SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 21, 1993
SILGAN HOLDINGS INC.
(Exact name of registrant as specified in its charter)
Delaware 33-28409 06-1269834
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
4 Landmark Square, Stamford, Connecticut 06901
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 975-7110
Item 2: Acquisition or Disposition of Assets.
On December 21, 1993 (the "Closing Date"), pursuant to the
Purchase Agreement, dated as of September 3, 1993, between Silgan Containers
Corporation ("Containers"), a Delaware corporation and an indirect wholly-
owned subsidiary of Silgan Holdings Inc. ("Holdings"), a Delaware
corporation, and Del Monte Corporation ("DM"), a New York corporation, as
amended by the Amendment to Purchase Agreement, dated as of December 10,
1993, between Containers and DM (such Purchase Agreement, as so amended,
being herein called the "Purchase Agreement"), Containers acquired from DM
substantially all of the fixed assets and certain working capital of DM's
container manufacturing business in the United States (the "Business").
Pursuant to the Purchase Agreement, Containers acquired (i) substantially all
of the fixed assets of the Business located in the United States (other than
those assets located in California and Washington) and certain working
capital of the Business (such assets and such working capital being herein
called the "DM Assets") and (ii) all of the issued and outstanding capital
stock (the "Shares") of California-Washington Can Corporation ("C-W Can"), a
California corporation and the owner of substantially all of the fixed assets
of the Business located in California and Washington (the "C-W Assets,"
together with the DM Assets, the "Acquired Assets"). The Acquired Assets
included (i) real property located in Rochelle, Illinois, Smithfield, Utah
and Toppenish, Washington and (ii) substantially all of the machinery and
equipment used by the Business. The working capital of the Business acquired
by Containers from DM included all inventories of the Business other than
finished steel open top containers and loose ends located at certain DM
canneries. Additionally, pursuant to the Purchase Agreement, Containers
assumed specified limited liabilities of DM relating to the Business.
On the Closing Date, pursuant to the Purchase Agreement, in
consideration for the DM Assets and the Shares and the assumption by
Containers of certain specified liabilities of the Business, Containers paid
to DM the aggregate purchase price (the "Purchase Price") of $72,800,000.
The Purchase Price is subject to adjustment as provided in the Purchase
Agreement. The Purchase Price was paid in cash and was determined as a
result of an arm's length negotiation between unrelated parties.
The Acquired Assets were used by DM to manufacture metal
containers for DM's cannery operations. Containers intends to continue such
use of the Acquired Assets.
In connection with the Purchase Agreement, DM and Containers
entered into the Supply Agreement dated as of September 3, 1993, as amended
by the Amendment to Supply Agreement, dated as of December 21, 1993, between
DM and Containers (such Supply Agreement, as so amended, being herein called
the "Supply Agreement"). The Supply Agreement became effective on the
Closing Date and continues for a term of ten years. Under the Supply
Agreement, DM has agreed to purchase from Containers, and Containers has
agreed to sell to DM, 100% of DM's annual requirements for metal containers
to be used for the packaging of food and beverages in the United States and
not less than 65% of DM's annual requirements of metal containers for the
packaging of food and beverages at DM's Irapuato, Mexico facility, subject to
certain limited exceptions.
The Supply Agreement provides for certain prices for all
metal containers supplied by Containers to DM thereunder and specifies that
such prices will be increased or decreased based upon specified cost change
formulas.
Under the Supply Agreement, after five years, DM may, under
certain circumstances, receive proposals with terms more favorable than those
under the Supply Agreement from independent commercial can manufacturers for
the supply of containers of a type and quality similar to the metal
containers that Containers furnishes to DM, which proposals shall be for the
remainder of the term of the Supply Agreement and for 100% of the annual
volume of containers at one or more of DM's canneries. Containers has the
right to retain the business subject to the terms and conditions of such
competitive proposal.
On the Closing Date, to finance the acquisition of the DM
Assets and the Shares, (i) Silgan Corporation ("Silgan"), a Delaware
corporation and wholly-owned subsidiary of Holdings, Containers, a wholly-
owned subsidiary of Silgan, and Silgan Plastics Corporation ("Plastics," and,
together with Silgan and Containers, the "Borrowers"), a Delaware corporation
and wholly-owned subsidiary of Silgan, entered into a Credit Agreement, dated
as of December 21, 1993 (the "Credit Agreement") with the lenders from time
to time party thereto (the "Banks"), Bank of America National Trust and
Savings Association ("Bank of America"), as Co-Agent, and Bankers Trust
Company ("Bankers Trust"), as Agent, and (ii) Holdings issued and sold to
Mellon Bank, N.A., as trustee for First Plaza Group Trust, a group trust
established under the laws of the State of New York ("First Plaza"), 250,000
shares of its Class B Common Stock, par value $.01 per share (the "Holdings
Stock"), for a purchase price of $60.00 per share and an aggregate purchase
price of $15,000,000. Additionally, Silgan, Containers and Plastics borrowed
term and working capital loans under the Credit Agreement to refinance and
repay in full all amounts owing under their Amended and Restated Credit
Agreement, dated as of August 31, 1987, as amended (the "Amended and Restated
Credit Agreement"), among the Borrowers, various lenders party thereto and
Bankers Trust, as Agent.
The sources and uses of funds on the Closing Date for the above-
described transactions were as follows:
Sources Uses
(in millions) (in millions)
Source Amount Use Amount
A Term Loan $60.0 Purchase of DM $72.8
under the Credit Assets and Shares
Agreement
B Term Loan 80.0 Repayment of 41.5
under the Credit term loans under the
Agreement Amended and Restated
Credit Agreement
Working Capital 29.8 Repayment of working 61.2
Loans under the capital loans under
Credit Agreement the Amended and
Restated Credit
Agreement
Sale of Holdings 15.0 Fees and Expenses 9.3
Stock and general corporate
________ purposes ________
TOTAL $184.8 TOTAL $184.8
Item 5: Other Events.
Description of the Credit Agreement
On December 21, 1993, Silgan, Containers and Plastics
entered into the Credit Agreement with the Banks, Bank of America, as Co-
Agent, and Bankers Trust, as Agent, to refinance in full all amounts owing
under the Amended and Restated Credit Agreement and to finance the
acquisition by Containers of the DM Assets and the Shares. The following is
a summary of the terms of the Credit Agreement.
The Available Credit Facility. Pursuant to the Credit
Agreement, the Banks loaned to Silgan (i) $60,000,000 of term loans (the "A
Term Loans") and (ii) $80,000,000 of term loans (the "B Term Loans", and,
together with the A Term Loans, the "Term Loans"), and agreed to lend to
Containers or Plastics up to an aggregate of $70,000,000 of working capital
loans (the "Working Capital Loans"). As part of the Working Capital Loans,
Bankers Trust agreed to lend to Containers or Plastics up to an aggregate of
$5,000,000 of revolving loans (the "Swingline Loans") and to issue to
Containers or Plastics for the account of Containers or Plastics up to an
aggregate of $15,000,000 of letters of credit, such Swingline Loans and
letters of credit outstanding being deducted from the amount of Working
Capital Loans available to be borrowed by Containers or Plastics.
The aggregate amount of Working Capital Loans which may be
outstanding at any time is subject to a borrowing base limitation of the sum
of (i) 85% of eligible accounts receivable of Containers and its subsidiaries
and Plastics and (ii) 50% of eligible inventory of Containers and its
subsidiaries and Plastics.
Each of the Term Loans and each of the Working Capital
Loans, at the respective Borrower's election, consists of loans designated as
Eurodollar rate loans or as Base Rate loans. Subject to certain conditions,
each of the Term Loans and each of the Working Capital Loans can be converted
from a Base Rate loan into a Eurodollar rate loan and vice versa. The term
"Base Rate" means the highest of (i) 1/2 of 1% in excess of the Adjusted
Certificate of Deposit Rate (as defined in the Credit Agreement), (ii) 1/2 of
1% in excess of the Federal Funds Rate (as defined in the Credit Agreement)
and (iii) Bankers Trust's prime lending rate.
As of the Closing Date, the outstanding principal amounts of
A Term Loans, B Term Loans and the Working Capital Loans under the Credit
Agreement were $60 million, $80 million and $29.8 million, respectively. At
December 31, 1993, the outstanding principal amount of Working Capital Loans
under the Credit Agreement was $2.2 million.
Security and Guarantees. To secure the obligations of the
Borrowers under the Credit Agreement: (i) Silgan pledged to the Banks all of
the capital stock of Containers and Plastics held by Silgan; (ii) Plastics
pledged to the Banks 65% of the capital stock of 827599 Ontario Inc.
("Canadian Holdco") held by Plastics; (iii) Containers pledged to the Banks
all of the capital stock of C-W Can held by Containers; (iv) Silgan,
Containers, Plastics and C-W Can each granted to the Banks security interests
in substantially all of their respective real and personal property; and (v)
Holdings pledged to the Banks all of the capital stock of Silgan held by
Holdings. Such collateral (other than the collateral described in (v)) also
secures on an equal and ratable basis Silgan's Senior Secured Floating Rate
Notes due 1997 (the "Secured Notes"), subject to intercreditor arrangements.
Holdings, each of the Borrowers and C-W Can have guaranteed
on a secured basis all of the obligations of the Borrowers under the Credit
Agreement.
Payment of Loans. Generally, the Working Capital Loans can
be borrowed, repaid and reborrowed from time to time until September 15,
1996, on which date all Working Capital Loans mature and are payable in full.
Amounts repaid under the Term Loans cannot be reborrowed.
The A Term Loans mature on September 15, 1996 and are
payable in installments as follows:
A Term Loan
Installment Repayment Date Principal Amount
September 30, 1994 . . . . . . . . .
$ 5,000,000
December 31, 1994 . . . . . . . . . 15,000,000
September 30, 1995 . . . . . . . . . 5,000,000
December 31, 1995 . . . . . . . . . 15,000,000
September 15, 1996 . . . . . . . . . 20,000,000
The B Term Loans mature and are payable in full on September
15, 1996.
Under the Credit Agreement, Silgan is required to repay the
Terms Loans (pro rata for each tranche of Term Loans) in an amount equal to
75% of Silgan's Excess Cash Flow (as defined in the Credit Agreement) in any
fiscal year during the Credit Agreement (beginning with the 1994 fiscal
year). Additionally, Silgan is required to repay the Term Loans (pro rata
for each tranche of Term Loans) in an amount equal to 80% of the net sale
proceeds from certain assets sales and 100% of the net equity proceeds from
certain sales of equity, all as provided in the Credit Agreement.
Interest and Fees. Interest on the Term Loans and the
Working Capital Loans is payable at certain margins over certain rates as
summarized below.
Interest on Term Loans maintained as Base Rate loans accrues
at floating rates of 1.75% (in the case of A Term Loans) and 2.25% (in the
case of B Term Loans) over the Base Rate. Interest on Term Loans maintained
as Eurodollar rate loans accrues at floating rates of 2.75% (in the case of A
Term Loans) and 3.25% (in the case of B Term Loans) over a formula rate (the
"Eurodollar Rate") determined with reference to the rate offered by Bankers
Trust for dollar deposits in the New York interbank Eurodollar market.
Interest on Working Capital Loans maintained as (i) Base Rate loans accrues
at floating rates of 2% over the Base Rate or (ii) Eurodollar rate loans
accrues at floating rates of 3% over the Eurodollar Rate.
Each of Containers and Plastics has agreed to jointly and
severally pay to the Banks, on a quarterly basis, a commitment commission
calculated as 0.50% per annum on the daily average unused portion of the
Banks' working capital commitment in respect of the Working Capital Loans
until such working capital commitment is terminated. Additionally,
Containers and Plastics are required to pay to Bankers Trust, on a quarterly
basis in arrears, a letter of credit fee of 3.0% per annum and a facing fee
of 1/4 of 1% per annum, each on the average daily stated amount of each
letter of credit issued for the account of Containers or Plastics,
respectively.
Certain Covenants. The Credit Agreement contains numerous
financial and operating covenants, under which Silgan and its subsidiaries
must operate. Failure to comply with any of such covenants permits the Banks
to accelerate, subject to the terms of the Credit Agreement, the maturity of
all amounts outstanding under the Credit Agreement.
The Credit Agreement restricts or limits each of the
Borrowers' and their respective subsidiaries' abilities: (i) to create
certain liens; (ii) to consolidate, merge or sell its assets and to purchase
assets; (iii) to pay dividends on, or repurchase shares of, its capital
stock, except that, among other things: (a) Silgan may pay dividends to
Holdings under certain circumstances; (b) Containers and Plastics may pay
dividends to Silgan as long as they remain wholly owned subsidiaries of
Silgan, Canadian Holdco may pay dividends to Plastics, and Express Plastic
Containers Limited ("Express") may pay dividends to Canadian Holdco; and (c)
Containers and Plastics may repurchase or redeem its respective stock options
(or common stock issuable upon exercise thereof) or SARs issued to its
management under certain circumstances; (iv) to lease real and personal
property; (v) to create additional indebtedness, except for, among other
things: (a) certain indebtedness existing on the date of the Credit Agreement
(including Silgan's indebtedness represented by the Secured Notes, the
11-3/4% Senior Subordinated Notes due 2002 (the "11-3/4% Notes") and by
intercompany notes); and (b) indebtedness of Containers to Plastics or
Plastics to Containers; (vi) to make certain advances, investments and loans,
except for, among other things: (a) loans from Silgan to each of Containers
and Plastics represented by intercompany notes; (b) loans from Containers to
Plastics or from Plastics to Containers; and (c) loans from Containers and/or
Plastics to Silgan not exceeding $15 million in aggregate principal amount
outstanding at any time; (vii) to enter into transactions with affiliates;
(viii) to make certain capital expenditures, except for, among other things,
capital expenditures which do not exceed in the aggregate for the Borrowers,
such amounts, during such periods, as set forth below:
Period Amount
Calendar year ended December 31, 1993 . . . $46,500,000
Calendar year ended December 31, 1994 . . . 35,000,000
Calendar year ended December 31, 1995 . . . 30,000,000
Calendar year ended December 31, 1996 . . . 30,000,000
; provided, however, that to the extent capital expenditures made during any
period set forth above are less than the amounts set forth opposite such
period, such amount may be carried forward and utilized to make capital
expenditures in the immediately succeeding calendar year, with any such
amount being deemed utilized first in such succeeding calendar year; (ix) to
make any voluntary payments, prepayments, acquire for value, redeem or
exchange, among other things, any 11-3/4% Notes or Secured Notes, or to make
certain amendments to the 11-3/4% Notes, the Secured Notes, the Borrowers' or
their respective subsidiaries' respective certificates of incorporation and
by-laws, or to certain other agreements; (x) with certain exceptions, to have
any subsidiaries other than Containers and Plastics with respect to Silgan,
C-W Can with respect to Containers, and Canadian Holdco and Express with
respect to Plastics; (xi) with certain exceptions, to permit its respective
subsidiaries to issue capital stock; (xii) to permit its respective
subsidiaries to create limitations on the ability of any such subsidiary to
(a) pay dividends or make other distributions, (b) make loans or advances, or
(c) transfer assets; and (xiii) to engage in any business other than the
packaging business.
The Credit Agreement requires that Silgan own not less than
90% of the outstanding common stock of Containers and Plastics and 100% of
all other outstanding capital stock of Containers and Plastics.
The Credit Agreement requires that the ratio of Consolidated
Current Assets (as defined below) to Consolidated Current Liabilities (as
defined below) of any of the Borrowers may not, at any time, be less than 2:1
and that the ratio of Bank EBITDA (as defined below) to Interest Expense (as
defined below) for any of the Borrowers may not be, for any period of four
consecutive fiscal quarters (or, if shorter, the period beginning on January
1, 1994 and ending on the last day of a fiscal quarter ended after January 1,
1994) (in each case, taken as one accounting period) ended during a period
set forth below, less than the ratio set forth opposite such period below:
Period Ratio
Fiscal quarter ending March 31, 1994 . . . . . 2.25:1
Fiscal quarter ending June 30, 1994 . . . . . 2.35:1
Fiscal quarter ending September 30, 1994 . . . 2.70:1
Fiscal quarter ending December 31, 1994 . . . 2.70:1
January 1, 1995 to and including
December 31, 1995 . . . . . . . . . . . . . . 3.00:1
January 1, 1996 to and including
September 30, 1996 . . . . . . . . . . . . . 3.40:1
In addition, the ratio of Total Indebtedness (as defined below) to
Consolidated Net Worth (as defined below) of any of the Borrowers is not
permitted to exceed on any date set forth below the ratio set forth opposite
such date:
Date Amount
December 31, 1994 . . . . . . . . . . . . 5.00:1
December 31, 1995 . . . . . . . . . . . . 3.25:1
August 31, 1996 . . . . . . . . . . . . . 2.75:1
"Bank EBITDA" means for any period, EBIT, adjusted by adding
thereto the amount of all depreciation and amortization of intangibles
(including covenants not to compete), goodwill and loan fees that were
deducted in arriving at EBIT for such period.
"Consolidated Current Assets" means the current assets of
Silgan and its subsidiaries determined on a consolidated basis, provided that
the unused amounts of commitments for Working Capital Loans shall also be
included as current assets of Silgan in making such determination.
"Consolidated Current Liabilities" means the current
liabilities of Silgan and its subsidiaries determined on a consolidated
basis, provided that the current portion of loans under the Credit Agreement
(including any accrued interest with respect to such current portion), the
current portion of any loans made by Silgan to Containers or Plastics, and
accrued interest on the Secured Notes and the 11-3/4% Notes from the last
regularly scheduled interest payment date shall not be considered current
liabilities for the purposes of making such determination.
"Consolidated Net Worth" means the Net Worth of Silgan and
its subsidiaries determined on a consolidated basis, and "Net Worth" of any
person means the sum of its capital stock, capital in excess of par or stated
value of shares of its capital stock, retained earnings (without giving
effect to any noncash adjustments resulting from changes in value of employee
stock options), and any other account which, in accordance with generally
accepted accounting principles, constitutes stockholders' equity, less
treasury stock.
"EBIT" means for any period, the consolidated net income of
Silgan and its subsidiaries, before interest expense and provision for taxes
and without giving effect to any extraordinary noncash gains or extraordinary
noncash losses and gains from sales of assets (other than sales of inventory
in the ordinary course of business), any noncash adjustments resulting from
changes in value of employee stock options.
"Indebtedness" means, as to any person, without duplication,
(i) all indebtedness (including principal, interest, fees and charges) of
such person for borrowed money or for the deferred purchase price of property
or services, (ii) the face amount of all letters of credit issued for the
account of such person and all drafts drawn thereunder, (iii) all liabilities
secured by any lien on any property owned by such person, whether or not such
liabilities have been assumed by such person, (iv) the aggregate amount
required to be capitalized under leases under which such person is the lessee
and (v) all contingent obligations of such person.
"Interest Expense" means, for any period, the total
consolidated interest expense of Silgan and its subsidiaries for such period.
"Total Indebtedness" means the aggregate Indebtedness of
Silgan and its subsidiaries determined on a consolidated basis, provided that
there shall be excluded, in making such determination, Indebtedness
consisting of capitalized lease obligations existing as of the effective date
of the Credit Agreement or permitted to be incurred pursuant to the Credit
Agreement.
For purposes of the ratios of Bank EBITDA to Interest
Expense and Total Indebtedness to Consolidated Net Worth, (i) all
computations utilize accounting principles in conformity with those used to
prepare the statements of consolidated and consolidating financial condition
of Holdings and its subsidiaries and Silgan and its subsidiaries at December
31, 1992 and the related consolidated and consolidating statements of income
and cash flow of Holdings and its subsidiaries and Silgan and its
subsidiaries for the fiscal year ended December 31, 1992, as audited by Ernst
& Young, and (ii) no effect is given to certain other matters as provided in
the Credit Agreement.
The ability of Holdings to take certain actions is
restricted or limited pursuant to the terms of the Amended and Restated
Guaranty, dated as of June 30, 1989, and amended and restated as of June 18,
1992, and further amended and restated as of December 21, 1993, made by
Holdings in favor of the Banks, Bank of America, as Co-Agent, and Bankers
Trust, as Agent (the "Holdings Guaranty"). The Holdings Guaranty restricts
or limits Holdings' ability to, among other things: (i) create certain liens,
(ii) incur additional indebtedness, (iii) consolidate, merge or sell its
assets and purchase or lease assets, (iv) pay dividends, (v) make loans or
advances and (vi) engage in any business other than holding Silgan's common
stock and certain other limited matters permitted by the Holding Guaranty.
Events of Default. Events of default under the Credit
Agreement include, with respect to each of the Borrowers, as the case may be,
among others: (i) the failure to pay any principal on the Term Loans or the
Working Capital Loans, the failure to reimburse drawings under any letters of
credit when due or the failure to pay within two business days after the date
such payment is due interest on the Term Loans, the Working Capital Loans or
any unpaid drawings under any letter of credit or any fees or other amounts
owing under the Credit Agreement; (ii) any failure to pay amounts due under
certain other agreements or any defaults that result in or permit the
acceleration of certain other indebtedness; (iii) subject to certain limited
exceptions, the breach of any covenants, representations or warranties
contained in the Credit Agreement or any related document; (iv) certain
events of bankruptcy, insolvency or dissolution; (v) the occurrence of
certain judgments, writs of attachment or similar process against any of the
Borrowers or any of their respective subsidiaries; (vi) the occurrence of
certain ERISA related liabilities; (vii) a default under or invalidity of the
guarantees (including an event of default under the Holdings Guaranty) or of
the security interests granted to the Banks pursuant to the Credit Agreement;
(viii) the failure of Holdings to own 100% of the capital stock of Silgan;
and (ix) a Change of Control (as defined in the Holdings Guaranty, the Note
Purchase Agreement dated as of June 29, 1992 between Silgan and each of the
persons party thereto relating to the Secured Notes, the indenture relating
to the 11-3/4% Notes or the indenture relating to Holdings' 13-1/4% Senior
Discount Debentures due 2002 (the "Debentures")) shall occur; and (x) the
requirement that Silgan repurchase 25% or more of the aggregate principal
amount of the Secured Notes then outstanding or any 11-3/4% Note or that
Holdings repurchase any Debenture, in any case as a result of a Change of
Control (as defined in the agreements and indentures relating thereto).
Upon the occurrence of any event of default under the Credit
Agreement, the Banks are permitted, among other things, to accelerate the
maturity of the Term Loans and the Working Capital Loans and all other
outstanding indebtedness under the Credit Agreement and terminate their
commitment to make any further Working Capital Loans or to issue any letters
of credit.
In connection with the Credit Agreement, the Banks (including
Bankers Trust) received certain fees amounting to $8.1 million.
Sale of Holdings Stock; Beneficial Owners of Holdings' Capital Stock
On December 21, 1993, Holdings sold to First Plaza the Holdings
Stock for a purchase price of $60.00 per share and an aggregate purchase
price of $15,000,000 pursuant to the terms of a stock purchase agreement
dated as of December 21, 1993. The following table sets forth, as of
December 21, 1993 and giving effect to such sale of the Holdings Stock,
certain information with respect to the beneficial ownership by all of the
directors of Holdings and by certain other persons and entities of
outstanding shares of capital stock of Holdings:
<TABLE>
<CAPTION>
Number of Shares of each class of Percentage Ownership of Holdings
Class A Class B Class C Class A Class B Class C Consolidated (1)
<C> <C> <C> <C> <C> <C> <C> <C>
D. Greg Horrigan (2) 208,750 -- -- 50% -- -- 19.24%
R. Philip Silver (2) 208,750 -- -- 50% -- -- 19.24%
James S. Hoch (3) . -- -- -- -- -- -- --
Robert H. Niehaus(3) -- -- -- -- -- -- --
Harley Rankin, Jr. -- -- 10,000(4) -- -- 15.63% --
James D. Beam (5) . -- -- -- -- -- -- --
Gary M. Hughes (5) -- -- -- -- -- -- --
The Morgan Stanley Leveraged
Equity Fund II, -- 417,500 -- -- 62.55% -- 38.48%
L.P.(6) . . . . . .
Mellon Bank, N.A., as trustee for
First Plaza Group -- 250,000 -- -- 37.45% -- 23.04%
Trust (7) . . . . .
All officers and directors as a
group . . . . . . 417,500 -- 14,000(4) 100% -- 21.88%(8) 38.48%
</TABLE>
___________________
(1) This column reflects the percentage ownership of voting common
stock that would exist if Holdings Class A Stock (as defined
under "Description of Holdings Common Stock" below) and Holdings
Class B Stock (as defined under "Description of Holdings Common
Stock" below) were treated as a single class. Holdings Class C
Stock (as defined under "Description of Holdings Common Stock"
below) generally does not have voting rights and is not included
in the percentage ownership reflected in this column. See
"Description of Holdings Common Stock" below.
(2) Director of Holdings and Silgan. Messrs. Horrigan and Silver are
parties to a voting agreement pursuant to which they have agreed
to use their best efforts to vote their shares as a block. The
address for such person is 4 Landmark Square, Stamford, CT 06901.
(3) Director of Holdings and Silgan. The address for such person is
c/o Morgan Stanley & Co. Incorporated, 1251 Avenue of the
Americas, New York, NY 10020.
(4) Reflects shares that may be acquired through the exercise of
vested stock options granted pursuant to Silgan Holdings Inc.
Amended and Restated 1989 Stock Option Plan.
(5) Options to purchase shares of common stock of Containers and
tandem SARs have been granted to such person pursuant to the
Silgan Containers Corporation Amended and Restated 1989 Stock
Option Plan (the "Containers Plan"). Pursuant to the Containers
Plan, such options may be converted into stock options of
Holdings (and the Containers' common stock issuable upon exercise
of such options may be converted into common stock of Holdings)
in the event of a public offering of any of Holdings' common
stock or a sale of Holdings to a third party.
(6) The address for The Morgan Stanley Leveraged Equity Fund II,
L.P., is 1251 Avenue of the Americas, New York, NY 10020.
(7) The address for First Plaza Group Trust is c/o General Motors
Investment Management Corporation, 767 Fifth Avenue, New York, NY
10153.
(8) Bankers Trust New York Corporation beneficially owns 50,000
shares of Holdings Class C Stock.
See "Description of Holdings Common Stock" below for
additional information about the common stock of Holdings, the holders
thereof and certain arrangements among them.
Description of Holdings Common Stock
Prior to the sale of the Holdings Stock to First Plaza,
Holdings amended its existing restated certificate of incorporation and filed
with the Delaware Secretary of State a Restated Certificate of Incorporation
(the "Certificate of Incorporation"), which restated in its entirety
Holdings' existing restated certificate of incorporation. Certain of the
statements contained herein are summaries of the detailed provisions of the
Certificate of Incorporation and are qualified in their entirety by reference
to the Certificate of Incorporation.
Under the Certificate of Incorporation, Holdings has
authority to issue 500,000 shares of Class A Common Stock, par value $.01 per
share (the "Holdings Class A Stock"), 667,500 shares of Class B Common Stock,
par value $.01 per share (the "Holdings Class B Stock"), and 1,000,000 shares
of Class C Common Stock, par value $.01 per share (the "Holdings Class C
Stock"). Except as described below, the rights, privileges and powers of
Holdings Class A Stock and Holdings Class B Stock are identical, with each
share of each class being entitled to one vote on all matters to come before
the stockholders of Holdings.
Until the occurrence of a Change of Control (as defined in
the Certificate of Incorporation and as described below), the affirmative
vote of the holders of not less than a majority of the outstanding shares of
Holdings Class A Stock and Holdings Class B Stock, voting as separate
classes, shall be required for the approval of any matter to come before the
stockholders of Holdings, except that (i) the holders of a majority of the
outstanding shares of Holdings Class A Stock, voting as a separate class,
have the sole right to vote for the election and removal of three directors
(the directors elected by the holders of Holdings Class A Stock being
referred to herein as "Class A Directors"); (ii) the holders of a majority of
the outstanding shares of Holdings Class B Stock, voting as a separate class,
have the sole right to vote for the election and removal of all directors
other than the Class A Directors (the directors elected by the holders of
Holdings Class B Stock being referred to herein as "Class B Directors"); and
(iii) the vote of not less than a majority of the outstanding shares of
Holdings Class B Stock shall be required in certain circumstances set forth
in the Certificate of Incorporation. The holders of Holdings Class C Stock
have no voting rights except as provided by applicable law and except that
such holders are entitled to vote as a separate class on certain amendments
to the Certificate of Incorporation as provided therein. In the event
Holdings sells shares of any class of its common stock to the public, the
distinctions between Holdings Class A Stock and Holdings Class B Stock
terminate, the powers, including voting powers, of Holdings Class A Stock and
Holdings Class B Stock shall be identical upon compliance with certain
provisions contained in the Certificate of Incorporation, and any Regulated
Stockholder (generally defined to mean banks) will be entitled to convert all
shares of Holdings Class C Stock held by such stockholder into the same
number of shares of Holdings Class B Stock (or Holdings Class A Stock to the
extent such Holdings Class C Stock was issued upon conversion of Holdings
Class A Stock).
After a Change of Control, the affirmative vote of the
holders of not less than a majority of the outstanding shares of Holdings
Class A Stock and Holdings Class B Stock, voting together as a single class,
will be required for the approval of any matter to come before the
stockholders of Holdings, except that the provisions described in clauses (i)
and (ii) in the preceding paragraph shall continue to apply from and after a
Change of Control, and except as otherwise provided in the Certificate of
Incorporation with respect to its amendment. Also, after a Change of
Control, the number of Class B Directors will be increased to five.
In the event that a vacancy among the Class A Directors or
the Class B Directors occurs at any time prior to the election of directors
at the next scheduled annual meeting of stockholders, the vacancy shall be
filled, in the case of the Class A Directors, by either (i) the vote of the
holders of a majority of the outstanding shares of Holdings Class A Stock, at
a special meeting of stockholders, or (ii) by written consent of the holders
of a majority of the outstanding shares of Holdings Class A Stock, and, in
the case of the Class B Directors, by either (i) the vote of the holders of a
majority of the outstanding shares of Holdings Class B Stock at a special
meeting or stockholders, or (ii) by written consent of the holders of a
majority of the outstanding shares of the Holdings Class B Stock.
A "Change of Control" is defined in the Certificate of
Incorporation to include the occurrence of any of the following events: (i)
Messrs. Horrigan and Silver shall collectively own, directly or indirectly,
less than one-half of the aggregate number of outstanding shares of Holdings
Class A Stock owned by them directly or indirectly on June 30, 1989 on a
common stock equivalent basis, or (ii) the acceleration of the indebtedness
under the Credit Agreement or the Debentures, as a result of the occurrence
of an event of default thereunder relating to a payment default or a
financial covenant event of default.
Description of the Holdings Organization Agreement
Concurrently with the issuance and sale to First Plaza of
the Holdings Stock, Holdings, The Morgan Stanley Leveraged Equity Fund II,
L.P. ("MSLEF II"), Bankers Trust New York Corporation ("BTNY"), First Plaza
and Messrs. D. Greg Horrigan and R. Philip Silver entered into the Amended
and Restated Organization Agreement dated as of December 21, 1993 (the
"Holdings Organization Agreement") that provides for the termination of the
Organization Agreement dated as of June 30, 1989 by and among Holdings, MSLEF
II, BTNY and Messrs. Horrigan and Silver (except for the indemnification
provisions thereof, which provisions survive) and for the investment by First
Plaza in Holdings and the relationships among the stockholders and between
the stockholders and Holdings. Certain of the statements contained herein
are summaries of the detailed provisions of the Holdings Organization
Agreement and are qualified in their entirety by reference to the Holdings
Organization Agreement.
The Holdings Organization Agreement prohibits the
disposition of Holdings' common stock without the prior written consent of
Messrs. Horrigan and Silver and MSLEF II, except for (i) dispositions to
affiliates (which, in the case of First Plaza, includes any successor or
underlying trust, and which, in the case of MSLEF II, does not include any
person which is not an Investment Entity (as defined below)), (ii)
dispositions to certain family members of Messrs. Horrigan and Silver or
trusts for the benefit of those family members, (iii) certain transfers among
MSLEF II, BTNY, First Plaza and Messrs. Horrigan and Silver that comply with
certain rights of first refusal set forth in the Holdings Organization
Agreement, which rights expire on June 30, 1994, (iv) dispositions to certain
parties at any time on or after June 30, 1994, subject to certain other
rights of first refusal discussed below, (v) the sale by First Plaza to
Holdings of all of the Holdings Stock acquired by First Plaza on December 21,
1993, upon the exercise of Holdings' call option as described below, and (vi)
dispositions in connection with an initial public offering of the common
stock of Holdings, as described below. Any transfer of Holdings' common
stock (other than transfers described in clauses (v) and (vi) of the
preceding sentence) will be void unless the transferee agrees in writing
prior to the proposed transfer to be bound by the terms of the Holdings
Organization Agreement.
At any time on or after June 30, 1994, MSLEF II may effect a
sale of stock to an Investment Entity (generally defined as any person who
(i) is primarily engaged in the business of investing in securities of other
companies and not taking an active role in the management or operations of
such companies and (ii) does not permit the participation or involvement in
any way in the business or affairs of Holdings of a person who is engaged in
a business not described in clause (i)) or, in the event of certain defaults
under the amended and restated management services agreement by and between
S&H, Inc., a company wholly-owned by Messrs. Horrigan and Silver ("S&H"), and
Holdings (described below under "Description of Management Agreements"), to a
third party, in each case, if it first offers such stock to: (a) Holdings,
(b) the Group (defined generally to mean, collectively, Silver and Horrigan
and their respective affiliates and certain related family transferees and
estates, with Silver and his affiliates and certain related family
transferees and estates being deemed to be collectively one member of the
Group, and Horrigan and his affiliates and certain related family transferees
and estates being deemed to be collectively one member of the Group) and (c)
BTNY, in each case on the same terms and conditions as the proposed sale to
an Investment Entity or the proposed third party sale. In addition, in any
such sale by MSLEF II, BTNY and First Plaza must be given the opportunity to
sell the same percentage of its stock to such Investment Entity or third
party. At any time on or after June 30, 1994, each member of the Group may
transfer shares of stock to a third party if such holder first offers such
shares to: (a) the other member of the Group, (b) Holdings, (c) MSLEF II and
(d) BTNY, in each case on the same terms and conditions as the proposed third
party sale. At any time on or after June 30, 1994, BTNY may effect a sale of
stock to a third party if it first offers such shares to: (a) Holdings, (b)
MSLEF II and (c) the Group, in each case on the same terms and conditions as
the proposed third party sale.
At any time on or after June 30, 1994, either MSLEF II or
the Group has the right to require a recapitalization transaction. A
recapitalization transaction is defined as any transaction (such as a merger,
consolidation, exchange of securities or liquidation) involving Holdings
pursuant to which MSLEF II and the Group retain their proportionate ownership
interest in the surviving entity if the following conditions are met: (i)
the value of any securities of the surviving entity acquired or retained by
the party not initiating the recapitalization transaction does not exceed 67%
of the difference between (x) the value of such securities and any cash
received by such party and (y) all taxes payable as a result of the
transaction, (ii) if MSLEF II initiates the recapitalization transaction and
will not own all the voting equity securities of the surviving entity not
owned by the Group, the Group shall have the right to purchase such
securities, (iii) if the Group initiates the recapitalization transaction and
will not own all of the voting equity securities of the surviving entity,
MSLEF II shall have the right to purchase such securities, and (iv) the
majority in principal amount of the indebtedness incurred in connection with
such transaction shall be held for at least one year by persons not
affiliated with either MSLEF II or any member of the Group.
The Holdings Organization Agreement provides that in the
event that either Mr. Silver or Mr. Horrigan (each, a "Manager") dies or
becomes permanently disabled prior to June 30, 1994 (an "Inactive Manager"),
such Inactive Manager or his affiliates shall have the right to sell to
Holdings all Holdings Class A Stock held by the Inactive Manager at the Fair
Market Value (as defined in the Holdings Organization Agreement) of such
stock, provided that such stock must first be offered to the remaining
Manager at the same price. The Holdings Organization Agreement also provides
that if either Mr. Silver or Mr. Horrigan dies, becomes permanently disabled
or is convicted of any felony directly related to the business of Holdings
prior to June 30, 1994, the other Manager and his affiliates shall have the
right to purchase all of such person's Holdings Class A Stock at a price
equal to Fair Market Value in the case of death or disability and the
Adjusted Book Value (as defined in the Holdings Organization Agreement) in
the case of a conviction as stated above, and Holdings shall have the right
to purchase all such stock not purchased by the other Manager.
At any time prior to December 21, 1998, Holdings shall have
the right and option to purchase from First Plaza, and First Plaza shall have
the obligation to sell to Holdings, all (but not less than all) of the
Holdings Stock for a price per share equal to the greater of (i) $120 per
share and (ii) the purchase price necessary to yield on an annual basis a
compound return on investment of forty percent (40%). The number of shares
subject to such call and the call purchase price shall be proportionately
adjusted to take into account any stock dividend, stock split, combination of
shares, subdivision or other recapitalization of the capital stock of
Holdings.
The Holdings Organization Agreement provides that at any
time after June 15, 1996, the holders of a majority of the issued and
outstanding shares of Holdings Class A Stock and Holdings Class B Stock
(considered together as a class) may by written notice to Holdings require
Holdings to pursue the first public offering of Holdings' common stock
pursuant to an effective registration statement (an "IPO") on the terms and
conditions provided in the Holdings Organization Agreement. The investment
banking firm designated by such holders to act as managing underwriter for
the IPO shall be Morgan Stanley & Co. Incorporated ("Morgan Stanley") (or an
affiliate of Morgan Stanley) or another firm designated by MSLEF II
reasonably acceptable to Holdings. In addition to the portion of the IPO
which shall consist of shares of Holdings' common stock to be sold by
Holdings, the IPO may also include a secondary tranche consisting of shares
of Holdings' common stock to be sold by stockholders of Holdings.
Pursuant to the provisions of the Holdings Organization
Agreement, each of MSLEF II, BTNY, First Plaza and Messrs. Silver and
Horrigan agrees to take all action (including voting its shares of Holdings'
common stock) to approve the adoption of the Restated Certificate of
Incorporation of Holdings, as amended, substantially in the form attached as
an exhibit to the Holdings Organization Agreement, the Amended and Restated
By-laws of Holdings, substantially in the form attached as an exhibit to the
Holdings Organization Agreement, and the Amended and Restated Management
Services Agreement, substantially in the form attached as an exhibit to the
Holdings Organization Agreement (the "Post-IPO Management Services
Contract"), in each case to become effective at the time an IPO is completed.
The Post-IPO Management Services Contract provides, among other things, for
the payment to S&H of management fees of $2.0 million annually plus
reimbursement of expenses.
Pursuant to the provisions of the Holdings Organization
Agreement, MSLEF II agrees that it will not vote its shares of Holdings Class
B Stock in favor of any changes in the Certificate of Incorporation or By-
laws of Holdings which would adversely affect the rights of First Plaza,
unless First Plaza has consented in writing to such change. In addition, so
long as First Plaza shall hold not less than 18.73% of the issued and
outstanding shares of Holdings Class B Stock, First Plaza shall have the
right to nominate one of the Class B Directors to be elected at each annual
meeting of stockholders in accordance with the provisions of the Certificate
of Incorporation, and the holders of Holdings Class B Stock parties to the
Holdings Organization Agreement agree to vote their shares of Holdings Class
B Stock in favor of such nominee.
In addition, in the event that First Plaza, MSLEF II or BTNY
shall purchase any shares of Holdings Class A Stock, such purchaser agrees
that it will vote such shares in accordance with the directions of the
"holders of a majority of the shares of Class A Stock held by the Group"
(defined generally to mean the holders of a majority of the aggregate of
417,500 shares of Holdings Class A Stock held by Messrs. Silver and Horrigan
at December 21, 1993, which at the time of any such determination have been
continuously and are held by the Group) until such time as a Change of
Control has occurred. In the event that Messrs. Silver or Horrigan shall
purchase any shares of Holdings Class B Stock, such purchaser agrees that it
will vote such shares in accordance with the directions of MSLEF II, unless
MSLEF II and First Plaza (together with their respective affiliates) shall
hold directly or indirectly less than one-half of the aggregate number of
shares of Holdings Class B Stock held by MSLEF II and First Plaza immediately
following the issuance and sale of the Holdings Stock to First Plaza on
December 21, 1993.
Pursuant to the terms of the Holdings Organization
Agreement, Holdings entered into an amended and restated management services
agreement with S&H, a corporation wholly owned by Messrs. Horrigan and
Silver. See "Description of Management Agreements" below.
The Holdings Organization Agreement terminates upon the
earlier of (i) the mutual agreement of the parties, (ii) such time as it
becomes unlawful, (iii) the completion of an IPO, and (iv) June 30, 1999.
The parties may agree to extend the term of the Holdings Organization
Agreement.
Concurrently with the issuance and sale to First Plaza of
the Holdings Stock, Holdings, MSLEF II, BTNY, First Plaza and Messrs. Silver
and Horrigan entered into a Stockholders Agreement dated as of December 21,
1993 (the "Stockholders Agreement") that provides for certain prospective
rights and obligations among the stockholders and between the stockholders
and Holdings. Upon termination of the Holdings Organization Agreement as a
result of an IPO, the operative provisions of the Stockholders Agreement
become effective. The Stockholders Agreement provides for certain
registration rights, certain stock transfer restrictions, and certain voting
agreements relating to the election of directors of Holdings and certain
mergers or sales of business or assets involving Holdings.
Description of Management Agreements
Holdings, Silgan, Containers and Plastics each entered into
an amended and restated management services agreement dated as of December
21, 1993 (collectively, the "Management Agreements") with S&H to replace in
its entirety its existing management services agreement, as amended, with
S&H. Pursuant to the Management Agreements, S&H provides Holdings, Silgan,
Containers and Plastics and their respective subsidiaries with general
management and administrative services (the "Services"). The Management
Agreements provide for payments to S&H (i) on a monthly basis, of $5,000 plus
an amount equal to 2.475% of consolidated earnings before depreciation,
interest and taxes of Holdings and its subsidiaries ("Holdings EBDIT"), for
such calendar month until Holdings EBDIT for the calendar year shall have
reached an amount set forth in the Management Agreements for such calendar
year (the "Scheduled Amount") and 1.65% of Holdings EBDIT for such calendar
month to the extent that Holdings EBDIT for the calendar year shall have
exceeded the Scheduled Amount but shall not have been greater than an amount
(the "Maximum Amount") set forth in the Management Agreements (the "Monthly
Management Fee") and (ii) on a quarterly basis, of an amount equal to 2.475%
of Holdings EBDIT for such calendar quarter until Holdings EBDIT for the
calendar year shall have reached the Scheduled Amount and 1.65% of Holdings
EBDIT for such calendar quarter to the extent that Holdings EBDIT for the
calendar year shall have exceeded the Scheduled Amount but shall not have
been greater than the Maximum Amount (the "Quarterly Management Fee"). The
Scheduled Amount was $65.5 million for the calendar year 1993 and increases
by $6.0 million for each year thereafter. The Maximum Amount is $90.197
million for the calendar year 1994, $95.758 million for the calendar year
1995, $98.101 million for the calendar year 1996, $100.504 million for the
calendar year 1997, $102.964 million for the calendar year 1998 and $105.488
million for the calendar year 1999. The Management Agreements provide that
upon receipt by Silgan of a notice from Bankers Trust that certain events of
default under the Credit Agreement have occurred, the Quarterly Management
Fee shall continue to accrue, but shall not be paid to S&H until the
fulfillment of certain conditions, as set forth in the Management Agreements.
The Management Agreements continue in effect until the
earliest of: (i) the completion of an IPO; (ii) June 30, 1999; (iii) at the
option of each of the respective companies, the failure or refusal of S&H to
perform its obligations under the Management Agreements, if such failure
continues unremedied for more than 60 days after written notice of its
existence shall have been given; (iv) at the option of MSLEF II (a) if S&H or
Holdings is declared insolvent or bankrupt or a voluntary bankruptcy petition
is filed by either of them, (b) upon the occurrence of any of the following
events with respect to S&H or Holdings if not cured, dismissed or stayed
within 45 days: the filing of an involuntary petition in bankruptcy, the
appointment of a trustee or receiver or the institution of a proceeding
seeking a reorganization, arrangement, liquidation or dissolution, (c) if S&H
or Holdings voluntarily seeks a reorganization or arrangement or makes an
assignment for the benefit of creditors or (d) upon the death or permanent
disability of both of Messrs. Horrigan and Silver; and (v) the occurrence of
a Change of Control (as defined in the Restated Certificate of Incorporation
of Holdings and as described under "Description of Holdings Common Stock"
above).
In addition to the management fees described above, the
Management Agreements provide for the payment to S&H on the closing date of
the IPO of an amount, if any (the "Additional Amount") equal to the sum of
the present values, calculated for each year or portion thereof, of (i) the
amount of the annual management fee for such year or portion thereof that
otherwise would have been payable to S&H for each such year or portion
thereof for the period beginning as of the time of the IPO and ending on June
30, 1999 (the "Remaining Term") pursuant to the provisions described in the
preceding paragraph but for the occurrence of the IPO, minus (ii) the amount
payable to S&H for the Remaining Term at the rate of $2.0 million per year.
The Management Agreements further provide that the amounts described in
clause (i) of the first sentence of this paragraph will be calculated based
upon S&H's good faith projections of Holdings EBDIT for each such year (or
portion thereof) during the Remaining Term (the "Estimated Fees"), which
projections shall be made on a basis consistent with S&H's past projections.
The difference between the amount of Estimated Fees for any particular year
and $2 million shall be discounted to present value at the time of the IPO
using a discount rate of eight percent (8%) per annum, compounded annually.
Additionally, the Management Agreements provide that
Holdings, Silgan, Containers, Plastics and their respective subsidiaries
shall reimburse S&H, on a monthly basis, for all out-of-pocket expenses paid
by S&H in providing the Services, including fees and expenses to consultants,
subcontractors and other third parties, in connection with such Services.
All fees and expenses paid to S&H under each of the Management Agreements are
credited against amounts paid to S&H under the other Management Agreements.
Under the terms of the Management Agreements, Holdings, Silgan, Containers
and Plastics have agreed, subject to certain exceptions, to indemnify S&H and
its affiliates, officers, directors, employees, subcontractors, consultants
or controlling persons against any losses, damages, costs and expenses they
may sustain arising in connection with the Management Agreements.
The Management Agreements also provide that S&H may select a
consultant, subcontractor or agent to provide the Services. S&H has retained
Morgan Stanley to render financial advisory services to S&H. In connection
with such retention, S&H has agreed to pay Morgan Stanley a fee equal to 9.1%
of the fees paid to S&H under the Management Agreements.
Item 7: Financial Statements and Exhibits.
(a) and (b) Financial Statements of Business Acquired and
Pro Forma Financial Information
It is impracticable at this time to file the financial
statements and pro forma financial information required to be filed pursuant
to Item 7 of Form 8-K. Such financial statements and pro forma financial
information will be filed, as soon as practicable, but not later than 60 days
from the date hereof.
(c) Exhibits
(1) Purchase Agreement, dated as of September 3, 1993,
between Silgan Containers Corporation and Del Monte Corporation.
(2) Amendment to Purchase Agreement, dated as of December
10, 1993, between Silgan Containers Corporation and Del Monte Corporation.
In accordance with Item 601(b)(2) of Regulation S-K, the
schedules and exhibits referenced in the Purchase Agreement and Amendment to
Purchase Agreement referenced above have not been filed as part of the
exhibits to this Form 8-K. The Registrant agrees to furnish supplementary a
copy of the omitted schedules and exhibits to the Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
SILGAN HOLDINGS INC.
By:/s/ Harley Rankin, Jr.
Harley Rankin, Jr.
Executive Vice President,
Chief Financial Officer
and Treasurer
Date: January 5, 1994
INDEX TO EXHIBITS
Exhibit No. Exhibit
1 Purchase Agreement, dated as of September
3, 1993, between Silgan Containers
Corporation and Del Monte Corporation
2 Amendment to Purchase Agreement, dated as
of December 10, 1993, between Silgan
Containers Corporation and Del Monte
Corporation
EXHIBIT 1
PURCHASE AGREEMENT
THIS IS A PURCHASE AGREEMENT (the "Agreement") made and entered into
as of September 3, 1993, by and between DEL MONTE CORPORATION, a New York
corporation ("DM"), and SILGAN CONTAINERS CORPORATION, a Delaware corporation
("Purchaser").
B A C K G R O U N D
DM desires to sell to Purchaser, and Purchaser desires to purchase from DM,
certain of the assets of DM, and also assume certain obligations and liabilities
of DM, all upon the terms and subject to the conditions set forth in this
Agreement
ACCORDINGLY, THE PARTIES AGREE AS FOLLOWS:
DEFINITIONS
As used in this Agreement, the following terms have these meanings when
begun with capital letters:
"AA" means Arthur Andersen & Co.
"Adjustment Date" means the date five Business Days after the date on which
the Final Closing Date Balance Sheet has been delivered as contemplated by
Section 2.3.
"Affected Employees" has the meaning set forth in Section 7.1(a).
"Affiliate" means (with respect to any entity) any other entity which
directly or indirectly owns or controls, or is owned or controlled by, or is
under common control with, the specified entity. For purposes of this
definition, the term "control" as applied to any entity (including with
correlative meanings the terms "controlling", "controlled by" and "under common
control with") means the direct or indirect ownership of stock or similar equity
interests, or contractual or other rights, in any such case entitling their
holder to elect at least 50 percent of the directors or similar functionaries of
that entity. Notwithstanding the foregoing, Morgan Stanley Group, Inc. and its
affiliates shall not be deemed an Affiliate of Purchaser.
"Antitrust Improvements Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations adopted by the United
States Federal Trade Commission under that statute.
"Assets" means the DM Assets and the Subsidiary Assets.
"Assumed Liabilities" has the meaning set forth in Section 1.4.
"Business" means the manufacture of metal containers for food and beverages
in the United States, as carried on by DM, as of the date of this Agreement.
"Business Day" means any day, Monday through Friday, on which commercial
banks are open for regular business in San Francisco and New York City.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, and the regulations adopted by the United States
Environmental Protection Agency under that statute.
"Closing" has the meaning set forth in Article III.
"Closing Date" has the meaning set forth in Article III.
"Closing Date Balance Sheet" means the audited balance sheet of the
Business as of the Closing Date prepared in accordance with GAAP, subject to the
next sentence. The "Closing Date Balance Sheet" (i) shall not include the
Excluded Assets or the Excluded Liabilities, (ii) shall include a footnote
setting forth any Underfunding Adjustment and (iii) shall include another
footnote setting forth the Three Hundred Can Conversion Costs.
"Code" means the United States Internal Revenue Code of 1986, as amended,
and the regulations adopted by the IRS under that statute.
"Damages" has the meaning set forth in Section 14.1.
"Disclosure Schedule" means the Disclosure Schedule dated the same date as
this Agreement furnished by DM to Purchaser, as amended from time to time in the
manner permitted by Section
4.19.
"DM Assets" has the meaning set forth in Section 1.1.
"DM Closing Documents" means all documents, agreements, instruments,
certificates, bills of sale, deeds, easements, assignments, leases and notices
to be executed and delivered by DM or caused by DM to be executed and delivered
at the Closing pursuant to this Agreement.
"DM Indemnitee" has the meaning set forth in Section 14.2.
"DM's Phase I Environmental Reports" means the reports of Green Engineering
relating to the Facilities dated August, 1993.
"EY" means Ernst & Young, DM's auditors.
"Effective Time" has the meaning set forth in Section 1.6.
"Employee Benefit Programs" means all of the plans, programs and benefits
referred to in Schedule 4.9.
"Environmental Claim" means any claim, action, cause of action or notice by
any person or entity alleging (i) any liability or potential liability arising
out of, based on or resulting from the presence or release or threatened release
into the environment of any Materials of Environmental Concern or (ii)
responsibility or potential responsibility for the cleanup, removal, treatment
or remediation of any Materials of Environmental Concern.
"Environmental Laws" means all federal, state, local and foreign laws and
regulations applicable to the Business and relating to pollution or protection
of human health or the environment, including, without limitation, laws and
regulations relating to emissions, discharges, releases or threatened releases
of Materials of Environmental Concern, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environmental Concern.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations adopted by the United States Department of Labor
under that statute.
"Estimated Closing Balance Sheet" means the unaudited balance sheet of the
Business as of a date not more than 10 Business Days before the Closing Date,
prepared in good faith by DM in accordance with GAAP, subject to the next
sentence. The "Estimated Closing Balance Sheet" (i) shall not include the
Excluded Assets or the Excluded Liabilities, (ii) shall include a footnote
setting forth DM's good faith estimate of any Underfunding Adjustment, and (iii)
shall include another footnote setting forth DM's good faith estimate of the
Three Hundred Can Conversion Costs.
"Estimated Purchase Price" has the meaning set forth in Section 2.2.
"Excluded Assets" has the meaning set forth in Section 1.3.
"Excluded Liabilities" has the meaning set forth in Section 1.4.
"Facility" or "Facilities" means the real estate used by the Business, as
set forth on Schedule 4.6 (which separately identifies the real estate included
in the DM Assets or Subsidiary Assets and the real estate to be leased to
Purchaser), and the buildings, improvements and fixtures thereon, either
individually or collectively, as appropriate for the context. As used herein,
real estate includes fee or leasehold title to all properties used by the
Business, together with all easements, rights and grants used in conjunction
with such properties.
"Final Closing Date Balance Sheet" has the meaning set forth in Section
2.3.
"FY 93 Statement of Costs" has the meaning set forth in Section 4.5(c).
"GAAP" means United States generally accepted accounting principles applied
on a basis consistent with that used to prepare DM's audited consolidated
financial statements for DM's fiscal year ended June 30, 1992; provided that no
write down shall be made for fixed assets which are not in present use, no
accrued or prepaid pension costs or pension plan disclosures are to be included,
and inventory balances shall not be adjusted for LIFO reserves.
"Indemnitee" has the meaning set forth in Section l4. 3.
"Indemnitor" has the meaning set forth in Section 14.3.
"IRS" means the United States Internal Revenue Service.
"June 30 Balance Sheet" has the meaning set forth in Section 4.5(a).
"Material Adverse Effect" means a material adverse effect on the
properties, earnings, results of operation or financial condition of the
Business taken as a whole.
"Materials of Environmental Concern" means pollutants, contaminants,
hazardous waste, hazardous substances, toxic substances, petroleum and petroleum
products, as defined in CERCLA or in any other Environmental Law.
"Net Working Capital" means the amount by which total current assets (other
than all current assets constituting Excluded Assets) exceeds total current
liabilities (other than all current liabilities constituting Excluded
Liabilities).
"Oakland Facility" means plant 237 located at 3100 East 9th Street and 2806
East 10th Street, Oakland, California to be leased by DM to Purchaser at the
Closing.
"PCP" means Pacific Coast Producers.
"PCP CanMan Assets" has the meaning set forth in Section 6.2(a).
"PCP Option" has the meaning set forth in Section 6.2(a).
"PCP Option Agreement" has the meaning set forth in Section 6.2(a)
"Plan" has the meaning set forth in Section 4.9(a).
"Plover Items" means the relining of the trenches and the removal or
decommissioning in place of the underground storage tanks located at plant 106
in Plover, Wisconsin as described in the letter dated August 31, 1993 from DM to
Purchaser.
"Purchase Price" has the meaning set forth in Section 2.1.
"Purchaser Closing Documents" means all documents agreements, instruments,
certificates, leases and notices to be executed and delivered by Purchaser at
the Closing pursuant to this Agreement.
"Purchaser Indemnitee" has the meaning set forth in Section 14.1.
"Shares" has the meaning set forth in Section 1.2.
"Statements of Costs" has the meaning set forth in Section 4.5(b).
Subsidiary" means DM Can Corporation, a California corporation.
"Subsidiary Assets" has the meaning set forth in Section 1.2.
"Supply Agreement" means the Supply Agreement dated the date hereof between
DM and Purchaser for the supply by Purchaser of DM's metal food container
requirements.
"Taxes" means United States, state, local and foreign taxes measured by
taxable or net income (as appropriate), property taxes, franchise taxes, sales
and use taxes (other than property, franchise, sales and use taxes imposed upon
the transactions contemplated by this Agreement), payroll taxes, wage and
withholding taxes, and value-added taxes, including interest and penalties on
all such taxes.
"Three Hundred Can Conversion Costs" means the sum of all amounts expended
by DM before the Closing Date (including before the date of this Agreement) or
accrued as a current liability of DM as of the Closing Date to effect the 303 to
300 can conversion at the Facilities, it being understood that such expenditures
and accruals shall have been included on Schedule 9.3 to this Agreement or
otherwise consented to in writing by Purchaser.
"To the Knowledge of DM" means to the actual knowledge of H. Dennis
Nerstad, David L. Meyers, William Spain, Thomas E. Gibbons or David Little.
"To the Knowledge of Purchaser" means to the actual knowledge of James D.
Beam, D. Greg Horrigan or Harley Rankin, Jr.
"Underfunding Adjustment" means the aggregate amount, if any, by which (the
following being determined separately for each applicable Plan as of the Closing
Date) (i) the "accumulated benefit obligation" (as defined in Statement of
Financial Accounting Standards No. 87) of the Affected Employees under each Plan
from which a transfer of assets is made to one or more transferee plans of the
Purchaser pursuant to Section 7.2 (e) (ii) of this Agreement, determined in
accordance with actuarial assumptions set forth on Schedule 7.2 and further
assuming that all Affected Employees are fully vested on the Closing Date,
exceeds (ii) the amount of assets that DM shall cause to be so transferred from
such Plan.
"WARN" means the Worker Adjustment and Retraining
Notification Act of 1988, as amended, and the regulations adopted
by the United States Department of Labor under that statute.
ARTICLE I
PURCHASE AND SALE AND
ASSUMPTION OF LIABILITIES
1.1 Assets. On the terms and subject to the conditions set forth in
this Agreement, at the Closing DM shall sell, convey, transfer, assign and
deliver to Purchaser, and Purchaser shall purchase and acquire from DM, all of
DM's right, title and interest in and to certain of the assets of DM related to
the Business, as set forth on Schedule 1.1 (the "DM Assets").
1.2 Shares. Immediately prior to the Closing, DM will transfer to
Subsidiary all of DM's right, title and interest in and to the assets of DM
related to the Business and located in Washington and California set forth on
Schedule 1.2 (the "Subsidiary Assets"). On the terms and subject to the
conditions set forth in this Agreement, at the Closing DM shall sell, convey,
transfer, assign and deliver to Purchaser, and Purchaser shall purchase and
acquire from DM, all of DM s right, title and interest in and to all of the
shares of capital stock of the Subsidiary (the "Shares").
1.3 Excluded Assets. The assets set forth on Schedule 1.3 (the
"Excluded Assets") shall be retained by DM.
1.4 Assumed Liabilities. At the Closing, as partial consideration
for the Assets and Shares, Purchaser shall assume all of the obligations and
liabilities (both direct and contingent) relating to the Business set forth on
Schedule 1.4 (the "Assumed Liabilities") and DM shall retain, and hereby
undertakes to perform and satisfy, all other obligations and liabilities of DM
(whether direct, contingent or unknown) relating to the Business (the "Excluded
Liabilities"). Other than the Assumed Liabilities and as otherwise explicitly
set forth in this Agreement, Purchaser does not assume or agree to be
responsible for any obligations or liabilities of DM of any nature whatsoever,
whether past, current or future and whether accrued, contingent, unknown or
otherwise. Purchaser shall use its best efforts promptly to relieve DM of as
many of the Assumed Liabilities as is possible, including substituting Purchaser
or its ultimate parent entity as the direct or contingent obligor or guarantor
of Assumed Liabilities in place of DM, it being understood and agreed that
Purchaser shall in no event be obligated to prepay any of the Assumed
Liabilities.
1.5 Consent of Third Parties. This Agreement shall not constitute an
agreement to assign any interest in any instrument, contract, lease, permit or
other agreement or arrangement or any claim, right or benefit, if an assignment
without the consent of a third party would constitute a breach or violation
thereof and adversely affect DM's ability to convey the interest or impair the
interest as conveyed to Purchaser or Subsidiary. If the consent of a third
party which is required in order to assign any such interest is not obtained
before the Closing, or if an attempted assignment would be ineffective or would
affect DM's ability to convey the interest unimpaired, DM and Purchaser shall
cooperate in any lawful and commercially reasonable arrangement, including
performance by Purchaser, DM or the Subsidiary, as the case may be, as agent for
the other, in order to cause Purchaser (or a subsidiary of Purchaser) to receive
the benefits of DM's interest, and to accept the burdens and perform the
obligations, under any such instrument, contract, lease, permit or other
agreement or arrangement or any such claim, right or benefit. Any transfer or
assignment to Purchaser or Subsidiary by DM of any interest under any such
instrument, contract, lease, permit or other agreement or arrangement or any
such claim, right or benefit that requires the consent of a third party shall be
made subject to such consent or approval being obtained.
1.6 Effective Time. If the transactions contemplated by this
Agreement are consummated, they shall be deemed to be effective at 11:59 p.m.
California time on the date immediately preceding the Closing Date (the
"Effective Time").
ARTICLE II
PURCHASE PRICE
2.1 Purchase Price. The purchase price to be paid by Purchaser to DM
for the Shares and the DM Assets (the "Purchase Price") shall equal: (a)
$45,000,000 plus (b) the Net Working Capital as shown on the Final Closing Date
Balance Sheet plus (c) the Three Hundred Can Conversion Costs as shown on the
Final Closing Date Balance Sheet minus (d) any Underfunding Adjustment as shown
on the Final Closing Date Balance Sheet.
2.2 Closing Payment. At the Closing, Purchaser shall pay an amount
equal to an estimate of the Purchase Price (the "Estimated Purchase Price").
That payment shall be made in immediately available U.S. funds transferred by
wire to such account or accounts, and in such manner, as DM may direct. The
amount of the Estimated Purchase Price shall equal: (a) $45,000,000 plus (b) the
Net Working Capital as shown on the
Estimated Closing Balance Sheet plus (c) the Three Hundred Can Conversion Costs
shown in the footnote respecting those costs included in the Estimated Closing
Balance Sheet minus (d) any Underfunding Adjustment shown in the footnote
respecting that adjustment included in the Estimated Closing Balance Sheet.
2.3 Closing Date Balance Sheet. Within 75 days after the Closing, DM
shall prepare and EY shall audit the Closing Date Balance Sheet and deliver it
to Purchaser along with a draft report from EY with respect to its audit. DM
shall provide Purchaser with access to DM's and EY's working papers relating to
the Closing Date Balance Sheet and the books and records that underlie those
working papers. Purchaser shall complete its review within 45 days after its
receipt of the Closing Date Balance Sheet. If, as a result of its review,
Purchaser objects in writing to any aspect of the Closing Date Balance Sheet
within those 45 days, DM and Purchaser shall attempt in good faith to resolve
the points of disagreement. If they do not resolve those disagreements within
30 days after Purchaser communicates its objections, DM and Purchaser shall
retain AA to resolve those disagreements and to prepare a revised Closing Date
Balance Sheet reflecting its resolution of the points of disagreement. AA s
fees shall be shared equally by DM and Purchaser, and the decision of that firm
shall bind both DM and Purchaser. The "Final closing Date Balance Sheet" shall
be the balance sheet meeting the definition of Closing Date Balance Sheet and
with respect to which one of the following has occurred: (a) Purchaser has not
objected to the Closing Date Balance Sheet within the requisite 45 days, (b) DM
and Purchaser have agreed on the Closing Date Balance Sheet or (c) AA has
delivered a revised Closing Date Balance Sheet reflecting the resolution of
points of disagreement between the parties. After the Closing Date, Purchaser
shall provide DM and its representatives with such access to the books and
records of the Business that are included in the Assets and such assistance by
personnel of the Business that are employed by Purchaser as DM may reasonably
require in order to carry out the provisions of this Section 2.3.
2.4 Adjustments. If "A" (see below) is greater than "B" (see below),
on the Adjustment Date, DM shall pay Purchaser an amount in cash equal to that
difference, plus interest on that difference at the rate of six percent per year
from and including the Closing Date to and including the Adjustment Date. If
"B" is greater than "A", on the Adjustment Date, Purchaser shall pay DM an
amount in cash equal to that difference, plus interest on that difference at the
rate of six percent per year from and including the Closing Date to and
including the Adjustment Date. For purposes of the first two sentences of this
Section 2.4, "A" shall mean: (a) the Net Working Capital shown on the Estimated
Closing Balance Sheet plus (b) the Three Hundred Can Conversion Costs shown in
the footnote respecting those costs included in the Estimated Closing Balance
Sheet minus (c) any Underfunding Adjustment shown in the footnote respecting
that adjustment Included in the Estimated Closing Balance Sheet. For purposes
of the first two sentences of this Section 2.4, "B" shall mean: (a) the Net
Working Capital shown on the Final Closing Date Balance Sheet plus (b) the Three
Hundred Can Conversion Costs shown in the footnote respecting those costs
included in the Final Closing Date Balance Sheet minus (c) any Underfunding
Adjustment shown in the footnote respecting that adjustment included in the
Final Closing Date Balance Sheet.
2.5 Allocation. At the Closing the parties shall agree to an
allocation of the Purchase Price among the Shares and classes of DM Assets. The
parties shall file all applicable tax returns in accordance with that
allocation. If the Purchase Price is adjusted pursuant to Section 2.4, the
parties shall also agree to an appropriate adjustment to the allocation at the
time the Final Closing Date Balance Sheet is delivered or, failing such
agreement, shall employ the procedures set forth in Section 2.3 to effect such
an adjustment.
ARTICLE III
CLOSING
The closing of the purchase and sale of the DM Assets and the Shares
(the "Closing") shall take place (with effect as of the Effective Time) at 11:00
am., California time, on the fifth Business Day after completion of the required
waiting period pursuant to the Antitrust Improvements Act ("Closing Date") at
the offices of Heller, Ehrman, White & McAuliffe, 333 Bush Street, San
Francisco, California, or such other time and place as may be mutually agreed
upon by the parties. At the Closing, Purchaser shall pay the Estimated Purchase
Price provided for in Section 2.2, and deliver the documents required to be
delivered pursuant to Article XIII, and DM shall deliver the documents required
to be delivered pursuant to Article XII and, simultaneously therewith, shall
take all steps as may be reasonably requIred to put Purchaser and Subsidiary, as
the case may be, in possession and exclusive operating control of the Assets.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF DM
DM hereby makes the representations and warranties to Purchaser set
forth in this Article IV, as of the date of this Agreement, but subject to the
information contained in, and the exceptions noted or referred to in, the
Disclosure Schedule. The disclosure of any matters in one part of the
Disclosure Schedule or any document delivered pursuant to any provision of this
Article IV shall be deemed to be a disclosure of such matters in response to any
other provision of this Article IV to which such matter may be applicable.
4.1 Organization of DM and Subsidiary. DM is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York. As of the Closing, the Subsidiary will be a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. DM has all requisite corporate power and
authority to execute and deliver this Agreement and the DM Closing Documents, to
perform its obligations under this Agreement and the DM Closing Documents and to
consummate the transactions contemplated by this Agreement and the DM Closing
Documents. As of the Closing, the Subsidiary will have all requisite corporate
power to own or lease, and to operate, its properties, and to carry on the
Business. DM is, and by the Closing the Subsidiary will be, duly qualified or
licensed to do business as foreign corporations in good standing in the
jurisdictions set forth on Schedule 4.1. DM has made available to Purchaser
complete and correct copies of the Certificate of Incorporation and the Bylaws
of DM as presently in effect.
4.2 Corporate Authorization; No Violation. DM has duly authorized
the execution and delivery of this Agreement and the DM Closing Documents, the
performance of its obligations under this Agreement and the DM Closing Documents
and the consummation of the transactions contemplated by this Agreement and the
DM Closing Documents. This Agreement constitutes, and each of the DM Closing
Documents to be executed and delivered by DM at the Closing shall, when so
executed and delivered, constitute, the valid and binding obligation of DM,
enforceable against DM in accordance with their respective terms (subject, as to
enforcement, to bankruptcy, reorganization, insolvency, moratorium, and other
laws relating to or affecting creditors' rights generally and to the
availability of equitable remedies). Except as shown on Schedule 4.2, neither
the execution and delivery of this Agreement or any of the DM Closing Documents
by DM nor the performance by DM of its obligations under this Agreement or any
of the DM Closing Documents nor the consummation by DM of the transactions
contemplated by this Agreement or any of the DM Closing Documents will conflict
with or result in a material breach of the terms, conditions or provisions of,
constitute a default under, result in any violation of, or result in the
creation of any lien or encumbrance upon any of the Shares or Assets pursuant
to, the Certificate of Incorporation or the Bylaws of DM or any agreement or
instrument to which DM is a party or by which it or any of the Assets or Shares
is bound or any statute, law, ordinance, rule or regulation of, or judgment,
order, writ, injunction or decree of any court of, administrative or
governmental agency or body applicable to DM, any of the Assets or any of the
Shares.
4.3 Compliance with Law. To the Knowledge of DM, DM and the
Subsidiary each holds all material licenses, permits and authorizations, and has
made all material filings and registrations, necessary for the lawful operation
of the Business as conducted by it or any of the Assets or Facilities pursuant
to all applicable statutes, laws, ordinances, rules and regulations of all
governmental bodies, agencies and subdivisions having jurisdiction over any part
of the Business or any of the Assets. To the Knowledge of DM, neither DM nor the
Subsidiary is in violation of any laws or regulations concerning the Business or
any of the Assets or Facilities or any material licenses, permits,
authorizations, filings or registrations referred to above, which violations,
individually or in the aggregate, would have a Material Adverse Effect.
4.4 The Subsidiary. The Subsidiary will be incorporated by DM as
close to the Closing Date as practicable and will carry on no activities and
incur no obligations or liabilities of any kind whatsoever prior to the
Closing.
As of the Closing: (a) all the Shares will have been validly issued and be fully
paid and non-assessable; (b) DM will own all of the Shares beneficially and of
record, free and clear of adverse claims and any encumbrance, pledge or other
restriction; (c) there will be no outstanding securities convertible into or
exchangeable or exercisable for any shares of the capital stock or any other
securities of the Subsidiary, nor will the Subsidiary have outstanding any
rights to subscribe for or to purchase, or any options to purchase, or any
agreements providing for the issuance of, any shares of its capital stock, any
securities convertible into or exchangeable or exercisable for any shares of its
capital stock or any other securities. Prior to the Closing, DM will make
available to Purchaser complete and correct copies of the Articles of
Incorporation and the Bylaws of the Subsidiary.
4.5 Unaudited Balance Sheet and Statements of Cost.
(a) Schedule 4.5(a) sets forth the unaudited "June 30 Balance
Sheet". The June 30 Balance Sheet sets forth DM's good faith estimate of the
balance sheet of the Business as of June 30, 1993 prepared in accordance with
GAAP, except that the Excluded Assets and the Excluded Liabilities have been
deleted from the June 30 Balance Sheet. The footnotes included in the June 30
Balance Sheet set forth DM's good faith estimate of the Three Hundred Can
Conversion Costs and the Underfunding Adjustment as of June 30, 1993.
(b) Schedule 4.5(b) includes unaudited statements of costs
relating to the Business for the fiscal years ended June 30, 1991 and 1992 and
for the nine months ended March 31, 1993 (the "Statements of Costs"). The
Statements of Costs (a) have been prepared from and are in accordance with the
books and records of DM and (b) present fully and fairly the total production
costs, purchased can costs, freight costs, and certain corporate allocations
less revenue related to sales of cans to third parties for the periods indicated
all as consistently accounted for by DM. EY has performed certain procedures
with respect to the Statements of Costs as set forth on Schedule 4.5(b).
(c) Within 30 days after the date of this Agreement, DM shall
deliver to Purchaser a Statement of Costs for the fiscal year ended June 30,
1993 (the "FY 93 Statement of Costs") which shall reflect costs consistent with
those set forth in the Statement of Costs for the nine months ended March 31,
1993. The FY 93 Statement of Costs will (a) have been prepared from and be in
accordance with the books and records of DM and (b) present fully and fairly the
total production costs, purchased can costs, freight costs, and certain
corporate allocations less revenue related to sales of cans to third parties for
the period indicated all as consistently accounted for by DM. EY will perform
certain procedures with respect to the FY 93 Statement of Costs as set forth on
Schedule 4.5(b).
4.6 Assets.
(a) Schedule 4.6 identifies the Facilities. DM owns all of the
Facilities and has good, marketable and insurable title to the Facilities shown
on Schedule 4.6 and as of the Closing the Subsidiary will own and have good,
marketable and insurable title to the Facilities shown on Schedule 4.6 which are
to be Subsidiary Assets, in each case free and clear of all liens, covenants,
conditions, restrictions, easements, encroachments, charges and encumbrances or
other adverse claims or interests of any nature, other than:
(i) the lien of current taxes not yet due and payable;
(ii) the lien of installments for special assessments not
yet due and payable;
(iii) such other matters set forth on Schedule
4.6 listed separately for each Facility;
(iv) such other encroachments, easements, overlaps, gaps,
boundary line disputes or claims and any matter which would be disclosed by an
accurate survey and inspection, and exceptions and reservations of record which,
individually and in the aggregate, do not interfere with the operation of the
Business or the operation of a Facility as presently operated in any material
respect;
(v) laws, ordinances and governmental
regulations(including, but not limited to, building and zoning ordinances and
environmental laws, statutes and ordinances) restricting, regulating or
prohibiting the occupancy, use or enjoyment of the Facilities or the water,
public ways or private ways adjoining or appurtenant to the Facilities or
regulating the character, dimensions or location of any improvement now or
hereafter erected on the Facilities, or prohibiting a separation in ownership or
a reduction in the dimensions or area of the Facilities, if the effect of any
violation of any such law, ordinance, statute or governmental regulation,
individually or in the aggregate, would not interfere in any material respect
with the operation of the Business or the operation of a Facility as presently
operated; and
(vi) such other imperfections of title, encumbrances,
covenants, conditions and restrictions which, individually or in the aggregate,
do not interfere with the operation of the Business or the operation of a
Facility as presently operated in any way which, individually or in the
aggregate, would have a Material Adverse Effect.
(b) DM has good and marketable title to all of the DM Assets
that are not leased (excluding for purposes of this subparagraph (b) only the
Facilities included in the DM Assets), free and clear of all mortgages, deeds of
trust, liens, pledges, charges, security interests, claims or encumbrances of
any kind or character (collectively, "Encumbrances"), except for those
Encumbrances set forth on Schedule 4.6 and liens for taxes not yet due and
payable.
(c) At the Closing, the Subsidiary will have good and marketable
title to all of the Subsidiary Assets that are not leased (excluding for
purposes of this subparagraph (c) only the Facilities included in the Subsidiary
Assets), free and clear of all mortgages, deeds of trust, liens, pledges,
charges, security interests, claims or encumbrances of any kind or character
(collectively, "Encumbrances"), except for those Encumbrances set forth on
Schedule 4.6 and liens for taxes not yet due and payable.
4.7 Operating and Trade Contracts and Agreements .Schedule 4.7 sets
forth the ten largest suppliers to the Business in terms of annual dollar volume
and all customers of the Business in the 12-month period ended March 31, 1993.
Except for the labor, retirement and similar plans and agreements referred to in
Sections 4.8 and 4.9, and the supply and joint venture agreements and equipment
leases identified on Schedule 4.7 (copies of which have been supplied to
Purchaser), there are no agreements to which DM is a party which relate to the
Business and which are material to the operation of the Business. To the
Knowledge of DM, DM has performed all obligations required to be performed by it
under all agreements to which DM is a party relating to the Business or any of
the Assets or Facilities and which, individually or in the aggregate, if not
performed by DM, would have a Material Adverse Effect.
4.8 Personnel Contracts and Collective BarGaining Agreements. DM is
not obligated with respect to the Business under any (a) executory or partially
executory contracts with any officer or employee, other than contracts which by
their terms are cancelable by DM on notice of not more than 30 days without any
liability or obligation on the part of DM or (b) collective bargaining
agreements or contracts with any labor union or other representative of
employees, in each case except for those contracts and agreements that are
identified on Schedule 4.8 (copies of which have been supplied to Purchaser).
4.9 Employee Benefit Plans.
With respect to employee benefits currently provided to employees of
the Business:
(a) Schedule 4.9 comprises a complete and correct list of all
"employee pension benefit plans" (as defined in Section 3(2) of ERISA),
"employee welfare benefit plans" (as defined in Section 3(l) of ERISA), bonus
and incentive compensation plans, stock purchase and stock option plans,
deferred compensation plans, severance plans or practices and other material
fringe benefit plans or practices which DM maintains, or to which DM presently
contributes, and which relate to any employees of the Business (collectively,
the "Plans"). DM has made available to Purchaser complete and correct copies of
relevant documents related to the Plans, including, as applicable, plan texts
and trust agreements and amendments thereto, summary plan descriptions,
actuarial reports for the most recent valuation period, the IRS Form 5500
(together with all schedules and attachments thereto) filed for the 1990 and
1991 plan years (and for the Plans that are employee welfare benefit plans for
the 1992 plan year), the most recent determination letters issued by the IRS
(and, if there has been no determination letter, all relevant correspondence
with the IRS), insurance contracts and employee handbooks.
(b) To the Knowledge of DM, each of the Plans is in compliance
with, and has been administered in accordance with, all material requirements of
ERISA, the Code and other applicable law and the material terms of such Plan.
Each Plan purported to be qualified under Code Section 401(a) has received a
favorable determination letter from the IRS (or, if no such determination letter
has been received for a Plan, to the Knowledge of DM, such Plan is so qualified)
and, to the Knowledge of DM, no event has occurred which would cause the loss of
such qualification.
(c) To the Knowledge of DM, none of the Plans that is an
"employee pension benefit plan" (as defined in Section 3(2) of ERISA), and no
fiduciary thereof or trust created thereunder, has engaged in any transaction
that has subjected, or may reasonably be expected to subject, DM, directly or
indirectly, to any material tax on prohibited transactions imposed by Section
4975 of the Code or to any material civil penalty imposed under Section 502 of
ERISA.
(d) DM has not, since September 26, 1980, incurred a complete or
partial withdrawal from any Plan that constitutes a "multiemployer plan" (as
defined in Section 3(37) of ERISA) which resulted in the imposition of
withdrawal liability under the Multiemployer Pension Plan Amendments Act of
1980, as amended, or which could result in the imposition of withdrawal
liability under that Act.
(e) To the Knowledge of DM, there are no pending or threatened
investigations or enforcement actions against DM with respect to any of the
Plans.
(f) To the Knowledge of DM, there are no pending or threatened
actions, suits or claims (other than routine claims for benefits) by present or
former employees of DM (or their beneficiaries) with respect to any of the Plans
or any of their assets or fiduciaries.
(g) Schedule 4.9 sets forth, for each of the Plans that is a
"multiemployer plan" (as defined in Section 3(37) of ERISA), the estimated
withdrawal liability, if any, that would be incurred by DM if DM engaged in a
complete or partial withdrawal from such Plan during the most recent year for
which such information has been made available by the trustees or administrator
of such Plan.
(h) Schedule 4.9 sets forth: (i) DM's good faith estimate of the
unfunded liability at September 1, 1993 attributable to employees of the
Business on June 30, 1993 under the DM Salary and Benefit Continuation Program
and any applicable collective bargaining agreements (by work location); and (ii)
DM's good faith estimate of the Accumulated Postretirement Benefit Obligation
(for postretirement benefits other than pensions) as of June 30, 1993 for
employees of the Business on such date, computed in accordance with Statement of
Financial Accounting Standards No. 106. DM's unfunded liability for accrued but
unpaid vacation is set forth as a current liability on the June 30 Balance
Sheet
and will be set forth as a current liability on both the Estimated Closing
Balance Sheet and the closing Date Balance Sheet.
4.10 Environmental Matters. To the Knowledge of DM, with respect to
the Assets, the Facilities and the operations of the Business:
(a) Except to the extent that failure to comply, either
individually or in the aggregate, would not result in an Material Adverse
Effect, each of DM, the Subsidiary, the Facilities and the Assets is in
compliance with all Environmental Laws;
(b) There is no Environmental Claim pending or threatened
against DM, the Subsidiary, any of the Facilities or any of the Assets which,
either individually or in the aggregate, would have a Material Adverse Effect;
and
(c) Except as shown on Schedule 4.10, there are at the
Facilities no (i) underground storage tanks, (ii) asbestos, (iii) equipment
using PCBs, (iv) underground injection wells, or (v) septic tanks in which
process waste water or any Materials of Environmental Concern have been
disposed.
4.11 Litigation.
(a) There is no claim, action, suit, proceeding or governmental
investigation pending or, to the Knowledge of DM, threatened, against or
involving DM or the Subsidiary which questions the validity of this Agreement or
seeks to prohibit, enjoin or otherwise challenge any of the transactions
contemplated by this Agreement or any of the DM Closing Documents.
(b) There is no claim, action, suit, proceeding or governmental
investigation pending or, to the Knowledge of DM, threatened against DM or the
Subsidiary which, either individually or in the aggregate, would have a Material
Adverse Effect.
(c) Neither DM nor the Subsidiary is subject to any judgment,
order, writ, injunction or decree which, either individually or in the
aggregate, would have a Material Adverse Effect, nor is DM or the Subsidiary in
default under any judgment, order, writ, injunction or decree to which it is
subject, the consequences of which default, individually or in the aggregate,
would have a Material Adverse Effect.
4.12 Taxes.
(a) DM has filed all returns respecting Taxes required by law to
be filed by it and has paid all Taxes required to be paid by it.
(b) DM shall be responsible for all Taxes imposed upon or
measured by the taxable income of DM allocable to any period ending on or before
the Closing Date and shall indemnify Purchaser and any other person with which
Purchaser files, has filed or will file a consolidated or combined tax return
and shall hold them harmless from any and all Taxes for any taxable year or
taxable period ending on or before the Closing.
(c) Purchaser and DM shall make an election under Code Sections
338(g) and 338(h) (10) with respect to the sale of the Shares. DM shall pay any
tax attributable to the making of such election and shall indemnify Purchaser
and any other person with which Purchaser files, has filed or will file a
consolidated or combined tax return and shall hold them harmless from any and
all Taxes resulting from the filing of an election under Code Sections 338(g)
and 338(h) (10) with respect to the purchase of the Shares by Purchaser.
(d) Within 60 days after the Closing Date, Purchaser shall
prepare or cause to be prepared and delivered to DM such information as DM shall
reasonably request to enable DM to prepare its tax returns. Purchaser and DM
agree to furnish or cause to be furnished to each other, upon request, as
promptly as is practical, such additional information (including by means of
access to books and records) and assistance relating to the Business as is
reasonably necessary for the filing of any returns, preparation for any audit
and prosecution or defense of any claim, suit or proceeding relating to any
taxes or proposed adjustment to taxes. Purchaser and DM shall reasonably
cooperate with each other in the conduct of any tax audit or other tax
proceedings involving DM or Purchaser or any entity with which DM or Purchaser
is consolidated or combined for any tax purpose, and each shall execute and
deliver such powers of attorney and other documents as may be reasonably
necessary or useful to carry out the intent of this Subsection 4.12(d).
(e) Purchaser shall keep or cause to be preserved and kept the
records of the Business included in the Assets for a period of seven years after
the Closing Date, or for any longer period as may be required by any statute,
regulation, government agency or ongoing litigation, and to make such records
available to DM or its representatives as may be reasonably requested by DM in
connection with any legal proceedings against, or any governmental
investigations or tax examination of, DM. If Purchaser wishes to destroy such
records after that time, it shall first give DM 60 days' prior written notice,
and DM shall have the right, at its option, upon prior written notice to
Purchaser within that 60-day period, to take possession of those records within
90 days after the date of DM's notice to Purchaser.
4.13 Intellectual Property. Schedule 4.13 lists all trademarks, trade
names, patents, registered designs and copyrights owned by DM that are used in
the Business (the "Intellectual Property"), all of which are included in the
Assets except as shown on Schedule 4.13. Except as disclosed on Schedule 4.13,
DM is the sole and exclusive beneficial owner of such Intellectual Property,
free and clear of any claims, encumbrances, charges or rights of others. Except
as disclosed on Schedule 4.13, to the Knowledge of DM, there has been no
infringement or violation of DM's rights in or to any Intellectual Property, nor
to the Knowledge of DM any claim of adverse ownership, invalidity or other
opposition to or conflict with any Intellectual Property which in any such case,
either individually or in the aggregate, would have a Material Adverse Effect.
To the Knowledge of DM, there has been no activity in which DM is engaged in
carrying on the Business that violates or infringes any intellectual property
rights of any third party.
4.14 Consents. Except for the requirements of the Antitrust
Improvements Act or as shown on Schedule 4.14, to the Knowledge of DM, no
consent, approval or authorization of, or declaration, filing (other than
filings with tax authorities) or registration with, any governmental or
regulatory authority or any other third party is required to be made or obtained
by DM in order to consummate the transactions contemplated by this Agreement and
the DM Closing Documents.
4.15 Absence of Certain Changes and Undisclosed Liabilities. Except
as contemplated or permitted by this Agreement, since March 31, 1993: (a) DM has
not entered into any material commitment or transaction relating to the
Business, other than in the ordinary course of business, including, without
limitation, any borrowing or capital expenditure material to the Business, and
there has not been (b) any material change by DM in accounting methods or
principles applicable to any portion of the Business (other than adoption of
FASB 106 and FASB 109), (c) any labor trouble or work stoppage at any Facility
having, either individually or in the aggregate, a Material Adverse Effect, (d)
any material change in the practices of DM with respect to the manner and timing
of payment of trade or other payables of the Business, (e) any material change
in the practices of DM relating to the collection of receivables of the
Business, (f) any mortgage, pledge or imposition of a lien or other encumbrance
on any of the assets or properties of the Business, other than in the ordinary
course of business, (g) any damage, destruction or loss (whether or not covered
by insurance) affecting the Assets or the Business which has had or is likely to
have, either individually or in the aggregate, a Material Adverse Effect, (h)
any sale, transfer or other disposition of any tangible or intangible assets of
the Business (except in the ordinary course of business) having an aggregate
book value of $50,000 or more, (i) any write-down or write-up of the value of
any of the Assets, except for any LIFO inventory adjustments made in the
ordinary course of the Business and in no event in excess of $250,000, (j) any
general uniform increase in the compensation of employees of DM relating to the
Business (including, without limitation, any increase pursuant to any Plan, but
excluding any increase pursuant to any collective bargaining agreement), or (k)
any material increase in inventory levels in excess of historical levels for
comparable periods.
4.16 Powers of Attorney. Neither DM nor the Subsidiary has given any
irrevocable powers of attorney relating to the Business to any person, firm or
corporation for any purpose whatsoever.
4.17 Effect of Agreements. This Agreement and the other agreements
and documents to be delivered at Closing by DM, taken together, will convey
ownership of, a license to, or access to, all assets used in the Business except
for the Excluded Assets and except as provided in Section 1.5.
4.18 DM Fiscal 1994 Annual Operating Plan. DM has delivered to
Purchaser the Del Monte Fiscal 1994 Annual Operating Plan as presented to DM's
board of directors on June 30, 1993 and will promptly deliver to Purchaser any
amendment to such Operating Plan relating to the Business which DM provides to
its board of directors prior to Closing.
4.19 Amendments to Disclosure Schedule. DM delivered the Disclosure
Schedule to Purchaser as of the date of this Agreement. DM may amend the
Disclosure Schedule at any time before the Closing to reflect developments that
have come to the attention of DM. DM's liability, if any, under Article XIV of
this Agreement for breach of any representation or warranty set forth in this
Agreement shall be determined with reference to the Disclosure Schedule as most
recently amended and delivered to Purchaser before the Closing. Purchaser shall
have the right to terminate this Agreement based on any amendment to the
Disclosure Schedule that, individually or in the aggregate, reflects a Material
Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby makes the representations and warranties to DM set
forth in this Article V, as of the date of this Agreement:
5.1 Organization of Purchaser. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to execute and deliver this Agreement and the Purchaser Closing
Documents, to perform its obligations under this Agreement and the Purchaser
Closing Documents and to consummate the transactions contemplated by this
Agreement and the Purchaser Closing Documents. Purchaser has all requisite
corporate power to own or lease and operate its properties, and to carry on the
Business.
5.2 Corporate Authorization; No Violation. Purchaser has duly
authorized the execution and delivery of this Agreement and the Purchaser
Closing Documents, the performance by Purchaser of its obligations under this
Agreement and the Purchaser Closing Documents and the consummation of the
transactions contemplated by this Agreement and the Purchaser Closing
Documents.
This Agreement constitutes, and each of the Purchaser Closing Documents to be
executed and delivered by Purchaser at the Closing shall, when so executed and
delivered, constitute, the legal, valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms (subject, as to
enforcement, to bankruptcy, reorganization, insolvency, moratorium and other
laws relating to or affecting creditors' rights generally and subject to the
availability of equitable remedies). Except as shown in Schedule 5.2, neither
the execution and delivery of this Agreement or any of the Purchaser Closing
Documents by Purchaser or the performance by Purchaser of its obligations under
this Agreement or any of the Purchaser Closing Documents nor the consummation
by Purchaser of the transactions contemplated by this Agreement or any of the
Purchaser Closing Documents will conflict with or result in a breach of the
terms, conditions or provisions of, constitute a default under, result in the
violation of or the creation of a lien or encumbrance upon, any of the assets of
Purchaser pursuant to the Certificate of Incorporation or Bylaws of Purchaser or
any agreement or instrument to which Purchaser is a party or by which Purchaser
or any of its assets is bound or any judgment, order, writ, injunction or decree
of any court, administrative or governmental agency or body applicable to
Purchaser.
5.3 Litigation. There is no claim, action, suit, proceeding or
governmental investigation pending or, to the Knowledge of Purchaser, threatened
against or involving Purchaser or any Affiliate of Purchaser which questions the
validity of this Agreement or seeks to prohibit, enjoin or otherwise challenge
any of the transactions contemplated by this Agreement or any of the Purchaser
Closing Documents.
5.4 Consents. Except for the requirements of the Antitrust
Improvements Act and the consummation of the transaction contemplated by the
letter dated June 28, 1993 from Bankers Trust Company referred to in Section
5.6, no consent, approval or authorization of, or declaration, filing (other
than filings with tax authorities, foreign companies registries, food regulatory
agencies and the like) or registration with, any governmental or regulatory
authority or any third party is required to be made or obtained by Purchaser or
any Affiliate of Purchaser before the consummation of the transactions
contemplated by this Agreement and the Purchaser Closing Documents.
5.5 Investment Intent. Purchaser is an "accredited investor" within
the meaning of Regulation D adopted by the United States Securities and Exchange
Commission under the Securities Act of 1933, as amended. Purchaser is acquiring
the Shares for investment purposes only and not with a view to any public
distribution of any of the Shares. Purchaser shall not sell or otherwise
dispose of any of the Shares in violation of the Securities Act of 1933, as
amended, the rules and regulations adopted by the United States Securities and
Exchange Commission under that Act or any other applicable securities laws.
5.6 Financing. Silgan Holdings Inc., the ultimate parent corporation
of Purchaser, has received a commitment letter dated June 24, 1993 from General
Motors Investment Management Corporation on behalf of the General Motors Pension
Trusts and a commitment letter dated September 2, 1993 from Bankers Trust
Company for equity and debt financing to enable Purchaser to acquire the DM
Assets and Shares. Neither commitment letter has been withdrawn and, to the
Knowledge of Purchaser, neither commitment letter is likely to be withdrawn. To
the Knowledge of Purchaser, there is no reason to believe that the financing
contemplated by either of the commitment letters will not be completed.
ARTICLE VI
OTHER AGREEMENTS
6.1 Best Efforts. DM shall use its best efforts to cause the
conditions set forth in Article X to be satisfied by the scheduled Closing
Date.
Purchaser shall use its best efforts to cause the conditions set forth in
Article XI (and Section 10.10) to be satisfied by the scheduled Closing Date.
Purchaser and DM shall each file, with the United States Department of Justice
and Federal Trade Commission, as soon as practical and no later than the close
of business on the tenth Business Day after execution of this Agreement, a
completed notification and report form under the Antitrust Improvements Act in
connection with the transactions contemplated by this Agreement and will
promptly and completely respond to any request for further documents or
information under that Act. Purchaser and DM shall cooperate with each other
and use their best efforts to obtain all other governmental and third party
consents and approvals necessary to complete the transactions contemplated by
this Agreement and to obtain all appropriate deferred consents after completion
of the transactions contemplated by this Agreement. The obligation to use best
efforts to cause the conditions set forth in Articles x and XI to be satisfied
and to obtain consents shall not require either party to pay any monies or other
value to any third party, except for filing fees imposed by law.
6.2 Pacific Coast Producers.
(a) DM has an option (the "PCP Option") to purchase
substantially all of the assets of PCP and its affiliates pursuant to an Option
Agreement between DM and PCP dated as of May 4, 1992 (the "PCP Option
Agreement"). DM shall not consummate the exercise of the PCP Option during the
term of the Supply Agreement unless, no later than the November 15 last
preceding the January during which DM notifies PCP that DM is exercising the PCP
Option (see Section 1.3 of the PCP Option Agreement), DM has given Purchaser
written notice of DM's interest or intention to exercise the PCP Option. The
purpose of that notice shall be to afford Purchaser an opportunity to determine
whether Purchaser wishes to purchase the container manufacturing assets and
properties (the "PCP CanMan Assets") that are included in the assets and
properties covered by the PCP Option. Subject to the terms of any applicable
confidentiality agreement with PCP, DM shall provide Purchaser at the time of
delivery of such notice the most current balance sheet and PCP CanMan Asset list
then available to DM and shall thereafter use its reasonable best efforts to
provide Purchaser such financial information relating to PCP and the PCP CanMan
Assets as Purchaser shall reasonably require. In order to be entitled to
purchase the PCP CanMan Assets, Purchaser, after receiving DM's notice, shall
give DM an irrevocable written notice, no later than the December 15 next
following that November 15, that Purchaser will purchase the PCP CanMan Assets
if DM consummates the exercise of the PCP Option. Purchaser's notice to DM
shall be accompanied by evidence reasonably satisfactory to DM that Purchaser is
fully capable of financing its purchase of the PCP CanMan Assets. If Purchaser
gives DM such a notice accompanied by such evidence, DM shall give PCP a timely
notice that DM is exercising the PCP Option, it being understood, however, that
DM shall not be obligated to consummate the exercise of the PCP Option if any of
the conditions to DM's obligation to do so set forth in the PCP Option Agreement
is not timely satisfied and DM chooses not to waive any such condition or if DM
has any reasonable basis for believing that Purchaser will not timely consummate
the purchase of the PCP CanMan Assets as required by the next sentence. DM will
not waive any condition to DM's obligation to consummate the exercise of the
PCP
Option which in any way relates to the PCP CanMan Assets without Purchaser's
consent, which consent will not be unreasonably withheld. If DM consummates an
exercise of the PCP Option, then, within one business day after that closing,
Purchaser shall purchase the PCP CanMan Assets from DM. The purchase price
Purchaser shall pay DM for the PCP CanMan Assets shall equal a percentage
premium over book value of such PCP CanMan Assets equal to that premium
percentage paid by DM for all of the PCP assets. The purchase price shall be
payable in cash. Purchaser shall purchase the PCP CanMan Assets from DM "as is"
without any DM warranty of any nature whatsoever other than that DM has not
itself encumbered title to any of the PCP CanMan Assets. DM and Purchaser shall
endeavor in good faith to allocate fairly, as between DM and Purchaser, the
various benefits running to DM under the PCP Option Agreement (including DM's
indemnification rights against PCP) and the burdens imposed by the PCP Option
Agreement on DM (including the assumption by DM of PCP liabilities and
obligations, but with Purchaser then indemnifying DM with respect to all such
liabilities and obligations thus allocated to Purchaser), in each case as such
benefits and burdens relate to the PCP CanMan Assets. If PCP has not consented
to the assignment of such benefits and burdens, that allocation shall be made
with due consideration to the fact that PCP has not consented to the assignment
by DM to Purchaser of such benefits that redound to DM's benefits under the PCP
Option Agreement upon DM's exercise of the PCP Option or has not relieved DM of
such burdens that DM must assume upon its exercise of the PCP Option.
(b) If DM gives Purchaser a notice of DM's interest or intention
to exercise the PCP Option but Purchaser does not purchase the PCP CanMan Assets
pursuant to this Section 6.2, DM shall be entitled, at its election: (i) not to
purchase the PCP CanMan Assets or (ii) to purchase the PCP CanMan Assets and
either retain and operate them or sell or lease them to any third party and
enter into a supply agreement with the purchaser or lessee thereof for the
requirements of the PCP canneries purchased by DM pursuant to the PCP Option
free and clear of any rights of Purchaser.
(c) If DM exercises the PCP Option, the parties will negotiate
in good faith an appropriate amendment to the Supply Agreement to reflect the
fact that DM, Purchaser or another party operates the PCP CanMan Assets. If DM
or another party operates the PCP CanMan Assets, the Supply Agreement shall be
amended to provide that DM or such other party, as the case may be, may
manufacture Containers (as defined in the Supply Agreement) for the requirements
of the former PCP food processing operation and for up to 100 million Containers
(as adjusted in Sections 3.6 and 7.5 and Article X of the Supply Agreement) per
Supply Year (as defined in the Supply Agreement) to be provided to DM. If
Purchaser owns or operates the PCP CanMan Assets, the Supply Agreement shall be
amended to provide that the Container requirements of the former PCP food
processing operation shall be provided by Purchaser subject to the terms and
conditions of the Supply Agreement.
6.3 Real Property Issues.
(a) Prior to the Closing Date, DM and Purchaser shall cooperate
in good faith to (i) fix the legal description for each of the Facilities based
upon historical usage by the Business and the reasonable needs of Purchaser
pursuant to the Supply Agreement and (ii) create a separate lease or (sublease)
for each of the Facilities to be leased by Purchaser, each of which shall be
adapted from the form lease attached hereto as Exhibit 10.8, but each modified
to (A) be adapted to the law of the state in which the relevant Facility is
located, (B) address particular common or shared facilities or services for the
relevant Facility, (C) set forth the Base Monthly Rent, (D) address the specific
rules and regulations and sign criteria for the relevant Facility and (E) make
any other specific modifications reasonably required because of the particular
aspects of the relevant Facility (for example, the term of the Oakland lease
shall expire on April 30, 1995, after which time the tenant thereunder may
extend the term thereof for up to six months on a month to month basis (so long
as such tenant is not then in default under such lease) and, notwithstanding the
foregoing, the landlord under such lease, may, at any time terminate such lease
on twelve month's written notice). The Base Monthly Rent for each such
Facility
shall be the fair market rental for the then existing use of the relevant
Facility in its specific location, as mutually agreed to by the parties.
Schedule 4.6 hereto includes drawings indicating the parties' intent as to the
legal description of each Facility to be purchased by Purchaser, however, these
drawings do not necessarily account for title matters (such as necessary
easements and necessary appurtenant rights) or subdivision, planning or zoning
matters.
(b) Prior to the Closing Date, DM and Purchaser shall use
commercially reasonable efforts with respect to the Facilities to be sold to
Purchaser to cause final legal descriptions to be fixed for each such Facility
based upon the aforesaid, and in doing so, if required, DM shall cause such
Facilities to be surveyed (at Purchaser's cost) and subdivided in accordance
with applicable legal requirements to permit its transfer to Purchaser as a
separate and distinct parcel under applicable law. As to each Facility (to be
leased or purchased by Purchaser), DM and Purchaser shall cooperate in good
faith with the appropriate title insurance company to identify all exceptions to
title that such title insurance company will show (and those which it may not
show or which it will affirmatively insure against) on an ALTA Extended Coverage
Title Insurance Policy to be issued to Purchaser at standard premium rates on
the Closing Date, and it shall be a condition to Purchaser's obligation to
purchase or lease, as the case may be, each of such Facilities that the
insurance provided and any exceptions to be shown on such policies with respect
to each such Facility is reasonably acceptable to Purchaser considering the
criteria set forth in Section 4.6(a) (excluding Section 4.6(a) (iii)) and
Purchaser's contemplated use of the Facilities. All exceptions to title will be
subject to the approval standards set forth in this Section 6.3.
(c) DM agrees that, with respect to each of the Facilities to be
leased by Purchaser, in addition to all other matters provided for herein and in
each Lease, DM shall, at its sole cost (not to be passed back to the tenant
under any applicable lease), take any commercially reasonable steps necessary to
comply with any applicable statutes, laws, ordinances, rules and regulations of
all governmental bodies, agencies and subdivisions having jurisdiction over such
Facility, but only to the extent that such need to comply arises solely as a
result of such Facility's being converted from single user to dual tenant use.
6.4 Accounting Matters. Purchaser will require certain audited
annual and unaudited interim financial statements with respect to the Business
to satisfy applicable Securities and Exchange Commission reporting
requirements.
DM will take all steps reasonably necessary and appropriate to provide Purchaser
with such financial statements in a timely manner after the Closing and shall
provide such financial statements not more than 45 days after the Closing. DM
shall direct EY (San Francisco) to perform preliminary auditing work for the
preparation of such financial statements prior to the Closing; provided that EY
(San Francisco) shall not be authorized to incur more than $100,000 of fees and
costs in such efforts prior to the Closing without the prior consent of
Purchaser. Subject to Section 18.1, Purchaser shall reimburse DM for all EY
(San Francisco) fees relating to preparation of such financial statements (with
DM insuring that an equitable adjustment has been made to reflect savings which
DM will receive on the preparation of the Closing Date Balance Sheet as a result
of this preliminary auditing work) within 10 Business Days after submission of
EY's invoice by DM to Purchaser. Purchaser shall be responsible for and shall
pay any and all fees and costs of any EY personnel other than EY personnel in
the San Francisco office.
ARTICLE VII
COVENANTS AND REPRESENTATIONS
RELATING TO PERSONNEL ARRANGEMENTS
7.1 Retention of Employees; WARN Act Obligations; Assumption of
Collective Bargaining Agreements.
(a) Schedule 7.1 sets forth all employees employed by the
Business on June 30, 1993, including employees on leave of absence, layoff, jury
duty, vacation, workers' compensation, short-term disability or other approved
absence (other than long-term disability). Purchaser shall continue to employ
all such employees who are employed by the Business on the Closing Date, plus
any employees hired by the Business in the ordinary course of business between
June 30, 1993 and the Closing Date who remain employed by the Business on the
Closing Date, including any employees of the Business on the Closing Date who
may be absent from work on the Closing Date for any of the reasons set forth in
the preceding sentence (the "Affected Employees"). Except as provided in the
following sentence, such continued employment shall be for a minimum period
ending one year after the Closing Date (and in all events shall be in accordance
with the terms of any applicable collective bargaining agreements relating to
any Affected Employees). For Affected Employees who are employed at DM's plant
in Oakland, California, such continued employment shall be for a minimum period
beginning the earlier of one year after the Closing Date or the end of the
initial term of the lease between DM and Purchaser for the Oakland plant. For
at least the applicable minimum period of continued employment, Purchaser shall
provide each Affected Employee with compensation at least equal to (and, with
respect to salaried employees, responsibilities at least comparable to) those
provided by DM during the period immediately preceding the Closing.
Notwithstanding the foregoing: (i) any Affected Employee's compensation may be
reduced or employment terminated sooner for cause as determined in good faith by
Purchaser; and (ii) Purchaser shall not be obligated to provide continued
employment to, and the term "Affected Employees" shall not include, any employee
of the Business who, on the Closing Date, is receiving (or has qualified to
receive) long-term disability benefits under any Plan providing such benefits on
such Date; provided that, if any employee described in clause (ii) is able to
return to work after the Closing Date (as determined in good faith by Purchaser)
and applies to do so, Purchaser shall employ such individual and shall
thereafter treat such individual as an Affected Employee hereunder if either (x)
Purchaser is required to employ such individual by any DM collective bargaining
agreement assumed by Purchaser or (y) DM is precluded from employing such
individual in an hourly position in its canneries as a result of applicable DM
collective bargaining agreements.
(b) DM shall be responsible for any notifications to Affected
Employees or governmental agencies that may be required under WARN, and for any
payments or penalties that may be required or imposed under WARN, with respect
to the sale of the DM Assets and Shares contemplated by this Agreement and any
other action taken by DM before the Closing. Purchaser shall be responsible for
any notifications, payments or penalties that may be required or imposed under
WARN with respect to actions taken by Purchaser affecting Affected Employees
after the Closing.
(c) Purchaser shall assume all obligations of DM under, and
shall be bound by the terms of, each collective bargaining agreement covering
any Affected Employee until the expiration of the term of that agreement, as
that agreement may be duly amended after the Closing. DM agrees that, with DM's
prior consent (which consent shall not be unreasonably withheld), Purchaser may,
between the date of this Agreement and the Closing Date, negotiate with any of
the unions that represent employees of the Business on the date of this
Agreement with respect to changes in the provisions of any applicable collective
bargaining agreement relating to employee benefits for Affected Employees;
provided that any such change so negotiated shall not be effective prior to the
Closing Date.
(d) DM shall retain and satisfy all obligations to make all, and
administer all claims for, workers' compensation payments to those Affected
Employees who are eligible to receive workers' compensation benefits prior to
the Closing Date in accordance with DM's policies in effect as of the Closing
Date and shall make such payments in accordance With DM's policies in effect as
of the Closing Date. DM shall also retain all obligations for short-term
disability payments due to Affected Employees for all events occurring prior to
the Closing Date, including all medical and related payments incurred prior to
the Closing Date.
7.2 Employee Benefits After Closing.
(a) Benefit accruals for Affected Employees under the Plans
shall cease as of the Closing Date. Purchaser agrees that, from and after the
Closing Date, Purchaser shall be responsible for all compensation and employee
benefits earned or accrued by Affected Employees with respect to service after
the Closing Date and DM shall have no liability therefor.
(b) As of the Closing Date, and for at least the applicable
minimum period of continued employment described in Section 7.1(a), Purchaser
shall provide or cause to be provided to all Affected Employees as a group, a
combination of direct compensation and employee benefits that are, on an
aggregate basis, at least of equivalent value to the sum of the Affected
Employees' direct compensation immediately before the Closing and the employee
benefits provided to the Affected Employees under the Plans in effect as of the
Closing (and in all events in accordance with the terms of any applicable
collective bargaining agreements relating to any Affected Employees). Such
employee benefits shall be provided through the continuation of such Plans,
without change, throughout such minimum period of continued employment, or
through the use of new or existing plans of Purchaser.
(c) As of the Closing, Purchaser shall assume all rights and
liabilities of DM with respect to Affected Employees under the vacation policies
applicable to Affected Employees as in effect on the Closing Date. Subject to
Purchaser's review and consent (which consent shall not be unreasonably
withheld), DM shall amend such policies after the date of this Agreement and
before the Closing so that the benefits provided or to be provided under such
policies will not be modified, delayed or accelerated as a result of any change
in employment status that is solely the result of the completion of the
transactions contemplated by this Agreement. Purchaser further agrees that,
subject to the terms of any applicable collective bargaining agreement, if at
any time after the Closing Date Purchaser changes the vacation policy applicable
to any Affected Employee on the Closing Date, Purchaser shall allow each such
Affected Employee to take any vacation that such Affected Employee had accrued
but not taken on the date of such change (or shall provide the employee with pay
in lieu of such accrued but unused vacation).
(d) As of the Closing, Purchaser shall assume all rights and
liabilities of DM with respect to Affected Employees under the DM Salary and
Benefit Continuation Program as in effect on the Closing Date. Subject to
Purchaser's review and consent (which consent shall not be unreasonably
withheld), DM shall amend such Program after the date of this Agreement and
before the Closing so that the benefits provided or to be provided under such
Program will not be modified, delayed or accelerated as a result of any change
in employment status that is solely the result of the completion of the
transactions contemplated by this Agreement. Purchaser further agrees that,
subject to the terms of any applicable collective bargaining agreement: (i)
notwithstanding any other provision of this Agreement to the contrary, with
respect to all Affected Employees who are eligible to participate at Closing,
Purchaser will maintain the DM Salary and Benefit Continuation Program, without
change, for a period of at least one year after the Closing Date; (ii) if
Purchaser modifies or terminates the DM Salary and Benefit Continuation Program
with respect to any Affected Employee more than one year after the Closing Date,
such modification or termination will not affect Purchaser's liability to any
former Affected Employee who is receiving (or who has qualified to receive)
benefits under such Program on the date of such modification or termination, and
Purchaser shall make reasonable arrangements with any such former Affected
Employee for the satisfaction of such liability; and (iii) if the employment of
any Affected Employee is terminated more than one year after the Closing Date
under circumstances that would have entitled such Affected Employee to benefits
under the terms of the DM Salary and Benefit Continuation Program as in effect
on the Closing Date, Purchaser shall provide such Affected Employee with
severance benefits that are at least equal to the benefits that would have been
provided to such Affected Employee under the terms of the DM Salary and Benefit
Continuation of Program as in effect on the Closing Date, based on employee's
pay and length of service (with DM and Purchaser) through the date one year
after the Closing Date.
(e) (i) With respect to Plans that are funded and qualified
under the Code, or funded and qualified or otherwise approved under other
applicable law, other than any such Plan that is a multiemployer plan (as
defined in Section 3(37) of ERISA), Purchaser shall designate, establish or
cause to be established as soon as practicable after the Closing a similarly
qualified, registered or approved plan to which all liabilities of the relevant
Plan with respect to the Affected Employees, and the assets related thereto (as
further defined below), shall be transferred. Any liabilities so transferred
shall be assumed by, and shall be the sole responsibility of, the transferee
plan, and DM shall not have any further liability therefor. Purchaser shall
establish such plans as soon as practical, and no more than 180 days, after the
Closing. If the approval of any such transferee plan by the IRS or any other
governmental authority is not obtained within that 180-day period, Purchaser
shall, within such period, provide an opinion of counsel reasonably satisfactory
to DM that such transferee plan meets all the applicable requirements in order
to be so qualified, registered or otherwise approved. In addition, DM shall
provide to Purchaser the most recent IRS determination letter or other
applicable evidence of governmental approval, or an opinion of counsel
reasonably satisfactory to Purchaser, that the transferor Plan meets all the
applicable requirements in order to be so qualified, registered or otherwise
approved.
(ii) With respect to the transfer of assets and liabilities
from any Plan that is a defined benefit pension plan, Purchaser agrees that DM
shall not have any obligation to transfer assets in an amount that exceeds the
"accumulated benefit obligation" for the Affected Employees under such Plan as
of the Closing Date, as such term is defined in Statement of Financial
Accounting Standards No. 87, minus the amount of any benefit payments for
Affected Employees made from the Plan during the period from the Closing Date to
the actual date the transfer is made; provided, however, that in no event shall
the amount of assets transferred be less than the amount required to be
transferred, or more than the amount allowed to be transferred, under Code
Section 414(l) and the regulations thereunder. The accumulated benefit
obligation for Affected Employees under any such Plan shall be computed, based
on the actuarial assumptions set forth in Schedule 7.2 and further assuming that
all Affected Employees are fully vested on the Closing Date.
(iii) The transfer of assets with respect to any Plan
described in subparagraph (ii) of this Section 7.2(e) shall include an amount of
earnings for the period beginning on the Closing Date and ending on the actual
date of transfer, computed by applying to the balance of the amount of assets to
be transferred outstanding from time to time the interest rate for 90-day U.S.
Treasury Bills established at the auction for such bills last preceding the
Closing Date, as published in Street Journal.
(iv) Before any transfer of assets or liabilities is made
from a Plan, Purchaser and its actuary shall have been given the opportunity to
review and shall have consented to the arithmetic calculation of the amount of
assets and liabilities to be so transferred (which consent shall not be
unreasonably withheld).
(v) With respect to the transfer of assets and liabilities
from any Plan that is an individual account (defined contribution) plan, the
liabilities of such Plan (and the corresponding amount of assets to be
transferred) shall equal the account balances of the Affected Employees
determined as of a valuation date which is no more than 30 days before the date
of actual transfer, subject to the following paragraph with respect to assets
which cannot be liquidated.
(vi) DM and Purchaser agree that any transfer of assets made
pursuant to this Section 7.2(e) shall be made solely in cash, and that, to the
extent any asset held by the DM Savings Plan or the DM Certain Hourly Savings
Plan cannot be liquidated so as to effect a cash transfer in a timely manner, DM
shall retain such asset until it can be liquidated. As soon as practicable but
in no event later than 30 days after the liquidation of any such asset, DM shall
transfer the full amount received on liquidation of such asset to the transferee
plan designated by Purchaser.
(vii) As of the day after the Closing Date, Purchaser shall
cause each Affected Employee to be fully vested in his or her accrued benefit as
of such day under each Plan from which assets are to be transferred in
accordance with this Section 7.2(e).
(viii) Purchaser acknowledges that any Plan with respect to
which a transfer of assets is contemplated by this Section 7.2(e) may be amended
by DM, subject to Purchaser's review and consent (which consent shall not be
unreasonably withheld), before the Closing so that benefits under that Plan will
not be modified, delayed or accelerated as a result of any change in employment
status that is solely the result of the completion of the transactions
contemplated by this Agreement.
(f) As to each Plan that is identified as a pension plan and a
multiemployer plan on Schedule 4.9, Purchaser shall:
(i) Continue to honor, or cause to be honored, the
contribution agreement in effect with respect to that Plan on the Closing Date;
(ii) Take, or cause to be taken, such steps as may be
necessary to meet the requirements of Section 4204 (a) (1) (B) of ERISA in
connection with the sale of assets contemplated by this Agreement; and
(iii) Indemnify and hold harmless DM from and against any and
all claims for withdrawal liability arising in connection with the sale of DM
Assets and Shares contemplated by this Agreement, or as a result of any action
taken or inaction occurring after the Closing (including the secondary liability
described in the following sentence) and any expenses (including reasonable
attorneys' fees and costs) incurred in connection therewith.
DM acknowledges that, if Purchaser withdraws from any multiemployer plan in a
complete or partial withdrawal during the five plan years beginning after the
Closing Date, and if Purchaser or any of its Affiliates does not pay the
withdrawal liability of Purchaser as a result of such complete or partial
withdrawal, DM will be secondarily liable to that multiemployer plan for any
withdrawal liability that it would have had as a result of the sale of assets
contemplated by this Agreement but for Section 4204 of ERISA.
(g) Purchaser shall credit the Affected Employees with their
service with DM before the Closing (and with any predecessors of DM to the
extent recognized before the date of this Agreement) for purposes of: (i)
vesting, eligibility to participate in and to receive benefits (including
subsidized early retirement benefits) from, and accrual of benefits under, any
employee pension benefit plan (as defined in Section 3(2) of ERISA), provided
that Purchaser shall not credit service for purposes of accruing benefits under
a Purchaser transferee plan until the appropriate amount of assets has been
transferred to the Purchaser's transferee plan in accordance with Section
7.2(e); (ii) eligibility for, and benefit computation under, any employee
welfare benefit plan (as defined in Section 3(1) of ERISA); and (iii)
eligibility and benefit computation for vacation benefits and severance pay
plans, policies or practices. Part II of Schedule 7.2 hereto sets forth a list
of the employees of the Business as of June 30, 1993, and (where available)
various dates that are used by DM to determine the years of service credited by
DM to each such employee for the purposes indicated therein. At the Closing, DM
shall provide Purchaser with a list of employees of the Business as of a die no
more than 10 Business Days prior to the Closing Date which shall identify any
such employees who are receiving (or are eligible to receive) short-term
disability benefits as of the date of such list. Within 30 days after the
Closing Date, DM shall provide Purchaser with a list of the Affected Employees
containing information about the years of service credited to each Affected
Employee by DM as of the Closing Date for each of the purposes described in this
Section 7.2(g) and which shall identify any Affected Employees who are receiving
(or are eligible to receive) short-term disability benefits as of the Closing
Date.
(h) DM and Purchaser shall give any notices required by law and
shall take whatever other actions with respect to the Plans as may be necessary
to carry out the arrangements described in this Section 7.2.
(i) If any of the arrangements described in this Section 7.2 is
determined to be prohibited by law, by the IRS or other applicable governmental
authority, or by a court of competent jurisdiction, DM and Purchaser shall
modify such arrangements to achieve, as closely as is possible, the intent and
economic benefits and burdens of the parties reflected in this Section 7.2 in a
manner that is not prohibited by law.
ARTICLE VIII
ACCESS TO INFORMATION
8.1 Pre-Closing.
(a) Between the date of this Agreement and the Closing Date,
subject to any and all confidentiality obligations of DM to third parties, DM
shall give Purchaser and its representatives (including, without limitation, its
accountants, counsel and employees), upon reasonable notice and during normal
business hours, reasonable access to the properties, contracts, books, records
and affairs of DM relating to the Business and shall cause DM's officers and
employees to furnish or otherwise make available to Purchaser all documents,
records and information concerning the affairs of DM relating to the Business as
Purchaser may reasonably request.
(b) Purchaser's environmental representatives shall be permitted
access to each of the Facilities in order to conduct an environmental review on
24 hours' notice to DM's environmental representative and Facility manager. A
representative of DM shall accompany Purchaser's environmental representatives
during any Facility visit. Purchaser's and DM's environmental representatives
(collectively, the "Environmental Representatives") shall coordinate their
schedules and activities for any such visits. Neither Purchaser nor its
representatives shall make any soil or other borings, take samples of any soil
or other ground surfaces, any ground water or surface water, or any indoor or
outdoor ambient air emission source, or conduct any other sampling,
investigation or test, and will not undertake any investigation not indicated by
DM's Phase I Environmental Report without first reaching an understanding with
DM regarding the nature and scope of each such proposed activity and the rights
and procedures related to the date obtained. The Environmental Representatives
shall inform each other on a prompt and regular basis concerning all aspects of
Purchaser's environmental review. Unless otherwise agreed by DM, Purchaser
shall conduct all interviews regarding any environmental matters, whether in
person, by telephone or otherwise, with any person, including, without
limitation, current or former employees of DM, neighbors of the Facilities, and
representatives of any government agency, in the presence of a representative of
DM. Purchaser and its environmental representatives shall treat as confidential
all information acquired in the course of Purchaser's environmental review
unless and to the extent otherwise required by law or in accordance with the
terms and conditions of the Confidentiality Agreement dated March 18, 1993
between the parties. If the Closing does not take place by December 31, 1993,
Purchaser and its representatives shall return to DM all originals and copies of
all documentation containing any environmental information regarding any
Facility or Asset. Before the Closing, DM shall retain the exclusive right and
responsibility for notifying any governmental authority regarding any
environmental condition or circumstance at or related to any of the Facilities
or Assets.
(c) Purchaser's facilities representatives shall be permitted
access to each of the Facilities in order to conduct a review of the structures
(including roof, foundation and bearing walls) and plant and equipment at such
Facilities and to clarify the legal description of the Facilities as
contemplated by Section 6.3 on two business days' notice to James E. Creech.
8.2 Post-Closing by Purchaser. After the Closing Date, Purchaser
shall give, or cause to be given, to DM's representatives (including, without
limitation, its accountants, counsel and employees), upon reasonable notice and
during normal business hours at Purchaser's premises, such reasonable access to
the personnel, properties, contracts, books, records, files, documents and
affairs of the Business and copies (at the expense of DM) of contracts, books,
records, files and documents that are among the Assets as are reasonably
necessary to allow DM to obtain information in connection with the preparation
for any audit of DM's tax returns and any claims, demands, reports (such as Form
R), other audits, suits, actions or proceedings by or against, or obligations
of, DM. Purchaser shall cooperate fully with DM after the Closing with respect
to any claims, demands, tax or other audits, suits, actions and proceedings by
or against DM relating to the Business. After the Closing, Purchaser shall
provide or cause to be provided to DM access to Purchaser's books, records and
files included in the Assets or relating to the Assets or the operations of the
Business before the Closing.
8.3 Post-Closing by DM. After the Closing, DM shall give, or cause
to be given, to Purchaser and its representatives (including, without
limitation, its accountants, counsel and employees), upon reasonable notice and
during normal business hours at DM's premises, such reasonable access to the
personnel, properties, contracts, books, records, files, documents and affairs
of DM relating to the Business and copies (at the expense of Purchaser) of
contracts, books, records, files and documents as are reasonably necessary to
allow Purchaser to obtain information in connection with the preparation for and
any audit of the tax returns of Purchaser and any claims, demands, other audits,
suits, actions or proceedings by or against, or obligation of, Purchaser. After
the Closing, DM shall cooperate fully with Purchaser with respect to any claims,
demands, tax or other audits, suits, actions or proceedings by or against
Purchaser as the owner and operator of the Business, and in connection
therewith, shall give Purchaser reasonable access to and copies of (at the
expense of Purchaser) the books, records, files and documents of DM relating to
the Business that are among the Excluded Assets. Purchaser and DM shall keep
each other fully informed of all matters relating to any audit or judicial or
administrative proceeding, including, without limitation, any settlement
negotiations for which such party is requesting access under Section 8.2 or 8.3,
as the case may be.
8.4 Elaboration. For purposes of this Article VIII: (i) wherever
access to records is referred to, such access shall be at the location of the
possessing party where such records are located; (ii) Purchaser and DM shall
each retain all records referred to in this Article VIII for all periods
required under applicable law and (iii) references to "at the expense" of a
party shall mean any reasonable and necessary payment to unrelated third
parties, but shall not include reimbursement of overhead and employee costs of
the other party.
ARTICLE IX
INTERIM OPERATIONS OF THE BUSINESS
Until the Closing:
9.1 In General. DM shall have complete control of the Business,
except as otherwise provided in this Agreement.
9.2 Affirmative Obligations. Except as approved in writing by
Purchaser (which approval shall not be unreasonably withheld), DM shall:
(a) continue to operate the Business in accordance with past
practices, including, without limitation, maintenance of the Assets in
accordance with past practices;
(b) maintain the books and records of the Business consistent
with past practices;
(c) use reasonable efforts to assist Purchaser to employ all of
the employees of the Business as of the Closing Pate other than those employees
identified on Schedule ~, it being understood that DM will not actively recruit
any of the employees of the Business other than those employees identified on
Schedule 9.2, to remain in the employ of DM unless Purchaser gives its prior
written approval; and
(d) use reasonable efforts to preserve the organization of the
Business intact and to conduct its business with suppliers, customers and others
having business relations with the Business in the best interest of the
Business.
9.3 Limitations. Except as approved in writing by Purchaser (which
approval shall not be unreasonably withheld), DM shall not:
(a) sell or lease, or agree to sell or lease, any of the Assets,
except in the ordinary course of business and except for the transfer of the
Subsidiary Assets to the Subsidiary as contemplated by this Agreement;
(b) except in the ordinary course of business, mortgage, pledge
or subject to any lien or other encumbrance any of the Assets, tangible or
intangible (it being understood that any such mortgage, pledge, lien or other
encumbrance shall be released prior to the Closing), except liens of the nature
described in Section 4.6;
(c) make any capital expenditures in the Business, or any
commitment with respect thereto, other than capital expenditures which are
included in the 1993 and 1994 fiscal year capital budget of the Business
(including anticipated capital expenditures for the 300 can conversion) and set
forth and described on Schedule 9.3 and additional capital expenditures not
exceeding $200,000 in the aggregate;
(d) enter into any material transaction or make any material
commitment with respect to the Business, except in the ordinary course of
business;
(e) take, cause or agree to take or cause any of the actions set
forth in Section 4.15 except for the transfer of Subsidiary Assets to the
Subsidiary as contemplated by this Agreement;
(f) pursue, initiate, encourage or engage in any negotiations or
discussions with, or provide any information to, any other person or entity
(other than Purchaser and its representatives) regarding the sale of any of the
Assets or the Shares, it being understood that this Section 9.3(f) does not
cover any transaction that would result in a sale of a majority of the
outstanding capital stock of DM's parent, Del Monte Foods Company; or
(g) amend any of the Plans.
ARTICLE X
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION
Purchaser's obligation to purchase the Shares and DM Assets is
subject, at the election of Purchaser, to the fulfillment of the following
conditions on or before the Closing:
10.1 Representations and Warranties. The representations and
warranties of DM contained in or made pursuant to this Agreement shall have been
true and correct in all material respects when made and, subject to the contents
of any amendments to the Disclosure Schedule, shall be true and correct in all
material respects as of and at the Closing Pate, and the facts set forth in any
amendments to the Disclosure Schedule delivered to Purchaser before the Closing
shall not, individually or in the aggregate, reflect a Materially Adverse
Effect.
10.2 Covenants. All covenants required by this Agreement to be
performed or complied with by DM on or before the Closing Date shall have been
duly performed or complied with in all material respects.
10.3 Consents. The consent or approval of each person listed in
Schedule 4.14 and any governmental authority required to be obtained before the
consummation of any of the transactions contemplated by this Agreement (other
than consents in respect of any contract, agreement or other instrument not
involving the borrowing of money or the leasing of assets, the assignment of
which requires the consent of any party thereto and in respect of which the
failure to obtain such consent, either individually or in the aggregate, would
not have a Material Adverse Effect) shall have been obtained and all necessary
filings and submissions pursuant to the Antitrust Improvements Act shall have
been made and all applicable waiting periods pursuant to the Antitrust
Improvements Act shall have been satisfied.
10.4 Delivery of Closing Documents. DM shall have delivered to
Purchaser on the Closing Date the closing documents required to be delivered
pursuant to Article XII in form and substance reasonably satisfactory to
Purchaser and its counsel.
10.5 Employee Benefit Matters. All actions required to be taken by DM
before the Closing pursuant to Article VII shall have been taken.
10.6 Absence of Proceedings. No suit, action, investigation or other
proceeding by any governmental agency shall be pending before any court or
governmental or regulatory agency or authority, and no such suit, action,
investigation or other proceeding before any governmental or regulatory
authority shall be threatened, which seeks to restrain or prohibit the
consummation of the transactions contemplated by this Agreement or claims that
consummation of those transactions would result in a violation of any applicable
law, rule or regulation
10.7 Supply Agreement. The Supply Agreement shall be in full force
and effect.
10.8 Leases. DM shall have executed and delivered to Purchaser leases
to the Plover, Oakland, Modesto, Stockton, Kingsburg and Crystal City
Facilities, in each case in substantially the form of Exhibit 10.8 to this
Agreement.
10.9 Transition Agreement. DM shall have executed and delivered to
Purchaser a Transition Agreement in substantially the form of Exhibit 10.9 to
this Agreement.
10.10 Permits. Purchaser shall have obtained all approvals,
permits, licenses and registrations from all governmental authorities which, if
not obtained, either individually or in the aggregate, would have a Material
Adverse Effect on Purchaser's ability to operate the Business or the Assets or
Purchaser shall have obtained reasonable assurances from governmental
authorities that those approvals, permits, licenses and registrations will be
forthcoming within a reasonable period of time after the Closing, that Purchaser
can operate the Business after the Closing consistent with DM's past practices
and that Purchaser's operation of the Business after the Closing and prior to
receipt of any such approval, permit, license or registration will not give rise
to any material liability.
10.11 Financing. The conditions to be satisfied in order that
Purchaser obtain the financing needed to consummate the transactions
contemplated by this Agreement that are listed
on Schedule 10.11 to this Agreement shall have been satisfied.
10.12 Plover Items. At DM's cost, DM shall have completed the
relining of the trenches and removal of or decommissioning in place of the
underground storage tanks at plant 106 in Plover, Wisconsin as described in the
letter dated August 31, 1993 from DM to Purchaser.
10.13 Removal of Unacceptable Exceptions. Those exceptions to
title designated in Schedule 4.2 or 4.6 as unacceptable to Purchaser shall have
been removed.
10.14 Title Policies. DM shall have caused title policies for
each of the Facilities to be delivered by First American Title Insurance Company
(such policies to be paid for by Purchaser at standard premium rates) in the
forms agreed to by the parties in accordance with Section 6.3.
10.15 Description of Facilities. The parties shall have agreed
upon the legal descriptions of each of the Facilities included in the DM Assets
or Subsidiary Assets and each of the Facilities to be leased to Purchaser as
contemplated under this Agreement, all in accordance with Section 6.3. DM shall
deliver to Purchaser all such Facilities as so described and all such Facilities
shall comply with the requirements of Section 6.3. As to the Facilities
included as DM Assets or Subsidiary Assets, DM shall have obtained any required
subdivision approvals in a manner reasonably acceptable to Purchaser.
ARTICLE XI
CONDITIONS PRECEDENT TO DM'S OBLIGATIONS
DM's obligation to sell the Shares and DM Assets to Purchaser is
subject, at the election of DM, to the fulfillment of the following conditions
on or before the closing:
11.1 Representations and Warranties. The representations and
warranties of Purchaser contained in or made pursuant to this Agreement shall
have been true and correct in all material respects when made and shall be true
and correct in all material respects as of and at the Closing Pate.
11.2 Covenants. All covenants required by this Agreement to be
performed or complied with by Purchaser on or before the Closing Pate shall have
been duly performed or complied with in all material respects.
11.3 Consents. The consent or approval of each person listed on
Schedule 5.2 to this Agreement and governmental authority required to be
obtained before the consummation of any of the transactions contemplated hereby
(other than consents in respect of any contract, agreement or other instrument
not involving the borrowing of money or the leasing of real property, the
assignment of which requires the consent of any party thereto and in respect of
which the failure to obtain such consent, either individually or in the
aggregate, would not have a Material Adverse Effect) shall have been duly
obtained and all necessary filings and submissions pursuant to the Antitrust
Improvements Act shall have been made and all applicable waiting periods
pursuant to the Antitrust Improvements Act shall have been satisfied.
11.4 Delivery of Closing Documents. Purchaser shall have delivered to
DM on the Closing Pate the closing documents required to be delivered pursuant
to Article XIII in form and substance reasonably satisfactory to DM and its
counsel.
11.5 Supply Agreement. The Supply Agreement shall be in full force
and effect, and Purchaser shall have satisfied its obligations (to be satisfied
prior to the effective date of the Supply Agreement) under Section 2.5 of the
Supply Agreement.
11.6 Leases. Purchaser shall have executed and delivered to DM leases
to the Plover, Oakland, Modesto, Stockton, Kingsburg and Crystal City
Facilities, in each case in substantially the form of Exhibit 10.8 to this
Agreement.
11.7 Transition Agreement. Purchaser shall have executed and
delivered to DM a Transition Agreement in substantially the form of Exhibit 10.9
to this Agreement.
11.8 Employee Benefit Matters. All actions required to be taken by
Purchaser before the Closing pursuant to Article VII shall have been taken, and
the forms of any instruments and documents attendant thereto shall be reasonably
acceptable to DM and its counsel.
11.9 Absence of Proceedings. No suit, action, investigation or other
proceeding by any governmental agency shall be pending before any court or
governmental or regulatory agency or authority, and no such suit, action,
investigation or other proceedings before any governmental or regulatory
authority shall be threatened, which seeks to restrain or prohibit the
consummation of the transactions contemplated by this Agreement or claims that
consummation of those transactions would result in a violation of any applicable
law, rule or regulation.
ARTICLE XII
CLOSING DOCUMENTS TO BE DELIVERED BY DM
The documents referred to in Section 10.4 are:
12.1 Opinion of Counsel. An opinion of DM's General Counsel, dated
the Closing Pate, to the effect set forth in Exhibit to this Agreement.
12.2 Certificates for Shares. Certificates representing the Shares,
together with duly executed stock powers covering the Shares.
12.3 Officer's Certificate. A certificate signed by the Chief
Financial Officer of DM to the effect that the conditions set forth in Sections
10.1 and 10.2 of this Agreement have been satisfied.
12.4 Consents. Copies of the written consents required by Section
10.3 of this Agreement.
12.5 Bill of Sale. A Bill of Sale in the form of Exhibit 12.5 to this
Agreement.
12.6 Secretary's Certificate. A certificate of the Secretary or an
Assistant Secretary of DM dated the Closing Pate and certifying (i) that
attached thereto is a true, complete and correct copy of the By-laws of DM as in
effect on the date of such certification, (ii) that attached thereto is a true,
complete and correct copy of the Certificate of Incorporation, as amended, of DM
as certified as of a recent date by the Secretary of State of the State of New
York, (iii) that attached thereto are true, complete and correct copies of the
resolutions duly adopted by the Board of Directors of DM approving the
transactions contemplated hereby and authorizing the execution, delivery and
performance by DM of this Agreement and the DM Closing Documents, as in effect
on the date of such certification, and (iv) as to the incumbency and signatures
of certain officers of DM executing any instrument or other document delivered
in connection with such transactions.
12.7 Further Instruments. Such further instruments of assignment,
conveyance or transfer or other documents of further assurance (subject to
Section 1.5) as Purchaser may reasonably request relating to the Shares and
Assets, including, without limitation, special warranty deeds (providing
warranties against grantor's acts) and easements with respect to the Facilities
to be sold and memoranda of leases for each of the Facilities to be leased, each
in the customary form for the state in which such Facility is located (it being
understood, however, that the special warranty deeds shall not expand the
liability of DM for defects in title beyond that provided in this Agreement).
ARTICLE XIII
CLOSING DOCUMENTS TO BE DELIVERED BY PURCHASER
The documents referred to in Section 11.4 are:
13.1 Opinion of Counsel. An opinion of Winthrop, Stimson, Putnam &
Roberts, dated the Closing Pate, to the effect set forth in Exhibit 13.1 to this
Agreement.
13.2 Officer's Certificate. A certificate signed by the Chief
Executive Officer of Purchaser to the effect that the conditions set forth in
Sections 11.1 and 11.2 of this Agreement have been satisfied.
13.3 Consents. Copies of the written consents required by Section
11.3 of this Agreement.
13.4 Assumption of Liabilities. An Assumption of Liabilities in the
form of Exhibit 13.4 to this Agreement.
13.5 Secretary's Certificate. A certificate of the Secretary or an
Assistant Secretary of Purchaser dated the Closing Date and certifying (i) that
attached thereto is a true, complete and correct copy of the By-laws of
Purchaser as in effect on the date of such certification, (ii) that attached
thereto is a true, complete and correct copy of the Certificate of
Incorporation, as amended, of Purchaser as certified as of a recent date by the
Secretary of State of Delaware (iii) that attached thereto are true, complete
and correct copies of the resolutions duly adopted by the Board of Directors of
Purchaser approving the transactions contemplated hereby and authorizing the
execution, delivery and performance by Purchaser of this Agreement and the
Purchaser Closing Documents, as in effect on the date of such certification, and
(iv) as to the incumbency and signatures of certain officers of Purchaser
executing any instrument or other document delivered in connection with such
transactions.
13.6 Further Instruments. Such further instruments of assumption or
other documents of further assurance with respect to the transactions
contemplated by this Agreement as DM may reasonably request.
ARTICLE XIV
INDEMNIFICATION
14.1 By DM
(a) Subject to the limitations set forth in the balance of
Article XIV and in Section 18.4, DM shall protect, defend, indemnify and hold
harmless Purchaser and its Affiliates, and their respective officers, directors
and employees (collectively, the "Purchaser Indemnitees") from and against any
and all losses, damages and expenses, (including, without limitation, reasonable
attorneys' fees, costs and expenses incurred in investigating and defending
against the assertion of such liabilities) (collectively, "Damages") which may
be sustained, suffered or incurred by any Purchaser Indemnitee: (i) as a result
of any Excluded Liability which is not discharged in full by DM, (ii) which
arise from any breach by DM of any of its representations, warranties or
covenants in this Agreement (it being understood that, for purposes of this
Article XIV but not for purposes of Section 10.1 of this Agreement, the
representations and warranties set forth in Sections 4.9(b) and (c) of this
Agreement shall be read as though they did not contain the phrase "To the
Knowledge of DM") or (iii) which arise out of the conduct of the Business prior
to the Effective Time, except for the Assumed Liabilities.
(b) DM shall protect, defend, indemnify and hold harmless all
Purchaser Indemnitees from and against any and all claims, demands, judgments,
damages, actions, causes of action, encumbrances, injuries, liabilities, losses,
fines, penalties, obligations, responsibilities, costs and expenses of any kind
whatsoever (including, without limitation, reasonable attorneys' fees, costs and
expenses, reasonable expert and consulting fees and costs of investigation and
feasibility studies incurred in investigating and defending against the
assertion of any of the foregoing) which may be suffered, sustained, incurred or
required to be paid by any Purchaser Indemnitee arising out of, in connection
with or as a result of:
(i) with respect to the Oakland Facility:
(A) the Cleanup of any Materials of Environmental Concern
Released on, beneath or adjacent to the Oakland Facility prior to the Closing;
(B) any noncompliance with any Environmental Law at the
Oakland Facility that occurred prior to the Closing; and
(C) the loss of life, injury to property or person or
damage to natural resources caused by the actual, alleged or threatened Release,
storage, transportation, treatment or generation of Materials of Environmental
Concern by DM prior to the Closing;
(ii) with respect to the Plover Items:
(A) DM's failure to perform its obligations as described in
the letter dated August 31, 1993 from DM to Purchaser, a copy of which is
attached hereto as Exhibit 14.1 (the "Plover Letter");
(B) the Cleanup of any Materials of Environmental Concern
Released on, beneath or adjacent to the Plover Facility prior to Closing, which
occurred as a result of any Release of Materials of Environmental Concern prior
to the Closing (i) into any of the all below surface trenches, sumps or pits at
the Plover Facility or (ii) from the underground process flow-through storage
tanks at the Plover Facility, in each case as referenced to in the Plover
Letter;
(C) any noncompliance with any Environmental Law at the
Plover Facility that occurred prior to the Closing and related to any of the all
below surface trenches, sumps or pits at the Plover Facility or the underground
process flow-through storage tanks at the Plover Facility, in each case as
referred to in the Plover Letter; and
(D) the loss of life, injury to property or person or
damage to natural resources caused by the actual, alleged or threatened Release,
storage, transportation, treatment or generation of Materials of Environmental
Concern by DM prior to the Closing, which occurred as a result of any Release of
Materials of Environmental Concern prior to the Closing (i) into any of the all
below surface trenches, sumps or pits at the Plover Facility or (ii) from the
underground process flow-through storage tanks at the Plover Facility, in each
case as referred to in the Plover Letter.
(c) For purposes of this Agreement, the following terms shall
have the meanings set forth below:
(i) "Cleanup" - means all actions required to: (I) cleanup,
remove, treat or remediate Materials of Environmental Concern in the indoor or
outdoor environment; (2) prevent the Release of Materials of Environmental
Concern so that they do not migrate, endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment; (3) perform pre-remedial
studies and investigations and post-remedial studies and investigations and
post-remedial monitoring and care; or (4) respond to any government requests for
information or documents in any way relating to cleanup, removal, treatment or
remediation of Materials of Environmental Concern in the indoor or outdoor
environment.
(ii) "Release" - means any release, spill, omission,
discharge, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment (including, without
limitation, ambient air, surface water, groundwater and surface or subsurface
strata) or into or out of any property, including the movement of Materials of
Environmental Concern through or in the air, soil, surface water, groundwater or
property.
14.1 By Purchaser. Subject to the limitation set forth in the balance
of Article XIV, Purchaser (and its ultimate parent entity) shall protect,
defend, indemnify and hold harmless DM and its Affiliates, and their respective
officers, directors and employees (collectively, the "Dm Indemnitees") from and
against any and all Damages which may be sustained, suffered or incurred by any
DM Indemnitee: (i) as a result of any Assumed Liability which is not discharged
in full by Purchaser (ii) which arise from any breach by Purchaser of any of
its
representations, warranties or covenants in this Agreement or (iii) which arise
out of the conduct of the Business after the Effective Time.
14.2 Defense. If any action, suit or proceeding is commenced, or any
claim or demand is asserted, in respect of which one party (the "Indemnitee")
proposes to demand indemnification under Section 14.1 or 14.2 above, the party
from which indemnification is sought (the "Indemnitor") shall have the right to
assume the entire control thereof (including the selection of counsel), subject
to the right of the Indemnitee to participate (with counsel of its choice but at
the Indemnitee's expense) in the defense, compromise or settlement thereof. The
Indemnitee shall notify the Indemnitor at the earliest practical time after the
Indemnitee becomes aware of the circumstance, event or activity which gives rise
to the asserted obligation of indemnity. With respect to any actions, suits,
proceedings, claims or demands as to which the Indemnitor shall not have
exercised its right to assume the defense, the Indemnitee shall assume and
control the defense of and contest such action with counsel chosen by it and
approved by the Indemnitor, which approval shall not be unreasonably withheld,
in which case the Indemnitor shall be entitled to participate in the defense of
such action (the cost of such participation to be at its own expense) and the
Indemnitor shall be obligated to pay the reasonable attorneys' fees and expenses
of the Indemnitee to the extent that such fees and expenses relate to claims as
to which indemnification is due under this Article XIV. Both the Indemnitor and
the lndemnitee shall cooperate fully in all respects with one another in any
such defense, compromise or settlement, including, without limitation, by making
available to the other all pertinent information and personnel under its direct
or indirect control. Neither party shall compromise or settle any such action,
suit, proceeding, claim or demand (other than, after consultation with the other
party, any action, suit, proceeding, claim or demand to be settled solely by the
payment of money damages and/or the granting of releases, provided that no such
settlement or release shall acknowledge liability for future acts or obligate
any DM Indemnitee with respect to any post-Closing activities of the Business
or, except for the Assumed Liabilities, obligate any Purchaser Indemnitee with
respect to any pre-Closing activities of the Business) without the prior
written
consent of the other party, which consent shall not be unreasonably withheld.
This Section 14.3 shall not apply to direct claims of any DM Indemnitee against
Purchaser or of any Purchaser Indemnitee against DM, that are not based upon
claims asserted by third parties.
14.3 Taxes. Liabilities for any taxes and related liens are within
the scope of this Article XIV. With respect to tax issues that an Indemnitor
desires to contest where such issues must be combined with taxes that are not
the responsibility of the Indemnitor, both parties shall cooperate fully. In
the event of an audit or contest with taxing authorities relating to taxes as to
which one party is responsible, such party shall be solely responsible for
conducting such audit or contest and shall have the right to control and make
all decisions regarding such audit or contest, including the settlement and the
selection of a forum for contest. Notwithstanding anything herein to the
contrary, to the extent that any contest by either party of any tax issue
results in a lien on any of the other party's property or assets, the contesting
party shall promptly take all action to remove such lien.
14.4 Certain Other Limitations.
(a) Except as set forth in Sections 14.5(b) and (c), the rights
of the Purchaser Indemnitees to indemnification by DM shall be subject to the
limitations that (i) they shall not be entitled to indemnification unless the
aggregate Damages with respect to all such claims exceeds $1,000,000 in which
event, subject to clause (ii) below, the indemnification provided for in this
Article XIV shall be effective only with respect to the amount of such Damages
which exceeds $1,000,000 and (ii) the maximum amount of DM's indemnification
obligation under this Agreement shall not exceed an aggregate of $6,250,000.
The rights of the DM Indemnitees to indemnification by Purchaser shall be
subject to the limitations that (iii) they shall not be entitled to
indemnification unless the aggregate Damages with respect to all such claims
exceed $1,000,000, in which event, subject to clause (iv) below, the
indemnification provided for in this Article XIV shall be effective only with
respect to the amount of such Damages which exceeds $1,000,000, and (iv) the
maximum amount of Purchaser's indemnification obligation under this Agreement
shall not exceed $6,250,000. Any adjustment to the Purchase Price made pursuant
to Section 2.4 shall not be considered Damages.
(b) The limitations set forth in Section 14.5(a) shall not apply
to any breach by DM of any of its representations, warranties or covenants set
forth in Section 1.4, 4.6, 4.9(h), 4.10, 4.12(c), 7.2 or 18.1. The Purchaser
Indemnitees shall not be entitled to indemnification for any matter relating to
any Environmental Claim or Environmental Law unless the aggregate Damages with
respect to all such matters exceeds $175,000, in which event, the
indemnification provided for in this Article XIV shall be effective only with
respect to the amount of Damages which exceeds $175,000; provided that this
$175,000 deductible amount shall not apply to any matter relating to an
Environmental Claim or Environmental Law relating to the Oakland Facility or the
Plover Items. Indemnification amounts paid by DM with respect Go any of the
breaches referred to in the first sentence of this Section 14.5(b) shall not
(except as provided in the next sentence) reduce the $1,000,000 deductible set
forth in Section 14.5(a) (i) or the $6,250,000 limitation set forth in Section
14.5(a) (ii). However, any Damages (up to $175,000) incurred by Purchaser with
respect to any of the matters referred to in the second sentence of this Section
14.5(b) for which Purchaser does not receive indemnification shall reduce
(dollar for dollar) the $1,000,000 deductible set forth in Section 14.5(a) (i).
(c) The limitations set forth in Section 14.5(a) shall not apply
to any breach by Purchaser of any of its representations, warranties or
covenants set forth in Section 1.4, 7.1, 7.2 or 18.1. The DM Indemnitees shall
not be entitled to indemnification for any matter relating to any Environmental
Claim or Environmental Law unless the aggregate Damages with respect to all such
matters exceeds $175,000, in which event, the indemnification provided for in
this Article XIV shall be effective only with respect to the amount of Damages
which exceeds $175,000. Indemnification amounts paid by Purchaser with respect
to any of the breaches referred to in the first sentence of this Section
14.5(c)
shall not (except as provided in the next sentence) reduce the $1,000,000
deductible set forth in Section 14.5(a) (iii) or the $6,250,000 limitation set
forth in Section 14.5(a) (iv). However, any Damages (up to $175,000) incurred
by DM with respect to any of the matters referred to in the second sentence of
this Section 14.5(c) for which DM does not receive indemnification shall reduce
(dollar for dollar) the $1,000,000 deductible set forth in Section 14.5(a)
(iii).
(d) Purchaser acknowledges that DM's indemnification
obligations, as described in this Article XIV, are intended to be the exclusive
remedies of Purchaser pursuant to this Agreement or otherwise in connection with
the transactions covered by this Agreement and that such remedies, as so limited
and as subject to the expiration periods for DM's representations, warranties
and covenants set forth in Section 18.4, are intended to supersede and preempt
any and all remedies (in law or equity) which Purchaser may have against DM and
its affiliates pursuant to this Agreement or otherwise in connection with the
transactions covered by this Agreement (whether for tort or for breach of
contract or of representation, warranty, covenant or otherwise) pursuant to any
applicable statute (including, without limitation, CERCLA and ERISA),
regulation, case law, public policy or otherwise. Nothing contained herein
shall affect or otherwise limit DM's or Purchaser's remedies under any other
agreement, document or instrument delivered pursuant hereto, including, without
limitation, the Supply Agreement or the leases for the Facilities. Purchaser
expressly waives the benefit of any such applicable statute, regulation, case
law or public policy and acknowledges that its remedies set forth in this
Agreement, as so limited, provide Purchaser with a reasonable remedy. The
parties acknowledge that the indemnification limits and expiration periods set
forth in this Agreement are a material element of this Agreement and that the
Purchase Price would have been substantially higher if any of those limits and
periods were not strictly enforced.
14.5 Reduction of Indemnification. Notwithstanding any other
provision of this Agreement, the amount of indemnification payable by Purchaser
to any DM Indemnitee or by DM to any Purchaser Indemnitee with respect to a
claim for indemnification under this Agreement shall be reduced (dollar for
dollar) by the amount of proceeds received by such DM Indemnitee or Purchaser
Indemnitee, as the case may be, from title or other insurance in respect of such
claim for indemnification. Indemnitees shall exercise reasonable efforts to
collect any such insurance.
14.6 No Assignment. Purchaser's rights to indemnification from DM
shall not be assignable to any other person or entity, whether or not an
assignee of all or any portion of the Business, and shall terminate with respect
to the affairs of any portion of the Business upon the sale or transfer of such
portion of the Business, except that Purchaser's rights to indemnification
hereunder may be transferred or assigned to an Affiliate of Purchaser upon any
merger, consolidation, sale of all or substantially all of the Assets of the
Business, or other similar business combination with or to such Affiliate of
Purchaser, and Purchaser's (and such Affiliate's) rights to indemnification
hereunder shall not terminate in such case. DM's rights to indemnification from
Purchaser shall not be assignable to any other person or entity and shall
terminate upon the sale or transfer of substantially all of DM's assets (after
giving effect to the transactions contemplated hereby), except that DM's rights
to indemnification hereunder may be transferred or assigned to an Affiliate of
DM upon any merger, consolidation, sale of all or substantially all of the
assets of DM or similar business combination with or to such Affiliate of DM,
and DM's (and such Affiliate's) rights to indemnification hereunder shall not
terminate in such case. Neither party may delegate its obligations to
indemnify.
ARTICLE XV
INSURANCE MATTERS
The parties acknowledge that after 11:59 pm. California time on the
Closing Date, existing insurance policies relating to the Business shall not
provide coverage to the Purchaser, and that, except as provided in Section 18.2
of this Agreement, Purchaser shall have no right to present, or receive payment
with respect to, any claims against, and no right of subrogation or similar
right against, DM's insurance.
ARTICLE XVI
TERMINATION
This Agreement may be terminated before the Closing:
(a) upon the written agreement of DM and Purchaser, (b) by DM alone (i) if any
of the conditions to its obligation to close has not been satisfied or waived
before November 1, 1993 or (ii) any of Purchaser's representations and
warranties set forth in Section 5.6 has ceased to be true and (c) by Purchaser
alone (i) if any of the conditions to its obligations to close has not been
satisfied or waived before November 1, 1993, (ii) pursuant to Section 4.19 or
(iii) if any of the Assets or Facilities has been lost, damaged, impaired,
confiscated, condemned or taken and such loss, damage, impairment, confiscation,
condemnation or taking, individually or in the aggregate, has had or is likely
to have a Material Adverse Effect. Notwithstanding the foregoing, if the
conditions set forth in Sections 10.6 and 11.9 of this Agreement have not been
satisfied or waived or the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 relating to the transactions covered by this
Agreement has not expired, neither DM nor Purchaser shall be entitled to
exercise its rights under clause (b) or (c) of the preceding sentence until the
earlier to occur of (x) ten Business Days after such conditions have been
satisfied and such waiting period has expired and (y) December 31, 1993.
Neither DM nor Purchaser shall be entitled to exercise its rights under clause
(b) or (c) of the first sentence of this Article I if it is then in material
breach of this Agreement. Termination of this Agreement by either party in
accordance with clause (b) or (c) of the first sentence of this Article XVI
shall not relieve any party of any liability for any breach of this Agreement.
ARTICLE XVII
BROKERAGE AND FINDERS' FEES
DM and Purchaser represent to, and agree with, each other that no
broker or finder has been involved in any manner in the negotiation or
consummation of the transactions contemplated by this Agreement other than
Merrill, Lynch & Co. ("Merrill Lynch"), on behalf of DM. DM agrees to indemnify
and save the Purchaser Indemnitees harmless from and against any and all claims,
liabilities and obligations with respect to brokerage or finders fees or
commissions in connection with the transactions contemplated by this Agreement
asserted by any person on the basis of any statement or representation made or
alleged to have been made by DM or any Affiliate, including the fees due Merrill
Lynch. Purchaser agrees to indemnify and save the DM Indemnitees harmless from
and against any and all claims, liabilities or obligations with respect to
brokerage or finders' fees or commissions in connection with the transactions
contemplated by this Agreement asserted by any person or persons on the basis of
any statement or representation made or alleged to have been made by Purchaser
or any Affiliate of Purchaser.
ARTICLE XVIII
MISCELLANEOUS
18.1 Expenses; Prorations. Each of the parties to this Agreement
shall bear all the expenses incurred by it in connection with the negotiation
and preparation of this Agreement and the consummation of the transactions
contemplated by this Agreement regardless of whether this Agreement shall be
terminated; provided that if this Agreement terminates as a result of DM's
failure to satisfy the conditions to Purchaser's closing obligations which are
within DM's reasonable control, DM shall pay one-half of EY's fees for work
relating to the financial statements set forth at Section 6.4. Notwithstanding
the foregoing: (a) stock transfer taxes and stamp duties, including those
necessary for recording, state and local real estate transfer taxes, recording
fees, and title insurance fees shall be paid by Purchaser, and (b) sales, use
and value added taxes shall be shared and paid equally by Purchaser and DM. All
real and personal property Taxes relating to the Assets and all utilities
relating to the Facilities will be prorated as of 11:59 p.m. on the Closing
Date. Not less than five days prior to the Closing Date DM shall submit to
Purchaser a schedule showing the categories and estimated amounts of all
proposed prorations. The parties shall agree on a final proration schedule
prior to Closing and shall deliver any amounts due at the Closing.
18.2 Risk of Loss. Subject to the balance of this Section 18.2, the
risk of any loss, damage, impairment, confiscation or condemnation of the Assets
or any part thereof shall be upon DM at all times before the Closing. In any
such event, the proceeds of, or any claim for any loss payable under, any DM
insurance policy, judgment or award with respect thereto shall be payable to DM
or the Subsidiary, which at DM's election shall either (a) repair, replace or
restore any such property as soon as possible after the loss, impairment,
confiscation or condemnation or (b) if insurance proceeds are insufficient to
repair, replace or restore the property and assuming the Closing takes place,
pay such proceeds to Purchaser. DM shall exercise reasonable efforts to
maintain its insurance coverages in effect on the date hereof which insure the
Assets or any part of the Assets. DM shall have no obligation with respect to
any uninsured loss, damage, impairment, confiscation or condemnation or the
uninsured portion of any loss, damage, impairment, confiscation or condemnation,
which in the aggregate does not constitute a Material Adverse Effect.
18.3 Further Assurances. At any time and from time to time after the
Closing, DM shall, upon the request of Purchaser, and Purchaser shall, upon the
request of DM, perform, execute, acknowledge and deliver all such further acts,
deeds, easements, assignments, transfers, conveyances, powers of attorney and
assurances as may be reasonably required by Purchaser or DM, as the case may be,
to effect or evidence the transfer to and possession by Purchaser of the Shares
and Assets and the assumption of the Assumed Liabilities by Purchaser.
Additionally, after the Closing, DM shall reasonably cooperate with Purchaser to
assist Purchaser in obtaining or making all permits, approvals, authorizations,
licenses, registrations and filings to enable Purchaser to operate the Business
as operated by DM.
18.4 Survival.
(a) Except for the representations and warranties of Purchaser
set forth in Section 5.6, the representations and warranties of DM and Purchaser
in this Agreement and in the Bill of Sale and any other instruments used to
effect the transfer of any Assets or the Shares to Purchaser shall survive the
Closing and shall remain effective for the following periods:
(i) Until the end of the 6th month after the Closing Date:
Sections 4.2, 4.5, 4.7, 4.8, 4.11, 4.13, 4.14, 4.15, 4.16, 4.17, 5.2, 5.3 and
5.4 and similar representations andwarranties in any Bill of Sale or other
instrument;
(ii) Until the end of the 12th month after the Closing Date:
Sections 4.3 and 4.18 and similar representations and warranties in any Bill of
Sale or other instrument;
(iii) Until the end of the 13th month after the Closing Date:
Section 4.9 and similar representations and warranties in any Bill of Sale or
other instrument;
(iv) Until the end of the 18th month after the Closing Date:
Section 5.5 and similar representations and warranties in any Bill of Sale or
other instrument;
(v) Until the end of the 36th month after the Closing Date:
Section 4.10 and similar representations and warranties in any Bill of Sale or
other instrument;
(v) Until the expiration of the applicable statutes of
limitation: Sections 4.4, 4.6, 4.10, 4.12 and 17 and similar representations and
warranties in any Bill of Sale or other instrument; and
(vi) Until the sixth anniversary of the Closing Date:
Sections 4.1 and 5.1 and similar representations and warranties in any Bill of
Sale or other instrument.
After the expiration of the relevant period, such representations and warranties
shall expire and be of no further force and effect, and no indemnity shall be
due with respect to any breach thereof unless a written notice specifying the
nature and amount of the claim or claims shall have been delivered by Purchaser
or DM, as the case may be, with respect thereto on or before the expiration of
such relevant period.
(b) Except for the covenants of DM at Section 14.1(b) to
indemnify Purchaser Indemnitees for any matters relating to any Environmental
Claim or noncompliance with any Environmental Law for events occurring or which
arise prior to the Closing (i) at the Oakland Facility or (ii) relating to the
Plover Items, DM's obligations to indemnify Purchaser Indemnitees for matters
relating to any Environmental Claim or noncompliance with any Environmental Law
for events occurring or which arise prior to the Closing shall remain effective
until the end of the 36th month after the Closing Date. Thereafter, such
obligation to indemnify shall expire and be of no further force and effect, and
no indemnity shall be due with respect to any breach thereof unless a written
notice specifying in reasonable detail the nature and specific facts or
conditions giving rise to such a claim or claims (as reasonably available to
Purchaser) and the amount of the claim or claims shall have been delivered by
Purchaser with respect thereto on or before the expiration of such 36-month
period.
18.5 Applicable Law. This Agreement shall be construed and enforced
in accordance with the internal laws of the State of California.
18.6 Attorneys' Fees. If either party seeks to enforce any of its
rights under this Agreement (whether by formal proceedings or otherwise) or
seeks a declaration of any its rights of this Agreement, the party that
substantially prevails shall be entitled to reimbursement of all of its
reasonable attorneys' fees, costs and expenses by the party that does not
substantially prevail.
18.7 Notices. All notices, demands, requests and other communications
required or permitted to be given under this Agreement shall be deemed duly
given three Business Days after mailing if mailed by certified or registered
mail, postage prepaid, on the date of delivery if delivered personally, and one
Business Day after the date of deposit with a nationally recognized overnight
courier, but subject to the subsequent designation of another address in
accordance with this Section 18.7, addressed as follows:
If to Purchaser:
Silgan Containers Corporation
3800 W. Alameda Avenue
Suite 900
Burbank, California 91505
Attention: James D. Beam
With a cony to:
Silgan Corporation
4 Landmark Square, Suite 301
Stamford, Connecticut 06901
Attention: D. Greg Horrigan
and
Winthrop, Stimson, Putnam & Roberts
Financial Centre
695 East Main Street
Post Office Box 6760
Stamford, Connecticut 06904-6760
Attention: G. William Sisley
If to DM:
Del Monte Corporation
One Market
P.O. Box 193575
San Francisco, California 94119-3575
Attention: Phyllis Kay Dryden
With a copy to:
Heller, Ehrman, White & McAuliffe
525 University Avenue
Palo Alto, California 94301
Attention: August J. Moretti
18.8 Headings And Context. The section and paragraph headings
contained in this Agreement are for convenience only and do not form a part of
this Agreement or in any way modify or affect the meaning of this Agreement.
Unless the context requires otherwise, the use of the singular of a term in this
Agreement includes the plural, and the use of the plural includes the singular.
18.9 Counterparts. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement, and shall become
effective when at least one counterpart has been signed by each of the parties
and delivered to the other party.
18.10 Confidentiality. DM and Purchaser have executed a
Confidentiality Agreement dated March 18, 1993. They acknowledge that the terms
and conditions of that agreement shall survive the execution of this Agreement
and the Closing. However, from and after the Closing, Purchaser may use and
disclose all confidential information of the Business.
18.11 Benefits. This Agreement shall be binding upon and shall
inure to the benefit of the parties to this Agreement and their successors and
permitted assigns. Nothing in this Agreement shall be construed to create any
rights in third parties as third party beneficiaries or otherwise, and nothing
in this Agreement shall be construed to create any rights in Silgan with respect
to PCP or the purchase by DM of PCP assets pursuant to the PCP Option and PCP
Option Agreement as third party beneficiaries or otherwise, except as set forth
in Section 6.2. This Agreement shall not be assigned by any party without the
prior written consent of the other party, except that either party to this
Agreement may transfer or assign this Agreement to any Affiliate of such party
upon any merger, consolidation, sale of all or substantially all of the assets
of such party (or, in the case of Purchaser, all or substantially all of the
Assets of the Business) or other similar business combination with or to such
Affiliate of such party without the prior written consent of the other party.
No assignment of this Agreement shall relieve the assigning party of its
obligations under this Agreement.
18.12 Amendment and Waiver. This Agreement may be amended, and
any provision of this Agreement may be waived, provided that any such amendment
or waiver will be binding on a party only if it is set forth in a writing signed
by that party. The waiver by any party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any other breach.
18.13 Public Announcements. Except as may be required by law and
then only after prior consultation with the other party, no party shall make any
public announcement or filing (other than pursuant to the Antitrust Improvements
Act) with respect to the transactions provided for in this Agreement without the
prior consent of the other party.
18.14 Entire Agreement. This Agreement, including its Schedules
and Exhibits, contain all of the terms agreed upon by the parties with respect
to its subject matter and supersedes any and all prior and contemporaneous
agreements, representations and warranties of the parties regarding that subject
matter.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
signed and delivered as of the date that appears in the first paragraph of this
Agreement.
DEL MONTE CORPORATION
By /s/David Meyers
Its Executive Vice President
SILGAN CONTAINERS CORPORATION
By /s/Harley Rankin, Jr.
Its Vice President
Exhibit 2
AMENDMENT TO PURCHASE AGREEMENT
THIS AMENDMENT TO PURCHASE AGREEMENT (this "Amendment") is made and
entered into as of December 10, 1993, by and between DEL MONTE CORPORATION, a
New York corporation ("DM"), and SILGAN CONTAINERS CORPORATION, a Delaware
corporation ("Purchaser").
BACKGROUND
DM and Purchaser are parties to that Purchase Agreement made and entered
into as of September 3, 1993 (the "Purchase Agreement"). DM and Purchaser
hereby desire to amend the Purchase Agreement as set forth in this Amendment.
Accordingly, the parties agree as follows:
ARTICLE I
DEFINITIONS
Any terms used in this Amendment without definition shall have the
meanings set forth in the Purchase Agreement.
ARTICLE II
PLOVER ITEMS
2.1 Agreement re Plover Items.
The parties are considering implementation of a continuous
deionization process (the "Process") to treat certain waste water at Plant
106 in Plover, Wisconsin ("Plant 106"). If the Process is implemented at
Plant 106, it is estimated that it will not be operational until
approximately May 1994. The parties agree to cooperate in the selection of a
final specification for the Process and the selection of a contractor to
construct and install the Process. The parties shall each have the right
upon five days' notice to terminate the implementation of the Process if in
their good faith judgment it is unlikely that the Process can be implemented
in a timely or cost effective manner or in a manner so as to operate
reasonably satisfactory to Purchaser. If either party so terminates the
implementation of the Process, DM shall thereafter promptly take all steps
reasonably necessary to cause two aboveground storage tanks to be installed
at Plant 106 in place of the underground process flow-through storage tanks
described below. The aboveground storage tanks shall meet the specifications
set forth in Exhibit 1 attached hereto and shall be located at Plant 106 in
such location as mutually agreed by the parties. Upon implementation of the
Process or installation of the aboveground storage tanks, as the case may be,
DM will decommission in place the underground process flow-through storage
tanks located at
Plant 106, at DM's cost as described in the Plover Letter.
2.2 Completion and Payment.
The parties agree that they will take all actions reasonably
necessary and appropriate to cause the implementation of the Process or
installation of the aboveground storage tanks, as the case may be, to be
completed as soon as reasonably practicable and that each party shall
promptly pay one-half of the purchase price and installation costs of the
Process or the aboveground storage tanks, as the case may be, as set forth in
invoices received from the contractor. Such payments shall be made within
thirty days of receipt of such invoice.
2.3 DM Indemnity.
DM shall protect, defend, indemnify and hold harmless all Purchaser
Indemnitees from and against any and all claims, demands, judgments, damages,
actions, causes of action, encumbrances, injuries, liabilities, losses,
fines, penalties, obligations, responsibilities, costs and expenses of any
kind whatsoever (including, without limitation, reasonable attorneys' fees,
costs and expenses, reasonable expert and consulting fees and costs of
investigation and feasibility studies incurred in investigating and defending
against the assertion of any of the foregoing) (collectively, "Losses") which
may be sustained, suffered, incurred or required to be paid by any Purchaser
Indemnitee which arise out of the conduct of the Business after the Closing
and prior to the date on which the Process or the aboveground storage tanks,
as the case may be, become operational as a result of the utilization by
Purchaser in connection with the conduct of the Business of the underground
process flowthrough storage tanks during such period, including, without
limitation, all Losses incurred as a result of or in connection with (i) the
Cleanup of any Materials of Environmental Concern Released on, beneath or
adjacent to Plant 106 during such period, which occurred as a result of any
Release of Materials of Environmental Concern during such period and (ii) the
loss of life, injury to property or person or damage to natural resources
caused by the actual, alleged or threatened Release of Materials of
Environmental Concern during such period, in each case from such underground
process flow-through storage tanks.
ARTICLE III
ROCHELLE REAL PROPERTY
The parties acknowledge that DM will transfer and Purchaser will
purchase at the Closing as part of the DM Assets the real property at
Rochelle identified at Exhibit 2 hereto and such Exhibit 2 hereby replaces in
its entirety the map of the Facility located in Rochelle, Illinois included
as part of Schedule 4.6 to the Purchase Agreement.
ARTICLE IV
AMENDMENT TO SCHEDULE 1.3
The parties acknowledge that Item 1 of Schedule 1.3 to the Purchase
Agreement is hereby amended in its entirety to read as follows:
1. All trade accounts receivable; other receivables; inventories of
completed steel open top containers; and inventories of loose ends
at stand alone DM canneries
As a result of this modification, cash and cash equivalents, inventories of
loose ends at DM canneries that are located adjacent to the Facilities and
inventories of aluminum open top containers will be included in Assets.
ARTICLE V
UNDERFUNDING ADJUSTMENT
The parties acknowledge that the determination of any Underfunding
Adjustment shall be made on the basis of an actuarial report by Wyatt &
Company and shall not be audited by E&Y.
ARTICLE VI
CLOSING DATE
The parties acknowledge that the Closing had been scheduled for December
14, 1993 and has been rescheduled for December 21, 1993 at the request of
Purchaser. As a result of this delay in the Closing, DM will incur
additional expenses for the salaries and benefits of Affected Employees and
utilities, taxes and other charges at the Facilities in connection with the
operation thereof during the period from December 14, 1993 through the
Closing. Within 30 days after the Closing, DM shall submit to Purchaser a
statement of the amount of such salaries, benefits, utilities, taxes and
other charges incurred by DM from December 14, 1993 through the Closing (the
"Expenses"). In consideration of DM's agreement to delay the Closing,
Purchaser agrees to reimburse one-half of the Expenses within 15 days of
receipt of DM's statement; provided that Purchaser shall not be required to
reimburse more than $100,000.
ARTICLE VII
SECTION 13.2
Section 13.2 of the Purchase Agreement is hereby amended by deleting it
in its entirety and replacing it with the following:
13.2 Officer's Certificate. A certificate signed by a Vice
President of Purchaser to the effect that the conditions set forth in
Sections Il.l and 11.2 of this Agreement have been satisfied.
ARTICLE VIII
REAFFIRMATION
The parties hereby reaffirm all of the other terms and conditions of the
Purchase Agreement. This Amendment amends the Purchase Agreement only to the
extent specified herein and shall not constitute an amendment to any other
provision of the Purchase Agreement. From and after the date hereof, all
references to the Purchase Agreement in the Purchase Agreement and other
documents referred to therein shall be referenced to the Purchase Agreement
as amended hereby.
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
signed and delivered as of the date that appears in the first paragraph of
this Amendment.
DEL MONTE CORPORATION SILGAN CONTAINERS CORPORATION
By /s/ Thomas E. Gibbons By /s/ Harley Rankin, Jr.
Its Vice President Its Vice President
