to
a Private Sale, the Purchase Price per share of such Preferred Shares
shall equal the price contained in the Transfer Notice. With respect to
Preferred Shares proposed to be sold pursuant to an Underwritten
Offering or a Rule 144 Sale, the Purchase Price per share of such
Preferred Shares shall equal the average closing price per share of the
Preferred Shares during the twenty (20) consecutive trading days
immediately preceding the Company's delivery of the Exercise Notice.
The closing price (the "Market Price") for each such day shall be the
last sale price regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices regular way,
in either case on the NYSE, or, if the Preferred Shares are not listed
or admitted to trading on such exchange, on the principal national or
international securities exchange on which the Preferred Shares are
listed or admitted to trading, or, if the Preferred Shares are not
listed or admitted to trading on any national or international
securities exchange but are designated as national market system
securities by the National Association of Securities Dealers, Inc.
("NASD"), the last sale price, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, in either
case as reported on the NASD Automated Quotation/National Market
System, or if the Preferred Shares are not so designated as national
market system securities, the average of the highest reported bid and
lowest reported asked prices as furnished by the NASD or similar
organization if the NASD is no longer reporting such information.
(ii) If the Preferred Shares are not publicly traded as contemplated
pursuant to clause (i) above, the value of the Preferred Shares shall
be determined by two United States nationally recognized investment
banking firms, one firm to be selected by each of Shareholder and the
Company, or in the event such firms are unable to agree, by a third
United States nationally recognized investment banking firm selected by
such firms. Shareholder and the Company shall use their reasonable best
efforts to cause any such determination of value to be made within ten
trading days following the Company's delivery of the applicable
Exercise Notice. In connection with any determination of fair market
value pursuant to this Section 4.2(b), each party will bear the fees
and expenses of the investment banking firm selected by it and the
parties will bear equally the fees and expenses of any third investment
banking firm.
(c) At any Section 4.2 Closing, the Company shall pay to Shareholder (or
its designees) the aggregate Purchase Price for the Preferred Shares by
wire transfer of immediately available funds in United States dollars, and
Shareholder shall deliver or cause to be delivered to the Company such
Preferred Shares, with documentation satisfactory to the Company evidencing
the transfer of such Preferred Shares, in form acceptable for transfer on
the Company's books.
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(d) If the Company does not exercise its right to purchase Preferred
Shares specified in a Transfer Notice, or if the Company exercises its
right to rescind as described in the proviso to the last sentence of
Section 4.2 (a) hereof, then the party giving such Transfer Notice shall be
free to effect the Disposition of such Preferred Shares, subject to Section
4.1 hereof (other than the restrictions contained therein relating to the
Company's purchase rights under this Section 4.2); provided that, in the
case of a Disposition pursuant to an Underwritten Offering, Shareholder may
effect such Disposition in accordance with the provisions of this Agreement
in an Underwritten Offering that is consummated at any time within one
hundred and twenty (120) days after the last date on which the Company's
Exercise Notice could have been timely delivered; provided, further that in
the case of a Disposition pursuant to a Rule 144 Sale, Shareholder may
effect such Disposition in accordance with the provisions of this Agreement
in a Rule 144 Sale within thirty (30) days following the last date on which
the Company's Exercise Notice could have been timely delivered.
(e) The obligations of the parties to effect any Section 4.2 Closing
shall be subject to the satisfaction of the following conditions: (i) all
waiting periods, if any, applicable to the transactions occurring at such
Section 4.2 Closing under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, shall have expired or been terminated and (ii) no
statute, rule, regulation, executive order, decree, ruling, injunction or
other order shall have been enacted, entered, promulgated or enforced by
any court or governmental authority of competent jurisdiction which
prohibits such transactions or makes such transactions illegal. If, as of
any date on which a Section 4.2 Closing is scheduled to occur, the
foregoing conditions relating thereto have not been satisfied, then such
Section 4.2 Closing shall occur as promptly as practicable following such
satisfaction, and the parties shall use their reasonable best efforts to
cause the satisfaction of such conditions; provided that if the foregoing
conditions relating to any Section 4.2 Closing are not satisfied within one
hundred twenty (120) days following the delivery of the applicable Exercise
Notice, then Shareholder or the Company may terminate the agreement deemed
to exist upon delivery of the applicable Exercise Notice.
Section 4.3 Company's Right to Purchase Common Shares. (a) If Shareholder or
any of its Controlled Affiliates wishes to effect any Disposition of shares of
Common Stock pursuant to Section 4.1(b), Section 4.1(c) or Section 4.1(d),
Shareholder will so notify the Company. Such notice shall indicate whether
such Disposition will occur pursuant to Section 4.1(b), 4.1(c) or 4.1(d). In
the event Shareholder has obtained a bona fide offer for such shares at a
price higher than the Market Price on the Business Day immediately preceding
such notice, the notice shall indicate such higher price, together with the
identity of the proposed purchaser and any other material terms in the case of
a Private Sale. The Company shall have the right to purchase all (but not less
than all) of the shares of Common Stock at the higher of the Market Price on
the Business Day immediately preceding such notice or the higher price
specified in such notice, if any. As promptly as practicable, and in no event
more than twenty-four (24) hours after receipt of such notice from
Shareholder, the Company shall advise Shareholder if it will purchase such
shares of Common Stock.
If the Company elects not to purchase such shares of Common Stock or if the
Company fails to agree to purchase such shares of Common Stock on the terms
provided herein within twenty-four (24) hours of receipt of notice, then
Shareholder shall be free to undertake the Disposition of such shares. In case
the notice shall have specified that such Disposition would occur pursuant to
Section 4.1(b), then Shareholder may effect such disposition in accordance
with the provisions of this Agreement in an Underwritten Offering that is
consummated at any time within one hundred and twenty (120) days after receipt
by the Company of such notice. In case the notice shall have specified that
such Disposition would occur pursuant to Section 4.1(c) or 4.1(d), then
Shareholder shall have twenty (20) Business Days to offer and sell such Common
Stock. In any case, any such sale may occur at a price above or below the
Market Price, but in the case of a Private Sale such sale may not occur at a
price less than the price at which such shares were offered to the Company if
the price at which such shares were so offered exceeded the Market Price on
the date of such offer to the Company.
(b) If the Company agrees to purchase any shares of Common Stock pursuant to
clause (a) above, the provisions of Section 4.2(c) and Section 4.2(e) shall
apply to such purchase as if it were a Section 4.2 Closing.
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Section 4.4 Assignment of Rights. The Company may assign any of its rights
under this Article 4 to any Person without the consent of Shareholder,
provided, however, that no such assignment shall relieve the Company of any of
its obligations pursuant to this Article 4. In the event that the Company
elects to exercise a right to purchase any Voting Securities under this
Article 4, the Company may specify another Person as the Company's designee to
purchase the Voting Securities.
Section 4.5 Required Dispositions. (a) The Company acknowledges that
Shareholder's Voting Power relative to Total Voting Power may from time to
time exceed [Shareholder's Voting Power percentage at execution hereof] solely
as a result of the Company's repurchase of its own outstanding Voting
Securities or reclassifications by the Company of Voting Securities. If, as a
result of such Company repurchases or reclassifications, Shareholder shall at
any time during the Standstill Period beneficially own Voting Securities
having Voting Power that is more than [3.5% of the Total Voting Power in
excess of Shareholder's Voting Power percentage at the execution hereof] of
Total Voting Power (the "Cap"), then, if and to the extent requested by the
Company by written notice to Shareholder, Shareholder shall, within eighteen
(18) months after such request, dispose of or cause its Controlled Affiliates
to dispose of (a "Required Disposition") such number of shares of Voting
Securities pursuant to Article 4 hereof as shall be necessary to reduce
Shareholder's beneficial ownership of Total Voting Power to no more than the
Cap.
ARTICLE 5
REGISTRATION RIGHTS
Section 5.1 Registration Upon Request. At any time after June 30, 1996,
Shareholder shall have the right to make written demand upon the Company, on
not more than eight (8) separate occasions (subject to the provisions of this
Section 5.1), to register under the Securities Act, the Common Stock, the
Preferred Shares, the shares of Common Stock received by Shareholder pursuant
to the conversion of the Preferred Shares and any additional Preferred Shares
or shares of Common Stock which Shareholder may have acquired after the date
hereof to the extent such additional shares were acquired by Shareholder in
compliance with the terms of this Agreement (the shares subject to such demand
hereunder being referred to as the "Subject Stock"), and the Company shall use
its reasonable efforts to cause such shares to be registered under the
Securities Act as soon as reasonably practicable so as to permit the sale
thereof; provided, however, that each such demand shall cover at least five
hundred thousand (500,000) shares of Subject Stock constituting Preferred
Shares or one million (1,000,000) shares of Subject Stock constituting shares
of Common Stock (subject to adjustment for stock splits, reverse stock splits,
stock dividends and similar events after the date hereof). In connection
therewith, the Company shall, as expeditiously as possible, prepare and file
with the Commission, a registration statement under the Securities Act to
effect such registration, and use reasonable efforts to cause such
registration statement to become and remain effective for at least ninety (90)
days. Shareholder agrees to provide all such information and materials and to
take all such action as may be reasonably required in order to permit the
Company to comply with all applicable requirements of the Securities Act and
the Commission and to obtain any desired acceleration of the effective date of
such registration statement. If the offering to be registered is to be
underwritten, the managing underwriter shall be selected by Shareholder and
shall be reasonably satisfactory to the Company, and Shareholder and such
underwriter shall enter into an underwriting agreement containing customary
terms and conditions. Notwithstanding the foregoing, the Company (i) shall not
be obligated to prepare or file more than one such registration statement
during any twelve (12) month period, (ii) shall be entitled to postpone for a
reasonable period of time (but in no event more than one hundred twenty (120)
days) the filing of any registration statement otherwise required to be
prepared and filed by the Company if (x) the Company is, at such time,
conducting or about to conduct an underwritten public offering of securities
and is advised by its managing underwriter or underwriters that such offering
would, in its or their opinion, be adversely affected by the registration so
requested, or (y) the Company determines in good faith that the registration
and distribution of the shares of Subject Stock would interfere with any
existing or proposed financing, acquisition, disposition, corporate
reorganization or other transaction of a similar type involving the Company.
In the event of such postponement, Shareholder shall have the right to
withdraw the request for registration by giving written
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notice to the Company within ten (10) days after receipt of the notice of
postponement (and, in the event of such withdrawal, such request shall not be
counted for purposes of determining the number of registrations to which
Shareholder is entitled pursuant to this Section 5.1).
Section 5.2 Incidental Registration Rights. If the Company proposes to
register any of the Preferred Shares or Common Stock for sale under the
Securities Act (other than (i) pursuant to Section 5.1 hereof, (ii) securities
to be issued pursuant to a stock option or other employee benefit or similar
plan, or (iii) securities proposed to be issued in exchange for securities or
assets of, or in connection with a merger or consolidation with, another
corporation) the Company shall, as promptly as practicable and in no event
less than thirty (30) days prior to the date such registration statement is
filed with the Commission, give written notice to Shareholder of the Company's
intention to effect such registration. If, within fifteen (15) days after
receipt of such notice, Shareholder submits a written request to the Company
specifying the amount of Subject Stock that it proposes to sell or otherwise
dispose of in accordance with this Section 5.2, the Company shall use
reasonable efforts to include the shares specified in Shareholder's request in
such registration. If the offering pursuant to such registration statement is
to be made by or through underwriters, the managing underwriters shall be
chosen by the Company in its sole discretion, and the Company, Shareholder and
such underwriter shall execute an underwriting agreement in customary form. If
the managing underwriter determines in good faith and advises Shareholder that
the inclusion in the registration statement of all the Subject Stock proposed
to be included would interfere with the successful marketing of all securities
proposed to be registered, then Shareholder shall agree to downward adjustment
in the number of shares of Subject Stock to be included in such underwriting
sufficient to alleviate fully such marketing concern (provided that if
securities are being offered for the account of Persons other than the Company
(other than pursuant to demand registration rights), then the proportion by
which the amount of securities intended to be offered for the account of
Shareholder is reduced shall not exceed the proportion by which the amount of
such securities intended to be offered for the account of such other Person is
reduced). If Shareholder has been permitted to participate in a proposed
offering pursuant to this Section 5.2, the Company thereafter may determine
either not to file a registration statement relating thereto, or to withdraw
such registration statement, or otherwise not to consummate such offering,
without any liability hereunder. In connection with any offering of shares of
Subject Stock registered pursuant to Section 5.1 or 5.2 hereof, Shareholder
shall comply with all other terms of this Agreement (including Section 4.1(b),
and in connection with Section 4.1(b), Shareholder shall use all reasonable
efforts to secure the agreement of the underwriters, in connection with any
underwritten offering of its Subject Stock, to comply therewith).
Section 5.3 Registration Mechanics. In connection with any offering of
shares of Subject Stock registered pursuant to Section 5.1 or 5.2 hereof, the
Company shall (i) furnish to Shareholder such number of copies of any
prospectus (including preliminary and summary prospectuses) and conformed
copies of the registration statement (including amendments or supplements
thereto and, in each case, all exhibits) and such other documents as it may
reasonably request, but only while the Company shall be required under the
provisions hereof to cause the registration statement to remain current; (ii)
(x) use reasonable efforts to register or qualify the Subject Stock covered by
such registration statement under such blue sky or other state securities laws
for offer and sale as Shareholder shall reasonably request and (y) keep such
registration or qualification in effect for so long as the registration
statement remains in effect; provided, however, that the Company shall not be
obligated to qualify to do business as a foreign corporation under the laws of
any jurisdiction in which it shall not then be qualified or to file any
general consent to service of process in any jurisdiction in which such a
consent has not been previously filed or subject itself to taxation in any
jurisdiction wherein it would not otherwise be subject to tax but for the
requirements of this Section 5.3; (iii) use reasonable efforts to cause all
shares of Subject Stock covered by such registration statement to be
registered with or approved by such other federal or state government agencies
or authorities as may be necessary in the opinion of counsel to the Company to
enable Shareholder to consummate the Disposition of such shares of Subject
Stock; (iv) notify Shareholder any time when a prospectus relating thereto is
required to be delivered under the Securities Act upon discovery that, or upon
the happening of any event as a result of which, the prospectus included in
such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, in the
light of the
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circumstances under which they were made, and (subject to the good faith
determination of the Board of Directors as to whether to cease all sales under
such registration statement), at the request of Shareholder prepare and
furnish to it a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
the light of the circumstances under which they were made; (v) otherwise use
reasonable efforts to comply with all applicable rules and regulations of the
Commission; (vi) use reasonable efforts to list, if required by the rules of
the applicable securities exchange or, if securities of the same class are
then so listed, the Subject Stock covered by such registration statement on
the NYSE, the Paris Stock Exchange and on any other principal securities
exchange on which such class of Voting Securities is then listed; and (vii)
before filing any registration statement or any amendment or supplement
thereto, furnish to Shareholder and its counsel copies of such documents and
permit Shareholder and its counsel to review and comment on such documents.
Upon any registration becoming effective pursuant to Section 5.1, the Company
shall use reasonable efforts to keep such registration statement current for a
period of ninety (90) days or such shorter period as shall be necessary to
effect the distribution of the Subject Stock.
Shareholder agrees that upon receipt of any notice from the Company of the
happening of any event of the kind described in clause (iv) of this Section
5.3, it will forthwith discontinue its Disposition of Subject Stock pursuant
to the registration statement relating to such Subject Stock until its receipt
of the copies of the supplemented or amended prospectus contemplated by clause
(iv) of this Section 5.3 and, if so directed by the Company, will deliver to
the Company all copies then in its possession of the prospectus relating to
such Subject Stock current at the time of receipt of such notice. If
Shareholder's Disposition of Subject Stock is discontinued pursuant to the
foregoing sentence, unless the Company thereafter extends the effectiveness of
the registration statement to permit Dispositions of Subject Stock by
Shareholder at least thirty (30) consecutive days and for an aggregate of
ninety (90) days, whether or not consecutive, the registration statement shall
not be counted for purposes of determining the number of registrations to
which Shareholder is entitled pursuant to Section 5.1.
Section 5.4 Expenses. Shareholder shall pay all agent fees and commissions
and underwriting discounts and commissions related to shares of Subject Stock
being sold by Shareholder and the fees and disbursements of its counsel and
accountants and the Company shall pay all fees and disbursements of its
counsel and accountants in connection with any registration pursuant to this
Article 5; provided that all fees and disbursements in connection with any
registration (excluding any withdrawn registration request) pursuant to this
Article 5 in excess of the first four (4) actual such registrations shall be
borne by the Shareholder. All other fees and expenses in connection with any
registration statement (including, without limitation, all registration and
filing fees, all printing costs, all fees and expenses of complying with
securities or blue sky laws) shall (i) in the case of a registration pursuant
to Section 5.1, be borne solely by Shareholder and (ii) in the case of a
registration pursuant to Section 5.2, be shared pro rata based upon the
respective market values of the securities to be sold by the Company,
Shareholder and any other holders participating in such offering.
Section 5.5 Indemnification and Contribution. In the case of any offering
registered pursuant to this Article 5, the Company agrees to indemnify and
hold Shareholder, each underwriter, if any, of the Subject Stock under such
registration and each Person who controls any of the foregoing within the
meaning of Section 15 of the Securities Act, and any directors and officers of
the foregoing, harmless against any and all losses, claims, damages, or
liabilities (including reasonable legal fees and other reasonable expenses
incurred in the investigation and defense thereof) to which they or any of
them may become subject under the Securities Act or otherwise (collectively
"Losses"), insofar as any such Losses shall arise out of or shall be based
upon (i) any untrue statement or alleged untrue statement of a material fact
contained in the registration statement relating to the sale of such Subject
Stock, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading or (ii) any untrue statement or alleged untrue statement of a
material fact contained in the prospectus relating to the sale of such Subject
Stock, or the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, provided, however,
that the
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indemnification contained in this Section 5.5 shall not apply to such Losses
which shall arise out of or shall be based upon any such untrue statement, or
any such omission or alleged omission, which shall have been made in reliance
upon and in conformity with information furnished in writing to the Company by
Shareholder or any such underwriter, as the case may be, specifically for use
in connection with the preparation of the registration statement or prospectus
contained in the registration statement or any such amendment thereof or
supplement therein.
In the case of each offering registered pursuant to this Article 5,
Shareholder and each underwriter, if any, participating therein shall agree,
substantially in the same manner and to the same extent as set forth in the
preceding paragraph, severally to indemnify and hold harmless the Company and
each Person, if any, who controls the Company within the meaning of Section 15
of the Securities Act, and the directors and officers of the Company, with
respect to any statement in or omission from such registration statement or
prospectus contained in such registration statement (as amended or as
supplemented, if amended or supplemented as aforesaid) if such statement or
omission shall have been made in reliance upon and in conformity with
information furnished in writing to the Company by Shareholder or such
underwriter, as the case may be, specifically for use in connection with the
preparation of such registration statement or prospectus contained in such
registration statement or any such amendment thereof or supplement thereto.
Each party indemnified under this Section 5.5 shall, promptly after receipt
of notice of the commencement of any claim against such indemnified party in
respect of which indemnity may be sought hereunder, notify the indemnifying
party in writing of the commencement thereof. The failure of any indemnified
party to so notify an indemnifying party shall not relieve the indemnifying
party from any liability in respect of such action which it may have to such
indemnified party on account of the indemnity contained in this Section 5.5,
unless (and only to the extent) the indemnifying party was prejudiced by such
failure, and in no event shall such failure relieve the indemnifying party
from any other liability which it may have to such indemnified party. In case
any action in respect of which indemnification may be sought hereunder shall
be brought against any indemnified party and it shall notify an indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it may desire, jointly with any
other indemnifying party similarly notified, to assume the defense thereof
through counsel reasonably satisfactory to the indemnified party, and after
notice from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party shall not be liable
to such indemnified party under this Section 5.5 for any legal or other
expenses subsequently incurred by such indemnified party in connection with
the defense thereof, other than reasonable costs of investigation (unless such
indemnified party reasonably objects to such assumption on the grounds that
there may be defenses available to it which are different from or in addition
to those available to such indemnifying party in which event the indemnified
party shall be reimbursed by the indemnifying party for the reasonable
expenses incurred in connection with retaining separate legal counsel). No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any claim or pending or threatened proceeding
in respect of which the indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party
from all liability arising out of such claim or proceeding.
If the indemnification provided for in this Section 5.5 is unavailable to an
indemnified party or is insufficient to hold such indemnified party harmless
from any Losses in respect of which this Section 5.5 would otherwise apply by
its terms (other than by reason of exceptions provided herein), then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall have a joint and several obligation to contribute to the amount paid or
payable by such indemnified party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party, on the one hand, and such indemnified party, on the other hand, in
connection with the offering to which such contribution relates as well as any
other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, each party's relative
knowledge and access to information concerning the matter with respect to
which the claim was asserted, and the opportunity to correct and prevent any
statement or omission. The amount paid or payable by a party as a result of
any Losses shall be deemed to include any legal or other fees or expenses
incurred by such party in
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<PAGE>
connection with any investigation or proceeding to the extent such party would
have been indemnified for such expenses if the indemnification provided for in
this Section 5.5 was available to such party.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5.5 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
Section 5.6 Assignment of Registration Rights. Shareholder may, in
connection with any transfer of its Voting Securities permitted by this
Agreement, assign its rights under this Article 5 to any Controlled Affiliate
without the Company's consent and, in the case of an assignment to a Person
which is not a Controlled Affiliate, with the Company's consent, which consent
shall not be unreasonably withheld (provided that if such assignment is to a
Person other than a Controlled Affiliate, any demand registration requested by
such assignee pursuant to Section 5.1 hereof shall be for a minimum of one
million (1,000,000) Preferred Shares or two million (2,000,000) shares of
Common Stock, respectively).
Section 5.7 Termination. The registration rights granted to Shareholder
pursuant to this Article 5 shall terminate immediately at such time as
Shareholder owns Voting Securities having a Voting Power of less than three
and one half percent (3.5%) of the Total Voting Power or if there is a
Designated Shareholder Breach.
ARTICLE 6
STANDSTILL PROVISIONS REGARDING THE SHAREHOLDER AND CERTAIN ENTITIES
Section 6.1 Restriction of Certain Actions by the Company. During the
Standstill Period (it being understood that for this purpose the Standstill
Period shall terminate only pursuant to Section 2.1(i)), the Company agrees
that none of the Company, any of its Controlled Affiliates or any Group of
which the Company or any such Controlled Affiliate is a member (it being
understood that, for the purposes of this Section 6.1, the Company is not (x)
a member of any Group of which Shareholder is a member or (y) a Controlled
Affiliate of Shareholder or MW) will in any manner, directly or indirectly,
effect or seek, initiate or propose (whether publicly or otherwise), to
effect, or cause or participate in, or in any way induce, assist or encourage
any other Person to effect, seek, offer, initiate or propose (whether publicly
or otherwise) to effect or participate in, any unsolicited tender or exchange
offer commenced by a Person for voting securities representing twenty percent
(20%) or more of the total voting power of Shareholder, MW or any of their
material subsidiaries, or an unsolicited proxy or consent solicitation by any
such Person in order to replace at least a majority of the directors of
Shareholder, MW or such subsidiary, (ii) any other proposal to take over
control of Shareholder or MW or for a merger, share exchange, business
combination, recapitalization, restructuring, liquidation or similar
transaction involving Shareholder, MW or any of their material subsidiaries or
any proposal or offer to acquire in any manner voting securities representing
more than twenty percent (20%) of the total voting power of Shareholder, MW or
any of their material subsidiaries, a substantial equity interest in any of
Shareholder's or MW's material subsidiaries or a substantial portion of the
assets of Shareholder or MW or any of their respective material subsidiaries,
(iii) any request to invite any Person to effect any of the actions specified
in this Section 6.1 or any request to challenge the validity of, waive the
benefit of, opt out of, or amend any provision of, any shareholder rights plan
of Shareholder or MW or any anti-takeover statutes or other anti-takeover
provisions applicable to Shareholder or MW, or (iv) a proposal having similar
effect, or (v) including without limitation any action described in (a)
through (c) below, unless in any such case invited in writing to do so by the
board of directors of Shareholder or MW, as the case may be, as specifically
expressed in a resolution adopted by a majority of the board of directors:
(a) acquire, offer or propose to acquire, or agree to acquire, whether by
purchase, tender or exchange offer, gift or otherwise, beneficial ownership
of any voting securities or any rights to acquire (whether currently, upon
lapse of time, following the satisfaction of any conditions, upon the
occurrence of any event
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<PAGE>
or any confirmation of the foregoing) any voting securities of Shareholder
or MW, as the case may be (it being understood that, if the Company
beneficially owns or acquires any voting securities of Shareholder or MW,
as the case may be, in violation of this Agreement, such voting securities
shall immediately be disposed of to Persons who are not Affiliates thereof;
provided, however, that Shareholder may also pursue any other available
remedies to which it may be entitled as a result of such violation.
(b) form, join, participate in or encourage the formation of, any Group
with respect to any voting securities of Shareholder or MW or deposit any
voting securities into a voting trust or subject any such voting securities
to a voting agreement or any other arrangement or agreement with respect to
the voting thereof; or
(c) request Shareholder or MW (or their respective directors, officers,
employees or agents) to amend or waive any provision of this Agreement
(including this paragraph).
Section 6.2 Termination. The provisions of Section 6.1 shall terminate on
the earlier of (a) the date of a Designated Shareholder Breach and (b) the
date on which the Standstill Period terminates pursuant Section 2.1(i).
Notwithstanding the foregoing, the provisions of Section 6.1 shall not
terminate if, at the time the provisions of Section 6.1 would have otherwise
terminated in accordance with the previous sentence, there is a Designated
Company Breach.
ARTICLE 7
MISCELLANEOUS
Section 7.1 Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, telex, fax or air courier guaranteeing delivery:
(a) If to the Company, to:
Crown Cork & Seal Company, Inc.
9300 Ashton Road
Philadelphia, Pennsylvania 19136
Attention:William J. Avery
Chairman, President and Chief Executive Officer
Telecopy:(215) 698-5206
(with copies to):
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103
Attention:Thomas A. Ralph and
William G. Lawlor
Telecopy:(215) 994-2222
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<PAGE>
or to such other person or address as the Company shall furnish to Shareholder
in writing;
(b) If to Shareholder, to:
CGIP
89, rue Taitbout
75009 Paris, France
Attention:Michel Renault
Telecopy:(011) 33 1 42 80 68 67
(with copies to):
Sullivan & Cromwell
250 Park Avenue
New York, New York 10177
Attention:Allan M. Chapin
Telecopy:(212)558-4915
or to such other person or address as Shareholder shall furnish to the Company
in writing.
All such notices, requests, demands and other communications shall be deemed
to have been duly given: at the time of delivery by hand, if personally
delivered; five (5) Business Days after being deposited in the mail, postage
prepaid, if mailed domestically in the United States (and seven (7) Business
Days if mailed internationally); when answered back, if telexed; when receipt
acknowledged, if telecopied; and on the Business Day for which delivery is
guaranteed, if timely delivered to an air courier guaranteeing such delivery.
Section 7.2 Survival of Representations and Warranties. The representations
and warranties made herein shall survive through the term of this Agreement.
Section 7.3 Legends. If requested in writing by the Company, Shareholder
shall present or cause to be presented promptly all certificates representing
Voting Securities beneficially owned by Shareholder or any of its Controlled
Affiliates, for the placement thereon of a legend substantially to the
following effect, which legend will remain thereon as long as such Voting
Securities are beneficially owned by Shareholder or a Controlled Affiliate:
"The securities represented by this certificate are subject to the
provisions of a Shareholders Agreement, dated as of , 199 , between
Compagnie Generale d'Industrie et de Participations and Crown Cork & Seal
Company, Inc. and may not be sold, pledged, hypothecated or otherwise
transferred except in accordance therewith. A copy of said agreement is on
file at the office of the Corporate Secretary of Crown Cork & Seal Company,
Inc."
The Company may enter a stop transfer order with the transfer agent or
agents of Voting Securities against any Disposition not in compliance with the
provisions of this Agreement.
Section 7.4 Enforcement. Shareholder, on the one hand, and the Company, on
the other hand, acknowledge and agree that irreparable injury to the other
party would occur in the event any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached and that such injury would not be adequately compensable in damages.
It is accordingly agreed that, in addition to any other remedies which may be
available at law or in equity, each party hereto (the "Moving Party") shall be
entitled to specific enforcement of, and injunctive relief to prevent any
violation of, the terms hereof, and the other parties hereto will not take
action, directly or indirectly, in opposition to the Moving Party seeking such
relief on the grounds that any other remedy or relief is available at law or
in equity. The parties further agree that no bond shall be required as a
condition to the granting of any such relief.
Section 7.5 Entire Agreement. This Agreement, the second, third, sixth and
fifteenth paragraphs of the Shareholder Confidentiality Agreement (but not to
the extent such paragraphs relate to information or
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<PAGE>
"Evaluation Material" of the "Subject Company", as such terms are used in the
Shareholder Confidentiality Agreement), the second, third, seventh and
seventeenth paragraphs of the Crown Confidentiality Agreement and the Exchange
Offer Agreement constitute the entire agreement and understanding of the
parties with respect to the transactions contemplated hereby and thereby, and
the Company Confidentiality Agreement and such other provisions of the
Shareholder Confidentiality Agreement and Crown Confidentiality Agreement not
expressly referred to above shall terminate with the execution hereof. This
Agreement may be amended only by a written instrument duly executed by the
parties or their respective successors or assigns.
Section 7.6 Severability. Whenever possible, each provision or portion of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law, rule or regulation in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or portion
of any provision in such jurisdiction, and this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision shall have been replaced
with a provision which shall, to the maximum extent permissible under such
applicable law, rule or regulation, give effect to the intention of the
parties as expressed in such invalid, illegal or unenforceable provision.
Section 7.7 Headings. Descriptive headings contained in the Agreement are
for convenience only and will not control or affect the meaning or
construction of any provision of this Agreement.
Section 7.8 Counterparts. For the convenience of the parties, any number of
counterparts of this Agreement may be executed by the parties, and each such
executed counterpart will be an original instrument.
Section 7.9 No Waiver. Any waiver by any party of a breach of any provision
of this Agreement shall not operate as or be construed to be a waiver of any
other breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term
of this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
Section 7.10 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Company and Shareholder, and to their
respective successors and assigns, including any successors to the Company or
Shareholder or their businesses or assets as the result of any merger,
consolidation, reorganization, transfer of assets or otherwise, and any
subsequent successor thereto, without the execution or filing of any
instrument or the performance of any act; provided that no party may assign
this Agreement without the other party's prior written consent, except as
expressly provided herein.
Section 7.11 Governing Law. This Agreement will be governed by and construed
and enforced in accordance with the internal laws of the Commonwealth of
Pennsylvania, without giving effect to the conflict of laws principles
thereof.
Section 7.12 Further Assurances. From time to time on and after the date
hereof, the Company and Shareholder, as the case may be, shall deliver or
cause to be delivered to the other party hereto such further documents and
instruments and shall do and cause to be done such further acts as the other
party hereto shall reasonably request to carry out more effectively the
provisions and purposes of this Agreement, to evidence compliance herewith or
to assure that it is protected in acting hereunder.
Section 7.13 Consent to Jurisdiction and Service of Process. Any legal
action or proceeding with respect to this Agreement or any matters arising out
of or in connection with this Agreement (other than the Exchange Offer
Agreement, which shall be governed solely by the analogous provisions
thereof), and any action for enforcement of any judgment in respect thereof
shall be brought exclusively in the Court of Common Pleas of Philadelphia
County in the Commonwealth of Pennsylvania or the United States District Court
for the Eastern District of Pennsylvania, and, by execution and delivery of
this Agreement, the Company and Shareholder each
A-4-21
<PAGE>
irrevocably consent to service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, or by recognized international
express carrier or delivery service, to the Company or Shareholder at their
respective addresses referred to herein. The Company and the Shareholder each
hereby irrevocably waives any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement (other than the Exchange Offer
Agreement, which shall be governed solely by the analogous provisions thereof)
brought in the courts referred to above and hereby further irrevocably waives
and agrees, to the extent permitted by applicable law, not to plead or claim
in any such court that any such action or proceeding brought in any such court
has been brought in an inconvenient forum. Nothing herein shall affect the
right of any party hereto to serve process in any other manner permitted by
law.
Section 7.14 Confidentiality. Confidential information of the Company on one
hand, and the Shareholder on the other hand, shall be deemed "Evaluation
Material" subject to the terms of the second, third, seventh and seventeenth
paragraphs of the Crown Confidentiality Agreement, in the case of Company
information, and subject to the terms of the second, third, sixth and
fifteenth paragraphs of the Shareholder Confidentiality Agreement, in the case
of Shareholder information.
In Witness Whereof, the parties hereto have caused this Agreement to be
executed as of the date first referred to above.
Crown Cork & Seal Company, Inc.
By: _________________________________
Name:
Title:
Compagnie Generale D'Industrie et de
Participations
By: _________________________________
Name:
Title:
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<PAGE>
ANNEX 5
(a) Organization and Qualification. The Company shall be a societe anonyme
duly organized, validly existing and in good standing under the laws of the
Republic of France and shall have the requisite corporate power and authority
to carry on its business as it is now being conducted. The Company shall be
duly qualified as a foreign corporation to do business, and be in good
standing, in each jurisdiction where the character of its properties owned or
leased or the nature of its activities make such qualification necessary,
except where the failure to be so qualified would not, individually or in the
aggregate, result in a Material Adverse Effect on the Company.
(b) Organizational Documents. The Company shall not be in violation of any
of the provisions of its statuts, and its statuts as delivered pursuant to
Section 6(i) of this Agreement shall not have been amended, modified, or
rescinded and remain in full force and effect other than as contemplated in
the BALO Announcement.
(c) Capitalization. As of April 30, 1995, the share capital of the Company
totalled FF 823,125,910, consisting of 82,312,591 shares of Common Stock
issued and outstanding, all of which shall have been duly authorized, validly
issued and fully paid and non-assessable, and (ii) 2,095,140 shares of Common
Stock shall have been reserved for future issuance upon exercise of
outstanding employee stock options granted under the Company's stock option
plans. Between April 30, 1995 and the date of this Agreement, there have been
no additional issuances of shares of Common Stock other than issuances upon
exercises of employee stock options outstanding on April 30, 1995. No shares
of Common Stock shall have been owned by the Company or a subsidiary of the
Company. Except for the employee stock options described in clause (ii) of the
preceding sentence and other than in respect of the Faba transaction described
in the BALO Announcement and the granting of options for 200,000 shares of the
Common Stock to the management of the Company (the "New Options"), a maximum
of 50,000 of which shall have been granted per fiscal quarter in the ordinary
course of business, and other than options for up to 44,000 shares of Common
Stock to be granted in respect of stock options authorized in 1994 by the
shareholders of the Company (the "1994 Options") there shall have been no
subscriptions, options, warrants, or other rights, convertible securities,
agreements, arrangements, or commitments of any character relating to the
issued or unissued capital stock of the Company to which the Company or any of
its material Subsidiaries is a party, or by which any of their properties are
bound or affected, or obligating the Company or any of its Subsidiaries to
issue or sell any shares of capital stock of, or other equity interests in,
the Company. At the Closing Date, the share capital of the Company shall total
88,068,398 shares on a fully-diluted basis (assuming the grant of all New
Options and the 1994 Options in accordance with this Agreement).
(d) Public Filings. The Company shall have filed all forms, reports, and
documents required to be filed with the COB, CBV, SBF, London Stock Exchange
and other French or U.K. securities law authorities or exchanges (the "French
and U.K. Securities Authorities") since December 31, 1993. The Company Public
Reports (including, without limitation, any financial statements or schedules
included therein) filed on or prior to the Filing Date (i) shall have been
prepared in compliance, in all material respects, with the requirements of
applicable law, and (ii) shall not have at the time of filing (or, if amended,
supplemented, or superseded by a filing prior to the date of this Agreement,
on the date of that filing) contained any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. None of the Company or its Subsidiaries
shall be required to file any forms, reports or other documents with the SEC
(whether pursuant to the Securities Act, Exchange Act or otherwise) or any
United States state securities commission. None of the Company or its
Subsidiaries shall have any class of security which is, or is required to be,
registered pursuant to Securities Act or Exchange Act.
(e) Financial Statements. Each of the consolidated financial statements
contained in the Company Public Reports filed on or prior to the Filing Date
and the Company's audited consolidated financial statements for the years
ended December 31, 1993 and December 31, 1994 (together, the "Financial
Statements") (including, in each case, any related notes thereto) shall have
been prepared in accordance with International Accounting
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<PAGE>
Standards issued by the IASC ("International Accounting Standards") applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes thereto), and each of them shall have presented fairly in all
material respects the consolidated financial position of the Company and its
Subsidiaries at their respective dates and the consolidated results of their
operations and cash flows for the periods indicated, except that (i) unaudited
interim financial statements included in any quarterly reports may have been
subject to normal and recurring year-end adjustments that were not expected to
be material in amount, and (ii) the Company may, in its sole discretion apply
United States GAAP or International Accounting Standards in effect at December
31, 1994 and December 31, 1993 or International Accounting Standards in effect
on the date of the filing of the Company Public Report with respect to
financial statements in respect of periods subsequent to January 1, 1995,
provided that the Company shall not have changed the annual account period.
(f) Absence of Certain Changes or Events. Except as disclosed in the Company
Public Reports, disclosed to Crown prior to the date of this Agreement or as
contemplated by this Agreement, since December 31, 1994, (i) there shall have
been no Material Adverse Effect on the Company, (ii) the businesses of the
Company and each of its Subsidiaries shall have been conducted only in the
ordinary course, consistent with past practice; (iii) neither the Company nor
any of its Subsidiaries shall have incurred any material liabilities (direct,
contingent or otherwise) or engaged in any material transaction or entered
into any material agreement outside the ordinary course of business; (iv) the
Company and its Subsidiaries shall not have increased in any material respect
the compensation of any officer or granted any general salary or benefits
increase to their employees other than in the ordinary course of business; and
(v) there shall have been no declaration, setting aside or payment of any
dividend or other distribution with respect to the capital stock of the
Company (other than as permitted in Section 10.1(j)). Neither the execution
and delivery of this Agreement by Shareholder nor the performance by
Shareholder of its obligations hereunder will, except as disclosed in writing
by Shareholder to Crown prior to the execution of this Agreement, result in a
default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise, or other instrument or obligation to which the Company or any of
its Subsidiaries is a party or by which any of its Subsidiaries or any of
their respective assets may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained or which, in the aggregate, would not result in a
Material Adverse Effect on the Company.
(g) Absence of Litigation. There shall be no civil, criminal, or
administrative claims, actions, suits, proceedings, or investigations pending
or, to the knowledge of the Company, threatened against the Company or any of
its Subsidiaries, or involving any properties or rights of the Company or any
of their Subsidiaries, before any court, arbitrator, or administrative,
governmental, or regulatory authority, domestic or foreign, that, individually
or in the aggregate, shall have had or are likely to have a Material Adverse
Effect on the Company. There shall be no judgments, decrees, injunctions,
rules, or orders of any governmental entity or arbitrator outstanding against
the Company or any of its Subsidiaries that shall have had or are likely to
have a Material Adverse Effect on the Company.
(h) Employee Benefit Plans.
(i) The obligations and liabilities of the Company and its Subsidiaries
under retirement, pension, profit sharing, savings, deferred compensation,
supplemental retirement, bonus, incentive, stock purchase, stock ownership,
stock option, severance, health, life insurance, disability, fringe benefit
and other material employee benefit plans, programs, or arrangements, and any
current or former executive employment, compensation, severance, consulting,
noncompetition, or indemnification agreements, whether written or unwritten,
funded or unfunded (x) maintained, sponsored, administered or contributed to
by the Company or any of its Subsidiaries, or (y) with respect to which the
Company or any of its Subsidiaries has any liability (together, the "Company
Employee Plans") shall have been properly accrued and reflected in the
Financial Statements in accordance with International Accounting Standards in
all material aspects.
(ii) Except for the liabilities accrued and reflected in the Financial
Statements, there shall be no material unfunded liabilities existing with
respect to any Company Employee Plan.
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<PAGE>
(iii) All of the Company Employee Plans shall have been operated and
administered in material compliance with their terms and shall be in material
compliance with the laws and governmental rules and regulations applicable to
them (including all applicable requirements for notification to participants
and governmental or regulatory authorities), and the Company and each of its
Subsidiaries shall have performed all material obligations required to be
performed by them under, are not in any material respect in default under or
in violation of, and the Company has no knowledge of any material default or
violation by any party to, any of the Company Employee Plans.
(iv) All contributions to, and payments from, any Company Employee Plan
required pursuant to applicable laws, rules and regulations, the terms of the
Company Employee Plan, or any collective bargaining agreement shall have been
made on or before their due dates. All such contributions to, and all payments
from, the Company Employee Plans shall have been properly accrued in
accordance with International Accounting Standards.
(v) Neither the Company nor any of its Subsidiaries shall have taken any
action with respect to any Company Employee Plan that will increase materially
the expense of maintaining such Company Employee Plan above the level of
expense reflected in the Financial Statements (except for the granting of the
New Options and the 1994 Options in accordance with this Agreement).
(vi) Except for claims for benefits in the normal operation of the Company
Employee Plans, there shall be no litigation, proceeding, investigation,
audit, assessment, complaint or proceeding of any kind in any court or
governmental agency with respect to any Company Employee Plan which could
reasonably be expected to have a Material Adverse Effect on the Company and
its Subsidiaries, taken as a whole.
(vii) Neither the Company nor any of its Subsidiaries shall have taken any
action with respect to any Company Employee Plan (including but not limited to
the recognition of the transaction contemplated by this Agreement as a change
of control) that will cause a material discretionary acceleration or increase
in the vesting, exercisability, or benefits provided by any such Company
Employee Plan (except for the granting of the New Options and the 1994 Options
in accordance with this Agreement).
(i) Taxes and Social Obligations. The Company and each of its material
Subsidiaries (i) shall have timely and correctly filed all material returns
and reports relating to Taxes required to be filed by it in the manner
required by the relevant taxing authorities (collectively, "Returns") and (ii)
shall have timely paid all Taxes shown to be due on such Returns and all
material Taxes for which no return was required to be filed. The financial
statements included in the Company Public Reports and the Financial Statements
shall have, to the extent required by International Accounting Standards, an
adequate reserve for all Taxes payable by the Company and its Subsidiaries for
all taxable periods and portions thereof through the date of such financial
statements. No material deficiencies for any Taxes shall have been proposed,
asserted or assessed against the Company or any of its Subsidiaries and no
requests for waivers of the time to assess any such Taxes are pending.
Neither the Company nor any of its Subsidiaries (i) shall have been at the
date of this Agreement the subject of any inquiry, investigation or audit
relating to Taxes or (ii) shall have received notice of any proposed inquiry,
investigation or audit relating to Taxes which is reasonably likely to may
have a Material Adverse Effect on the Company.
(j) Registration Statement; Proxy Statement. The information to be supplied
by or on behalf of the Company for inclusion in the Registration Statement
shall not, at the time the Registration Statement is declared effective or at
the Filing Date, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading. The information supplied by or on behalf of
the Company for inclusion in the Proxy Statement shall not have, on the date
the Proxy Statement (or any amendment thereof or supplement thereto) is first
mailed to shareholders, at the time of the Crown Shareholder Meeting, at the
Filing Date, the Commencement Date or the Closing Date, contained any
statement that, in light of the circumstances under which it is made, was
false or misleading with respect to any material fact, omitted to state any
material
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fact necessary in order to make the statements made therein not false or
misleading, or omitted to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Crown Shareholder Meeting that had become false or misleading.
(k) Note d'Information, U.K. Filing; Etc. The information supplied by or on
behalf of the Company for inclusion in the Note d'Information, the CBV Filing,
the U.K. Filing and all other filings made in connection with the Exchange
Offers shall not have, at the time such filings received the regulatory
approval or clearance required by applicable law, at the Filing Date,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
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<PAGE>
ANNEX B
Annex B sets forth the Acquisition Articles Amendment and the proposed
resolution of Crown's Board of Directors authorizing the issuance and fixing
the designations, number and the voting rights, preferences, privileges,
limitations, restrictions, conversion rights and other rights of the series of
Crown 4.5% Preferred Stock.
ACQUISITION ARTICLES AMENDMENT
Pursuant to the adoption of the Acquisition Articles Amendment, Article
THIRD of Crown's Articles of Incorporation will be amended to read (assuming
the adoption of the Articles Modernization Proposal, which is attached hereto
as Annex D) in its entirety as follows:
THIRD: The total number of shares which may be issued by the Corporation
is 500,000,000 shares of Common Stock, at a par value per share of $5.00
(the "Common Stock") and 50,000,000 shares of Preferred Stock to be used in
the acquisition of CarnaudMetalbox (the "Acquisition Preferred Stock").
A. Common Stock. The designations, voting powers, restrictions and rights of
the Common Stock are as follows:
1. Dividends. Holders of Common Stock will be entitled to receive such
dividends as may be declared by the Board of Directors.
2. Liquidation. In any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, after the debts of the
Corporation and obligations with respect to any issued and outstanding
shares of preferred stock shall have been paid or provided for, all of the
remaining assets of the Corporation shall belong to and shall be
distributed ratably among the holders of the Common Stock.
3. Reacquired Shares. The Board of Directors shall have the power to
eliminate reacquired shares of Common Stock from the authorized number of
shares of the Corporation or to restore such shares to the status of
authorized but unissued shares.
4. Voting Rights. Except as may otherwise be required by law in any case
and as provided in a resolution of the Board of Directors fixing voting
rights pursuant to Section C below, the holders of shares of Common Stock
possess the exclusive voting powers of the Corporation. At every meeting of
stockholders of the Corporation, the holders of record of shares of Common
Stock entitled to vote thereat shall be entitled to one vote for each share
held. The holders of Common Stock shall not be entitled to cumulative
voting in the election of directors of the Corporation.
B. Capital Stock Generally. The following provisions shall apply to all
classes of the Corporation's capital stock:
1. Additional or Increased Stock. No holder of stock of the Corporation
of any class shall be entitled as of right to subscribe for any additional
or increased stock of any class or any obligations convertible into any
class or classes of stock, and the Corporation may, without offering any
such increased or additional stock or obligations to stockholders of any
class, sell or dispose of the same to such persons and for such
consideration permitted by law as the Board of Directors from time to time
in its absolute discretion determines.
2. Authorized Shares. The Corporation may issue and sell its authorized
shares, if any, without par value from time to time in the absence of fraud
in the transaction, for such consideration as may from time to time be
fixed by the Board of Directors, and sell and dispose of any stock having a
par value, for such consideration permitted by law, as the Board of
Directors may from time to time determine, without other authority, consent
or vote of the stockholders of the Corporation of any class or classes,
except as otherwise provided herein or under applicable law.
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C. Preferred Stock.
1. Acquisition Preferred Stock. The following provisions shall apply to
Acquisition Preferred Stock:
(a) Designation. The unissued shares of Acquisition Preferred Stock
may be divided and issued at any time, as set forth in C.1(b) below, in
one or more classes or series of a class as may be designated by the
Board of Directors of the Corporation. The Board of Directors shall
have the full authority permitted by law to fix by resolution the
designations, number and the voting rights, preferences, privileges,
limitations, restrictions, conversion rights and other special or
relative rights, if any, of any class or any series of any class of the
Acquisition Preferred Stock that may be desired.
(b) Issuance. Shares of Acquisition Preferred Stock shall be issued
solely to effect the acquisition by the Corporation of the capital
stock (and securities convertible into or exchangeable for such capital
stock) of CarnaudMetalbox, a societe anonyme organized under the laws
of the Republic of France. Following the initial issuance of
Acquisition Preferred Stock to effect the acquisition of
CarnaudMetalbox, no further shares of Acquisition Preferred Stock shall
be issued and, in the event that any shares of Acquisition Preferred
Stock are authorized but unissued, the number of authorized shares of
Acquisition Preferred Stock shall be reduced accordingly.
A new Article 11 of the Corporation's Articles of Incorporation shall be
added to read as follows:
ELEVENTH: Subchapter E, Control Transactions, of Chapter 25 of the
Pennsylvania Business Corporation Law, as amended, shall not be applicable
to the Corporation.
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PROPOSED RESOLUTION OF THE CROWN BOARD OF DIRECTORS
RESOLVED, that pursuant to the authority vested in the Board of Directors of
the Corporation in accordance with Article THIRD of the Articles of
Incorporation of the Corporation, a series of Acquisition Preferred Stock of
the Corporation is hereby created (the "4.5% Preferred Stock") under the terms
and provisions herein set forth:
1. Designation and Amount. The shares of such series shall be designated
as "4.5% Cumulative Preferred Stock" (the "4.5% Preferred Stock") and the
number of shares constituting such series shall be .* The par value of
the 4.5% Preferred Stock shall be $ ** per share.
2. Rank. All shares of 4.5% Preferred Stock shall, with respect to
dividend rights and rights upon liquidation, dissolution and winding-up,
rank senior to all of the Corporation's now or hereafter issued Junior
Securities (as hereinafter defined) and on a parity with the Parity
Securities (as hereinafter defined), unless the issuance of a new class of
preferred stock that ranks senior in respect of dividend rights or rights
upon liquidation, dissolution and winding-up is specifically approved by
the holders of 4.5% Preferred Stock as provided under Section 6(d). The
Common Stock and other equity securities (other than any senior securities
specifically approved by the holders of 4.5% Preferred Stock as provided
under Section 6(d)) of the Corporation shall be "Junior Securities" for all
purposes hereunder unless, with respect to any class of equity securities
other than the Common Stock such securities expressly provide that they
rank on a parity with the 4.5% Preferred Stock with respect to dividends
and upon liquidation, dissolution or winding-up, in which case such class
of equity securities shall be "Parity Securities". The terms of the 4.5%
Preferred Stock do not restrict the creation of Junior Securities and
Parity Securities other than as provided in Section 6(d).
3. 4.5% Preferred Dividends. The holders of 4.5% Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out
of funds at the time legally available therefor, dividends at the rate of
$ *** per annum per share (the "4.5% Preferred Dividends"), and no more,
which shall be fully cumulative and shall be payable in cash (except as
provided in Section 5(i)) quarterly in arrears on February 20, May 20,
August 20 and November 20 of each year (each a "Dividend Payment Date")
(except that if any such date is a Saturday, Sunday or legal holiday, then
such dividend shall be payable on the next day that is not a Saturday,
Sunday or legal holiday) to holders of record as they appear upon the stock
transfer books of the Corporation on such record dates, not more than sixty
days nor less than ten days preceding the respective Dividend Payment
Dates, as are fixed by the Board of Directors (or, to the extent permitted
by applicable law, a duly authorized committee thereof).
The first dividend period shall be from the date of initial issuance of
the 4.5% Preferred Stock to, but excluding, the first Dividend Payment Date
occurring in 1996 (except that if the date of initial issuance occurs
within 20 days prior to such Dividend Payment Date, the first dividend
period shall be from the date of initial issuance to, but excluding, the
next following Dividend Payment Date) and the first Dividend Payment Date
in respect of the 4.5% Preferred Stock shall be the first Dividend Payment
Date occurring in 1996 (or if the date of initial issuance occurs within 20
days prior to such date, the next following Dividend Payment Date).
Dividends on the 4.5% Preferred Stock shall accrue (whether or not declared
and whether or not such amounts would be available, legally or otherwise,
at that time for distribution to holders of 4.5% Preferred Stock) on a
daily basis from the date of original issuance of the 4.5% Preferred Stock
or from the most recent Dividend Payment Date to which full dividends have
been paid. Dividends will cease to accrue in respect of any shares of the
4.5% Preferred Stock on the effective date of a mandatory conversion
pursuant to Section 5(e) or on the date of their earlier voluntary
conversion. Dividends (or cash amounts
- --------
* Insert the number of shares of 4.5% Preferred Stock to be issued in the
Offer.
** Insert the average Market Closing Price (as defined in the Exchange Offer
Agreement) per share of Common Stock (as defined in the Exchange Offer
Agreement), in U.S. dollars, for the most recent 20 business days on which
trading of Crown Common Stock has occurred prior to the Measurement Date
(as defined in the Exchange Offer Agreement).
*** Insert 0.045 x the par value of the 4.5% Preferred Stock.
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equal to accrued and unpaid dividends) payable on the 4.5% Preferred Stock
for any period shorter than a quarterly dividend period shall be computed
on the basis of a 360-day year of twelve 30-day months.
For purposes hereof, the term "legal holiday" shall mean any day on which
banking institutions are authorized to close in New York, New York or in
Philadelphia, Pennsylvania. Subject to the next Paragraph of this Section
3, payments on account of accrued and unpaid dividends for any past
dividend period may be declared and paid at any time, without reference to
any regular Dividend Payment Date. The amount of dividends payable per
share of 4.5% Preferred Stock for each quarterly dividend period shall be
computed by dividing the annual dividend amount by four. No interest shall
be payable in respect of any accrued and unpaid dividends on the 4.5%
Preferred Stock. Holders of the shares of 4.5% Preferred Stock, as such,
shall not be entitled to any dividends, whether payable in cash, property
or stock, in excess of full cumulative cash dividends as provided in this
Section 3.
No dividends or other distributions shall be declared, paid or set apart
for payment or otherwise made on shares of any Junior Securities (other
than a dividend or distribution paid solely in shares of, or warrants,
rights or options exercisable for or convertible into Junior Securities),
unless and until all accrued and unpaid dividends on the 4.5% Preferred
Stock for all dividend payment periods ending on or before the payment date
of such dividend or other distribution on Junior Securities shall have been
paid or declared and set apart for payment.
No payment in cash or otherwise on account of the purchase, redemption,
retirement or other acquisition of shares of Junior Securities shall be
made unless and until all accrued and unpaid dividends on the 4.5%
Preferred Stock for all dividend payment periods ending on or before such
payment in respect of such Junior Securities shall have been paid or
declared and set apart for payment; provided, however, that the
restrictions set forth in this sentence shall not apply to the purchase or
other acquisition of Junior Securities (A) pursuant to any employee or
director incentive or benefit plan or arrangement (including any
employment, severance or consulting agreement) of the Corporation or any
subsidiary of the Corporation heretofore or hereafter adopted, (B) solely
in exchange for or upon conversion into Junior Securities or (C) pursuant
to a redemption at the stated redemption price of any rights granted to
holders of Common Stock pursuant to a stockholder rights plan.
No full dividends shall be declared, paid or set apart for payment on
shares of any class or series of the Parity Securities for any period
unless full cumulative dividends have been, or contemporaneously are, paid
or declared and set apart for such payment on the 4.5% Preferred Stock for
all dividend payment periods ending on or before the payment date of such
full dividends on Parity Securities. No dividends may be paid on Parity
Securities except on dates on which dividends are paid on the 4.5%
Preferred Stock. If dividends are not paid or set apart in full upon the
shares of 4.5% Preferred Stock and any Parity Securities, all dividends
paid or declared and set apart for payment on the 4.5% Preferred Stock and
the Parity Securities shall be paid or declared and set apart for payment
pro rata so that the amount of dividends paid or declared and set apart for
payment per share on the 4.5% Preferred Stock and the Parity Securities on
any date shall in all cases bear to each other the same ratio that accrued
and unpaid dividends to the date of payment on the 4.5% Preferred Stock and
the Parity Securities bear to each other.
No payment on account of the purchase, redemption, retirement or other
acquisition of shares of Parity Securities shall be made, and, other than
dividends to the extent permitted by the preceding Paragraph, no
distributions shall be declared, paid or set apart for payment or otherwise
made on shares of Parity Securities, unless and until all accrued and
unpaid dividends on the 4.5% Preferred Stock for all dividend payment
periods ending on or before such payment in respect of, or the payment date
of such distribution on, such Parity Securities shall have been paid or
declared and set apart for payment; provided, however, that the
restrictions set forth in this sentence shall not apply to the purchase or
other acquisition of Parity Securities (A) pursuant to any employee or
director incentive or benefit plan or arrangement (including any
employment, severance or consulting agreement) of the Corporation or any
subsidiary of the Corporation hereafter adopted, (B) solely in exchange for
or upon conversion into other Parity Securities or Junior Securities or (C)
pursuant to a redemption at the stated redemption price of any rights
granted to holders of Common Stock pursuant to a stockholder rights plan.
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<PAGE>
Subject to the foregoing provisions, the Board of Directors may declare
and the Corporation may pay or set apart for payment dividends and other
distributions on any Junior Securities or Parity Securities, and may
redeem, purchase or otherwise acquire any Junior Securities or Parity
Securities, and the holders of the 4.5% Preferred Stock shall not be
entitled to share therein.
Any dividend payment made on shares of the 4.5% Preferred Stock shall
first be credited against the earliest accrued but unpaid dividend due with
respect to shares of the 4.5% Preferred Stock.
All dividends paid with respect to shares of the 4.5% Preferred Stock
pursuant to this Section 3 shall be paid pro rata to the holders entitled
thereto.
Holders of shares of the 4.5% Preferred Stock shall be entitled to
receive the dividends provided for in this Section 3 in preference to and
in priority over any dividend upon any of the Junior Securities.
4. Liquidation Preference. In the event of a liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the
holders of shares of 4.5% Preferred Stock shall be entitled to receive out
of the assets of the Corporation available for distribution to stockholders
an amount per share of 4.5% Preferred Stock equal to all dividends accrued
and unpaid on such share to (but not including) the date of final
distribution to such holders, whether or not declared, without interest,
plus a sum equal to $ * per share, before any payment shall be made or
any assets distributed in respect of such Junior Securities.
If the assets of the Corporation available for distribution to
stockholders are not sufficient to pay in full the liquidation payments
payable to the holders of outstanding shares of 4.5% Preferred Stock (as
provided in the preceding Paragraph of this Section 4) and any Parity
Securities, then the holders of such shares shall share ratably in such
distribution of assets in accordance with the amounts which would be
payable on such distribution if the amounts to which the holders of
outstanding shares of 4.5% Preferred Stock and the holders of outstanding
shares of such Parity Securities are entitled were paid in full.
Except as provided in this Section 4, holders of 4.5% Preferred Stock, as
such, shall not be entitled to any distribution in the event of
liquidation, dissolution or winding up of the affairs of the Corporation.
For the purposes of this Section 4, none of the following shall be deemed
to be a voluntary or involuntary liquidation, dissolution or winding up of
the Corporation:
(i) the voluntary sale, conveyance, lease, exchange or transfer (for
cash, shares of stock, securities or other consideration) of all or
substantially all of the property or assets of the Corporation;
(ii) the consolidation or merger of the Corporation with or into one
or more other corporations, or other associations;
(iii) the consolidation or merger of one or more corporations or
other associations with or into the Corporation;
(iv) the participation by the Corporation in a share exchange; or
(v) the division of the Corporation pursuant to 15 Pa. C.S. Subch.
19D.
5. Conversion Privilege.
(a) Right of Conversion. At any time after the date of initial issuance
of the 4.5% Preferred Stock, each share of 4.5% Preferred Stock shall be
convertible at the option of the holder thereof into fully paid and
nonassessable shares of Common Stock, at the rate of that number of shares
of Common Stock for each full share of 4.5% Preferred Stock that is equal
to $ * divided by the conversion price applicable per share of Common
Stock. For purposes of this Section 5, the "conversion price" applicable
per share of Common Stock shall initially be equal to $ ** and shall be
adjusted from time to time in accordance with the provisions of this
Section 5.
- --------
* Insert par value of the 4.5% Preferred Stock.
** Insert 1.0975 x par value.
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<PAGE>
(b) Conversion Procedures. Any holder of shares of 4.5% Preferred Stock
desiring to convert such shares into Common Stock shall surrender the
certificate or certificates evidencing such shares of 4.5% Preferred Stock
at the office of the transfer agent for the 4.5% Preferred Stock, which
certificate or certificates, if the Corporation shall so require, shall be
duly endorsed to the Corporation or in blank, or accompanied by proper
instruments of transfer to the Corporation or in blank, accompanied by
irrevocable written notice to the Corporation that the holder elects so to
convert such shares of 4.5% Preferred Stock and specifying the name or
names (with address or addresses) in which a certificate or certificates
evidencing shares of Common Stock are to be issued.
The Corporation shall, as soon as practicable after such surrender of
certificates evidencing shares of 4.5% Preferred Stock accompanied by the
written notice and compliance with any other conditions herein contained,
deliver at such office of such transfer agent to the person for whose
account such shares of 4.5% Preferred Stock were so surrendered, or to the
nominee or nominees of such person, certificates evidencing the number of
full shares of Common Stock to which such person shall be entitled as
aforesaid, together with a cash adjustment without interest in respect of
any fraction of a share of Common Stock as hereinafter provided. Such
conversion shall be deemed to have been made on the date of such surrender
of the shares of 4.5% Preferred Stock to be converted (the "Surrender
Date"), and the person or persons entitled to receive the Common Stock
deliverable upon conversion of such 4.5% Preferred Stock shall be treated
for all purposes as the record holder or holders of such Common Stock on
such date.
In the event that fewer than all shares of 4.5% Preferred Stock
represented by a surrendered certificate are to be converted hereunder, a
new certificate shall be issued at the expense of the Corporation
representing the shares of 4.5% Preferred Stock not so converted. No
interest will be payable with respect to any cash adjustment paid with
respect to any fractional shares of Common Stock as hereinafter provided.
No holder of a certificate or certificates which immediately prior to the
Surrender Date represented shares of outstanding 4.5% Preferred Stock shall
have any rights as a holder of such Common Stock, including without
limitation voting rights or the right to receive any dividend or other
distribution from the Corporation with respect to any Common Stock, until
surrender of such certificate or certificates that prior to the Surrender
Date represented such shares of 4.5% Preferred Stock in exchange for a
certificate or certificates representing such Common Stock.
Effective on the day following the Surrender Date, dividends shall cease
to accrue on any shares of 4.5% Preferred Stock surrendered for conversion,
such shares of 4.5% Preferred Stock shall no longer be deemed outstanding,
all rights of the holders thereof as preferred stockholders of the
Corporation shall cease (other than the right to receive dividends declared
payable to holders of record of 4.5% Preferred Stock on a record date prior
to the Surrender Date) and thereupon the certificate or certificates
theretofore representing such shares of 4.5% Preferred Stock shall
represent only the right to receive the Common Stock deliverable upon
conversion in respect thereof.
(c) Adjustment of Conversion Price. The conversion price at which a share
of 4.5% Preferred Stock is convertible into Common Stock shall be subject
to adjustment from time to time as follows:
(1) In case at any time after the date of original issuance of the
4.5% Preferred Stock, the Corporation shall pay or make a dividend or
other distribution to all holders of its Common Stock or other Junior
Securities of the Corporation in shares of Common Stock, the conversion
price in effect at the opening of business on the business day
following the date fixed for the determination of stockholders entitled
to receive such dividend or other distribution shall be reduced by
multiplying such conversion price by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution, such
reduction to become effective immediately prior to the opening of
business on the day following the date fixed for such determination.
For the purposes of this Subparagraph (1), the number of shares of
Common Stock at any time outstanding shall not include shares held in
the treasury of the Corporation but shall include shares issuable in
respect of scrip certificates issued in
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lieu of fractions of shares of Common Stock. The Corporation will not
pay any dividend or make any distribution on shares of Common Stock
held in the treasury of the Corporation.
(2) In case at any time after the date of original issuance of the
4.5% Preferred Stock, the Corporation shall issue rights or warrants to
all holders of its Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the
current market price per share (determined as provided in Subparagraph
(6) of this Paragraph) of the Common Stock on the date fixed for the
determination of stockholders entitled to receive such rights or
warrants, the conversion price in effect at the opening of business on
the day following the date fixed for such determination shall be
reduced by multiplying such conversion price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at
the close of business on the date fixed for such determination plus the
number of shares of Common Stock which the aggregate of the offering
price of the total number of shares of Common Stock so offered for
subscription or purchase would purchase at such current market price
(determined by multiplying such total number of shares by the exercise
price of such rights or warrants and dividing the product so obtained
by such current market price) and the denominator shall be the number
of shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common
Stock so offered for subscription or purchase, such reduction to become
effective immediately prior to the opening of business on the day
following the date fixed for such determination. For the purposes of
this Subparagraph (2), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the
Corporation but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The
Corporation will not issue any rights or warrants in respect of shares
of Common Stock held in the treasury of the Corporation. The foregoing
provision shall not apply to issuances of rights pursuant to a
stockholder rights plan provided that such rights are issued together
with the Common Stock upon conversion of the 4.5% Preferred Stock. In
the event that all the shares of Common Stock offered for subscription
or purchase are not delivered upon the exercise of such rights or
warrants, upon the expiration of such rights or warrants the conversion
price shall be adjusted to the conversion price which would have been
in effect had the numerator and the denominator of the foregoing
fraction and the resulting adjustment been made based upon the number
of shares of Common Stock actually delivered upon the exercise of such
rights or warrants rather than upon the number of shares of Common
Stock offered for subscription or purchase; provided, however, that no
such readjustment upon expiration of such rights or warrants shall
affect the number of shares of Common Stock issued upon any conversion
of 4.5% Preferred Stock prior to such readjustment.
(3) In case at any time after the date of original issuance of the
4.5% Preferred Stock, outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the
conversion price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall
be proportionately reduced, and, conversely, in case at any time after
the date of original issuance of the 4.5% Preferred Stock outstanding
shares of Common Stock shall each be combined into a smaller number of
shares of Common Stock, the conversion price in effect at the opening
of business on the day following the day upon which such combination
becomes effective shall be proportionately increased, such reduction or
increase, as the case may be, to become effective immediately prior to
the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(4) In case at any time after the date of original issuance of the
4.5% Preferred Stock, the Corporation shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its
indebtedness or assets (including securities, but excluding (i) any
rights or warrants referred to in Subparagraph (2) of this Paragraph,
(ii) any dividend or distribution in cash solely out of the retained
earnings of the Corporation (retained earnings of the Corporation for
this purpose being calculated at any date to exclude the one-time
impact of the Corporation's adopting changes in accounting principles
required by changes in (x) United States generally accepted accounting
principles or (y) the application or interpretation of United States
generally accepted accounting principles by any applicable
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governmental or regulatory authority, provided that only changes
occurring in the fiscal year with respect to which retained earnings is
being determined shall be excluded for this purpose) and (iii) any
dividend or distribution referred to in Subparagraph (1) of this
Paragraph), then in each such case, unless the Corporation elects to
reserve shares or other units of such securities or assets for
distribution to the holders of the 4.5% Preferred Stock upon the
conversion of the shares of 4.5% Preferred Stock so that any holder of
4.5% Preferred Stock will receive upon such conversion, in addition to
the shares of the Common Stock to which such holder is entitled, the
kind and amount of such securities or assets which such holder would
have received if such shares of 4.5% Preferred Stock had been converted
into shares of Common Stock immediately prior to the date fixed for the
determination of stockholders entitled to receive such distribution,
the conversion price shall be adjusted so that the same shall equal the
price determined by multiplying the conversion price in effect
immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution by
a fraction of which the numerator shall be the current market price per
share (determined as provided in Subparagraph (6) of this Paragraph) of
the Common Stock on the date fixed for such determination less the then
fair market value (as determined by the Board of Directors, whose
determination, if made in good faith, shall be conclusive and described
in a resolution of the Board of Directors filed with the transfer agent
for the 4.5% Preferred Stock and mailed to the holders of record of the
4.5% Preferred Stock) on the date fixed for such determination of the
portion of the assets or evidences of indebtedness so distributed
applicable to one share of Common Stock and the denominator shall be
such current market price per share of the Common Stock, such
adjustment to become effective immediately prior to the opening of
business on the day following the date fixed for the determination of
stockholders entitled to receive such distribution.
(5) The reclassification of Common Stock into securities other than
Common Stock (other than any reclassification upon a consolidation or
merger to which Section 5(f) applies) shall be deemed to involve (a) a
distribution of such securities other than Common Stock to all holders
of Common Stock (and the effective date of such reclassification shall
be deemed to be "the date fixed for the determination of stockholders
entitled to receive such distribution" and "the date fixed for such
determination" within the meaning of Subparagraph (4) of this
Paragraph), and (b) a subdivision or combination, as the case may be,
of the number of shares of Common Stock outstanding immediately prior
to such reclassification into the number of shares of Common Stock, if
any, outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such
subdivision becomes effective" or "the day upon which such combination
becomes effective", as the case may be, and "the day upon which such
subdivision or combination becomes effective" within the meaning of
Subparagraph (3) of this Paragraph).
(6) For the purpose of any computation under Subparagraphs (2) and
(4) of this Paragraph, the current market price per share of Common
Stock on any day shall be deemed to be the average of the "market
prices" (as defined below) for shares of Common Stock for any five
consecutive Business Days selected by the Corporation commencing not
more than 20 Business Days before the date in question, provided,
however, that if the "ex" date (as defined later in this Subparagraph
(6)) for any event (other than the issuance or distribution requiring
such computation) that requires an adjustment to the conversion price
pursuant to Subparagraph (1), (2), (3) or (4) above occurs on or after
the 20th Business Day prior to the day in question and prior to the
"ex" date for the issuance or distribution requiring such computation,
the market price for each Business Day prior to the "ex" date for such
other event shall be adjusted by multiplying such market price by the
same fraction by which the conversion price is required to be adjusted
as a result of such other event. For purposes of this Paragraph, the
term "'ex' date", (i) when used with respect to any issuance or
distribution, means the first day on which the Common Stock trades
regular way on the relevant exchange or in the relevant market from
which the market price was obtained without the right to receive such
issuance or distribution and (ii) when used with respect to any
subdivision or combination of shares of Common Stock, means the first
date on which the shares of Common Stock trade regular way on such
exchange or in such market after the time at which such subdivision or
combination becomes effective. The term
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"market price" as used in this Paragraph means, the last reported sales
price regular way or, in case no such reported sale takes place on such
day, the average of the reported closing bid and asked prices regular
way, in either case of the Common Stock on the New York Stock Exchange
or, if the Common Stock is not listed or admitted to trading on such
exchange, on the principal national securities exchange on which the
Common Stock is listed or admitted to trading or, if not listed or
admitted to trading on any national securities exchange, on the
National Association of Securities Dealers Automated Quotations
National Market System or, if the Common Stock is not listed or
admitted to trading on any national securities exchange or quoted on
such National Market System, the average of the closing bid and asked
prices in the over-the-counter market as furnished by any New York
Stock Exchange member firm selected from time to time by the
Corporation for that purpose. If none of the conditions set forth above
is met, the closing price of Common Stock on any day or the average of
such closing prices for any period shall be the fair market value of
such class of stock as determined by a member firm of the New York
Stock Exchange, Inc. selected by the Corporation.
(7) In any case in which this Paragraph shall require that an
adjustment be made immediately following a record date, the Corporation
may elect to defer the implementation of such adjustment (but in no
event until a date later than the effective time of the event giving
rise to such adjustment), in which case the Corporation shall, with
respect to any share of 4.5% Preferred Stock converted after such
record date and before such adjustment shall have become implemented
(i) defer paying any cash payment pursuant to Paragraph (d) below in
respect of fractional shares or issuing to the holder of such share of
4.5% Preferred Stock the number of shares of Common Stock issuable upon
such conversion in excess of the number of shares of Common Stock
issuable thereupon only on the basis of the conversion price prior to
adjustment, and (ii) not later than five Business Days after such
adjustment shall be implemented, pay to such holder the appropriate
cash payment pursuant to Paragraph (d) and issue to such holder the
additional shares of Common Stock and other capital stock and
securities of the Corporation issuable on such conversion and deliver
to such holder such other assets deliverable on such conversion. If an
event otherwise requiring that an adjustment be made pursuant to this
Paragraph never becomes effective, no such adjustment shall be required
to be implemented.
(8) Notwithstanding anything to the contrary herein, no adjustment in
the Conversion Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in such price; provided,
that any adjustments which by reason of this Subparagraph (8) are not
required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Paragraph shall
be made by the Corporation to the nearest cent or the nearest one-
hundredth of a share, as the case may be.
(9) The Corporation may make such reductions in the conversion price,
in addition to those required by Subparagraphs (1), (2), (3) and (4) of
this Paragraph, as it considers to be advisable in order that any event
treated for Federal income tax purposes as a dividend of stock or stock
rights shall not be taxable to the recipients. Any determination by the
Board of Directors of the Corporation in connection with the foregoing,
if made in good faith, shall be conclusive and described in a
resolution of the Board of Directors filed with the transfer agent for
the 4.5% Preferred Stock and mailed to the holders of record of the
4.5% Preferred Stock.
(10) As used in this Section 5 "Business Day" means any day other
than a Saturday, Sunday or a day on which banking institutions in the
State of New York are authorized by law or executive order to close.
(11) Whenever the conversion price is adjusted as herein provided,
the Corporation shall:
(i) forthwith compute the adjusted conversion price in accordance
with this Section 5(c) and prepare a certificate signed by the Chief
Financial Officer, any Vice President, the Treasurer or Controller
of the Corporation setting forth the adjusted conversion price, the
method of calculation thereof in reasonable detail and the facts
requiring such adjustment and upon which such adjustment is based,
which certificate shall be conclusive, final and binding evidence of
the
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correctness of the adjustment, and file such certificate forthwith
with the transfer agent or agents for the 4.5% Preferred Stock and
the Common Stock; and
(ii) mail a notice stating that the conversion price has been
adjusted, the facts requiring such adjustment and the facts upon
which such adjustment is based and setting forth the adjusted
conversion price to the holders of record of the outstanding shares
of the 4.5% Preferred Stock at or prior to the time the Corporation
mails an interim statement to its stockholders covering the fiscal
quarter during which the facts requiring such adjustment occurred,
but in any event within 45 days of the end of such fiscal quarter
for the first three quarters of each year and within 90 days of the
end of the last fiscal quarter of each year.
(d) No Fractional Shares. No fractional shares or scrip representing
fractional shares of Common Stock shall be issued upon conversion of 4.5%
Preferred Stock. If more than one certificate evidencing shares of 4.5%
Preferred Stock shall be surrendered for conversion at one time by the same
holder, the number of full shares issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of 4.5% Preferred
Stock so surrendered. Instead of any fractional share of Common Stock that
would otherwise be issuable to a holder upon conversion of any shares of
4.5% Preferred Stock, the Corporation shall pay a cash adjustment without
interest in respect of such fractional share in an amount equal to the same
fraction of the market price per share of Common Stock (as determined by
the Board of Directors, which, so long as the Common Stock is listed on the
New York Stock Exchange, shall be the reported last sale price regular way
on the New York Stock Exchange) at the close of business on the day of
conversion.
(e) Mandatory Conversion. On the fourth anniversary of the date of
original issuance of the 4.5% Preferred Stock (the "Latest Mandatory
Conversion Date") all of the 4.5% Preferred Stock shall convert into shares
of Common Stock on the basis provided in Subparagraph (3) of this Paragraph
(e). If, at any time prior to the Latest Mandatory Conversion Date less
than 30% of the number of shares of 4.5% Preferred Stock initially issued
remain outstanding, the remaining shares of 4.5% Preferred Stock shall, at
the election of the Corporation and after notice has been provided as set
forth below, convert into shares of Common Stock on the basis provided in
Subparagraph (3) of this Paragraph (e).
(1) Notice of Conversion. If the Corporation has elected to convert
the 4.5% Preferred Stock into Common Stock pursuant to the second
sentence of this Paragraph (e), the Corporation will provide notice of
mandatory conversion of shares of 4.5% Preferred Stock pursuant to this
Paragraph (e) (other than any conversion on the Latest Mandatory
Conversion Date) to holders of record of the 4.5% Preferred Stock to be
converted not less than 15 nor more than 60 days prior to the date
fixed for conversion. Such notice shall be provided by mailing notice
of such conversion first class air mail postage prepaid, to each holder
of record of the 4.5% Preferred Stock to be converted, at such holder's
address as it appears on the stock register of the Corporation;
provided, however, that no failure to give such notice nor any defect
therein shall affect the validity of the preceding notice for the
conversion of any shares of 4.5% Preferred Stock except as to the
holder to whom the Corporation has failed to give said notice or except
as to the holder whose notice was defective. Such notice shall specify
the date fixed for conversion, the conversion price then in effect and
that on and after the date fixed for conversion dividends will cease to
accrue on such shares.
(2) Deposit of Shares and Funds. The Corporation's obligation to
deliver shares of Common Stock and (only with respect to fractional
shares) provide funds in accordance with this Paragraph (e) shall be
deemed fulfilled if, on the mandatory conversion date, the Corporation
shall deposit, with a bank or trust company, having an office or agency
in New York, New York and having a capital and surplus of at least
$50,000,000, such number of shares of Common Stock as are required to
be delivered by the Corporation pursuant to this Paragraph (e) upon the
conversion (including the payment of fractional share amounts) in trust
for the account of the holders of the shares to be converted (and so as
to be and continue to be available therefor), with irrevocable
instructions and authority to such bank or trust company that such
shares and funds be delivered upon conversion of the shares of 4.5%
Preferred Stock so called for conversion, provided that the Corporation
shall not deposit such shares of
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Common Stock or such funds on any date prior to the mandatory
conversion date. Any interest accrued on such funds shall be paid to
the Corporation from time to time. Any shares of Common Stock or funds
so deposited and unclaimed at the end of two years from such conversion
date shall be repaid and released to the Corporation, after which the
holder or holders of such shares of 4.5% Preferred Stock so called for
conversion shall look only to the Corporation for delivery of such
shares of Common Stock or funds.
(3) Effective Date. Provided that the Corporation has fulfilled its
obligations to deposit shares and funds as provided in Subparagraph (2)
of this Paragraph (e), then effective on the conversion date fixed by
the Corporation and notified to the holders of 4.5% Preferred Stock
pursuant to Subparagraph (1) of this Paragraph (e) (or on the Latest
Mandatory Conversion Date, as the case may be), each outstanding share
of 4.5% Preferred Stock shall be converted into fully paid and
nonassessable shares of Common Stock at the conversion price then in
effect, automatically and without any action on the part of any holder
of shares of 4.5% Preferred Stock, and such shares of Common Stock
shall be deemed outstanding from and after the conversion date.
(4) Surrender of Certificates; Status. Each holder of shares of 4.5%
Preferred Stock to be converted pursuant to this Paragraph (e) shall
surrender the certificates evidencing such shares to the Corporation at
the place designated in the notice of such conversion or, if such
conversion occurs on the Latest Mandatory Conversion Date, then such
conversion shall, unless the Corporation has notified each holder
otherwise, take place at the offices of the Corporation's transfer
agent, and shall thereupon be entitled to receive certificates
evidencing shares of Common Stock and to receive any funds payable
following such surrender and following the date of such conversion. If
any required notice of conversion shall have been given or no such
notice is required by the terms hereof, and if on the date fixed for
conversion, shares of Common Stock and funds necessary for the
conversion shall have been deposited with a bank or trust company as
provided in Subparagraph (2) of this Paragraph (e), then,
notwithstanding that the certificates evidencing any shares of 4.5%
Preferred Stock subject to conversion shall not have been surrendered,
the shares represented thereby subject to conversion shall be deemed no
longer outstanding, dividends with respect to the shares subject to
conversion shall cease to accrue after the date fixed for conversion
and all rights with respect to the shares subject to conversion shall
forthwith after such date cease and terminate, except for the right of
the holders to receive the shares of Common Stock and funds, if any, to
which they are entitled without interest upon surrender of their
certificates therefor.
(f) Reclassification, Consolidation, Merger or Sale of Assets. In case of
any consolidation of the Corporation with, or merger of the Corporation or
share exchange into, any other Person (as hereinafter defined), any merger
of another Person into the Corporation (other than a merger or share
exchange which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock) or any sale
or transfer of all or substantially all of the assets of the Corporation,
lawful provision shall be made as a part of the terms of such
consolidation, merger, sale or transfer whereby the holder of each share of
the 4.5% Preferred Stock shall have the right to convert such share into
the kind and amount of securities, cash and other property receivable upon
such consolidation, merger, sale or transfer by a holder of the number of
shares of Common Stock of the Corporation into which a share of the 4.5%
Preferred Stock might have been converted at the conversion price in effect
immediately prior to such consolidation, merger, sale or transfer
(including aggregation rights with respect to fractional shares equivalent
to those set forth in Paragraph (d) above), assuming such holder of Common
Stock of the Corporation (i) is not a Person with which the Corporation
consolidated or into which the Corporation merged or which merged into the
Corporation or exchanged its shares or to which such sale or transfer was
made, as the case may be (a "constituent Person"), or an Affiliate (as
hereinafter defined) of a constituent Person, and (ii) failed to exercise
his rights of election, if any, as to the kind or amount of securities,
cash or other property receivable upon such consolidation, merger, sale or
transfer by other than a constituent Person or an Affiliate thereof and in
respect of which such rights of election shall not have been exercised;
provided, however, that if the kind or amount of securities, cash and other
property receivable upon such
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consolidation, merger, sale or transfer is not the same for each share of
Common Stock of the Corporation held immediately prior to such
consolidation, merger, sale or transfer by others than a constituent Person
or an Affiliate thereof and in respect of which such rights of election
shall not have been exercised ("non-electing share"), then for the purpose
of this Paragraph the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer by
each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares. It is
understood for purposes of this Paragraph that, if the stockholders of the
Corporation have approved any such consolidation, merger, sale or transfer
which makes provision for the 4.5% Preferred Stock under the terms of such
consolidation, merger, sale or transfer (such approval to include the
necessary approval, if any, of the holders of the 4.5% Preferred Stock
under Section 6), then the holders of 4.5% Preferred Stock shall be deemed
to have waived the benefits of this Paragraph.
Such provision shall also provide, as a part of the terms of such
consolidation, merger, share exchange, sale or transfer, for adjustments
for subsequent events equivalent to the adjustments provided for in Section
5(c). The above provisions of this Paragraph (f) shall similarly apply to
successive consolidations, mergers, share exchanges, sales or transfers.
For purposes of this Paragraph (f), "Person" means any individual,
corporation, partnership, joint venture, trust, unincorporated
organization, government or any agency or political subdivision thereof, or
any other entity and "Affiliate" of any specified Person means any other
Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
With respect to any consolidation, merger, share exchange, sale or
transfer in which the Corporation is not the surviving Person, the
surviving Person shall be a Person organized under the laws of a State of
the United States.
(g) Reservation of Shares; Etc. The Corporation shall at all times
reserve and keep available, free from preemptive rights out of its
authorized and unissued stock, solely for the purpose of effecting the
conversion of the 4.5% Preferred Stock, such number of shares of its Common
Stock as shall from time to time be sufficient to effect the conversion of
all shares of 4.5% Preferred Stock from time to time outstanding. The
Corporation shall from time to time, in accordance with the laws of the
Commonwealth of Pennsylvania, increase the authorized number of shares of
Common Stock if at any time the number of shares of authorized and unissued
Common Stock shall not be sufficient to permit the conversion of all the
then-outstanding shares of 4.5% Preferred Stock.
If any shares of Common Stock required to be reserved for purposes of
conversion of the 4.5% Preferred Stock hereunder require registration with
or approval of any governmental authority under any Federal or State law
before such shares may be issued upon conversion, the Corporation will in
good faith and as expeditiously as possible endeavor to cause such shares
to be duly registered or approved as the case may be. If the Common Stock
is listed on the New York Stock Exchange, the Paris Stock Exchange or any
other national or foreign securities exchange, the Corporation will, if
permitted by the rules of such exchange, list and keep listed on such
exchange, upon official notice of issuance, all shares of Common Stock
issuable upon conversion of the 4.5% Preferred Stock.
(h) Prior Notice of Certain Events. In case:
(1) the Corporation shall declare any dividend (or any other
distribution) on its Common Stock other than ordinary quarterly
dividends in accordance with the Corporation's dividend policy (and
other than dividends and distributions described in clauses (2) and (3)
below); or
(2) the Corporation shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any
shares of stock of any class or series or of any other rights or
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warrants other than pursuant to a stockholder rights plan provided that
such rights are issuable together with Common Stock upon conversion of
the 4.5% Preferred Stock; or
(3) of any reclassification of Common Stock (other than a subdivision
or combination of the outstanding Common Stock, or a change in par
value, or from par value to no par value, or from no par value to par
value), or of any division or consolidation or merger to which the
Corporation is a party and for which approval of any stockholders of
the Corporation shall be required, or of the sale or transfer of all or
substantially all of the assets of the Corporation or of any compulsory
share exchange whereby the Common Stock is converted into other
securities, cash or other property; or
(4) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation; then the Corporation shall cause to be
filed with the transfer agent for the 4.5% Preferred Stock, and shall
cause to be mailed to the holders of record of the 4.5% Preferred
Stock, at their last addresses as they shall appear upon the stock
transfer books of the Corporation, at least fifteen days prior to the
applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record (if any) is to be taken for the
purpose of such dividend, distribution, redemption, repurchase, rights
or warrants or, if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to such dividend,
distribution, redemption, rights or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger,
sale, transfer, share exchange, dissolution, liquidation or winding up
is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger,
sale, transfer, share exchange, dissolution, liquidation or winding up
(but no failure to mail such notice or any defect therein or in the
mailing thereof shall affect the validity of the corporate action
required to be specified in such notice).
(i) Accrued and Unpaid Dividends. Notwithstanding the provisions of
Paragraph (b) above, the holder of each share of 4.5% Preferred Stock
shall, upon the conversion of shares of 4.5% Preferred Stock pursuant to
Paragraph (e) above, convert all accrued and unpaid dividends in respect of
such shares of 4.5% Preferred Stock into Common Stock at the conversion
price.
6. Voting Rights. Other than as set forth below and except as provided
under applicable law, the holders of 4.5% Preferred Stock shall be entitled
to vote together with the holders of Common Stock on all matters to be
voted on by the Corporation's holders of Common Stock. When voting together
with the holders of Common Stock on any matter, each share of 4.5%
Preferred Stock shall be entitled to the number of votes equal to the
number of shares of Common Stock into which such share of 4.5% Preferred
Stock is convertible as provided under Section 5 as of the record date
applicable to such vote. The holders of 4.5% Preferred Stock shall have the
following additional voting rights:
(a) Required Votes. Except as provided below, a vote of at least a
majority of 4.5% Preferred Stock then outstanding shall be sufficient
to take any action requiring the vote of the 4.5% Preferred Stock as a
separate class. The Common Stock shall not vote together with the 4.5%
Preferred Stock on any such matters. At any meeting where the 4.5%
Preferred Stock shall have the right to vote as a separate class, the
presence, in person or by proxy, of a majority of the outstanding
shares of the 4.5% Preferred Stock shall constitute a quorum of such
class.
(b) Default Voting Rights. Whenever dividends accrued on the 4.5%
Preferred Stock shall be in arrears and unpaid for at least six
consecutive quarterly dividend periods, (i) the number of members
constituting the Board of Directors shall be increased by two,
effective as of the time of election of such directors as hereinafter
provided and (ii) the holders of shares of 4.5% Preferred Stock (voting
separately as a class together with holders of any Parity Securities
upon which like voting rights have been conferred and are then
exercisable) will have the exclusive right to vote for and elect such
two additional directors of the Corporation (the "4.5% Preferred Stock
Directors") to fill such newly-created directorships. Such right to
elect two 4.5% Preferred Stock Directors shall become effective at the
earlier of (x) the next meeting of stockholders of the Corporation at
which directors are to be elected held after such dividends have been
in arrears and unpaid for six consecutive quarterly dividend
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periods and (y) the special meeting of holders of 4.5% Preferred Stock
(and of Parity Securities on which similar voting rights have been
conferred) called as provided below in this Paragraph (b), and shall
terminate when all accrued and unpaid dividends on the 4.5% Preferred
Stock have been declared and paid or set apart for payment in full,
subject to re-vesting in the event of each and every subsequent failure
of the Corporation to pay dividends for the requisite number of
quarterly dividend periods as described above.
Each of the two 4.5% Preferred Stock Directors shall serve until the
next annual meeting of stockholders of the Corporation and until his or
her successor shall be elected and shall have qualified or the earlier
expiration of his or her term as provided in this Paragraph (b). No
4.5% Preferred Stock Director may be removed without the vote of
holders of a majority of the shares of 4.5% Preferred Stock voting as a
class, or the holders of a majority of shares of 4.5% Preferred Stock
and Parity Securities having the right to vote in the election of the
4.5% Preferred Stock Directors in case holders of shares of Parity
Securities shall also have the right to elect such directors voting
together as a single class, as the case may be. If, prior to the
expiration of the term of any 4.5% Preferred Stock Director, a vacancy
in the office of such director shall occur, such vacancy shall, until
the expiration of such term, in each case be filled by the vote of the
holders of record of a majority of the then outstanding shares of 4.5%
Preferred Stock voting as a class, or the holders of a majority of the
shares of 4.5% Preferred Stock and Parity Securities who are then
entitled to participate in the election of the 4.5% Preferred Stock
Directors in case holders of such Parity Securities shall also have the
right to elect such directors voting together as a single class, as the
case may be.
Upon any termination of the right of the holders of 4.5% Preferred
Stock voting as a class to elect the 4.5% Preferred Stock Directors as
herein provided, the term of office of the 4.5% Preferred Stock
Directors then in office shall terminate immediately. Upon such
termination the number of directors constituting the Board of Directors
shall, without further action, be reduced by two.
At elections for 4.5% Preferred Stock Directors, each holder of 4.5%
Preferred Stock shall be entitled to one vote per share. In the event
that the holders of any Parity Securities shall be entitled to
participate in the election of the 4.5% Preferred Stock Directors, the
holders of such Parity Securities shall be entitled to cast one vote
for each $ * in liquidation value of such Parity Securities.
The foregoing right of the holders of shares of 4.5% Preferred Stock
with respect to the election of the 4.5% Preferred Stock Directors may
be exercised at any annual meeting of stockholders or at any special
meeting of stockholders held for such purpose. If the right to elect
directors shall have accrued to the holders of shares of 4.5% Preferred
Stock more than ninety days preceding the date established for the next
annual meeting of stockholders, the President of the Corporation shall,
within twenty days after the delivery to the Corporation at its
principal office of a written request for a special meeting signed by
the holders of at least 10% of all outstanding shares of 4.5% Preferred
Stock, call a special meeting of the holders of 4.5% Preferred Stock
(and of any Parity Securities on which similar voting rights have been
conferred) to be held within sixty days after the delivery of such
request for the purpose of electing the 4.5% Preferred Stock Directors.
(c) Removal. The holders of shares of 4.5% Preferred Stock (together
with the holders of any Parity Securities on which similar voting
rights have been conferred), voting as a class shall have the right to
remove without cause at any time and replace the 4.5% Preferred Stock
Directors.
(d) Class Voting Rights. So long as any 4.5% Preferred Stock is
outstanding (except when notice of the mandatory conversion of all
outstanding shares of 4.5% Preferred Stock has been duly given by the
Corporation or as of the Latest Mandatory Conversion Date and, in each
case, shares of Common Stock and any necessary funds have been
deposited in trust for such conversion pursuant to Section 5(e)), the
Corporation shall not, without the affirmative vote or consent of the
holders of at least two-thirds ( 2/3) (unless a higher percentage shall
then be required by applicable law) of all outstanding shares of 4.5%
Preferred Stock voting separately as a class, given in person or by
proxy,
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* Insert par value of 4.5% Preferred Stock.
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either in writing or by resolution adopted at an annual or special
meeting called for this purpose, (i) amend, alter or repeal any
provision of the Articles of Incorporation of the Corporation, as
amended, so as to affect, in any manner adverse to the holders of the
4.5% Preferred Stock, the relative rights, preferences, qualifications,
limitations or restrictions of the 4.5% Preferred Stock; (ii) create,
authorize, or reclassify any authorized stock of the Corporation into,
or increase the authorized amount of, any class or series of the
Corporation's capital stock ranking prior to the 4.5% Preferred Stock
as to dividends or as to distributions of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, or any security convertible into shares of such a class or
series; or (iii) take any other action on which the holders of the 4.5%
Preferred Stock shall be entitled by law to vote separately as a class.
For purposes of Paragraph 6(d), without limitation, (i) the creation,
authorization or issuance of any shares of any Junior Securities or
Parity Securities and (ii) the creation of any indebtedness of the
Corporation (other than indebtedness convertible into or exchangeable
for capital stock of the Corporation other than Junior Securities or
Parity Securities), shall not require the consent of the holders of the
4.5% Preferred Stock voting as a class.
(e) Limitations. Except as may otherwise be required by law, the
shares of 4.5% Preferred Stock shall not have any powers, preferences
or relative, participating, optional or other special rights other than
those specifically set forth in the Articles of Incorporation of the
Corporation (as the same may be amended from time to time).
(f) No Cumulative Voting. The holders of 4.5% Preferred Stock shall
not be entitled to cumulative voting in the election of directors of
the Corporation whether voting as a class or voting together with the
holders of Common Stock.
7. Status of Acquired Shares and Further Issuances of 4.5% Preferred
Stock. Shares of 4.5% Preferred Stock received upon conversion pursuant to
Section 5 or otherwise acquired by the Corporation, shall be cancelled and
shall not be reissued by the Corporation, and the number of authorized
shares of 4.5% Preferred Stock shall be correspondingly reduced.
Following the initial issuance of 4.5% Preferred Stock, no further shares
of 4.5% Preferred Stock shall be issued and, in the event that any shares
of 4.5% Preferred Stock are authorized but unissued, the number of
authorized shares of 4.5% Preferred Stock shall be reduced accordingly.
8. Severability of Provisions. Whenever possible, each provision hereof
shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating or
otherwise adversely affecting the remaining provisions hereof. If a court
of competent jurisdiction should determine that a provision hereof would be
valid or enforceable if a period of time were extended or shortened or a
particular percentage were increased or decreased, then such court may make
such change as shall be necessary to render the provision in question
effective and valid under applicable law.
9. Miscellaneous. (a) The Corporation shall pay any and all stock
transfer and documentary stamp taxes that may be payable in respect of any
issuance or delivery of shares of 4.5% Preferred Stock or shares of Common
Stock or other securities issued on account of 4.5% Preferred Stock
pursuant hereto or certificates or instruments evidencing such shares or
securities. The Corporation shall not, however, be required to pay any such
tax which may be payable in respect of any transfer involved in the
issuance or delivery of shares of 4.5% Preferred Stock or Common Stock or
other securities in a name other than that in which the shares of 4.5%
Preferred Stock with respect to which such shares or other securities are
issued or delivered were registered, or in respect of any payment to any
person with respect to any such shares or securities other than a payment
to the registered holder thereof, and shall not be required to make any
such issuance, delivery or payment unless and until the person otherwise
entitled to such issuance, delivery or payment has paid to the Corporation
the amount of any such tax or has established, to the satisfaction of the
Corporation, that such tax has been paid or is not payable.
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(b) In the event that a holder of shares of 4.5% Preferred Stock shall
not by written notice designate the name in which shares of Common Stock to
be issued upon conversion of such shares should be registered or to whom
payment upon redemption of shares of 4.5% Preferred Stock should be made or
the address to which the certificates evidencing such shares, or such
payment, should be sent, the Corporation shall be entitled to register such
shares, and make such payment, in the name of the holder of such 4.5%
Preferred Stock as shown on the records of the Corporation and to send the
certificates evidencing such shares, or such payment, to the address of
such holder shown on the records of the Corporation.
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ANNEX C
[LOGO OF CS FIRST BOSTON APPEARS HERE]
CS First Boston Corporation 55 East 52nd Street
New York, NY 10035-0186
Telephone 212 909 2000
November 13, 1995
Board of Directors
Crown Cork & Seal Company, Inc.
9300 Ashton Road
Philadelphia, PA 19136
Dear Members of the Board:
You have asked us to advise you with respect to the fairness to Crown Cork &
Seal Company, Inc. (the "Acquiror" or "CCK") from a financial point of view of
the consideration to be paid by the Acquiror pursuant to the terms of the
Exchange Offer Agreement, dated May 22, 1995, as amended as of November 13,
1995 (the "Agreement"), between Compagnie Generale d'Industrie et de
Participations S.A. ("CGIP") and the Acquiror. CGIP currently owns
approximately 30.4% of the outstanding share capital of CarnaudMetalbox S.A.
("CMB" or the "Company"). The Agreement provides for, among other things, an
undertaking by the Acquiror, subject to certain conditions including
satisfactory due diligence, to commence an Offre Publique d'Echange to acquire
all of the outstanding share capital of the Company (subject to a minimum
condition that at least a majority of the Voting Power (as defined in the
Agreement) of such outstanding share capital is tendered) for, at the election
of each CMB shareholder, either a number of Units (as defined in the
Agreement) consisting of CCK common shares and CCK preferred shares (the
"Securities") equal to the Exchange Ratio (as defined in the Agreement) and
subject to a collar with the result that the Exchange Ratio shall not exceed
1.183 Units nor be less than 0.968 Units, with cash being paid in lieu of any
fractional share interest, or Ffr 225 in cash for each CMB share tendered (the
"OPE"). The Agreement further provides that, subject to certain conditions,
CGIP shall tender its shares in the Company and elect to receive Units in the
OPE.
In arriving at our opinion, we have reviewed the Proxy Statement/Prospectus
of the Acquiror, dated November 13, 1995 (the "Proxy Statement/Prospectus"),
the Agreement and certain publicly available business and financial
information relating to the Acquiror and the Company. We have also reviewed
certain other information, including financial forecasts for the Acquiror and
the Company, provided to us by the Acquiror and the Company, and have met with
the management of the Acquiror and the Company to discuss the business and
prospects of the Acquiror and the Company, their projected performance, the
strategic importance of the Company to the Acquiror, and the benefits expected
to be achieved through the combination of the operations of the Acquiror and
the Company.
We have also considered certain financial and stock market data of the
Acquiror and the Company, and we have compared that data with similar data for
other publicly held companies in businesses similar to those of the Acquiror
and the Company and we have considered the financial terms of certain other
business combinations and other transactions which have recently been
effected. We also considered such other information, financial studies,
analyses and investigations and financial, economic and market criteria which
we deemed relevant.
C-1
<PAGE>
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information (including the
information contained in the Proxy Statement/Prospectus) and have relied on
its being complete and accurate in all material respects. With respect to the
financial forecasts, we have assumed that they have been reasonably prepared
on bases reflecting the best currently available estimates and judgments of
the management of the Acquiror and the Company as to the future financial
performance of the Acquiror and the Company. In rendering our opinion we also
assumed, with your consent, that, in connection with obtaining the approval of
the European Community required by EC Council regulation 4064/89, the Acquiror
will divest the European aerosol assets and operations of the Acquiror and the
Company which have been previously disclosed to us. In addition, we have not
made an independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) of the Acquiror or the Company, nor have we been
furnished with any such evaluations or appraisals. Our opinion is necessarily
based upon financial, economic, market and other conditions as they exist and
can be evaluated on the date hereof. We are not expressing any opinion as to
what the value of the Securities actually will be when issued to the Company's
stockholders pursuant to the OPE or the prices at which such Securities will
trade subsequent to the OPE.
We have acted as financial advisor to the Acquiror in connection with the
OPE and will receive a fee for our services, a significant portion of which is
contingent upon the consummation of the OPE.
In the past, we have performed certain investment banking services for the
Company, the Acquiror and CGIP and have received customary fees for such
services.
In the ordinary course of our business, CS First Boston and its affiliates
may actively trade the debt and equity securities of the Company, the Acquiror
and CGIP for their own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
It is understood that this letter is for the information of the Board of
Directors of the Acquiror only in connection with its consideration of the OPE
and is not to be quoted or referred to, in whole or in part, in any
registration statement, prospectus or proxy statement, or in any other
document used in connection with the offering or sale of securities, nor shall
this letter be used for any other purposes, without CS First Boston's prior
written consent (it being understood, however, that this opinion may be
reproduced in full in any proxy statement mailed to the Acquiror's
shareholders, provided that any comments or references to such letter or to CS
First Boston accompanying such reproduction in the proxy statement shall be
satisfactory in all respects to CS First Boston).
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the consideration to be paid by the Acquiror in the OPE is fair
to the Acquiror from a financial point of view.
Very truly yours,
CS FIRST BOSTON CORPORATION
/s/ Charles G. Ward III
C-2
<PAGE>
ANNEX D
Pursuant to the approval of the Articles Modernization Proposal, Article
THIRD, Section 4 of Crown's Articles of Incorporation will be amended by
deleting the following in its entirety:
4. Authorizing Mortgages. The holders of Common Stock are specifically
excluded from the right to vote in any proceeding to authorize and/or upon
the question of authorizing a mortgage or mortgages to secure an aggregate
of not more than $5,500,000 principal amount of bonds (in addition to any
pledges of current assets) to secure current indebtedness at any one time
outstanding which may be issued on such terms and conditions as the
directors, in their exclusive and uncontrolled discretion, may determine
without notice to or vote by or consent of such holders.
The effectiveness of the Articles Modernization Proposal is not conditioned
on the approval of any other proposal.
D-1
<PAGE>
ANNEX E
Pursuant to the approval of the Additional Preferred Stock Proposal, Article
THIRD of Crown's Articles of Incorporation will be amended by inserting the
following at the end of the first sentence of the first paragraph of Article
THIRD:
THIRD: "and 30,000,000 shares of preferred stock ("Additional Preferred
Stock"), without par value."
In addition, Article THIRD of Crown's Articles of Incorporation will be
amended by inserting the following paragraph at the end of Article THIRD as a
new provision:
Additional Preferred Stock. The unissued shares of Additional Preferred
Stock may be divided and issued at any time and from time to time in one or
more classes or series of a class as may be designated by the Board of
Directors of the Corporation. The Board of Directors shall have the full
authority permitted by law to fix by resolution the designations, number and
the voting rights, preferences, privileges, limitations, restrictions,
conversion rights and other special or relative rights, if any, of any class
or any series of any class of the Additional Preferred Stock that may be
desired; provided, however, that such shares will rank on a parity with or
junior to Acquisition Preferred Stock and provided further that the shares of
any such class or series of a class shall not be entitled to more than one
vote per share when voting as a class with holders of the Corporation's common
stock.
The effectiveness of the Additional Preferred Stock Proposal is not
conditioned on the approval of any other proposal.
E-1
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under the Pennsylvania Business Corporation Law of 1988, as amended (the
"PBCL"), Pennsylvania corporations have the power to indemnify any person
acting as a representative of the corporation against liabilities incurred in
such capacity provided certain standards are met, including good faith and the
belief that the particular action or failure to take action is in the best
interests of the corporation. In general, this power to indemnify does not
exist in the case of actions against any person by or in the right of the
corporation if the person otherwise entitled to indemnification shall have
been adjudged to be liable to the corporation unless a court determines that
despite the adjudication of liability but in view of all the circumstances of
the case, the person is fairly and reasonably entitled to indemnity for
expenses that the court deems proper. A corporation is required to indemnify
representatives of the corporation against expenses they may incur in
defending actions against them in such capacities if they are successful on
the merits or otherwise in the defense of such actions. In all other cases, if
a representative of the corporation acted, or failed to act, in good faith and
in a manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation, indemnification is discretionary, except as may
be otherwise provided by a corporation's bylaws, agreement, vote of
shareholders or disinterested directors or otherwise. Indemnification so
otherwise provided may not, however, be made if the act or failure to act
giving rise to the claim for indemnification is determined by a court to have
constituted willful misconduct or recklessness. Expenses (including attorney's
fees) incurred in defending any such action may be paid by the corporation in
advance of the final disposition of the action upon receipt of an undertaking
by or on behalf of the representative to repay the amount if it is ultimately
determined that he or she is not entitled to be indemnified by the
corporation.
Section 1746 of the PBCL provides that the foregoing provisions shall not be
deemed exclusive of any other rights to which a person seeking indemnification
may be entitled under, among other things, any bylaw provision, provided that
no indemnification may be made in any case where the act or failure to act
giving rise to the claim for indemnification is determined by a court to have
constituted willful misconduct or recklessness.
The Registrant's Bylaws provide that the Registrant shall indemnify to the
fullest extent permitted by applicable law any person who was or is a party or
is threatened to be made a party to or is otherwise involved in any
threatened, pending or completed action, suit or proceeding by reason of the
fact that such person is or was a director or officer of the Registrant,
against all liability, loss and expense (including attorney's fees and amounts
paid in settlement) actually and reasonably incurred by such person in
connection with such proceeding, whether or not the indemnified liability
arises or arose from any proceeding by or in the right of the Registrant. The
Registrant's Bylaws also provide that expenses incurred by a director or
officer in defending (or acting as a witness in) a proceeding may be paid by
the Registrant in advance of the final disposition of such proceeding, subject
to the provisions of applicable law, upon receipt of any undertaking by or on
behalf of the director or officer to repay such amount if it shall ultimately
be determined that such person is not entitled to be indemnified by the
Registrant under applicable law. Additionally, the Registrant's Bylaws limit
directors' personal liability for monetary damages for any action taken, or
any failure to take any action, unless (1) the director has breached or failed
to perform the duties of his or her office under the PBCL's standard of care
and justifiable reliance provisions and (2) the breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness. However, these
provisions do not apply to the responsibility or liability of a director
pursuant to any criminal statute or for the payment of taxes pursuant to
local, state or federal law. The Registrant has purchased directors and
officers' liability insurance covering certain liabilities which may be
incurred by the officers and directors of the Registrant in connection with
the performance of their duties.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The Exhibit Index appearing on pages II-6 through II-7 is hereby
incorporated by reference.
(b) No additional information is required to be filed herewith pursuant to
Item 21(b) or (c) of this Form.
II-1
<PAGE>
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of any
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c),
the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
The Registrant undertakes that every prospectus (i) that is filed pursuant
to the paragraph immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Securities Act of 1933 and is used in
connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the Registration Statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against the public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-2
<PAGE>
(b) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of response to the request.
(c) The undersigned Registration hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF PHILADELPHIA,
COMMONWEALTH OF PENNSYLVANIA, ON NOVEMBER 13, 1995.
Crown Cork & Seal Company, Inc.
/s/ William J. Avery
By: _________________________________
Name: William J. Avery
Title: Chairman of the Board,
President and Chief
Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ William J. Avery Chairman of the November 13, 1995
- ------------------------------------- Board, President and
WILLIAM J. AVERY Chief Executive
Officer (Principal
Executive Officer)
/s/ Alan W. Rutherford Executive Vice November 13, 1995
- ------------------------------------- President, Chief
ALAN W. RUTHERFORD Financial Officer
and Director
(Principal Financial
Officer)
/s/ Timothy J. Donahue Financial Controller November 13, 1995
- ------------------------------------- (Principal
TIMOTHY J. DONAHUE Accounting Officer)
* Director November 13, 1995
- -------------------------------------
HENRY E. BUTWEL
* Director November 13, 1995
- -------------------------------------
CHARLES F. CASEY
* Director November 13, 1995
- -------------------------------------
FRANCIS X. DALTON
* Director November 13, 1995
- -------------------------------------
FRANCIS J. DUNLEAVY
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
- ------------------------------------- Director November 13, 1995
CHESTER C. HILINSKI
* Director November 13, 1995
- -------------------------------------
RICHARD L. KRZYZANOWSKI
* Director November 13, 1995
- -------------------------------------
JOSEPHINE C. MANDEVILLE
* Director November 13, 1995
- -------------------------------------
MICHAEL J. MCKENNA
* Director November 13, 1995
- -------------------------------------
J. DOUGLASS SCOTT
* Director November 13, 1995
- -------------------------------------
ROBERT J. SIEBERT
* Director November 13, 1995
- -------------------------------------
HAROLD A. SORGENTI
* Director November 13, 1995
- -------------------------------------
EDWARD P. STUART
/s/ William J. Avery November 13, 1995
*____________________________________
William J. Avery
as Attorney-in-Fact
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGE
----------- ----------- -------------
<C> <S> <C>
2.1 Exchange Offer Agreement, dated as of May 22,
1995, and amended as of November 13, 1995 between
Registrant and Compagnie Generale d'Industrie et
de Participations (incorporated by reference to
Annex A of the Proxy Statement/Prospectus forming
a part of this Registration Statement).
3.1 Articles of Incorporation of Registrant
(incorporated by reference to Exhibit 4.1 of the
Company's Registration Statement of Form S-4 filed
with the Securities and Exchange Commission on
March 9, 1993 (Registration No. 33-59286)).
3.2 Bylaws of Registrant (incorporated by reference to
Exhibit 3 of Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1995, (File
No. 1-2227)).
4.1 Form of Registrant's 5 7/8% Notes Due 1998
(incorporated by reference to Exhibit 22 of
Registrant's Current Report on Form 8-K, dated
April 12, 1993 (File No. 1-2227)).
4.2 Form of Registrant's 6 3/4% Notes Due 2003
(incorporated by reference to Exhibit 23 of
Registrant's Current Report on Form 8-K, dated
April 12, 1993 (File No. 1-2227)).
4.3 Form of Registrant's 8% Debentures Due 2023
(incorporated by reference to Exhibit 24 of
Registrant's Current Report on Form 8-K, dated
April 12, 1993 (File No. 1-2227)).
4.4 Officers' Certificate of Registrant (incorporated
by reference to Exhibit 4.3 of Registrant's
Quarterly Report on Form 10-Q for the quarter
ended March 31, 1993 (File No. 1-2227)).
4.5 Indenture dated as of April 1, 1993 between
Registrant and Chemical Bank, as Trustee
(incorporated by reference to Exhibit 26 of
Registrant's Current Report on Form 8-K, dated
April 12, 1993 (File No. 1-2227)).
4.6 Terms Agreement, dated March 31, 1993
(incorporated by reference to Exhibit 27 of
Registrant's Current Report on Form 8-K, dated
April 12, 1993 (File No. 1-2227)).
4.7 Form of Registrant's 7% Notes Due 1999
(incorporated by reference to Exhibit 99.1 of
Registrant's Current Report on Form 8-K, dated
June 16, 1994 (File No. 1-2227)).
4.8 Officers' Certificate of Registrant (incorporated
by reference to Exhibit 99.2 of Registrant's
Current Report on Form 8-K, dated June 16, 1994
(File No. 1-2227)).
4.9 Terms Agreement, dated June 9, 1994 (incorporated
by reference to Exhibit 99.3 of Registrant's
Current Report on Form 8-K, dated June 16, 1994
(File No. 1-2227)).
4.10 Indenture, dated as of January 15, 1995, between
Registrant and Chemical Bank, as Trustee
(incorporated by reference to Exhibit 4 of
Registrant's Report on Form 8-K, dated June 25,
1994 (File No. 1-2227)).
4.11 Form of Registrant's 8 3/8% Note Due 2005
(incorporated by reference to Exhibit 99.1 of
Registrant's Current Report on Form 8-K, dated
June 25, 1994 (File No. 1-2227)).
4.12 Officers' Certificate of Registrant, dated January
25, 1995 (incorporated by reference to Exhibit 99b
of Registrant's Current Report on Form 8-K, dated
June 25, 1994 (File No. 1-2227)).
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGE
----------- ----------- -------------
<C> <S> <C>
4.13 Terms Agreement, dated January 18, 1995
(incorporated by reference to Exhibit 99c of
Registrant's Current Report on Form 8-K dated June
25, 1994 (File No. 1-2227)).
4.14 Revolving Credit and Competitive Advance Facility
Agreement, dated February 10, 1995, among
Registrant, the Subsidiary Borrowers referenced
therein, the Lenders referenced therein and
Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 4.n of
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994 (File No. 1-2227)).
4.15 Rights Agreement, dated August 7, 1995, between
Crown Cork & Seal Company, Inc. and First Chicago
Trust Company of New York (incorporated by
reference to Exhibit 1 of Registrant's Form 8-A,
dated August 10, 1995 (File No. 1-2227)).
4.16 Form of Resolution of Registrant's Board of
Directors fixing the terms of Crown Acquisition
Preferred Stock (incorporated by reference to
Annex B of the Proxy Statement/Prospectus forming
a part of this Registration Statement).
4.17 Financing Commitment Letter by and among
Registrant, Chemical Bank and Chemical Securities
Inc., dated August 25, 1995, and Amendment, dated
November 9, 1995.
5.1 Opinion and Consent of Dechert Price & Rhoads.
8.1 Opinion of Dechert Price & Rhoads with respect to
certain U.S. federal income tax matters.
8.2 Opinion of Titmuss Sainer Dechert with respect to
certain United Kingdom tax matters.
8.3 Opinion of Jeantet et Associes with respect to
certain French tax matters.
12.1 Statement of Computation of Ratio of Earnings to
Fixed Charges.
15.1 "Awareness Letter" of Arthur Andersen LLP, Befec-
Price Waterhouse and Salustro Reydel.
15.2 "Awareness Letter" of Price Waterhouse LLP.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Arthur Andersen LLP, Befec-Price
Waterhouse and C. Chevalier.
Consent of Dechert Price & Rhoads (included in
23.3 Exhibits 5.1 and 8.1).
Consent of Titmuss Sainer Dechert (included in
23.4 Exhibit 8.2).
Consent of Jeantet et Associes (included in
23.5 Exhibit 8.3).
23.6 Consent of Director Designees of Compagnie
Generale d'Industrie et de Participations.
24.1 Power of Attorney.
99.1 Form of Proxy for holders of Crown Common Stock.
</TABLE>
II-7
<PAGE>
Exhibit 4.17
CHEMICAL BANK
CHEMICAL SECURITIES INC.
270 Park Avenue
New York, NY 10017-2070
August 25, 1995
Crown Cork & Seal Company, Inc.
9300 Ashton Road
Philadelphia, Pennsylvania 19136
Attention of Craig R. L. Calle,
Senior Vice President and
Treasurer
Crown Cork & Seal Company, Inc.
-------------------------------
Commitment Letter
-----------------
Dear Sirs:
We understand that Crown Cork & Seal Company, Inc., a Pennsylvania
corporation ("CCSC"), will require a multi-currency credit facility (the
"Facility") in the amount of French Francs 13,700,000,000 (or its equivalent in
other applicable currencies). The proceeds of the Facility will be used by CCSC
and selected non-U.S. subsidiaries (a) to pay the cash portion of the
consideration to be paid in connection with the acquisition (the "Acquisition")
by CCSC of CarnaudMetalbox S.A. ("CMB") and to fund costs and expenses of the
Acquisition, (b) to repurchase shares of capital stock of CCSC and (c) following
the Acquisition, for general corporate purposes.
Chemical Bank ("Chemical") is pleased to advise you of its commitment
to provide a portion of the Facility equal to the FF 1,750,000,000,on the terms
and subject to the conditions set forth or referred to herein and in the Summary
of Terms and Conditions attached hereto as Exhibit A (the "Term Sheet"). You
hereby engage Chemical, and Chemical hereby agrees, to act as exclusive
administrative agent for the Facility and to perform all functions and exercise
all authority (including, without limitation, negotiating definitive credit
documentation) customarily performed and exercised by it in such capacities.
You hereby engage Chemical Securities Inc. ("CSI"), and CSI hereby agrees, to
act as arranger for and to manage the
<PAGE>
2
syndication of the Facility on the terms set forth herein. Societe Generale and
Credit Suisse also will be named as arrangers and documentation agents for the
Facility, and certain banks, to be agreed by Chemical and CCSC, will be named as
senior lead managers for the Facility. However, such arrangers, documentation
agents and senior lead managers will not perform any functions or have any
authority in such capacities.
You agree to assist CSI in achieving a timely syndication of the
Facility that is satisfactory to Chemical and CSI. This will be accomplished by
a variety of means, including direct contact during the syndication among the
senior officers, representatives and advisors of CCSC and its affiliates, on the
one hand, and the proposed Lenders, on the other hand.
You agree promptly to provide, and to cause your advisors to provide,
and to use your best efforts to cause CMB and its advisors to provide, CSI upon
request with all information reasonably deemed necessary by it to complete
successfully the arrangement of the Facility (the "Information"), including your
periodic reports filed with the Securities and Exchange Commission, which shall
be complete and correct in all material respects and not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein not materially misleading in light of
the circumstances under which such statements are made.
As consideration for Chemical's commitment hereunder and for CSI's
agreement to arrange and syndicate the Facility, you agree to pay the fees set
forth in the Term Sheet and in the fee letter dated the date hereof and
delivered herewith (the "Fee Letter").
Chemical's commitment hereunder is subject to (a) there not occurring
any material adverse change in the business, operations, condition (financial or
otherwise) or prospects of CCSC and its subsidiaries taken as a whole as shown
in the Information reviewed by Chemical prior to the date hereof, (b)
commitments being obtained for the balance of the Facility not committed for by
Chemical (subject to CCSC's right to reduce the amount of the Facility, it being
understood that, if the amount of the Facility is reduced below FF
12,330,000,000, then Chemical's commitment will be reduced ratably to the extent
of any reduction below that
<PAGE>
3
amount), (c) Chemical's satisfaction with the structure, terms and conditions of
the Acquisition and the documentation therefor (it being understood that
Chemical is satisfied with those matters communicated to it prior to the date
hereof), and (d) the negotiation, execution and delivery of definitive
documentation with respect to the Facility satisfactory to Chemical and its
counsel (which documentation will, to the extent consistent with the Term Sheet,
substantially incorporate the representations and warranties, covenants,
conditions and events of default contained in the Revolving Credit and
Competitive Advance Facility Agreement dated as of February 10, 1995, as
amended, among CCSC, certain subsidiaries of CCSC, the lenders referred to
therein and Chemical, as agent). To the extent not covered by or made clear
under the provisions hereof and of the Term Sheet, the terms and conditions of
Chemical's commitment hereunder and of the Facility are subject to the mutual
agreement of Chemical and CCSC.
By executing this letter agreement, you agree (a) to indemnify and
hold harmless CSI, Chemical and the other financial institutions which become
parties to the definitive credit documentation (together with Chemical, the
"Lenders") and their respective officers, directors, employees, affiliates,
agents and controlling persons from and against any and all losses, claims,
damages and liabilities (collectively, "Losses") to which any such person may
become subject arising out of or in connection with this Commitment Letter, the
Fee Letter, the Facility or any claim, litigation, investigation or proceeding
relating to any of the foregoing, regardless of whether any of such indemnified
parties is a party thereto, and to reimburse each of such indemnified parties
upon demand for any reasonable legal or other expenses incurred in connection
with investigating or defending any of the foregoing; provided that the
--------
foregoing indemnity will not, as to any indemnified party, apply to Losses or
related expenses to the extent they arise from the wilful misconduct or gross
negligence of such indemnified party (or from the negligence of such indemnified
party if such Losses or related expenses result from an action brought against
such indemnified party by CCSC or by a stockholder or creditor of such
indemnified party); and (b) to reimburse CSI and Chemical from time to time for
all reasonable out-of-pocket expenses (including travel expenses and fees and
disbursements of counsel) incurred in connection with the Facility or the
transactions contemplated hereby, it being understood that the Company will
refer to its own internal expense reimbursement
<PAGE>
4
policies in determining reasonableness of expenses incurred and that
international travel must be approved by CCSC. Chemical will consult with you
from time to time at your request as to the nature and amount of the expenses
for which it intends to seek reimbursement pursuant to clause (b) of the
preceding sentence. The provisions contained in this paragraph shall remain in
full force and effect regardless of whether definitive financing documentation
shall be executed and delivered and notwithstanding the termination of this
Commitment Letter or the commitment hereunder.
You agree that this Commitment Letter (including the Term Sheet) and
the Fee Letter are for your confidential use only and will not without the prior
agreement of CSI and Chemical be disclosed by you to any person other than your
accountants, attorneys and other advisors on a confidential basis; provided that
--------
following your execution hereof (i) you may disclose this Commitment Letter and
the Term Sheet (but not the Fee Letter) to CMB and their accountants, attorneys
and other advisors on a confidential basis; (ii) you may file a copy of this
Commitment Letter and the Term Sheet (but not the Fee Letter) in any public
record in which it is or may be required by law in your good faith judgment to
be filed; and (iii) you may make such other disclosures of the terms and
conditions hereof as you are or may be required by law, in the opinion of your
counsel, to make.
If the foregoing correctly sets forth our agreement, please indicate
your acceptance of the terms hereof and of the Term Sheet by signing in the
appropriate spaces below and in the Fee Letter and returning to us the enclosed
duplicate originals of this Commitment Letter and the Fee Letter on or before
the close of business on August 25, 1995. Chemical's commitment will expire in
the event that definitive documentation shall not have been executed by March
31, 1996, unless Chemical shall agree to an extension. CCSC may terminate
Chemical's commitment at any time.
This Commitment Letter shall not be assignable by you without the
prior written consent of CSI and Chemical, and may not be amended or waived
except by an instrument in writing signed by you, CSI and Chemical. This
Commitment Letter may be executed in any number of counterparts, each of which
shall be an original and all of which, when taken together, shall constitute one
agreement. This Commitment
<PAGE>
5
Letter shall be governed by, and construed in accordance with, the laws of the
State of New York.
CSI and Chemical are pleased to have been given the opportunity to
arrange and serve as agent for this financing.
Very truly yours,
CHEMICAL BANK,
by /s/ William J. Caggiano
------------------------------
Name: William J. Caggiano
Title: Managing Director
CHEMICAL SECURITIES INC.
by /s/ Christopher K. Stout
----------------------------
Name: Christopher K. Stout
Title: Vice President
Accepted and agreed to
as of the date first
written above:
CROWN CORK & SEAL
COMPANY, INC.,
by /s/ Craig R.L. Calle
-----------------------------
Name: Craig R.L. Calle
Title: Senior Vice President - Finance
Treasurer
<PAGE>
EXHIBIT A
CROWN CORK & SEAL COMPANY, INC.
CREDIT FACILITY
Summary of Terms and Conditions
-------------------------------
BORROWERS: Crown Cork & Seal Company, Inc., a Pennsylvania corporation
- --------- ("CCSC") and certain subsidiaries of CCSC designated by
CCSC (the "Subsidiary Borrowers"; together with CCSC, the
"Borrowers"). CCSC will guarantee all obligations of the
Subsidiary Borrowers.
ARRANGER AND Chemical Bank ("Chemical").
- ------------
ADMINISTRATIVE
- --------------
AGENT:
- ------
ARRANGERS AND Credit Suisse and Societe Generale.
- -------------
DOCUMENTATION
- -------------
AGENTS:
- -------
SENIOR LEAD To be determined.
- -----------
MANAGERS:
- ---------
FACILITY: Multi-currency credit facility in a principal amount of
- -------- French Francs 13,700,000,000 (the "Facility"). During the
Availability Period (as defined below) amounts borrowed and
repaid may be reborrowed, subject to availability under the
Facility. At the end of the Availability Period (a) all
commitments to advance loans under the Facility will
terminate and (b) any loans outstanding under the Facility
will convert to term loans maturing on the date one year
after the end of the Availability Period.
USE OF The proceeds of the Facility will be used (a) to pay the
- ------ cash portion of the consideration to be paid in connection
PROCEEDS: with the acquisition (the "Acquisition")
- --------
<PAGE>
2
by CCSC of CarnaudMetalbox S.A. ("CMB") and to fund costs
and expenses of the Acquisition, (b) to repurchase shares
of capital stock of CCSC and (c) following the Acquisition,
for general corporate purposes of CCSC and its
subsidiaries.
AVAILABILITY: Borrowings under the Facility may be made only during the
- ------------ period (the "Availability Period") commencing on the date
of execution of definitive documentation for the Facility
(the "Closing Date") and ending 364 days thereafter (the
"Commitment Termination Date"), subject to satisfaction of
applicable conditions.
Up to the entire amount of the Facility will be available
to Subsidiary Borrowers for Euro-currency borrowings in
French Francs, British Pounds Sterling or U.S. dollars.
Borrowings advanced in French Francs will be limited to FF
2,000,000,000 (subject to increase at the request of CCSC
with the agreement of the Lenders) on any one day. During
the Availability Period, loans that are denominated in a
currency other than the currency in which commitments are
denominated (which will be French Francs) will be revalued
periodically (based on prevailing exchange rates) in order
to establish that the outstanding loans do not exceed the
commitments. Prepayments will be required to the extent
that, based on such revaluations, the outstanding loans are
determined to exceed the commitments.
COMMITMENT All commitments will terminate on the Commitment
- ---------- Termination Date, which will occur 364 days after the
TERMINATION Closing Date. On the Commitment Termination Date, any loans
- ----------- outstanding under the Facility will convert to term loans
DATE; CONVERSION (the "Term Loans").
- ----------------
TO TERM LOANS:
- -------------
<PAGE>
3
FEES: As set forth in the attached Annex I.
- -----
INTEREST RATES: As set forth in the attached Annex I.
- --------------
MATURITY: All Term Loans will mature on the date (the "Maturity
- -------- Date") one year after the Commitment Termination Date.
OPTIONAL All or a portion of the outstanding loans under the
- -------- Facility may be prepaid at any time and commitments may be
PREPAYMENTS AND terminated in whole or in part (in minimum amounts of FF
- --------------- 250,000,000 and in integral multiples of FF 100,000,000) at
COMMITMENT CCSC's option, subject to reimbursement of redeployment
- ---------- costs in the case of LIBOR loans prepaid other than at the
REDUCTIONS: end of an applicable interest period.
- -----------
INTEREST PERIODS: At the Borrower's option:
- ----------------
LIBOR Loans: 1, 2, 3, 6 or, if available from all Lenders,
12 months
Alternate Base Rate ("ABR") Loans: up to 90 days
In any event, Interest Periods for Term Loans must end on
or prior to the Maturity Date. Interest on LIBOR loans will
be payable on the last day of each Interest Period (and at
the end of each three months, in the case of Interest
Periods of longer than three months), and upon prepayment.
Interest on LIBOR loans shall be payable in arrears on the
basis of a 360-day year (calculated on the basis of actual
number of days elapsed). Interest on ABR loans will be
payable quarterly in arrears, and upon prepayment, on the
basis of a 365/366-day year for ABR loans when based on
Chemical's Prime Rate and a 360-day year for ABR loans when
based on the Base CD Rate or Federal Funds Effective Rate
(in each case calculated
<PAGE>
4
on the basis of actual number of days elapsed).
NOTIFICATION
- ------------ The relevant Borrower must provide the following periods of
SCHEDULE: notice to the Agent prior to any proposed date of
- -------- borrowing:
LIBOR Loans in U.S.$ and all Loans in currencies other than
U.S.$ - 3 business days
ABR Loans in U.S.$ - same business day
CONDITIONS Effectiveness. The effectiveness of the Facility will be
- ---------- -------------
PRECEDENT: subject to conditions substantially similar to those under
- --------- CCSC's existing Revolving Credit and Competitive Advance
Facility Agreement dated as of February 10, 1995 (the
"Existing Agreement"), including but not limited to
negotiation of mutually acceptable documentation, absence
of material adverse change, satisfactory legal opinions,
financial statements, accuracy of representations and
warranties, absence of defaults, borrowing certificates,
evidence of authority and compliance with applicable laws
and regulations (including ERISA, Federal Reserve margin
regulations and environmental laws). It is anticipated that
the foregoing conditions will be satisfied, and that the
Facility will become effective, on the Closing Date.
<PAGE>
5
Exchange Offer Borrowings. It is contemplated that the
-------------------------
Acquisition will involve a public exchange offer in France
made as an Offre Publique d'Echange (the "Exchange Offer")
for the outstanding shares of common stock of CMB. Subject
to the Exchange Offer being made on the terms and
conditions of the Exchange Offer Agreement dated as of May
22, 1995 (without any material modifications or waivers
that have not been approved by the Lenders prior to
commencement of the Exchange Offer) and the accuracy of
representations and absence of defaults immediately prior
to commencement of the Exchange Offer, the obligations of
the Lenders to advance each borrowing under the Facility to
fund the purchase of shares pursuant to the Exchange Offer
will be subject only to the following conditions:
(i) receipt of applicable borrowing notices;
(ii) satisfaction of the conditions applicable to
the Exchange Offer (unless waived with the
approval of the Lenders); and
(iii) the absence of any material modification of
the terms and conditions of the Exchange
Offer (unless approved by the Lenders).
The period during which borrowing conditions will be
limited as described above shall not exceed 90 days,
commencing on the date of commencement of the Exchange
Offer, unless the Lenders agree to an extension.
In the event that, due to the limitation on the daily
amount of borrowings advanced in French Francs, as Borrower
desires to borrow amounts advanced in French Francs prior
to the date that
<PAGE>
6
shares will be purchased pursuant to the Exchange Offer,
such borrowings will be permitted, but the proceeds thereof
shall be held in escrow by the Administrative Agent (and
invested for the account of the Borrower and at the
direction of the Borrower in liquid investments to be
agreed) until the foregoing conditions are satisfied.
Other Borrowings. Each borrowing under the Facility (other
----------------
than those described in the preceding paragraph) will be
subject to conditions substantially similar to those
applicable to each borrowing under the Existing Agreement.
DOCUMENTATION: A credit agreement incorporating customary terms and
- ------------- provisions and such other provisions as Chemical may
reasonably require in the context of the transactions
contemplated hereby, including but not limited to those set
forth below. The credit agreement will substantially
incorporate the representations and warranties, covenants,
conditions and events of default contained in the Existing
Agreement, except as specifically stated herein.
Representations and Warranties:
------------------------------
To include, without limitation, organization, due
authorization, non-contravention of charter documents,
contractual restrictions or laws, governmental approvals,
regulations, validity, financial information, absence of
material adverse change in financial condition or results
of operations of CCSC and its subsidiaries taken as a
whole, absence of litigation or labor controversies,
subsidiaries, ownership of properties, taxes, pension and
welfare plans, environmental warranties, compliance with
Regulations G, U and X and accuracy of information.
<PAGE>
7
Affirmative Covenants:
---------------------
To include, without limitation, delivery of financial
information, reports and notices, compliance with laws,
maintenance of properties, maintenance of insurance,
maintenance of books and records and environmental
compliance and information. In addition, CCSC will covenant
and agree that the Acquisition will be consummated in
accordance with the material terms and conditions thereof
as disclosed to and approved by the Lenders prior to the
Closing Date, without any material modifications or waivers
that have not been approved by the Lenders, and in
compliance in all material respects with applicable laws,
and that all requisite consents and approvals shall have
been obtained.
Negative Covenants:
------------------
To include, without limitation, restrictions on
transactions with affiliates, indebtedness (with certain
exceptions including, with respect to subsidiary
indebtedness, indebtedness under the Facility, indebtedness
of CMB and its subsidiaries in an amount up to that
existing at the time of the Acquisition and other
subsidiary indebtedness of the greater of $1.15 billion and
35% of Total Capitalization), liens (with certain
exceptions including with respect to liens securing
indebtedness not in excess of the greater of $655 million
and 20% of Total Capitalization), consolidations and
mergers of CCSC, restrictive agreements and the following
financial covenants:
(i) leverage ratio of not greater than .70:1
during the six-month period following the
Acquisition, and otherwise
<PAGE>
8
.60:1 (excluding Funded Debt which is non-
recourse to CCSC and giving effect only to
CCSC's pro-rata share of consolidated
indebtedness of joint ventures); and
(ii) interest coverage ratio (the ratio of (a)
EBIT to (b) net interest expense) of not
less than 1.5:1 (tested on a rolling four-
quarter basis at each fiscal quarter end
following the Closing Date).
For purposes of the foregoing:
-----------------------------
(A) Funded Debt shall mean indebtedness of CCSC and its
subsidiaries on a consolidated basis, which is incurred
under the Facility or under the Existing Agreement or which
by its terms:
(i) matures or is payable more than one year
from the date on which it was created, or
(ii) matures within one year from the date on
which it was created, but is renewable or
extendible under terms such that under GAAP
such indebtedness would be treated as long-
term indebtedness; and
(B) Total Capitalization shall mean the sum of (i) all
indebtedness of CCSC and its subsidiaries on a consolidated
basis and (ii) the amount, determined on a consolidated
basis, in the capital stock account of CCSC plus (or minus
in the case of a deficit) the additional paid-in capital
and retained earnings of CCSC and its subsidiaries, and in
any event, net of the value of treasury stock in such
capital stock account. The amount included pursuant to
clause (ii) above shall include the preferred
<PAGE>
9
stock of CCSC issued in connection with the Acquisition.
Events of Default:
-----------------
To include, without limitation, nonpayment of obligations,
breach of warranties, non-performance of certain covenants
and obligations, non-performance of other covenants and
obligations, cross acceleration to other indebtedness
aggregating $100 million or more (other than indebtedness
of acquired companies to the extent such indebtedness is
repaid in full promptly following such acquisition, but
such indebtedness may remain outstanding up to 180 days
after the acquisition so long as no remedies, other than
acceleration, are exercised), undischarged final judgments
aggregating $100 million or more, pension plans, change of
control of CCSC and bankruptcy or insolvency.
COST AND YIELD To include, without limitation, compensation in respect of
- -------------- redeployment costs, reserve requirements, taxes (including
PROTECTION: gross-up provisions for withholding taxes) and decreased
- ---------- profitability resulting from U.S. or foreign capital
adequacy requirements, guidelines or policies or their
interpretation or application.
ASSIGNMENTS AND
- ---------------
PARTICIPATIONS: Lenders will be permitted to assign and participate loans,
- -------------- notes and commitments; however, no partial assignment will
be permitted which would result in the assigning Lender
retaining a commitment of less than FF 250,000,000.
Assignments would be by novation, will be in minimum
amounts of FF 250,000,000 and would require CCSC's consent
(not to be unreasonably withheld, it being agreed that CCSC
will not be deemed to act unreasonably if it
<PAGE>
10
shall withhold consent on the basis of concerns relating to
a proposed and assignee's creditworthiness or reputation).
Assignees will not be permitted to make yield protection
claims in respect of costs which existed at the time they
acquired their interests and did not affect the original
Lenders. Participations would be without restriction and
participants would have the same benefits as syndicate
Lenders with regard to yield protection and increased costs
and provision of information on the Borrowers. Voting
rights of participants would be limited to changes in
amounts, rates, fees and maturity. Each assignment would be
subject to the payment of a service fee to the Agent by the
parties to such assignment.
EXPENSES AND All reasonable out-of-pocket expenses of CSI and Chemical
- ------------ (and the Lenders for enforcement costs and documentary
INDEMNIFI- taxes) associated with (i) the arrangement of the
- ---------- Facilities and (ii) the preparation, execution and delivery
CATION: and enforcement of the Credit Agreement and the other
- ------ documentation contemplated hereby (including reasonable
fees, charges and disbursements of counsel) are to be paid
by the Borrowers.
The Borrowers will indemnify CSI, Chemical and the Lenders
and hold them harmless from and against all losses, costs,
expenses (including reasonable fees, charges and
disbursements of counsel) and liabilities, including those
resulting from any litigation or other proceedings
(regardless of whether CSI, Chemical or any Lender is a
party thereto), related to or arising out of the
transactions contemplated hereby; provided that neither
--------
CSI, Chemical nor any Lender will be indemnified for its
gross negligence or wilful misconduct (or for its
negligence if such losses,
<PAGE>
11
costs, expenses or liabilities result from an action
brought against CSI, Chemical or such Lender by any
Borrower or by a stockholder or creditor of the indemnified
party).
GOVERNING LAW
- -------------
AND FORUM: New York.
- ---------
AGENT'S
- -------
COUNSEL: Cravath, Swaine & Moore.
- -------
<PAGE>
ANNEX I
Upfront An upfront fee of 2.00 Basis Points for each Senior Lead
- ------- Manager, on the amount of their respective allocated
Fee: commitments under the Facility, will be paid by CCSC on the
- --- Closing Date. Upfront fees will be payable in French
Francs.
Facility A Facility Fee of 7.00 Basis Points per annum will accrue
- -------- and be payable by CCSC to the Lenders on the aggregate
Fee: amount of the commitments under the Facility (and, on and
- --- after the Commitment Termination Date, on the aggregate
principal amount of Term Loans outstanding), commencing on
the Closing Date and payable in arrears at the end of each
calendar quarter and upon any termination of the
commitments or repayment of Term Loans. Facility Fees will
be payable in French Francs.
Interest The interest rate applicable to LIBOR loans under the
- -------- Facility will be equal to LIBOR plus 0.125% per annum,
Rates: increasing to LIBOR plus 0.175% on the earlier of (i) the
- ----- date six months after the initial borrowing under the
Facility and (ii) the date 210 days after the Closing Date.
The interest rate applicable to ABR loans under the
Facility will be equal to ABR, flat.
LIBOR
-----
One, two, three, six or, if available from all Lenders,
twelve month London Interbank Offered Rate (adjusted
upwards to four decimal places) as quoted on Telerate pages
3750/3740 ("LIBOR"). Lenders also will be compensated for
statutory reserves as incurred, including MLA costs in
respect of borrowings denominated in British Pounds
Sterling.
ABR
---
<PAGE>
2
Alternative Base Rate ("ABR")--the highest of Chemical's
Prime Rate; the Federal Funds Effective Rate plus 1/2 of 1%
per annum; and the Base CD Rate plus 1% per annum.
<PAGE>
CHEMICAL BANK
CHEMICAL SECURITIES INC.
270 Park Avenue
New York, NY 10017-2070
November 9, 1995
Crown Cork & Seal Company, Inc.
9300 Ashton Road
Philadelphia, Pennsylvania 19136
Attention of Craig R. L. Calle,
Senior Vice President and
Treasurer
Crown Cork & Seal Company, Inc.
-------------------------------
Amendment to Commitment Letter
------------------------------
Dear Sirs:
We refer to our commitment letter (the "Commitment Letter") to you,
dated August 25, 1995 and agreed and accepted by you as of such date, with
respect to a multi-currency credit facility (the "Facility") in the amount of
French Francs 13,700,000,000 (or its equivalent in other applicable currencies).
All capitalized terms used in this letter not defined herein shall have the
meanings assigned to such terms in the Commitment Letter.
You have requested that we amend the Commitment Letter to reflect
certain changes in the terms of the Facility that have been agreed among us
since the date of the Commitment Letter.
This letter shall serve to amend the Commitment Letter as described
below and, upon its execution by both of us, shall become a part thereof.
The paragraph under the caption "Facility Fee" in ANNEX I to the Term
Sheet attached to the Commitment Letter is hereby amended to read as follows:
A Facility Fee equal to the "Applicable Facility Fee Percentage" per
annum will accrue and be payable by CCSC to the Lenders on the
aggregate amount of the commitments under the Facility (and, on and
after the Commitment Termination Date, on the aggregate principal
amount of Term Loans outstanding), commencing on the Closing Date and
payable in arrears at the end of each quarter and upon any termination
of the commitments or repayment of Term Loans. Facility Fees will be
<PAGE>
2
payable in French Francs. The "Applicable Facility Fee Percentage"
shall be based on the ratings assigned to CCSC's senior unsecured debt
by Standard & Poor's ("S&P") and Moody's Investors Service, Inc.
("Moody's") and shall equal (x) .0500% if CCSC's rating from S&P is A
or better or from Moody's is A2 or better, (y) .0700% if CCSC's rating
from S&P is A- to BBB or from Moody's is A3 to Baa2 or (z) .1250% if
CCSC's rating from S&P is BBB- or below or from Moody's is Baa3 or
below; provided that if the ratings established by S&P and Moody's
shall fall into different categories, the Applicable Facility Fee
Percentage shall be based on the higher of the two ratings.
The first paragraph under the caption "Interest Rates" in ANNEX I to
the Term Sheet attached to the Commitment Letter is hereby amended to read as
follows:
The interest rate applicable to LIBOR/PIBOR loans under the Facility
will be equal to (a) LIBOR/PIBOR plus (b) the "Applicable Percentage"
plus (c) 0.05% per annum on the earlier of (i) the date six months
after the initial borrowing under the Facility and (ii) the date 210
days after the Closing Date. The "Applicable Percentage" shall be
based on the ratings assigned to CCSC's senior unsecured debt by S&P
and Moody's and shall equal (x) .1000% if CCSC's rating from S&P is A
or better or from Moody's is A2 or better, (y) .1250% if CCSC's rating
from S&P is A- to BBB or from Moody's is A3 to Baa2, or (z) .1750% if
CCSC's rating from S&P is BBB- or below or from Moody's is Baa3 or
below; provided that if the ratings established by S&P and Moody's
shall fall into different categories, the Applicable Percentage shall
be based on the higher of the two ratings.
If the foregoing correctly sets out our agreement, please indicate
your acceptance of the terms hereof by signing the appropriate spaces below and
returning to us the enclosed duplicate originals of this letter.
This letter may be executed in any number of counterparts, each of
which shall be an original and all of which, when taken together shall
constitute an agreement.
<PAGE>
3
This letter shall be governed by, and construed in accordance with, the laws of
the State of New York.
Very truly yours,
CHEMICAL BANK,
by /s/ William J. Caggiano
----------------------------
Name: William J. Caggiano
Title: Managing Director
CHEMICAL SECURITIES INC.
by /s/ Christopher K. Stout
-----------------------------
Name: Christopher K. Stout
Title: Vice President
Accepted and agreed to as
of the date first written
above:
CROWN CORK & SEAL COMPANY, INC.,
by /s/ Craig R.L. Calle
- --------------------------------
Name: Craig R.L. Calle
Title: Senior Vice President - Finance
Treasurer
<PAGE>
Exhibit 5.1
[LETTERHEAD OF DECHERT PRICE & RHOADS APPEARS HERE]
November 13, 1995
Crown Cork & Seal Company, Inc.
9300 Ashton Road
Philadelphia, PA 19136
Re: Form S-4 Registration Statement
-------------------------------
Gentlemen:
We have acted as counsel to Crown Cork & Seal Company, Inc. (the "Company")
in connection with the preparation of a Registration Statement on Form S-4 (the
"Registration Statement") filed by the Company with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
relating to the issuance of shares of common stock, $5.00 par value, of the
Company (the "Common Stock") and shares of a new series of preferred stock of
the Company (the "Preferred Stock") having the terms set forth in the Exchange
Offer Agreement, dated as of May 22, 1995, as amended as of November 13, 1995
(the "Exchange Offer Agreement"), between the Company and Compagnie Generale
d'Industrie et de Participations, a societe anonyme organized under the laws of
the Republic of France. The Registration Statement also relates to the issuance
of shares of Common Stock upon conversion of shares of Preferred Stock, as well
as the issuance of Common Stock purchase rights pursuant to the terms of the
Rights Agreement, dated as of August 7, 1995 (the "Rights Agreement"), between
the Company and First Chicago Trust Company of New York, as Rights Agent (the
"Rights").
In connection with a proposed offer (as described in the Exchange Offer
Agreement and the Registration Statement, the "Offer") by the Company to acquire
the outstanding shares of common stock of CarnaudMetalbox, a societe anonyme
organized under the laws of the Republic of France, the Company intends to hold
a special meeting of shareholders of the Company at which such shareholders will
be asked to adopt, among other things, an amendment to the Company's Articles of
Incorporation to increase the Company's authorized Common Stock to 500,000,000
shares and
<PAGE>
Crown Cork & Seal Company, Inc.
November 13, 1995
Page 2
to authorize 50,000,000 shares of Preferred Stock (the "Articles Amendment"),
all as described in the Registration Statement.
We have examined such corporate records and documents, including the
Articles Amendment, the Rights Agreement, the Resolution and the Statement (as
such terms are defined below), and such other matters as we have deemed
necessary in order to render these opinions.
Based upon the foregoing and subject to the qualifications stated herein,
we are of the opinion that:
1. Upon the adoption of the Articles Amendment by the shareholders of the
Company pursuant to Section 1914 of the Pennsylvania Business Corporation Law
(the "PBCL") and the filing of the Articles Amendment with the Department of
State pursuant to Section 1916 of the PBCL (the "Articles Amendment Adoption"),
the Common Stock, when issued and delivered against payment therefor pursuant to
the Offer, will be validly issued, fully paid and non-assessable.
2. Upon (i) the Articles Amendment Adoption, (ii) the approval by the
Board of Directors of the Company (or a duly authorized committee thereof) of
the terms of the Preferred Stock substantially in the form filed as Exhibit 4.16
of the Registration Statement (the "Resolution"), and (iii) the filing of a
statement with the Department pursuant to Section 1522 of the PBCL establishing
the designations, preferences, rights and limitations of the Preferred Stock as
set forth in the Resolution, (x) the shares of Preferred Stock, when issued and
delivered against payment therefor pursuant to the Offer, will be validly
issued, fully paid and nonassessable and (y) the shares of Common Stock issuable
upon conversion of the Preferred Stock in accordance with the terms of the
Statement, when issued and delivered upon such conversion, will be validly
issued, fully paid and nonassessable.
3. The Rights issued with respect to shares of Common Stock that are
issued pursuant to the Offer or upon conversion of shares of Preferred Stock in
accordance with the terms of the Statement will be validly issued, fully paid
and nonassessable.
<PAGE>
Crown Cork & Seal Company, Inc.
November 13, 1995
Page 3
The opinions expressed herein are limited to the laws of the Commonwealth
of Pennsylvania, and we express no opinion as to the effect on the matters
covered by this letter of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the use of our name in respect thereof under the
caption "LEGAL OPINIONS" in the Proxy Statement/Prospectus constituting a part
of the Registration Statement.
We also hereby consent to the references to us under the captions "SUMMARY
- - The CarnaudMetalbox Proposals -Description of the CarnaudMetalbox Proposals -
Possible Modifications to the Offer Consideration" and "THE CARNAUDMETALBOX
PROPOSALS - Description of the CarnaudMetalbox Proposals - Possible
Modifications to the Offer Consideration" in the Proxy Statement/Prospectus
forming a part of the Registration Statement. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act.
Very truly yours,
/s/ Dechert Price & Rhoads
<PAGE>
Exhibit 8.1
[LETTERHEAD OF DECHERT PRICE & RHOADS APPEARS HERE]
November 13, 1995
Crown Cork & Seal Company, Inc.
9300 Ashton Road
Philadelphia, PA 19136
Re: Proposed Offer to Acquire Shares of
CarnaudMetalbox
-----------------------------------
Gentlemen:
We have acted as counsel to Crown Cork & Seal Company, Inc., a
Pennsylvania corporation ("Crown"), in connection with the contemplated offer by
Crown to exchange either (1) a number of Units consisting of .75 shares of Crown
Common Stock and .25 shares of Crown Acquisition Preferred Stock equal to the
Exchange Ratio or (2) FF 225 in cash for each outstanding share of common stock
of CarnaudMetalbox (the "Offer") pursuant to the terms of the Exchange Offer
Agreement dated as of May 22, 1995, as amended, between Crown and Compagnie
Generale d'Industrie et de Participations (the "Exchange Offer Agreement").
All capitalized terms used herein, unless otherwise specified, have
the meanings assigned to them in the Proxy Statement/Prospectus (the "Proxy
Statement/Prospectus") forming a part of the Registration Statement filed on
Form S-4 by Crown with respect to the Offer (the "Registration Statement").
We have assisted in the preparation of the description of certain tax
consequences of the Offer contained in the Proxy Statement/Prospectus under the
caption "THE OFFER -- Certain Tax Consequences of the Offer" (the "Tax
Summary"). You have requested our opinion with respect to the U.S. federal
income tax consequences contained in the Tax Summary.
<PAGE>
Crown Cork & Seal Company, Inc
November 13, 1995
Page 2
We have examined the Registration Statement and the Tax Summary. In
rendering our opinion, we have examined and relied upon the accuracy and
completeness of the facts, information, covenants and representations contained
in originals or copies, certified or otherwise identified to our satisfaction,
of the Exchange Offer Agreement, the Proxy Statement/Prospectus, the
Registration Statement and such other documents as we have deemed necessary or
appropriate as a basis for the opinion set forth below. We have assumed that
the Offer will be consummated in accordance with the Exchange Offer Agreement
and as described in the Proxy Statement/Prospectus.
In rendering our opinion, we have considered the applicable provisions
of the Internal Revenue Code of 1986, as amended, Treasury Regulations
promulgated thereunder, pertinent judicial authorities, interpretive rulings of
the Internal Revenue Service and such other authorities as we have considered
relevant, in each case as in effect on the date hereof. Statutes, regulations,
judicial decisions and administrative interpretations are subject to change at
any time and, in some circumstances, with retroactive effect. A material change
in the authorities upon which our opinion is based could affect our conclusions.
Based solely upon the foregoing, we are of the opinion that the Tax
Summary as it relates to matters of U.S. federal income tax law, although
general in nature, is, in all material respects, a fair and accurate summary of
the principal U.S. federal income tax consequences of the Offer under present
law. As noted in the introductory paragraph of the Tax Summary, the tax
consequences with respect to any shareholder of CarnaudMetalbox will depend upon
that shareholder's particular circumstances and tax situation, and we express no
belief with respect to the accuracy or completeness of the Tax Summary as
applied to any shareholder in particular.
Except as set forth above, we express no opinion as to the federal,
state, local or foreign tax consequences of the Offer or of any transactions
related thereto. This opinion is solely for your benefit and is not to be used,
quoted, circulated or otherwise referred to without our express written
permission. Notwithstanding the previous sentence, we hereby consent to the
references to us under the captions "LEGAL OPINIONS" and "THE OFFER -- Certain
Tax Consequences of the Offer" in the Proxy Statement/Prospectus forming a part
of the Registration Statement filed with the Securities and Exchange Commission
in connection with this transaction. We also consent to the filing of a copy of
this opinion as an exhibit to the Registration Statement. In giving such
consent, we do not thereby admit that we are in the
<PAGE>
Crown Cork & Seal Company, Inc.
November 13, 1995
Page 3
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended.
Very truly yours,
/s/ DECHERT PRICE & RHOADS
<PAGE>
Exhibit 8.2
[LETTERHEAD OF TITMUSS SAINER DECHERT APPEARS HERE]
Crown Cork & Seal Company Inc.
9300 Ashton Road
Philadelphia, PA 19136
November 13, 1995
Re: Proposed Offer to acquire shares of CarnaudMetalbox
- -------------------------------------------------------
Gentlemen,
We have acted as UK counsel to Crown Cork & Seal Company, Inc., a Pennsylvania
corporation ("Crown"), in connection with the contemplated offer by Crown to
exchange either (1) a number of Units consisting of 0.75 shares of Crown Common
Stock and 0.25 shares of Crown Acquisition Preferred Stock equal to the Exchange
Ratio or (2) FF 225 in cash for each outstanding share of common stock of
CarnaudMetalbox (the "Offer") pursuant to the Exchange Offer Agreement dated as
of May 22, 1995, as amended, between Crown and Compagnie Generale d'Industrie et
de Participations (the "Exchange Offer Agreement").
All capitalized terms used herein, unless otherwise specified, have the meanings
assigned to them in the Proxy Statement/Prospectus (the "Proxy
Statement/Prospectus") forming a part of the Registration Statement filed on
Form S-4 by Crown with respect to the Offer (the "Registration Statement").
We have assisted in the preparation of the description of UK income and capital
tax consequences to UK shareholders referred to under the section dealing with
certain tax consequences of the Offer contained in the Proxy
Statement/Prospectus under the caption "THE OFFER" - Certain Tax Consequences of
the Offer" (the "Tax Summary"). You have requested our opinion with respect to
the UK income and capital tax consequences contained in the Tax Summary.
We have examined the Registration Statement and the Tax Summary. In rendering
our opinion, we have examined and relied upon the accuracy and completeness of
the facts, information, covenants and representations contained in originals or
copies, certified or otherwise identified to our satisfaction, of the Exchange
Offer Agreement, the Proxy Statement/Prospectus, the Registration Statement and
such other documents as we have deemed necessary or appropriate as a basis for
the opinion set forth below. We have assumed that the Offer will be consummated
in accordance with the Exchange Offer Agreement and as described in the Proxy
Statement/Prospectus.
In rendering our opinion, we have considered the applicable provisions of
legislation relating to UK taxation, secondary legislation promulgated
thereunder, pertinent judicial authorities, and statements of practice of the UK
Inland Revenue and such other authorities as we have considered relevant, in
each case as in effect on the date hereof. Statutes, secondary legislation,
judicial decisions and administrative interpretations and statements are subject
to change at any time and, in some circumstances, with retroactive effect. A
material change in the authorities upon which our opinion is based could affect
our conclusions.
Based solely upon the foregoing, we are of the opinion that the Tax Summary as
it relates to matters of UK income and capital tax law, although general in
nature, is, in all material respects, a fair and accurate summary of the
principal UK income tax and taxation of capital gains consequences of the Offer
under present law. As noted in the introductory paragraph of the Tax Summary,
the tax consequences with respect to any shareholder of CarnaudMetalbox will
depend upon that shareholder's particular circumstances and tax situation, and
we express
<PAGE>
Crown Cork & Seal Company Inc.
November 13, 1995
Page 2
no belief with respect to the accuracy or completeness of the Tax Summary as
applied to any shareholder in particular.
Except as set forth above, we express no opinion as to the tax consequences (UK
or otherwise) of the Offer or of any transactions related thereto. This opinion
is solely for your benefit and is not to be used, quoted, circulated or
otherwise referred to without our express written permission. Notwithstanding
the previous sentence, we hereby consent to the references to us under the
captions "LEGAL OPINIONS" and "THE OFFER - Certain Tax Consequences of the
Offer" in the Proxy Statement/Prospectus forming a part of the Registration
Statement filed with the Securities and Exchange Commission in connection with
this transaction. We also consent to the filing of a copy of this opinion as an
exhibit to the Registration Statement. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended.
Yours truly
TITMUSS SAINER DECHERT
<PAGE>
Exhibit 8.3
[LETTERHEAD OF JEANTET ET ASSOCIES APPEARS HERE]
November 13, 1995
Crown Cork & Seal Company, Inc.
9300 Ashton Road
Philadelphia, PA 19136
Re: Proposed Offer to Acquire Shares of
CarnaudMetalbox
----------------------------------
Gentlemen:
We have acted as counsel to Crown Cork & Seal Company, Inc., a Pennsylvania
corporation ("Crown"), in connection with the contemplated offer by Crown to
exchange either (1) a number of Units consisting of .75 shares of Crown Common
Stock and .25 shares of Crown Acquisition Preferred Stock equal to the Exchange
Ratio or (2) FF 225 in cash for each outstanding share of common stock of
CarnaudMetalbox (the "Offer") pursuant to the terms of the Exchange Offer
Agreement dated as of May 22, 1995, as amended, between Crown and Compagnie
General d'Industrie et de Participations (the "Exchange Offer Agreement").
All capitalized terms used herein, unless otherwise specified, have the meanings
assigned to them in the Proxy Statement/Prospectus (the "Proxy
Statement/Prospectus") forming a part of the Registration Statement filed on
Form S-4 by Crown with respect to the Offer (the "Registration Statement").
We have assisted in the preparation of the description of certain tax
consequences of the Offer contained in the Proxy Statement/Prospectus under the
caption "THE OFFER -- Certain Tax Consequences of the Offer" (the "Tax
Summary"). You have requested our opinion with respect to the French income tax
consequences contained in the Tax Summary.
We have examined the Registration Statement and the Tax Summary. In rendering
our opinion, we have examined and relied upon the accuracy and completeness of
the facts, information, covenants and representations contained in originals or
copies, certified or otherwise identified to our satisfaction, of the Exchange
Offer Agreement, the Proxy Statement/Prospectus, the Registration Statement and
such other documents as we have deemed necessary or appropriate as a basis for
the opinion set forth below. We have assumed that the Offer will be consummated
in accordance with the Exchange Offer Agreement and as described in the Proxy
Statement/Prospectus.
In rendering our opinion, we have considered the applicable provisions of the
French Tax Code (Code General des Impots), interpretive rulings of the French
-----------------------
Service de la Legislation Fiscale (SLF) and such other authorities as we have
- ---------------------------------
considered relevant, in each case as in effect on the date hereof. Statutes,
regulations, judicial decisions and administrative interpretations are subject
to change at any time and, in some circumstances, with
<PAGE>
Crown Cork & Seal Company, Inc.
November 13, 1995
Page 2
retroactive effect. A material change in the authorities upon which our opinion
is based could affect our conclusions.
Based solely upon the foregoing, we are of the opinion that the Tax Summary as
it relates to matters of French income tax law, although general in nature, is,
in all material respects, a fair and accurate summary of the principal French
income tax consequences of the Offer to holders of CarnaudMetalbox Shares under
present law. As noted in the introductory paragraph of the Tax Summary, the tax
consequences with respect to any shareholder of CarnaudMetalbox will depend upon
that shareholder's particular circumstances and tax situation, and we express no
belief with respect to the accuracy or completeness of the Tax Summary as
applied to any shareholder in particular.
We express no opinion as to the non French tax consequences of the Offer or of
any transactions related thereto. This opinion is solely for your benefit and
is not to be used, quoted, circulated or otherwise referred to without our
express written permission. Notwithstanding the previous sentence, we hereby
consent to the references to us under the captions "LEGAL OPINIONS" and "THE
OFFER -- Certain Tax Consequences of the Offer" in the Proxy
Statement/Prospectus forming a part of the Registration Statement filed with the
Securities and Exchange Commission in connection with this transaction. We also
consent to the filing of a copy of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not hereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended.
Very truly yours,
JEANTET ET ASSOCIES
<PAGE>
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Exhibit 12.1
<TABLE>
<CAPTION>
Six Months ended
June 30,
----------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Computation of Earnings:
- -----------------------
Pretax income from continuing operations 137.0 144.6 182.7 279.8 254.7 208.8 178.7
Adjustments to income:
Add: Distributed income
from less than 50%
owned companies 3.8 4.8 7.3 7.1 4.6 3.3 0.0
Add: Portion of rent expense
representative of
interest expense 0.0 0.0 0.0 0.0 .6 2.0 1.6
Add: Interest incurred
net of amounts capitalized 73.5 43.7 98.8 89.5 77.4 76.6 59.9
Add: Amortization of
interest previously capitalized .6 0.0 .6 0.0 0.0 0.0 0.0
Add: Amortization of
debt issue costs and discount
or premium on indebtedness .4 .2 .5 .3 0.0 0.0 0.0
----- ----- ----- ----- ----- ----- -----
Earnings 215.3 193.3 289.9 376.7 337.3 290.7 240.2
----- ----- ----- ----- ----- ----- -----
Computation of Fixed Charges:
- ----------------------------
Interest incurred 76.5 46.9 104.4 89.5 77.4 76.6 59.9
Amortization of debt issue costs
and discount or premium
on indebtedness .4 .2 .5 .3 0.0 0.0 0.0
Portion of rental expense
representative of interest 0.0 0.0 0.0 0.0 .6 2.0 1.6
----- ----- ----- ----- ----- ----- -----
Fixed Charges 76.9 47.1 104.9 89.8 78.0 78.6 61.5
----- ----- ----- ----- ----- ----- -----
Ratio of Earnings to Fixed Charges 2.8x 4.1x 2.8x 4.2x 4.3x 3.7x 3.9x
</TABLE>
- --------------------
<PAGE>
Exhibit 15.1
November 13, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Ladies and Gentlemen:
We are aware that Crown Cork & Seal Company, Inc. has included in the Prospectus
constituting part of its Registration Statement on Form S-4 to be filed on or
about November 13, 1995 our report dated October 6, 1995 (issued pursuant to the
provisions of Statement on Auditing Standards No 71) covering the unaudited
interim financial information of CarnaudMetalbox contained therein. Pursuant to
Regulation C of the Securities Act of 1933, that report is not considered a part
of the registration statement prepared or certified by our firms or a report
prepared or certified by our firms within the meaning of Sections 7 and 11 of
the Act.
Yours very truly,
/s/ Arthur Andersen LLP /s/ M.S. Moralee /s/ J.P. Crouzet
- ----------------------- ---------------------- ----------------
Arthur Andersen LLP Befec-Price Waterhouse Salustro Reydel
(formerly PS Audit) by J.P. Crouzet
by M.S. Moralee
<PAGE>
Exhibit 15.2
November 10, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Ladies and Gentlemen:
We are aware that Crown Cork & Seal Company, Inc. has incorporated by reference
our report dated October 20, 1995 (issued pursuant to the provisions of
Statement on Auditing Standards No. 71) in the Prospectus constituting part of
its Registration Statement on Form S-4 to be filed on or about November 13,
1995. We are also aware of our responsibilities under the Securities Act of
1933.
Yours very truly,
/s/ Price Waterhouse LLP
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of our report dated
February 10, 1995, appearing on page 19 of Crown Cork & Seal Company, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1994. We also consent
to the references to us under the heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
Philadelphia, PA
November 10, 1995
<PAGE>
Exhibit 23.2
As independent public accountants of CarnaudMetalbox SA, we hereby consent to
the use in the Prospectus constituting part of the Registration Statement
on Form S-4 of Crown Cork & Seal Company, Inc. of our report dated
March 29, 1995 relating to the consolidated financial statements of
CarnaudMetalbox SA, which appear in such prospectus. We also consent to the
reference to us under the headings "Experts.
November 13, 1995
/s/ Arthur Andersen LLP /s/ M.S. Moralee /s/ C. Chevalier
_______________________ __________________________ _________________________
Arthur Andersen LLP Befec-Price Waterhouse
(formerly PS Audit)
By M.S. Moralee
<PAGE>
EXHIBIT 23.6
[LETTERHEAD OF COMPAGNIE GENERALE D'INDUSTRIE ET DE PARTICIPATIONS APPEARS HERE]
Crown Cork & Seal Company, Inc.
9300 Ashton Road
Philadelphia PA 19136
U.S.A.
Ladies and Gentlemen:
I hereby consent to the reference to me as a person about to become a
director of Crown Cork & Seal Company, Inc. ("Crown") in the Proxy
Statement/Prospectus of Crown relating to the Special Meeting of Crown
shareholders to be held in connection with the proposed offer by Crown
for outstanding CarnaudMetalbox shares and in the Registration
Statement on Form S-4 of which such Proxy Statement/Prospectus is a
part.
Very truly yours,
/s/ Ernest-Antoine Seilliere
Ernest-Antoine Seilliere
Dated: 13th November 1995
<PAGE>
[LETTERHEAD OF COMPAGNIE GENERALE D'INDUSTRIE ET DE PARTICIPATIONS APPEARS HERE]
Crown Cork & Seal Company, Inc.
9300 Ashton Road
Philadelphia PA 19136
(U.S.A.)
Ladies and Gentlemen:
I hereby consent to the reference to me as a person about to become a
director of Crown Cork & Seal Company, Inc. ("Crown") in the Proxy
Statement/Prospectus of Crown relating to the Special Meeting of Crown
shareholders to be held in connection with the proposed offer by Crown
for outstanding CarnaudMetalbox shares and in the Registration
Statement on Form S-4 of which such Proxy Statement/Prospectus is a
part.
Very truly yours,
/s/ Guy de Wouters
Guy de Wouters
Dated: 13th November 1995
<PAGE>
[LETTERHEAD OF FELIX G. ROHATYN APPEARS HERE]
Crown Cork & Seal Company, Inc.
9300 Ashton Road,
Philadelphia, PA 19136
Ladies and Gentlemen:
I hereby consent to the reference to me as a person about to become a
director of Crown Cork & Seal Company, Inc. ("Crown") in the Proxy
Statement/Prospectus of Crown relating to the Special Meeting of Crown
shareholders to be held in connection with the proposed offer by Crown for
outstanding CarnaudMetalbox shares and in the Registration Statement on Form S-4
of which such Proxy Statement/Prospectus is a part.
Very truly yours,
/s/ Felix G. Rohatyn
--------------------
Dated: 13th November, 1995
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William J. Avery and Richard L. Krzyzanowski, and
each of them (with full power to each of them to act alone), his or her true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities to sign any and all necessary documents including,
without limitation, a Registration Statement on Form S-4 of Crown Cork & Seal
Company, Inc. and any instruments or documents required to comply with state
or foreign securities laws, and any and all amendments (including post-effective
amendments) to the Registration Statement or such other instruments or
documents, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission or any
other applicable authorities, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents
or any of them, or their substitutes, may lawfully do or cause to be done by
virtue hereof.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ William J. Avery Chairman of the Board, President
- --------------------------- and Chief Executive Officer November 13, 1995
William J. Avery (Principal Executive Officer)
/s/ Alan W. Rutherford Executive Vice President,
- --------------------------- Chief Financial Officer and November 13, 1995
Alan W. Rutherford Director
(Principal Financial Officer)
/s/ Timothy J. Donahue
- --------------------------- Financial Controller November 13, 1995
Timothy J. Donahue (Principal Accounting Officer)
/s/ Henry E. Butwel Director November 13, 1995
- ---------------------------
Henry E. Butwel
/s/ Charles F. Casey Director November 13, 1995
- ---------------------------
Charles F. Casey
/s/ Francis X. Dalton Director November 13, 1995
- ---------------------------
Francis X. Dalton
/s/ Francis J. Dunleavy Director November 13, 1995
- ---------------------------
Francis J. Dunleavy
- --------------------------- Director ----------
Chester C. Hilinski
/s/ Richard L. Krzyzanowski Director November 13, 1995
- ---------------------------
Richard L. Krzyzanowski
/s/ Josephine C. Mandeville Director November 13, 1995
- ---------------------------
Josephine C. Mandeville
/s/ Michael J. McKenna Director November 13, 1995
- ---------------------------
Michael J. McKenna
/s/ J. Douglass Scott Director November 13, 1995
- ---------------------------
J. Douglass Scott
/s/ Robert J. Siebert Director November 13, 1995
- ---------------------------
Robert J. Siebert
/s/ Harold A. Sorgenti Director November 13, 1995
- ---------------------------
Harold A. Sorgenti
/s/ Edward P. Stuart Director November 13, 1995
- ---------------------------
Edward P. Stuart
</TABLE>
<PAGE>
EXHIBIT 99.1
P
R CROWN CORK & SEAL COMPANY, INC.
O
X PROXY SOLICITED BY THE BOARD OF DIRECTORS
Y FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 19, 1995
The undersigned hereby appoints William J. Avery, Richard L. Krzyzanowski and
Alan W. Rutherford, and each of them, his or her attorneys and agents, with
full power of substitution to vote as proxy for the undersigned, as herein
stated, at the Special Meeting of shareholders of Crown to be held on December
19, 1995, and any adjournment or postponement thereof, according to the number
of votes the undersigned would be entitled to vote if personally present (i)
on the proposals set forth below (and as more particularly set forth in the
Notice of Special Meeting enclosed herewith) and (ii) in their discretion on
any other matters that may properly come before the meeting.
Capitalized terms not otherwise defined herein have the meanings set forth in
the Proxy Statement/ Prospectus enclosed herewith.
---------
CARNAUDMETALBOX PROPOSALS
THE EFFECTIVENESS OF EACH OF THE CARNAUDMETALBOX PROPOSALS IS CONDITIONED UPON
THE APPROVAL OF ALL OF THE CARNAUDMETALBOX PROPOSALS. FAILURE OF THE
SHAREHOLDERS TO APPROVE ANY ONE OR MORE OF THE CARNAUDMETALBOX PROPOSALS WILL
RESULT IN THE INEFFECTIVENESS OF ALL OF THE CARNAUDMETALBOX PROPOSALS.
THE CROWN BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
ALL OF THE CARNAUDMETALBOX PROPOSALS.
---------
All shares of Crown Common Stock that are represented at the Special Meeting
by properly executed proxies received prior to or at the Special Meeting and
not revoked will be voted at the Special Meeting in accordance with the
instructions indicated herein. IF NO INSTRUCTIONS FOR A PROPOSAL ARE INDICATED
ON AN EXECUTED PROXY CARD, SUCH PROXY WILL BE VOTED IN ACCORDANCE WITH THE
BOARD OF DIRECTORS' RECOMMENDATIONS THAT ARE SET FORTH HEREIN WITH RESPECT TO
SUCH PROPOSAL(S).
-----------
SEE REVERSE
SIDE
-----------
<PAGE>
+
+++ +
[X] PLEASE MARK YOUR + +
VOTES AS IN THIS ++++++
EXAMPLE.
CARNAUDMETALBOX PROPOSALS THE EFFECTIVENESS OF EACH OF THE CARNAUDMETALBOX
PROPOSALS IS CONDITIONED UPON THE APPROVAL OF
ALL OF THE CARNAUDMETALBOX PROPOSALS.
THE CROWN BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE FOR ALL
OF THE CARNAUDMETALBOX PROPOSALS.
1. PROPOSAL ONE: Approval of the transactions contemplated by the Exchange
Offer Agreement between Crown and CGIP.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. PROPOSAL TWO: Approval of the issuance of shares of Crown Common Stock and
Crown Acquisition Preferred Stock in connection with the proposed acquisition
of CarnaudMetalbox, and the issuance of shares of Crown Common Stock upon
conversion of Crown Acquisition Preferred Stock.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. PROPOSAL THREE: Approval of the adoption of the Acquisition Articles
Amendment.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
- --------------------------------------------------------------------------------
ADDITIONAL PROPOSALS
THE EFFECTIVENESS OF EACH OF THE ADDITIONAL PROPOSALS IS NOT CONDITIONED UPON
THE APPROVAL OF ANY OTHER PROPOSAL.
THE CROWN BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
EACH OF THE ADDITIONAL PROPOSALS.
4. PROPOSAL FOUR: FOR AGAINST ABSTAIN
Approval of the Articles [ ] [ ] [ ]
Modernization Proposal.
5. PROPOSAL FIVE: FOR AGAINST ABSTAIN
Approval of the Additional [ ] [ ] [ ]
Preferred Stock Proposal.
6. Any other matter that may properly come before
the meeting.
If you plan to attend the Special Meeting of Shareholders, please
mark the following box and promptly return this Proxy [ ]
Card.
SIGNATURE(S) _____________________________________________________ DATE________
NOTE: Signatures of shareholders should correspond exactly with the names shown
on the Proxy Card. Attorneys, executors, trustees, administrators, guardians
and others signing in a representative capacity should designate their full
titles. All joint owners should sign. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by an authorized person.
