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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) December 30, 1999
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U.S. CAN CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-13678 06-1094196
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(Commission File Number) (I.R.S. Employer Identification No.)
900 Commerce Drive, Oak Brook, IL 60523
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(Address of Principal Executive Offices) (Zip Code)
(630) 571-2500
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 30, 1999, USC May Verpackungen Holding Inc., a Delaware corporation
("USC May") completed the acquisition of May Verpackungen GmbH & Co., KG,
("May"). USC May is an indirectly wholly owned subsidiary of U.S. Can
Corporation. May was a wholly owned subsidiary of Lucretia GmbH ("Lucretia"),
which in turn is owned by May Holding GmbH & Co., KG. May, headquartered in
Erftstadt, Germany, is a leading manufacturer of pet food and specialty food
packaging as well as aerosol cans, primarily dedicated to whipping cream. May's
assets include manufacturing facilities in Germany and Denmark. These operations
will be combined with U.S. Can's Europe operations.
As consideration for the purchase of May, USC May deposited the purchase price
of DM 123.7 million (approximately $63.8 million) into a bank account (the
"Joint Account"), owned jointly by USC May and Lucretia. Under the terms of the
sale and purchase agreement dated December 22, 1999 (the "Agreement"), Lucretia
will receive the purchase price if, on or prior to January 31, 2000, USC May
does not give written notice that its claims arising out of certain of
Lucretia's representations and warranties under the agreement exceed DM 10
million. If USC May does provide written notice that such claims exceed DM 10
million, Lucretia, on or prior to March 1, 2000, may either confirm that its
indemnity covers such claims (in which case Lucretia will receive the proceeds
of the Joint Account) or may rescind the Agreement (in which case USC May will
receive the proceeds of the Joint Account).
USC May obtained the funds for the acquisition through borrowings from its
parent, United States Can Company ("U.S. Can"). U.S. Can obtained the cash from
$38.5 million of borrowings under an existing line of credit and $20 million of
borrowings under a new line of credit with Bank of America, as agent and
various banks, as lenders. The balance of the purchase price was paid from cash
on hand.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
The financial statements required by this item are not filed with this initial
report, but will be filed by amendment not later than 60 days after the date
that this initial report is required to be filed.
(b) Pro Forma Financial Information.
The financial information required by this item is not filed with this initial
report, but will be filed by amendment not later than 60 days after the date
that this initial report is required to be filed.
(c) Exhibits.
Exhibit No. Document Description
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2.1 Sale and Purchase Agreement dated December 22, 1999 among
Lucretia GmbH, as Seller, USC May Verpackungen Holding Inc.,
as Buyer, May Holding GmbH & Co. KG and U.S.
Can Corporation.
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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.
U.S. CAN CORPORATION
Dated: January 13, 2000 By: /s/ John L. Workman
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John L. Workman
Executive Vice President
and Chief Financial Officer
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EXHIBIT 2.1
Conformed Copy
SALE AND PURCHASE AGREEMENT
BETWEEN
LUCRETIA GMBH,
AS SELLER,
USC MAY VERPACKUNGEN HOLDING INC.,
AS BUYER,
MAY HOLDING GMBH & CO. KG
AND
U.S. CAN CORPORATION
DATED
DECEMBER 22, 1999
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TABLE OF CONTENTS
Page
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Section 1 - Interpretation 2
Section 2 - Sale and Purchase 9
Section 3 - Consideration 9
Section 4 - Conditions Precedent 11
Section 5 - Closing 12
Section 6 - Additional Undertakings 14
Section 7 - Effective Date Financial Statements 22
Section 8 - Representations and Warranties of Seller 25
Section 9 - Representations and Warranties of Buyer 41
Section 10 - Survival of Representations; Indemnification; Remedies 42
Section 11 - Trademark and Name 49
Section 12 - Termination 50
Section 13 - Rescission 51
Section 14 - Costs 53
Section 15 - No Waivers 53
Section 16 - Assignment 54
Section 17 - Guarantee 55
Section 18 - Entire Agreement 55
3
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Section 19 - Time of Essence 56
Section 20 - Language 56
Section 21 - Notices 56
Section 22 - Exclusivity 58
Section 23 - Arbitration 59
Section 24 - Non-Competition Undertaking 60
Section 25 - Counterparts 62
Section 26 - Amendment 62
Section 27 - Severability 63
Section 28 - No Brokers 63
Section 29 - Governing Law 63
LIST OF EXHIBITS
Exhibit A - First Lease Agreement
Exhibit B - Second Lease Agreement
Exhibit C - Option Agreement
LIST OF SCHEDULES
Schedule 4.1 - German Cartel Office (Bundeskartellamt) Approval
Schedule 6.4(a) - SAP System Configuration
4
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Schedule 6.8 - Press Release
Schedule 7.2 - Environmental Remedial Actions
Schedule 8.1 - Subsidiaries and other Shares and Interests Held
Schedule 8.6 - Options, etc.
Schedule 8.8(a) - Financial Statements
Schedule 8.8(d) - Off-Balance Sheet Obligations
Schedule 8.10 - Bank Accounts
Schedule 8.13 - Real Property and Real Property Leases
Schedule 8.14 - Intellectual Property
Schedule 8.15 - Contracts
Schedule 8.15(d) - Investments
Schedule 8.17 - Insurance
Schedule 8.19 - Tax Transfer Agreements
Schedule 8.21 - Litigation
Schedule 8.22 - Major Customers and Major Suppliers
Schedule 11 - May Trademark
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CONFIDENTIAL
THIS SALE AND PURCHASE AGREEMENT is made on December 22, 1999 (this "AGREEMENT")
BETWEEN:
(1) LUCRETIA GMBH, which has applied for but not yet registered the change
of its name to May Beteiligungs GmbH, a limited liability company
formed under the laws of the Federal Republic of Germany, having its
principal offices at Peter-May-Strasse 45, 50374 Erftstadt, Germany,
registered in the commercial register of the Cologne local court under
HRB 31617 and represented by its duly authorized representatives,
Thomas May and Heinz-Jurgen May, as Seller;
(2) USC MAY VERPACKUNGEN HOLDING INC., a corporation formed under the laws
of the State of Delaware, having its principal offices at 900 Commerce
Drive, Oak Brook, Illinois 60523, U.S.A., and represented by its duly
authorized attorney-in-fact, Mark Nicolaides, as Buyer;
(3) MAY HOLDING GMBH & CO. KG, a limited partnership incorporated under the
laws of Germany, having its principal offices at Peter-May-Strasse 45,
50374 Erftstadt, Germany, registered in the commercial register of the
Bruhl local court under HRA 0768 and represented by its duly authorized
representatives, Thomas May and Heinz-Jurgen May, as Seller's
Guarantor; and
(4) U.S. CAN CORPORATION, a corporation formed under the laws of the State
of Delaware, having its principal offices at 900 Commerce Drive, Oak
Brook, Illinois 60523, U.S.A., and represented by its duly authorized
attorney-in-fact, Mark Nicolaides, as Buyer's Guarantor;
WHEREAS:
(A) Seller (such and other capitalized terms being used herein with the
meaning provided in Section 1 hereof) is the sole owner of (i)
directly, as sole limited partner the only partnership interest
(Kapitalkonto) in May Verpackungen GmbH & Co., KG, a limited
partnership formed under the laws of the Federal Republic of Germany,
having its principal offices at Peter-May-Strasse 45, 50374 Erftstadt,
Germany, registered in the commercial register of the Bruhl local court
under HRA 0820 (notwithstanding its legal form, hereinafter referred to
as the "COMPANY") and (ii) indirectly through the Company, the
Interests and Shares in the persons identified on Schedule
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8.1 attached hereto (notwithstanding the legal form of such persons,
hereinafter referred to as the "SUBSIDIARIES" and, together with the
Company but excluding the Subsidiaries domiciled in Spain, hereinafter
collectively referred to as the "GROUP COMPANIES"), and Seller is
willing to sell such direct and indirect interests to Buyer;
(B) May Verpackungen Verwaltungs GmbH is the sole general partner of the
Company holding no capital interest in it; and
(C) Buyer is willing to purchase the Company Interest and thus, indirectly,
the Company's direct or indirect shareholdings and other interests in
the Subsidiaries on the terms and subject to the conditions contained
in this Agreement.
THE PARTIES AGREE as follows:
1. INTERPRETATION
1.1 In this Agreement:
"AFFILIATE" shall mean, with respect to person or entity, any person or
entity, or persons or entities acting in concert, which directly or
indirectly, through one or more intermediaries, Controls, is Controlled
by, or is under common Control with such person or entity;
"AGGREGATE SAP AMOUNT" shall have the meaning provided in Section
6.4(a);
"AGGREGATE THRESHOLD" shall have the meaning provided in Section 10.4;
"ARBITRAL DISPUTE" shall have the meaning provided in Section 23.1;
"BANK ONE" means Bank One, N.A., Frankfurt Branch, Hochstr. 35-37,
60313 Frankfurt am Main, Germany;
"BUSINESS DAY" shall mean a day other than a Saturday or Sunday or
public holiday in Cologne, Germany or Chicago, Illinois, U.S.A.;
"BUYER" shall mean USC May Verpackungen Holding Inc., each assignee of
Buyer pursuant hereto and each of their respective legal successors;
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"BUYER'S GUARANTOR" shall mean U.S. Can Corporation, each assignee of
U.S. Can Corporation pursuant hereto and each of their respective legal
successors;
"CLAIMS" shall mean demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs and expenses,
including, without limitation, attorneys' fees and disbursements;
"CLOSING" shall mean the transfer and delivery by Seller of the Company
Interest to Buyer against payment of the Purchase Price into the Joint
Account and the other transactions contemplated to take place
concurrently therewith in accordance with this Agreement;
"CLOSING DATE" shall have the meaning set out in Section 5.1;
"COLLECTIVE BARGAINING AGREEMENT" shall be construed broadly and shall
include shop agreements (Betriebsvereinbarungen), collective bargaining
agreements (Tarifvertrage) and similar labor agreements;
"COMPANY" shall have the meaning provided in Recital (A);
"COMPANY INTEREST" shall mean the entire partnership interest
(Kapitalkonto) of the Company existing at Closing;
"COMPUTER SYSTEM" shall have the meaning provided in Section 8.12;
"CONTRACT" shall mean any contract, lease, commitment, understanding,
sales order, purchase order, agreement, indenture, mortgage, note,
bond, right, warrant, instrument, plan, permit or license, whether
written or verbal, which is intended or purports to be binding and
enforceable;
"CONTROL" shall mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether
through ownership of voting securities, by agreement or otherwise);
"COVERED TAX CLAIM" shall have the meaning provided in Section 10.7;
"DM" shall mean the lawful currency for the time being of the Federal
Republic of Germany;
"DOCUMENTS" shall mean any paper or other material (including, without
limitation, computer
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storage media) on which is recorded information that may be
evidentially used, including, without limitation, instruments,
agreements, insurance policies, reports, studies, financial statements,
other written financial information, schedules, certificates, charts,
maps, plans, photographs, letters, memoranda and all similar materials;
"EFFECTIVE DATE" shall have the meaning provided in Section 5.1;
"EFFECTIVE DATE FINANCIAL STATEMENTS" shall have the meaning set out in
Section 7.1;
"EMPLOYMENT AGREEMENT" shall mean (a) in the case of Jurgen May, an
Employment Agreement in the form agreed (and initialed for
identification) prior to the parties' execution of this Agreement
between the Company, on the one hand, and Jurgen May, on the other
hand, and (b) in the case of each of Walter Schmidt, Werner Fruhling
and Friedhelm Pilarski, an addendum to the existing employment contract
between each of them and the Company, which addendum shall be in the
form agreed (and initialed for identification) prior to the parties'
execution of this Agreement between the Company, on the one hand, and
such employee, on the other hand;
"ENCUMBRANCE" shall mean any mortgage, lien, pledge, right of first
refusal, right of pre-emption, third-party right or interest, security
interest, deed of trust, option, encroachment, reservation, order,
decree, judgment, condition, restriction, charge, agreement, claim or
equity of any kind;
"ENVASUR" shall mean Envases Metalicos Del Sureste S.L. a company
formed and existing under the laws of Spain;
"ENVIRONMENTAL LAW" shall mean any Law which relates to or otherwise
imposes liability or standards of conduct concerning discharges,
emissions, releases or threatened releases of noises, odors or any
pollutants, contaminants or hazardous or toxic wastes, substances or
materials, whether as matter or energy, into ambient air, water, or
land, or otherwise relating to the manufacture, processing, generation,
distribution, use, treatment, storage, disposal, cleanup, transport or
handling of pollutants, contaminants, or hazardous or toxic wastes,
substances or materials, in each case as in effect on the date of this
Agreement (and not taking into account any future changes);
"ENVIRONMENTAL PERMIT" shall mean any permit, license, approval,
consent or other authorization
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required by or pursuant to any applicable Environmental Law;
"FINANCIAL STATEMENTS" shall mean (i) the audited balance sheet and
statement of income and loss of each Group Company for the fiscal year
ended March 31, 1999, and (ii) the unaudited consolidated and
consolidating balance sheet and statement of income and loss of the
Company for the fiscal year ended March 31, 1999;
"FIRST LEASE AGREEMENT" shall mean the Lease Agreement relating to the
Company's manufacturing facility at Erftstadt, Germany, in
substantially the form of Exhibit A hereto;
"GERMAN GAAP" shall mean at any time German generally accepted
accounting principles at such time in effect;
"GOVERNMENTAL AUTHORITY" shall mean any domestic or foreign government
or political subdivision thereof, whether on a federal, state or local
level and whether executive, legislative or judicial in nature,
including, without limitation, any agency, authority, board, bureau,
commission, court, department or other instrumentality thereof and any
public or private business association or self-regulating organization
that acts in lieu of or in the same manner as a governmental agency or
other instrumentality;
"GROUP COMPANIES" shall have the meaning provided in Recital (A);
"HAZARDOUS SUBSTANCE" shall mean any material or substance which is
regulated, monitored or controlled as a hazardous substance, toxic
substance, pollutant or other regulated or controlled material,
substance or matter pursuant to any applicable Environmental Law;
"INITIAL DATE" shall have the meaning provided in Section 5.1;
"INTELLECTUAL PROPERTY" shall mean any and all trademarks, trade names,
service marks, patents, copyrights (including any registrations,
applications, licenses or rights relating to any of the foregoing),
technology, trade secrets, inventions, know-how, designs, computer
programs, processes, formulas and all other intangible assets,
properties and rights. The "Company's Intellectual Property" shall mean
any and all Intellectual Property used by any Group Company in the
conduct of its businesses;
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"INTERESTS" shall mean, with respect to any person existing in the
legal form of a partnership in any jurisdiction, all interests of any
nature whatsoever in such person relating to the ownership or control
of such person, including without limitation partnership interests
(Kapitalkonten), partner accounts (Kontokorrentkonten) and loan
accounts (Darlehenskonten);
"JOINT ACCOUNT" shall mean the bank account jointly owned by Seller and
Buyer, Account No. 1012568, BLZ 503 304 00, Swift FNBC DE FX, at Bank
One, N.A., Frankfurt Branch, Hochstr. 35-37, 60313 Frankfurt am Main,
Germany;
"KEY EMPLOYEE" shall mean each of Jurgen May, Walter Schmidt, Werner
Fruhling and Friedhelm Pilarski;
"LAW" shall mean any law, statute, regulation, ordinance, rule, order,
decree, judgment, consent decree, settlement agreement or governmental
requirement enacted, promulgated, entered into, agreed or imposed by
any Governmental Authority;
"LOGISTICS AGREEMENT" shall have the meaning provided in Section
6.5(a);
"MAJOR CUSTOMER" shall have the meaning provided in Section 8.22;
"MAJOR SUPPLIER" shall have the meaning provided in Section 8.22;
"MAY LOGISTIK" shall have the meaning provided in Section 6.5(a);
"MAY TRADEMARK" shall have the meaning provided in Section 11;
"MATERIAL ADVERSE EFFECT" shall mean an effect on the business,
operations, assets, liabilities, results of operations, cash flows,
condition (financial or otherwise) or prospects of any Group Company
which results in or will result (and not just might or could result in)
in (a)(i) a reduction in the gross income or (ii) a reduction in the
assets or (iii) an increase in the liabilities, in any case of any
Group Company of more than DM 10,000,000 or (b) a reduction in the
profits of any Group Company of more than DM 1,500,000;
"MEDIATION" shall have the meaning provided in Section 23.1;
"NET EQUITY" shall mean the amount set forth on the Effective Date
Financial Statements as the
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consolidated shareholder capital of the Company (Eigenkapital) (the
components of which, for the avoidance of doubt, the parties agree
shall be Festkapital, Kapitalrucklage, Wahrungsausgleichsposten,
Bilanzverlust and Underschiedsbetrag aus der Kapitalkonsolidierung in
accordance with section 266 paragraph 3A HGB);
"NEUTRAL ACCOUNTANT" shall have the meaning provided in Section 7.3;
"OPTION AGREEMENT" shall mean the Deed of Option Agreement relating to
the Company's warehouse facility at Erftstadt, Germany, in
substantially the form of Exhibit C hereto;
"ORDINARY COURSE OF BUSINESS" shall mean, as to any person, the
ordinary course of business, consistent with past practices, of such
person;
"ORGANIZATIONAL DOCUMENTS" means the articles of association
(Gesellschaftsvertrag or Satzung), the management rules
(Geschaftsordnung) and the supervisory or advisory board rules
(Geschaftsordnung des Aufsichtsrates bzw. Beirates), if any, and the
current and complete extract of the commercial register
(Handelsregisterauszug) with regard to the respective company or, in
the case of the foreign subsidiaries, the respective documents in such
jurisdiction;
"PERMITS" shall have the meaning provided in Section 8.16;
"PURCHASE PRICE" shall have the meaning set forth in Section 3.1;
"QUALIFYING INDEMNIFICATION CLAIM" shall have the meaning provided in
Section 10.4;
"REAL PROPERTY" shall have the meaning provided in Section 8.13(a);
"REAL PROPERTY LEASES" shall have the meaning provided in Section
8.13(a);
"REGISTRABLE INTELLECTUAL PROPERTY" shall mean all Intellectual
Property which is capable of being registered with any Governmental
Authority pursuant to applicable Law;
"RELATED DOCUMENTS" means each and every Document to be entered into by
one or more of the parties hereto, the Group Companies and/or any of
their respective Affiliates in connection with the completion of the
transactions contemplated hereby, including, without limitation, the
Logistics Agreement, the Employment Agreements, and the Real Property
Leases;
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"RELEVANT CLAIM" shall have the meaning provided in Section 10.5;
"SAP SYSTEM" shall have the meaning provided in Section 8.12(b);
"SECOND LEASE AGREEMENT" shall mean the Lease Agreement relating to the
Company's warehouse facility at Erftstadt, Germany, in substantially
the form of Exhibit B hereto;
"SELLER" shall mean LUCRETIA GmbH, registered in the commercial
register of the Cologne local court under HRB 31617, each assignee of
Seller pursuant hereto and each of their respective legal successors;
"SELLER GROUP" shall mean Seller and each of its Affiliates other than
the Company and the Subsidiaries;
"SELLER'S GUARANTOR" shall mean May Holding GmbH & Co. KG, registered
in the commercial register of the Bruhl local court under HRA 0768,
each assignee of May Holding GmbH & Co. KG pursuant hereto and each of
their respective legal successors;
"SHARES" shall mean, with respect to any person existing as a
corporation, all of the equity share capital of such person, whether or
not represented by share certificates or other Documents;
"SOFTWARE" shall have the meaning provided in Section 8.12(b);
"SUBSIDIARIES" shall have the meaning provided in Recital (A);
"TAXES" shall mean all taxes, charges, fees, duties (including customs
duties), levies or other assessments, including income, gross receipts,
net proceeds, ad valorem, turnover, real and personal property
(tangible and intangible), sales, use, franchise, excise, value added,
stamp, leasing, lease, user, transfer, fuel, excess profits,
occupational, interest equalization, windfall profits, severance,
license, payroll, environmental, capital stock, disability, employee's
income withholding, other withholding and unemployment taxes, which are
imposed by any Governmental Authority, and such term shall include any
interest, penalties or additions to tax attributable thereto.
"TERMINATION NOTICE" shall have the meaning provided in Section 4.3;
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"THIRD PARTY CLAIMS" shall have the meaning provided in Section 10.6;
and
"WILH. WESSEL" shall have the meaning provided in Section 6.5(a).
1.2 In this Agreement, a reference to:
a. an "AGREEMENT" shall mean any concurrence of understanding and
intention between two or more persons (or entities) with
respect to their relative rights and/or obligations or with
respect to a thing done or to be done (whether or not
conditional, executory, express, implied, in writing or
meeting the requirements of contract), including, without
limitation, contracts, leases, promissory notes, covenants,
easements, rights of way, commitments, arrangements and
understandings;
b. a "PERSON" includes a reference to an individual, corporation,
proprietorship, firm, partnership, limited partnership, trust,
association, Governmental Authority or other entity, and
includes reference to that person's legal personal
representatives and successors;
c. a statutory provision includes a reference to the statutory
provision as modified or reenacted or both from time to time
before the date of this Agreement and any subordinate
legislation made under the statutory provision before the date
of this Agreement; and
d. a Section, subsection, Schedule or exhibit, unless the context
otherwise requires, is a reference to a Section or subsection
of, or a schedule or exhibit to, this Agreement.
1.3 The headings in this Agreement do not affect its interpretation.
2. SALE AND PURCHASE
2.1 On the basis of the representations, warranties and agreements
contained herein, and subject to the terms and conditions hereof,
Seller agrees to sell and transfer to Buyer, and Buyer agrees to
purchase and accept the transfer from Seller, good, valid and
marketable title to the entire Company Interest, free from
Encumbrances, together with all rights attaching to such Company
Interest as of and after the Effective Date.
2.2 The sale of the Company Interest shall include the right to receive all
distributions in respect
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thereof for any fiscal year ending after the fiscal year ending on
December 31, 1999, but Seller shall retain the right to receive all
dividends and distributions payable by the Company and the Subsidiaries
in respect of the Company Interest with respect to the fiscal year
ending on December 31, 1999 and the fiscal years prior thereto. The
sale of the Company Interest does not include any partner accounts
(Kontokorrentkonten) or loan accounts (Darlehenskonten); claims under
such accounts shall be retained by Seller.
3. CONSIDERATION
3.1 In consideration for its purchase of the Company Interest, Buyer shall
pay to Seller a purchase price of DM 123,700,000 (in words one hundred
twenty three million seven hundred thousand Deutsche Marks) (the
"PURCHASE PRICE").
3.2 On the Closing Date, Buyer shall pay the Purchase Price into the Joint
Account. Interest accrued (if any) on amounts deposited in the Joint
Account shall be paid to the recipient of such amounts in accordance
with Section 13.
3.3 In addition to any interest payable on amounts on deposit in the Joint
Account, the Purchase Price shall bear interest as and from the
Effective Date until the date on which the Purchase Price is paid into
the Joint Account at a rate equal to 3-month EURIBOR plus 1% per annum;
provided that, in the event that Buyer defaults in its obligation to
pay the Purchase Price into the Joint Account on the Closing Date, then
the Purchase Price shall bear interest as and from the Effective Date
until the date on which the Purchase Price is paid into the Joint
Account at a rate equal to 3-month EURIBOR plus 5%.
3.4 Amounts standing to the credit of the Joint Account shall be released
in accordance with Section 13. The release of amounts standing to the
credit of the Joint Account shall require the approval of Seller and
Buyer both confirming that the requirements for a release to either
Seller or Buyer pursuant to Section 13 have been satisfied; it being
understood and agreed that Seller's delivery to Buyer and Bank One of a
notice pursuant to Section 13.3(b)(ii) shall be deemed to constitute
Seller's approval that the requirements for release to Buyer of amounts
on deposit in the Joint Account have been satisfied. Seller's delivery
to Buyer and Bank One of a notice of the nature referred to in Section
13.3(b)(ii) shall also constitute Seller's waiver of any further rights
to
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amounts standing to the credit of the Joint Account. It is further
understood and agreed that Buyer's delivery to Seller of a notice
pursuant to Section 13.2(a) or 13.2(b) shall be deemed to constitute
Buyer's approval that the requirements for release to Seller of amounts
on deposit in the Joint Account have been satisfied. Buyer's delivery
to Seller of a notice of the nature referred to in Section 13.2(a) or
13.2(b) shall also constitute Buyer's waiver of any further rights to
amounts standing to the credit of the Joint Account.
3.5 Each of Buyer and Seller agree to give the approval referred to in the
foregoing Section 3.4 promptly in accordance with the requirements of
Section 13. If such approval is withheld by either party although the
requirements for a release of the Purchase Price under Section 13 have
been satisfied, the party withholding its approval shall pay interest
on the amounts on deposit in the Joint Account for the period from the
date when the requirements for a release of the Purchase Price under
Section 13 were satisfied until the payment thereof to the party
entitled thereto at a rate per annum equal to the excess of (i) 3-month
EURIBOR plus 5% over (ii) the interest actually paid (if any) to such
receiving party in respect of amounts on deposit in the Joint Account
for such period.
4. CONDITIONS PRECEDENT
4.1 Conditions Precedent
The sale, purchase and transfer of the Company Interest is subject to
the fulfillment (or waiver pursuant to Section 4.2(b)) at or prior to
the Closing, of each of the following conditions:
a. German Cartel Office Approval
The approval of the German Cartel Office (Bundeskartellamt),
in the form attached hereto as Schedule 4.1, shall remain in
full force and effect as of the Closing Date.
b. No Judgment or Award
No action or proceeding by or before any governmental or
judicial authority or arbitral tribunal shall have been
instituted (and not subsequently settled, dismissed or
otherwise terminated) which restrains or prohibits, or is
reasonably expected to restrain, prohibit or
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invalidate, the transactions contemplated by this Agreement or
any Related Document.
c. No Material Averse Effect
Since September 30, 1999, no Group Company shall have suffered
a Material Adverse Effect.
4.2 Responsibility for Satisfaction; Waiver
a. To the extent it is able, each party will use its reasonable
best efforts to ensure the satisfaction of the condition set
out in Section 4.1(a) and will notify the other party
immediately upon becoming aware either (i) that any condition
set out in Section 4.1 has been satisfied or (ii)
circumstances or events have arisen or exist which are
reasonably expected to cause one or more of such conditions
not to be satisfied by the Effective Date. Without prejudice
to the foregoing, it is agreed that all requests and inquiries
from any government, governmental, supranational or trade
agency, court or regulatory body shall be dealt with by Buyer
and Seller in consultation with each other and each of Buyer
and Seller shall promptly co-operate with and provide all
necessary information and assistance that may be reasonably
required by such government, agency, court or body upon being
requested to do so by the other.
b. Any of the conditions set forth in Sections 4.1(b) or (c) may
be waived, in whole or part, by mutual agreement of the
parties.
4.3 Non Satisfaction
If any of the conditions set out in Section 4.1 has not been obtained
within 90 days after the date of this Agreement, or such later date as
Buyer and Seller may agree in writing, any party may elect to terminate
this Agreement by giving to the other party notice in writing (a
"TERMINATION NOTICE"), whereupon this Agreement shall forthwith
terminate without prejudice to any rights and liabilities which may
have already arisen.
5. CLOSING
5.1 Closing
<PAGE> 17
The Closing shall, subject to satisfaction of all of the requirements
of Sections 4 and 5 of this Agreement, take place on December 30, 1999
or, if any of the conditions set forth in Section 4.1 have not been
satisfied on December 30, 1999, as soon as reasonably practicable on
the date which is three Business Days following the date on which such
condition have been satisfied (the "INITIAL DATE"), or in any event
such other date as shall be mutually agreed upon by Buyer and Seller
(the "CLOSING DATE"). Subject to the terms and conditions set forth in
this Agreement, the Closing shall take place on the Closing Date at the
offices of Mayer, Brown & Platt, Kaiser- Wilhelm-Ring 27-29, 50672
Cologne or such other place as may be mutually agreed between Buyer and
Seller. Each of Buyer and Seller shall make all reasonable efforts to
remove or cause to be removed any impediments to the Closing and to
cause the Closing to take place as soon as is reasonably practicable
and with the intent that Closing take place no later than December 31,
1999. Notwithstanding the actual date and time of Closing, the parties
agree that as between themselves the sale and transfer of the Company
Interest shall be effective as of December 31, 1999 at 11:59 p.m.,
Cologne time (the "EFFECTIVE DATE").
5.2 Deliveries by Seller
At the Closing, Seller shall deliver to Buyer the following:
a. a deed of transfer executed by Seller and May Verpackungen
Verwaltungs GmbH in which (i) Seller transfers the Company
Interest to Buyer with effect from the Effective Date and
under the condition subsequent (auflosende Bedingung) that the
transfer of the Company Interest to Buyer shall become
ineffective with effect from the Effective Date in case of a
rescission of this Agreement pursuant to Section 13, and (ii)
May Verpackungen Verwaltungs GmbH consents to the transfer of
the Company Interest to Buyer;
b. a copy, certified to be true and correct by an authorized
representative of Seller, of the resolutions adopted by all of
the shareholders of Seller, authorizing the transactions
contemplated by this Agreement and by the Related Documents;
c. certificates from, or excerpts from the official registries
of, the applicable Governmental Authorities in the
jurisdictions of organization of Seller, Seller's Guarantor
and each Group Company as to the legal existence of each such
person and reflecting each such
<PAGE> 18
person's current status and any applications made but not yet
registered;
d. copies of all Organizational Documents of each Group Company;
e. extracts from land registries (Grundbuchauszuge), or other
record of ownership, of each Group Company, dated as soon as
practicable before the Closing and evidencing all Real
Property owned by each Group Company and its ownership
interest therein;
f. the First Lease Agreement, duly executed by May Grundbesitz
and the Company;
g. the Second Lease Agreement, duly executed by May/Geske GbR and
the Company;
h. the Option Agreement, duly executed by May Grundbesitz,
May/Geske GbR and the Company;
i. a letter from SAP confirming that the Company may continue to
use the SAP System, notwithstanding the transfer of the
Company Interest to Buyer, until at least March 1, 2000, on
the same terms as such system is used by the Company on the
date hereof;
j. the Employment Agreements, each duly executed by one of the
Key Employees, on the one hand, and the Company, on the other
hand; and
k. a shareholder resolution of Envasur, waiving all rights of
Envasur, under applicable Law or otherwise, with respect to
any competing or potentially competing activities of Buyer's
Guarantor and its Affiliates.
5.3 Deliveries by Buyer
At the Closing, Buyer shall deliver to Seller the following:
a. the Purchase Price, in immediately available funds deposited
into the Joint Account;
b. a copy, certified to be true and correct by an authorized
representative of Buyer, of the resolutions adopted by Buyer's
Guarantor authorizing the transactions contemplated by this
Agreement and by the Related Documents;
c. a certificate from, or an excerpt from the official registry
of, the applicable Governmental
<PAGE> 19
Authorities in the jurisdiction of organization of Buyer and
Buyer's Guarantor, dated not more than fifteen Business Days
prior to the Closing Date, as to the legal existence and good
standing (as applicable) of Buyer;
d. counterpart signature page to the deed of transfer referred to
in Section 5.2(a), in which Buyer accepts the transfer of the
Company Interest to it; and
e. a letter from Bank One (i) confirming its agreement with the
arrangements set forth in Sections 3.4 and 13 regarding
payment of amounts standing to the credit of the Joint
Account, (ii) confirming its agreement to pay interest at a
rate of 3.5% per annum on amounts standing to the credit of
the Joint Account for the period from the Closing Date until
January 31,2000, and (iii) confirming the basis upon which
interest payable on amounts standing to the credit of the
Joint Account shall be determined (which basis shall be
reasonably acceptable to Buyer and Seller) for periods after
January 31, 2000.
6. ADDITIONAL UNDERTAKINGS AND COVENANTS
Buyer, on the one hand, and Seller, as applicable, on the other hand,
hereby covenant and agree with each other as follows:
6.1 Consents and Approvals
Without prejudice to the provisions of Section 4.2, Buyer and Seller
shall take all measures reasonably necessary or advisable prior to the
Closing to secure such consents, authorizations and approvals of
Governmental Authorities and of private persons or entities with
respect to the transactions contemplated by this Agreement and the
Related Documents, and to the performance of all other obligations of
the parties hereunder, as may be required by any applicable statute or
regulation of Germany or any other country, state or other jurisdiction
or by any agreement of any kind whatsoever to which Buyer, Seller, the
Company or any Subsidiary is a party or by which Buyer, Seller, the
Company or any Subsidiary is bound. Buyer and Seller shall (i)
cooperate in the filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant
to applicable statutes, rules, regulations or orders of any
Governmental Authority in connection with the transactions contemplated
by this Agreement and (ii) use their respective reasonable best efforts
to cause any applicable waiting periods thereunder to expire and
<PAGE> 20
any objections to the transactions contemplated hereby to be withdrawn
before the Closing. In the event that there is a time limit on any
filing, notification or submission of reports, the parties shall
discuss in good faith the timing of any such filing, notification or
submission of reports.
6.2 Access; Investigations by Buyer; Seller Third Party Claims
a. Access
Following the date of this Agreement, Seller will permit
Buyer's representatives, upon reasonable notice to the
Company, access during normal business hours to the premises
and all the books and records of the Company and each
Subsidiary and the directors and employees of the Company and
each Subsidiary for any reasonable purpose, including for the
purpose of confirming the accuracy of any of Seller's
representations and warranties, and Seller's compliance with
any of its undertakings, set forth herein.
b. Effect of Investigation
Buyer's investigation of the financial and operating data, and
other information with respect to the business and assets of
the Company and the Subsidiaries shall in no way affect the
obligations of Seller with respect to the agreements,
representations, warranties, covenants and indemnification
obligations set forth in this Agreement.
c. Company Information
In connection with Seller's handling of any Third Party Claim
(including any Covered Tax Claim), Buyer shall, upon
reasonable notice to the Company, provide Seller with such
copies of all information and records of the Company and each
Subsidiary which Seller may reasonably request in connection
with its handling of such Third Party Claim.
6.3 Operation of Business of the Group Companies
a. Ordinary Course of Business
Between the date of this Agreement and the Closing, Seller
shall cause the Group Companies to incur and pay expenses and
otherwise operate only in the Ordinary Course of Business and
Seller shall procure that each Group Company makes all
reasonable
<PAGE> 21
efforts to (i) preserve intact the present business
organization of the Group Companies, (ii) retain its key
employees and, to the extent advantageous to such Group
Company, its personnel, (iii) preserve the good will and
advantageous relationships of the Group Companies with
customers, suppliers, independent contractors, employees and
other persons material to the operation of their respective
businesses, (iv) prevent any event or circumstance which could
have a Material Adverse Effect.
b. Certain Restrictions
Between the date of this Agreement and Closing, Seller shall
cause each of the Group Companies not to, directly or
indirectly: (i) issue any Interests or Shares or any options,
warrants or other rights to subscribe for or purchase any
Interests or Shares or any securities or obligations
convertible into or exchangeable for such Interests or Shares;
(ii) declare, set aside or pay any dividend or distribution
with respect to its Interests or Shares for the fiscal year
ending December 31, 1999, or declare, set aside or pay any
dividend or distribution with respect to its Interests or
Shares for any fiscal year ending prior thereto the amount of
which was not reflected as payable in the Financial
Statements; (iii) directly or indirectly redeem, purchase or
otherwise acquire any of its Interests or Shares; (iv) effect
a split, reclassification or other change in or of any of its
Interests or Shares; (v) amend its Organizational Documents,
except for such amendments which have already been approved
and disclosed to Buyer; (vi) consummate or commit to any
consolidation, merger or sale of assets; (vii) purchase or
commit to purchase all or substantially all of the assets of
any person or consummate or commit to any other transaction
outside the Ordinary Course of Business; (viii) take, omit or
agree to take or omit any action that would cause a Material
Adverse Effect; (ix) transfer, lease, sell, mortgage, pledge,
dispose of or encumber any of its properties or assets other
than the sale of finished goods in the Ordinary Course of
Business and other than the sale of other assets in the
Ordinary Course of Business not having an original acquisition
value in excess of DM 100,000 in the aggregate; (x) authorize
or commit to make capital expenditures in excess of DM 100,000
in the aggregate not committed to prior to the date of this
Agreement (it being understood and agreed that the Group
Companies are allowed to make capital expenditures exceeding
DM 100,000 in the aggregate in cases of emergency (Gefahr im
<PAGE> 22
Verzug) provided that Buyer is informed thereof afterwards as
soon as practicable); (xi) establish, adopt, enter into or
amend (except as required by Law or this Agreement) any
Collective Bargaining Agreements, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any directors, officers,
consultants or employees of any Group Company other than
modifications to Collective Bargaining Agreements which are
not material in the Ordinary Course of Business or the
termination or amendment of employment contracts in the
Ordinary Course of Business or the engagement of a number of
new employees which is not material in the Ordinary Course of
Business; (xii) settle or compromise any claims or litigation
or waive, release or assign any material rights or claims that
Buyer is directly or indirectly acquiring hereunder, other
than the settlement of claims in the Ordinary Course of
Business in an amount not in excess of DM 50,000 in the
aggregate; (xiii) make any Tax election, settle or compromise
any Tax liability, or waive or extend the statute of
limitations in respect of any Taxes; (xiv) permit any
insurance policy naming a Group Company as a beneficiary or
loss payee or otherwise relating to the business conducted by
any Group Company to be cancelled or terminated, other than
with respect to policies the loss of which is not material to
such Group Company; (xv) amend, restate or otherwise modify,
or waive the provisions of, any Contract disclosed on Schedule
8.15 other than such actions which are not material to the
Group Company party thereto and are taken in the Ordinary
Course of Business; (xvi) collect any accounts receivable,
withdraw cash, cash equivalents or other assets or pay
accounts payable other than in the Ordinary Course of
Business, or (xvii) make any loan to any person, other than
travel advances to employees in the Ordinary Course of
Business.
6.4 SAP System
a. Seller agrees that, until the respective dates set forth below
and except as provided in the following sentence, it shall be
responsible for the payment, in the manner provided in clause
(b), of all costs and expenses incurred by the Company with
respect to the installation and operation of the SAP System as
presently configured (and as described in Schedule 6.4(a)) in
excess of the sum (as from time to time in effect, the
"AGGREGATE
<PAGE> 23
SAP AMOUNT") of:
i. until December 31, 2004, the amount of DM 15,375 per month
for the SAP license,
ii. until December 31, 2004, the amount of DM 47,500 per month
for support (including IT infrastructure),
iii. until December 31, 2004, the amount of DM 32,535 per month
for implementation,
iv. until December 31, 2002, the amount of DM 42,090 for data
center (DVO) usage, and
v. until December 31, 2004, the amount of DM 15,000 per month
with respect to the current installation and operation of
scanning capabilities for the SAP System as described in
Schedule 6.4(a);
provided that, if the Company terminates any of the services set
forth in clauses (i) through (v) above at any time following the
separation of the SAP System referred to in clause (c), the
Aggregate SAP Amount shall be reduced by the amount set forth in
such clause. Buyer shall notify Seller promptly of any change to
the installation and operation (including data center usage) of
the SAP System as presently configured; and provided, further,
that the parties agree that the Company and its Subsidiaries (and
not Seller nor any other member of the Seller Group) shall be
responsible for the payment for all additional data use and
additional system users and other system upgrades in excess of the
amounts and numbers and configuration thereof presently in place
with respect to the SAP System.
b. Until the separation of the SAP System referred to in clause (c),
the Company shall pay directly to Seller's Guarantor not later
than the fifth day of each month the amounts set forth in clauses
(i) through (v) above for such month, to the extent Seller's
Guarantor is obligated to pay them to IBM/DVO or SAP, and Seller's
Guarantor shall pay such amounts and any additional amounts for
which it is responsible pursuant to clause (a)
<PAGE> 24
directly to IBM/DVO and SAP, as appropriate. Following the
separation of the SAP System referred to in clause (c), Seller's
Guarantor shall pay to the Company not later than the fifth day of
each month for such month the amounts for which Seller's Guarantor
is liable pursuant to clause (a) and the Company shall, to the
extent it is obligated to pay them to IBM/DVO or SAP, pay such
amounts directly to IBM/DVO and SAP, as appropriate.
c. Seller and Buyer intend to split the SAP System as presently
configured into two physically and functionally separate systems
(including separate data center and support) during calendar year
2000, and with that goal in mind intend to negotiate and enter
into separate contractual arrangements with IBM/DVO and SAP by
March 1, 2000. Each of Buyer and Seller agrees to make all
reasonable efforts to cooperate with each other in order to
complete such separation as promptly as possible and to minimize
the disruption to them and to any of their Affiliates (including
the Group Companies) resulting from such separation. Seller agrees
to pay for the project costs and expenses incurred by it and by
the Company and its Affiliates in connection with the planning,
implementation and completion of such separation, other than (i)
the hardware and cabling costs of the Company and its Affiliates
in connection with such separation, and (ii) without limiting
Seller's obligation set forth in clause (a), the direct
contractual costs incurred by the Company under its new contracts
with IBM/DVO and SAP, including without limitation the cost of any
new SAP license the Company may be required to purchase in
connection therewith.
d. In the event that, following the separation referred to in clause
(c), the Company terminates its separate contracts with IBM/DVO
and SAP at any time, it shall nevertheless be obligated to
continue to pay to Seller's Guarantor, until January 1, 2005, an
amount of DM 32,535 per month. Except as set forth in the
foregoing sentence, all other amounts paid prior to such
termination by the Company to Seller's Guarantor in respect of the
SAP System shall, upon the effectiveness of such termination,
cease to be payable to Seller's Guarantor.
e. Until the installation and implementation of the SAP System in the
manner contemplated by Schedule 6.4(a) and Section 8.12, Seller's
Guarantor shall continue to provide support
<PAGE> 25
for the implementation of the SAP System at the levels currently
provided.
f. Buyer shall have the option to acquire from Seller's Guarantor the
license for the scanning system (Acsis) for the price paid
therefor by Seller's Guarantor; provided that after such
acquisition Buyer charges other users of such scanning system
within the Seller Group, if any, amounts therefor which are no
greater than those charged by Seller's Guarantor immediately prior
to such acquisition with the exception of maintenance increases.
g. The undertakings of Seller in this Section 6.4 are not subject to
the limitations set forth in Section 10.
h. All amounts set forth in this Section 6.4 are determined exclusive
of any value added taxes which are payable in respect of such
amounts.
6.5 Logistics
a. With respect to the Logistics Agreement (Rahmenvereinbarung uber
Logistikdienstleistungen) (the "LOGISTICS AGREEMENT") between the
Company, Wilh. Wessel Nachfl. Blechemballagenfabrik GmbH & Co. KG
("WILH. WESSEL"), and May Logistik GmbH & Co. KG ("MAY LOGISTIK"),
the parties agree that the services currently provided thereunder
by May Logistik shall continue to be provided at the current
prices and on the other current terms therefor for the period from
the Effective Date until December 31, 2000, except as the parties
thereto may otherwise mutually agree.
b. Not later than August 15, 2000, May Logistik shall provide to the
Company and Wilh. Wessel an offer to provide logistics services
covering either (i) the existing needs of the Company and Wilh.
Wessel or (ii) such expanded services as shall be necessary to
meet the anticipated needs of the Company and Wilh. Wessel
commencing on January 1, 2001 and as shall have been communicated
by the Company to May Logistik not later than June 30, 2000.
c. The Company and Wilh. Wessel shall, following receipt of such
offer, be entitled to request a offer from third parties which
shall be comparable to the offer of May Logistik in all material
respects. The third party offer must include an offer to May
Logistik (x)
<PAGE> 26
to take over all of the employees of May Logistik currently
engaged in providing logistics services under the Logistics
Agreement on not less favorable terms than the current employment
conditions of such employees (it being understood and agreed that
May Logistik shall be responsible for the pension obligations of
such employees prior to any such transfer and that such third
party shall take over such pension obligations against payment by
May Logistik of the present value thereof), and (y) to acquire at
book value all of the assets of May Logistik currently used in
connection with the provision of logistics services under the
Logistics Agreement.
d. In the event that the offer of May Logistik referred to in clause
(b) is less favorable to the Company and Wilh. Wessel in any
significant respect than the third party offer referred to in
clause (c), then the Company and Wilh. Wessel shall, provided it
shall have notified May Logistik of such election prior to
September 30, 2000, be entitled to accept such third party offer
and the parties shall, subject to such third party actually making
and fulfilling the offer to May Logistik described in clause (c),
procure the termination of the Logistics Agreement without further
act as of December 31, 2000. As it is the parties' preference to
continue the Logistics Agreement on mutually agreed terms, the
Company may (but shall not be obligated to) permit May Logistik to
improve its offer to make it competitive with such third party
offer.
e. To the extent of any inconsistency between this Section 6.5 and
the Logistics Agreement, the terms of this Section 6.5 shall
prevail, and Seller and Seller's Guarantor shall procure the same
with May Logistik.
6.6 Notice of Breach
Until the Closing Date, Seller agrees to notify Buyer of any event or
circumstance which Seller considers to be a breach of any of its
representations, warranties, covenants or agreements set forth herein.
6.7 Warranty Pass Through
In connection with investments numbered 3, 5, 20, 22, 23 and 30 on
Schedule 8.15(d), to the extent that Seller's Guarantor is the
contracting party with the seller of the assets acquired in
<PAGE> 27
connection with such investments (and the Company is not contracting
party thereto), then Seller's Guarantor shall procure that the Company
receives the benefit of any seller warranties actually available to
Seller's Guarantor in connection with such assets to the extent such
warranties relate to assets owned or used by the Group Companies.
6.8 News Releases
Subject to applicable laws and regulations and the rules of any stock
exchange, neither party may, before or after the Closing, make or send
any public announcement, communication or circular relating to the
transactions contemplated hereby unless it has first obtained the other
party's written consent, which may not be unreasonably withheld or
delayed. The parties have agreed upon a press release to be issued upon
their execution of this Agreement, the text of which is attached hereto
as Schedule 6.8.
7. EFFECTIVE DATE FINANCIAL STATEMENTS
7.1 Preparation of Effective Date Financial Statements
As promptly as possible (and in any event within five months) following
the Closing Date, the Company shall with the assistance of Seller and
Buyer, prepare and deliver to Seller and Buyer consolidated financial
statements for the Group Companies as of the Effective Date (the
"EFFECTIVE DATE FINANCIAL STATEMENTS"). The Effective Date Financial
Statements need not be consistent with Buyer's opening financial
statements for the Group Companies as of December 31, 1999.
The Effective Date Financial Statements shall be prepared in accordance
with German GAAP consistently applied with the principles used to
prepare the March 31, 1999 consolidated financial statements. Since many
of the amounts that were the basis of the negotiations between Buyer and
Seller were based on historical and projected financial statements
prepared by Seller, it is understood that there cannot be undue
enrichment to either party from practices that are different, if any,
between the internal financial statements and projections and the
audited financial statements in determining the net profit to be
distributed to Seller for the period between April 1, 1999 and December
31, 1999. The Effective Date Financial Statements shall be reviewed
jointly by Bachem Fervers Janssen Mehrhoff, Cologne, and Arthur
Andersen, Frankfurt.
<PAGE> 28
7.2 Certain Accruals
a. The Effective Date Financial Statements shall contain an accrual
in the amount of DM 250,000 to cover the remedial actions
described on Schedule 7.2. The parties agree that the amount of
such accrual shall fully cover Seller's responsibility for all
costs of taking the remedial actions described on Schedule 7.2 and
that Buyer shall not make any claim against Seller under this
Agreement to be indemnified for such costs. For the avoidance of
doubt, the preceding two sentences shall not limit Buyer's ability
to bring claims under Section 10 (to the extent provided therein)
with respect to violations by the Group Companies of or liability
under applicable Environmental Laws arising out of the underlying
events or circumstances which the remedial actions described in
Schedule 7.2 are designed to test or avoid, including, for
example, with respect to any release or discharge of Hazardous
Substances into the environment covered by Section 8.20.
b. The Effective Date Financial Statements shall contain an accrual
in the amount of not less than DM 400,000 in respect of the claim
by Konservenfabrik Siegfried Linkenheil KG referred to in its
letter to the Company dated November 23, 1999. In the event that
the full amount of such reserve is not needed to satisfy such
claim, once such claim is fully and finally settled with
Konservenfabrik Siegfried Linkenheil KG, the Company shall pay the
amount of such reserve, if any, not needed to satisfy such claim
(including any reimbursement by insurance therefor) to Seller.
7.3 Cooperation and Access
Seller and Buyer shall (i) assist and co-operate with each other and the
Company in the preparation of the Effective Date Financial Statements
and (ii) grant to (and procure that the Company grants to) their
representatives such access as each party shall reasonably request to
any books, records or other information that may be used or useful in
preparing or evaluating the Effective Date Financial Statements.
<PAGE> 29
7.4 Approval Procedure
The Effective Date Financial Statements shall be subject to the approval
of both Seller and Buyer, such approval not to be unreasonably withheld
or delayed. If Seller and Buyer cannot agree on the Effective Date
Financial Statements within six months after the Closing Date, both
parties may refer the unresolved disputed items of the Effective Date
Financial Statements for final and binding resolution to KPMG, Cologne,
or such other independent account firm as the parties may mutually
select (the "NEUTRAL ACCOUNTANT"). The decision of the Neutral
Accountant with respect to any dispute shall be in writing and shall,
absent demonstrable error, be final, binding and conclusive on the
parties. Before issuing a decision on the matter, the Neutral Accountant
shall provide each party with the opportunity to deliver a statement of
opinion. The fees and expenses of the Neutral Accountant, if any, shall
be allocated between Seller and Buyer by the Neutral Accountant in such
manner or proportions as he may consider appropriate.
7.5 Distribution of Profits
Following Buyer's and Seller's acceptance of the audited Effective Date
Financial Statements, Buyer shall promptly pass a partner's resolution
and shall cause the Company to pass a shareholder's or partner's
resolution for each Group Company declaring that all distributable
profits for the Company and each other Group Company for the fiscal year
ending December 31, 1999 are to be distributed, and Buyer shall procure
that the Company shall promptly thereafter pay such distributable
profits to Seller. Any set-off or retention rights of Buyer with respect
to such distribution shall be excluded.
7.6 Interest
The amount of any distribution payable to Seller pursuant to Section 7.5
shall bear interest at the rate of 3-month EURIBOR plus 1% from April 1,
2000 until the date of payment thereof.
7.7 Costs
All costs and expenses of Bachem Fervers Janssen Mehrhoff with respect
to the audit of the Effective Date Financial Statements shall be borne
by the Company and the full amount thereof shall be reflected as
expenses in the Effective Date Financial Statements. To the extent that
such
<PAGE> 30
costs and expenses of Bachem Fervers Janssen Mehrhoff are not so
reflected in the Effective Date Financial Statements, they shall be
borne by Seller. All costs and expenses of Arthur Andersen with respect
to the preparation of the Buyer's opening financial statements for the
Group Companies as of December 31, 1999 and the Effective Date Financial
Statements shall be borne by Buyer.
8. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants by way of independent guarantees
(selbstandige Garantieerklarung) to Buyer, both on the date hereof and
(except as expressly provided herein) on the Closing Date, that:
8.1 Organization and Standing
Each of Seller and Seller's Guarantor is a legal entity duly organized
and validly existing under the law of the Federal Republic of Germany
and has the full and unrestricted power and authority to carry on its
business as currently conducted, to enter into this Agreement and the
Related Documents to which it is a party and to carry out the
transactions contemplated hereby and thereby.
The Company is a limited partnership duly organized and validly existing
under the law of the Federal Republic of Germany and has the full and
unrestricted power and authority to carry on its business as currently
conducted and to enter into the Related Documents to which it is a party
and to carry out the transactions contemplated thereby. The Company
Interest has been validly issued.
Each Subsidiary is a corporation or a limited partnership, as specified
on Schedule 8.1 hereto, duly organized and validly existing under the
laws of the jurisdiction of its formation and has the full and
unrestricted power and authority to carry on its business as currently
conducted and to enter into the Related Documents to which it is a party
and to carry out the transactions contemplated thereby. Each of the
Interests or the Shares of such Subsidiary, as the case may be, have
been validly issued and, in the case of Shares, are fully paid and
non-assessable.
Except as set forth on Schedule 8.1, the Company has no direct or
indirect subsidiaries, either
<PAGE> 31
wholly or partially owned, and the Company does not hold any direct or
indirect Interests, Share, or economic, voting or management interest in
any person or directly or indirectly own any security issued by any
person.
8.2 Authorization
The execution, delivery and performance by each of Seller and Seller's
Guarantor of this Agreement and all other Documents contemplated hereby,
the fulfillment of and the compliance with the respective terms and
provisions hereof and thereof, and the consummation by Seller and
Seller's Guarantor of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate and shareholder
action and will not (i) conflict with, or violate any provision of, any
term or provision of the Organizational Documents of Seller or Seller's
Guarantor, as the case may be, or (ii) conflict with, or result in any
breach of, or constitute a default under, any agreement to which Seller
or Seller's Guarantor, as the case may be, is a party or by which it is
bound.
True, accurate and complete copies of the Organizational Documents, as
in effect on the Closing Date, of each Group Company have been delivered
to Buyer.
8.3 Binding Obligation
This Agreement constitutes, and each Related Document to be executed by
Seller or Seller's Guarantor, as the case may be, or their respective
Affiliates, as applicable, when executed and delivered in accordance
with the provisions hereof shall constitute, a valid and binding
obligation of Seller, Seller's Guarantor or such Affiliate, as
applicable, enforceable in accordance with its terms, except as the same
may be limited by (i) any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights
generally or (ii) general principles of equity, whether considered in a
proceeding in equity or at law.
8.4 Consents and Approvals
Except as have been obtained or will have been obtained by the Closing
Date, (i) there is no requirement applicable to Seller, Seller's
Guarantor or any of their respective Affiliates, to make any filing
with, or to obtain any permit, authorization, consent or approval of any
public body or
<PAGE> 32
other third party as a condition to the lawful consummation of the
transactions contemplated by this Agreement, and (ii) there is no
requirement that any party consent to the execution of this Agreement,
and the consummation of the transactions contemplated by this Agreement
or any Related Document by Seller, Seller's Guarantor or its Affiliates.
8.5 Compliance with Law
Each Group Company and all of its operations, properties and assets are
in compliance with, and no violation exists under, any and all Laws
applicable thereto.
8.6 Ownership of Company Interest
Seller is the sole legal and beneficial owner of the Company Interest,
free and clear of all Encumbrances. Seller has full legal power, right
and authority to sell and convey to Buyer full legal and beneficial
title to all of the Company Interest, and Seller's sale of the Company
Interest to Buyer pursuant to this Agreement will transfer good and
marketable title thereto, free and clear of all Encumbrances. The
Company Interest is not subject to any options, warrants, rights of
first refusal, co-sale rights, or any other restrictions. There are no
Interests with respect to the Company outstanding other than (i) the
Company Interest, (ii) Interests held in the Company by May Verpackungen
Verwaltungs GmbH and (iii) loan accounts (Darlehenskonten) and partner
accounts (Kontokorrentkonten), including without limitation in respect
of profits of the Company for fiscal periods ending on or prior to
December 31, 1999, provided that such accounts are included in the
Effective Date Financial Statements as liabilities (and are thus
deducted from the computation of the shareholder capital (Eigenkapital)
of the Company set forth on such Effective Date Financial Statements) in
accordance with Section 7.5.
Except as set forth on Schedule 8.6, there are no outstanding
contractual obligations of Seller, the Company or any Subsidiary which
relate to the purchase, sale, issuance, repurchase, redemption,
acquisition, transfer, disposition, holding or voting of any Interests
or Shares of the Company or any Subsidiary or the management or
operation of the Company or any Subsidiary. Except for Seller's rights
as a holder of Shares, no person has any right to participate in, or
receive any payment based on any amount relating to, the revenue,
income, value or net worth of the Company and the Subsidiaries or any
component or portion thereof, or any increase or decrease in any of the
foregoing, other than employee bonus schemes calculated on the basis of
the profits
<PAGE> 33
of the relevant Group Company and provided for in employment agreements
disclosed to Buyer pursuant to Section 8.15. No person has the right
(whether exercisable now or in the future and whether contingent or not)
to call for the allotment, conversion, issue, sale or transfer of any of
the Company Interest or other ownership interests or any other security
giving rise to a right over the ownership of or interest in the Company
under any option or other agreement (including conversion rights and
rights of pre-emption). There are no agreements or obligations to create
any Encumbrances on the Company Interest.
8.7 Ownership of Subsidiary Interests and Shares
The Company and/or the other Group Companies are the sole record and
beneficial owners of the Interests and Shares identified on Schedule 8.1
hereto, including without limitation all of the Shares of May
Verpackungen Verwaltungs GmbH, the sole general partner of the Company,
in each case free and clear of all Encumbrances. Except with respect to
the right to receive dividends and distributions as provided in Section
2.2, such Interests and Shares are not subject to any options, warrants
or other restrictions or Encumbrances. Each Group Company owning such
Shares and Interests has full legal power, right and authority to sell
and convey to any person legal and beneficial title to such Interests
and Shares, except that the right to receive certain dividends and
distributions shall remain with Seller pursuant to Section 2.2.
Following Seller's sale of the Company Interest to Buyer, the Company
will, except as provided in Section 2.2, retain good and marketable
title to such Interests and Shares, including without limitation all of
the Shares of May Verpackungen Verwaltungs GmbH, the sole general
partner of the Company, in each case free and clear of all Encumbrances.
Such Interests and Shares are not subject to any options, warrants,
rights of first refusal, co-sale rights, or any other restrictions.
8.8 Financial Statements
a. The Financial Statements attached as Schedule 8.8(a) hereto
present a true and fair view of the consolidated and consolidating
balance sheet of the Group Companies as of March 31, 1999 and the
consolidated and consolidating income statement of the Group
Companies for the periods covered thereby, in each case taken as a
whole, and in each case in conformity with German GAAP applied
consistently during such periods in accordance with the past
accounting practices of Seller; provided that, in the unaudited
<PAGE> 34
consolidated financial statements, an elimination of inter-company
profits has not been made.
b. The Effective Date Financial Statements, when prepared in
accordance with Section 7, shall present a true and fair view of
the consolidated and consolidating balance sheet of the Group
Companies as of December 31, 1999 and the consolidated and
consolidating income statement of the Group Companies for the
periods covered thereby, in each case taken as a whole, and in
each case in conformity with German GAAP applied consistently
during such periods in accordance with the past accounting
practices of Seller (provided that the Effective Date Financial
Statements shall provide for an elimination of inter-company
profits).
c. The Company's Net Equity stated on the Effective Date Financial
Statements shall be equal to or greater than DM 22,667,904.
d. Except as set forth on Schedule 8.8(d), no Group Company has any
off-balance sheet obligation in respect of any financings (such as
lease arrangements).
8.9 No Material Adverse Effect
Since March 31, 1999, no Group Company has suffered any Material Adverse
Effect.
8.10 Bank Accounts
Schedule 8.10 sets forth the names of all banks or other financial
institutions with which any Group Company has an account or safe deposit
box on the date of this Agreement, and such Schedule 8.10 identifies
each such account and safe deposit box, together with the names of all
persons authorized to draw therefrom or have access thereto. Up to and
including the Closing Date, Seller shall deliver to Buyer written notice
of all accounts and safe deposit boxes opened by any Group Company on or
after the date hereof and on or prior to such Closing Date.
8.11 Properties and Assets
Other than due to (i) retention of title clauses and (ii) statutory
security rights (e.g., landlord liens), each Group Company has good and
valid record and marketable title to, and are the lawful
<PAGE> 35
owners of or holders of valid leasehold interests in, all of the
tangible and intangible assets, properties and rights used in connection
with its business, free and clear of all Encumbrances. All of the
tangible assets and properties of each Group Company with an original
acquisition value in excess of DM 20,000, whether real or personal,
owned or leased, have been well maintained and are in good operating
condition and repair (with the exception of normal wear and tear).
Immediately after the Closing, the Group Companies shall own or have a
continuing right to use all the assets, properties, rights, know-how,
processes and ability which are required for or currently used in
connection with the operation of their respective businesses as they are
presently conducted.
8.12 Computer Software
a. All of the Software used by any Group Company complies with the
necessary requirements to function efficiently after December 31,
1999, and is otherwise "Year 2000 Compliant."
b. Each Group Company has all of the software necessary to operate in
the Ordinary Course of Business (the "SOFTWARE"). The Software,
including without limitation the system provided by IBM and SAP
(the "SAP SYSTEM"), is free from any significant defect or
programming or documentation error, operates and runs in a
reasonable and efficient business manner, conforms to the stated
specifications thereof, and, with respect to owned Software, the
applications can be recreated from their associated source codes.
No Group Company has knowingly altered its data, or any Software
or supporting software which may, in turn, damage the integrity of
the data, stored in electronic, optical, or magnetic or other
from. On the basis of its use of the virus program "Inoculate IT"
(version 4.53) throughout the network, Seller has no knowledge of
the existence of any bugs or viruses with respect to the Software.
c. To the extent that any of the Software has been designed or
developed by the development staff of, or by consultants on behalf
of, Seller, Seller's Guarantor or any Group Company, such Software
is original and capable of copyright protection in the
jurisdiction of such company and the applicable Group Company has
complete rights to and ownership of such Software including
possession of, or ready access to, the source
<PAGE> 36
code for such Software in its most recent version. No part of any
such Software is an imitation or copy of, or infringes upon, the
software of any other person or entity, or violates or infringes
upon any common law or statutory rights of any other person or
entity, including, without limitation, rights relating to
defamation, contractual rights, copyrights, trade secrets, and
rights of privacy or publicity. Neither Seller nor Seller's
Guarantor nor any Group Company has sold, assigned, licensed,
distributed or in any other way disposed of or encumbered any of
the Software. The Software to the extent it is licensed from any
third party licensor or constitutes "off-the-shelf" software, is
held by the applicable Group Company legitimately and is fully
transferable hereunder without any third party consent. All of the
computer hardware of the Group Companies has legitimately licensed
software installed therein.
d. Seller shall, to the maximum possible extent, pass through to
Buyer and the Group Companies all manufacturer's and supplier's
warranties and support contacts for the Software that are not
owned by the Group Companies, and Seller shall, upon Buyer's
reasonable request, execute each and every document that is
necessary or appropriate to effectuate Buyer's and the Group
Companies' obtaining and enjoying the benefits of any such
pass-through warranty. The books and records of the Group
Companies contain true and accurate copies of all documentation
(end user or otherwise) relating to the use, maintenance and
operation of the Software.
8.13 Real Property
a. Schedule 8.13 contains (i) excerpts of the land register owned by
the Group Companies (the "REAL PROPERTY") and (ii) true, accurate
and complete descriptions of the real estate held or used by the
Group Companies under real property leases (the "REAL PROPERTY
LEASES"). The Real Property and the land subject to the Real
Property Leases constitute all of the land owned, held or used by
the Group Companies in the conduct of their respective businesses.
Seller has delivered to Buyer true, accurate and complete copies
of the Real Property Leases and the most recent surveys (if any)
for the Real Property in the possession of Seller or any Group
Company, together with copies of all reports (if any) of any
engineers, environmental consultants or other consultants in its
possession or control relating to any of the Real Property or land
subject to a Real Property Lease.
<PAGE> 37
b. The activities carried on in all buildings, plants, facilities,
installations, fixtures and other structures or improvements
included as part of, or located on or at, the Real Property or the
land subject to a Real Property Lease, and the buildings, plants,
facilities, installations, fixtures and other structures or
improvements themselves, comply, subject to customary permitted
exceptions, with any applicable zoning, environmental or health
regulations or ordinance or any other similar Law.
c. Except as set forth in Schedule 8.13 or as provided in a Real
Property Lease, no parcel of land included in the Real Property or
subject to a Real Property Lease relies on or regularly makes use
of access to the nearest public road or right-of-way over land
owned by others, except where such access is by means of one or
more valid recorded easements not subject to divestiture, the
terms of which have been disclosed in writing to Buyer prior to
the date hereof. All covenants or other restrictions (if any) to
which any of the Real Property is subject or to which any land
subject to a Real Property Lease is subject are being in all
respects properly performed and observed and, except for covenants
contained in the Real Property Leases, do not provide for
forfeiture or reversion of title if violated, and no Group Company
has received any notice of violation (or claimed violation)
thereof.
d. Except as set forth in Schedule 8.13 or as provided in a Real
Property Lease, each separate parcel of land included in the Real
Property or subject to a Real Property Lease has adequate water
supply, storm and sanitary sewer facilities, access to telephone,
gas and electrical connections, fire protection, drainage and
other public utilities, and has adequate parking facilities that
meet all requirements imposed by applicable Laws and are otherwise
sufficient in the Ordinary Course of Business of each Group
Company. None of the Real Property is subject to any Encumbrance,
easement, right-of-way, building or use restriction, exception,
variance, reservation or limitation as might in any material
respect interfere with or impair the present and continued use
thereof in the Ordinary Course of Business of any Group Company.
e. Except as set forth on Schedule 8.13, there is no pending or, to
Seller's knowledge, threatened or proposed proceeding or
governmental action to modify the zoning classification of, or to
condemn or take by the power of eminent domain (or to purchase
<PAGE> 38
in lieu thereof), or to classify as a landmark, or to impose
special assessments on, or otherwise to take or restrict in any
way the right to use, develop or alter, all or any part of the
Real Property or the land subject to the Real Property Leases.
f. All of the Real Property Leases are in full force and effect,
valid and enforceable in accordance with their respective terms,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws
in effect which affect the enforcement of creditors' rights
generally and by equitable limitations on the availability of
specific remedies. None of the Real Property Leases have been
amended or modified except as set forth on Schedule 8.13.
g. No Group Company has received any notice of any, and there exists
no, dispute, claim, event of default or event which constitutes or
would constitute (with notice or lapse of time or both) a default
under any Real Property Lease. All rent and other amounts due and
payable with respect to the Real Property Leases have been paid
through the date of this Agreement and all rent and other amounts
due and payable with respect to the Real Property Leases on or
prior to the Closing Date will have been paid prior to the Closing
Date.
h. All lessors under the Real Property Leases have consented or prior
to Closing will have consented (where such consent is necessary)
to the consummation of the transactions contemplated by this
Agreement or the Related Agreements without requiring modification
in the rights or obligations thereunder. There are no indications
that the landlord with respect to any Real Property Lease would
refuse to renew such lease upon expiration of the period thereof
upon substantially the same terms, except for rent increases that
would not be material.
<PAGE> 39
8.14 Intellectual Property
Schedule 8.14 sets forth a true, accurate and complete list of all of
the Registrable Intellectual Property owned by any Group Company. Except
as set forth on Schedule 8.14:
a. all Intellectual Property used by the Group Companies in their
businesses is owned by them free and clear of all Encumbrances,
and is not subject to any license, royalty or other agreement, and
no Group Company has granted any license or agreed to pay or
receive any royalty in respect of any such Intellectual Property;
b. no Registrable Intellectual Property of any Group Company has been
or is the subject of any pending or threatened litigation or claim
of infringement;
c. no license or royalty agreement to which any Group Company is a
party is in breach or default by any counterparty to such Group
Company thereunder and no such counterparty is the subject of any
notice of termination or default given or threatened under any
such license or agreement;
d. the products and services produced and sold by the Group
Companies, any process, method, part, design, material or other
Intellectual Property they employ, and the marketing and use by
the Group Companies of any such product, service or Intellectual
Property, in each case do not infringe any Registrable
Intellectual Property or confidential or proprietary rights of
another person, and no Group Company has received any notice
contesting its right to use any such Intellectual Property; and
e. each Group Company owns or possesses adequate rights in and to all
Intellectual Property necessary to conduct their business in the
Ordinary Course of Business.
8.15 Contracts
Schedule 8.15 sets forth a true, accurate and complete list of all
Contracts and arrangements of the following types to which any Group
Company is a party or by which any of them is bound, or to which any of
their respective assets or properties is subject:
a. any Collective Bargaining Agreement;
<PAGE> 40
b. any Contract or arrangement of any kind with any employee, officer
or director of any Group Company or any of the respective
Affiliates or relatives (within the meaning of ss. 15 AO
(Angehoriger) of such individuals, or any Contract or other
arrangement of any kind with Seller or any Affiliate of Seller;
provided that, in the case of employment agreements providing for
an annual remuneration of less than DM 100,000, Seller shall only
be required to provide (i) a list of the Group Company employees
(containing their names, ages and remuneration as of December 14,
1999), (ii) separate written disclosure of any other special
material terms of employment and (iii) the model contracts
currently in use by the Group Companies;
c. any Contract or arrangement with a sales representative,
manufacturer's representative, distributor, dealer, broker, sales
agent, advertising agent or other person engaged in sales,
distributing or promotional activities, or any Contract for a
Group Company to act in one of the foregoing capacities on behalf
of any person;
d. any Contract or arrangement of any nature which involves the
payment or receipt of cash or other property, an unperformed
commitment, or goods or services, having a value in excess of DM
100,000 or which cannot be fully performed within six months
following the date of this Agreement, other than (i) Contracts for
the purchase of raw materials in the Ordinary Course of Business
at market prices on a one-time basis, (ii) Contracts to fulfill
customer orders in the Ordinary Course of Business at customary
prices on a one-time basis, whether or not under frame
agreements, and (iii) maintenance and service agreement involving
payments of less than DM 100,000 entered into in the Ordinary
Course of Business; provided that Seller shall only be obligated
to list prior to Closing a Contract relating to an investment
listed on Schedule 8.15(d) to the extent that such Contract
involves an amount in excess of DM 100,000 and such Contract is
not yet fully performed;
e. any Contract or arrangement pursuant to which any Group Company
has made or will make loans or advances, or has or will have
incurred debts or become a guarantor or surety or pledged its
credit on or otherwise become responsible with respect to any
undertaking of another (except for the negotiation or collection
of negotiable instruments in transactions in the Ordinary Course
of Business), including without limitation the credit
<PAGE> 41
agreement regarding the loan made by the Company to Envasur;
f. any indenture, credit agreement, loan agreement, note, mortgage,
security agreement, lease of real property or personal property,
loan commitment or other Contract or arrangement relating to the
borrowing of funds, an extension of credit or financing in excess
of DM 100,000;
g. any Contract or arrangement involving a partnership, joint venture
or other cooperative undertaking;
h. any Contract or arrangement involving any restriction with respect
to any Group Company's activities or the geographical area of
operations or scope or type of business of any Group Company;
i. any power of attorney or agency agreement or arrangement with any
person pursuant to which such person is granted the authority to
act for or on behalf of any Group Company involving an amount in
excess of DM 50,000, or any Group Company is granted the authority
to act for or on behalf of any person involving an amount in
excess of DM 50,000;
j. any material Contract relating to the Computer System;
k. any Contract not made in the Ordinary Course of Business which is
to be performed in whole or in part at or after the date of this
Agreement, other than any such Contracts having an aggregate
contractual value, collectively, not in excess of DM 100,000;
l. any Contract executed within a period of three years prior to the
date of this Agreement, whether or not fully performed, relating
to any acquisition or disposition of any Group Company or any
predecessor in interest of any of them, or any acquisition or
disposition by any Group Company or any predecessor in interest of
any subsidiary, division, line of business, substantial portion of
its assets or real property; and
m. any Contract involving an amount in excess of DM 50,000 not
specified above that is material to any Group Company.
<PAGE> 42
Seller has delivered to Buyer true, accurate and complete copies of each
Document set forth on Schedule 8.15, and a written description of each
oral arrangement so listed. Seller has delivered to Buyer true, accurate
and complete copies of each Document in which its business conditions
are contained which has been used in the business of the Company and the
Subsidiaries and is in effect with respect to any third party on the
date hereof.
8.16 Permits, etc.
Each Group Company holds all licenses, certificates, permits, variances,
interim permits, permit applications, approvals, franchises, rights,
code approvals and private product approvals (collectively, "PERMITS")
necessary or appropriate for the carrying on of the businesses and
operations of any Group Company as now carried on, as previously carried
on and as proposed to be carried on. All such Permits are not limited in
duration, are in full force and effect, have been and are being complied
with and, will not be affected by the sale of the Company Interest to
Buyer hereunder.
8.17 Insurance
a. Schedule 8.17 sets forth a true, accurate and complete list of all
policies of fire, liability, workmen's compensation, title and
other forms of insurance owned, held by or applicable to the Group
Companies (and their respective businesses and assets), and Seller
has heretofore delivered to Buyer a true, accurate and complete
copy of all such policies, including all occurrence-based policies
applicable to the Group Companies (and their respective businesses
and assets) for all periods prior to the Closing Date. All such
policies are in full force and effect, all premiums with respect
thereto covering all periods up to and including the Closing Date
have been paid, and no notice of cancellation or termination has
been received with respect to any such policy. Such policies are
sufficient for compliance with (i) all requirements of Law and
(ii) all Contracts to which any Group Company is a party, and are
valid, outstanding and enforceable policies. Such insurance
policies provide types and amounts of insurance customarily
obtained by businesses similar to the business of the Group
Companies. Except as set forth on Schedule 8.17, no Group Company
has been refused any insurance with respect to its assets or
operations, and its coverage has not been limited by any insurance
carrier to
<PAGE> 43
which it has applied for any such insurance or with which it has
carried insurance, during the last three years.
b. Schedule 8.17 sets forth (except for claims disclosed on Schedule
8.21) a true, accurate and complete list of all claims which have
been made by any Group Company within the past three years
exceeding DM 50,000 under any workmen's compensation, general
liability, property or other insurance policy applicable to any
Group Company or any of its respective properties. Except as set
forth on Schedule 8.17 or 8.21, there are no pending or threatened
claims under any insurance policy exceeding DM 20,000. Such claim
information includes the following information with respect to
each accident, loss, or other event: (i) the identity of the
claimant; (ii) the date of the occurrence; (iii) the status as of
the report date and (iv) the amounts paid or expected to be paid
or recovered.
c. All product liability claims against any of the Group Companies
arising out of a product produced by any of the Group Companies
before Closing Date are covered by insurance policies of the Group
Companies in place before the Closing Date, whether or not such
product liability claim is reported to the relevant insurers
before or after the Closing Date.
8.18 Employment and Labor Matters
a. The Group Companies have and currently are conducting their
respective businesses in material compliance with all Laws
relating to employment and employment practices, terms and
conditions of employment, wages and hours and non discrimination
in employment.
b. The relationships of the Group Companies with their respective
employees and their unions are good and there is, and during the
past three years there has been, no labor strike, slow-down, work
stoppage or other similar labor difficulty affecting production
actually pending or threatened against or involving any Group
Company. No grievance or arbitration proceedings arising out of or
under any Collective Bargaining Agreement to which any Group
Company and their respective employees are subject is pending and
no claim therefor has been asserted.
8.19 Taxes
<PAGE> 44
a. The amounts provided as a liability or accrual for Taxes on the
Financial Statements are adequate to cover all unpaid liabilities
for all Taxes, whether or not disputed, that have accrued with
respect to or are applicable to the period ended on and including
March 31, 1999 or to any years and periods prior thereto for which
any Group Company may be directly or contingently liable in its
own right or as a transferee of the assets of, or successor to,
any person. The amounts provided as a liability or accrual for
Taxes on the Effective Date Financial Statements will be adequate
to cover all unpaid liabilities for all Taxes, whether or not
disputed, that have accrued with respect to or are applicable to
the period ended on and including the Effective Date or to any
years and periods prior thereto for which any Group Company may be
directly or contingently liable in its own right or as a
transferee of the assets of, or successor to, any person. There
are no Encumbrances relating to Taxes (other than Encumbrances for
current taxes not yet due and payable) upon the properties or
assets of any Group Company.
b. All filings in respect of Taxes which are required by applicable
Law to have been made for any Group Company for all periods
through and including the Closing Date have been made. All taxes
shown as due on all such filings have been paid or fully reserved
in the Financial Statements or will be paid or fully reserved in
the Effective Date Financial Statements as described in clause
(a). Each such filing is true, accurate and complete.
c. Except as attached to Schedule 8.19 as an exhibit, no Group
Company is a party to any profit and loss sharing agreement
(Gewinn- und Verlustabfuhrungsvertrag).
8.20 Environmental Matters
Except as provided in Section 7.2:
a. the business and operations of the Group Companies are in full
compliance with all applicable Environmental Laws, and no
condition exists or event has occurred which, with or without
notice or the passage of time or both, would constitute a
violation of or give rise to any Encumbrance or liability of any
Group Company under any applicable Environmental Law;
b. the Group Companies are in possession of all Environmental Permits
required for the
<PAGE> 45
conduct or operation of their respective businesses (or any part
thereof), and are in material compliance with all of the
requirements and limitations included in such Environmental
Permits;
c. there are no, and no Group Company has used or stored any,
Hazardous Substances in, on, or at any of the properties or
facilities of any Group Company, and no Hazardous Substances have
been used in the construction or repair of, or any alterations or
additions to, any of the properties or facilities of any Group
Company, but only to the extent that any of the foregoing would,
with or without notice or the passage of time or both, constitute
a violation of or give rise to any Encumbrance or liability of any
Group Company under any applicable Environmental Law;
d. no Group Company has received any notice from any Governmental
Authority or any other person that any aspect of the business,
operations or facilities of any Group Company is in violation of
any Environmental Law or Environmental Permit, or that any of them
is responsible (or potentially responsible) for the cleanup or
remediation of any substances in, at or under any location;
e. no Group Company has deposited or incorporated any Hazardous
Substances into, on, beneath, or adjacent to any property, but
only to the extent that any of the foregoing would, with or
without notice or the passage of time or both, constitute a
violation of or give rise to any Encumbrance or liability of any
Group Company under any applicable Environmental Law;
f. no Group Company is the subject of any pending or threatened
litigation or proceedings in any forum, judicial or
administrative, involving a demand for damages, injunctive relief,
penalties, or other potential liability with respect to violations
of any Environmental Law or clean up or remediation of any
property;
g. Seller has delivered all surveys, assessments, reports,
correspondence, notices and other documents and written
information regarding the environmental status of the properties
or facilities of the Group Companies or the compliance of the
business, operations or facilities of each Group Company with any
Environmental Law;
<PAGE> 46
h. no condition has existed or event has occurred with respect to any
property that was at any time owned or leased, or any direct or
indirect subsidiary that was at any time owned, by any Group
Company, any predecessor to any Group Company or any person that
is or was an Affiliate of any Group Company, which property or
subsidiary has been sold, transferred or disposed or for which any
lease has terminated that in any case would, with or without
notice, passage of time or both, give rise to any present or
future liability of any Group Company pursuant to any applicable
Environmental Law; and
i. there has been no release or, to Seller's knowledge, threatened
release of any Hazardous Substance at, from or under any Group
Company's property, now or previously owned or used, or that of
predecessor parties, but only to the extent that any of the
foregoing would, with or without notice or the passage of time or
both, constitute a violation of or give rise to any Encumbrance or
liability of any Group Company under any applicable Environmental
Law.
8.21 Litigation
a. Except as set forth on Schedule 8.21, there are no actions, suits,
arbitrations, regulatory proceedings or other litigation,
proceedings or governmental investigations involving an amount in
dispute in excess of DM 50,000 pending or threatened against or
affecting any Group Company or any of their respective officers,
directors, employees, agents or stockholders thereof in their
capacity as such, or any of the properties or businesses of any
Group Company.
b. There are no and have not in the last two years been any actions,
suits, arbitrations, regulatory proceedings or other litigation,
proceedings or governmental investigations involving an amount in
dispute in excess of DM 50,000 involving or brought by any
Governmental Authority against any Group Company.
c. There are no claims, actions, suits, proceedings or investigations
pending or threatened by or against Seller, any Group Company with
respect to this Agreement or any Related Document, or in
connection with the transactions contemplated hereby or thereby,
and Seller has no reason to believe there is a valid basis for any
such claim, action, suit, proceeding, or investigation.
<PAGE> 47
8.22 Customers and Suppliers
Schedule 8.22 lists (a) the ten customers of the Group Companies having
the highest revenues during the 12-month period ended October 31, 1999
("MAJOR CUSTOMERS"), together with the amount of the Group Companies'
sales to each such Major Customer during such period, and (b) each
supplier ("MAJOR SUPPLIER") from whom the Group Companies purchased or
commissioned more than DM 3,000,000 of materials, products, or services
during the 12-month period ended October 31, 1999, together with the
amount of the Group Companies' purchases from each such Major Supplier
during such period. Except as set forth on Schedule 8.22, neither Seller
nor any Group Company knows or has received any notice that any Major
Customer or Major Supplier has or will reduce the amount of products
purchased by or the materials, products or services supplied by, as
applicable, such person.
8.23 Envasur
No Group Company has or shall have any liability in respect of the
Company having acted as managing director of Envasur at any time on or
prior to the Closing Date.
8.24 Solvency
Each Group Company is solvent and no order has been made, petition
presented, resolution adopted or meeting convened for its dissolution,
there are no actions or proceedings under any bankruptcy, insolvency,
liquidation, reorganization or similar laws concerning any Group Company
and no events have occurred which, under such laws, would justify any
such actions or proceedings.
9. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller, both on the date hereof
and (except as expressly provided herein) on the Closing Date, that:
9.1 Organization and Standing
Buyer is a corporation duly organized and validly existing under the
laws of the State of Delaware, U.S.A. and has the full and unrestricted
corporate power and authority to enter into this
<PAGE> 48
Agreement and to carry out the transactions contemplated hereby.
9.2 Authorization
The execution, delivery and performance by Buyer of this Agreement and
all other Related Documents contemplated hereby, the fulfillment of and
the compliance with the respective terms and provisions hereof and
thereof, and the consummation by Buyer of the transactions contemplated
hereby and thereby has been duly authorized by all necessary corporate
and shareholder action and will not (i) conflict with, or violate any
provision of, any term or provision of the Organizational Documents of
Buyer or (ii) conflict with, or result in any breach of, or constitute a
default under, any Agreement to which Buyer is a party or by which Buyer
is bound.
9.3 Binding Obligation
This Agreement constitutes, and each Related Document to be executed by
Buyer pursuant hereof when executed and delivered in accordance with the
provisions hereof shall constitute, a valid and binding obligation of
Buyer, enforceable in accordance with its terms, except as the same may
be limited by (i) any applicable bankruptcy, insolvency, reorganization,
moratorium or similar law affecting creditors' rights generally or (ii)
general principles of equity, whether considered in a proceeding in
equity or at law.
9.4 Consents and Approvals
Except as have been obtained or will have been obtained by the Closing
Date, (i) there is no requirement applicable to Buyer, to make any
filing with, or to obtain any permit, authorization, consent or approval
of any public body or other third party as a condition to the lawful
consummation of the transactions contemplated by this Agreement, and
(ii) there is no requirement that any party consent to the execution of
this Agreement, and the consummation of the transactions contemplated by
this Agreement by Buyer.
10. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION; REMEDIES
10.1 Survival
All representations, warranties, covenants, and agreements made by any
party to this Agreement
<PAGE> 49
herein or pursuant hereto shall survive the Closing and any
investigation, audit or inspection at any time made by or on behalf of
any party hereto.
10.2 Agreement of Seller to Indemnify
Subject to the conditions and limitations set forth in this Section 10,
Seller hereby agrees to indemnify, defend and hold harmless Buyer from
and against and in respect of all Claims asserted against, imposed upon,
resulting to or incurred by Buyer, any Group Company or any of their
Affiliates arising out of or resulting from any breach of any
representation, warranty, covenant or agreement given or made by Seller
in this Agreement. In the event that Buyer makes any claim hereunder in
respect of Seller's indemnity set forth in this Section 10, Seller shall
be entitled, for a period of 30 days following receipt of any such
claim, to try to put Buyer in the same position that Buyer would have
been in had the breach of representation, warranty, covenant or
agreement underlying such claim not occurred. If Seller fails to do so
within such 30 day period, Buyer shall be entitled to make a claim for
indemnification pursuant hereto.
10.3 Agreement of Buyer to Indemnify
Subject to the conditions and limitations set forth in this Section 10,
Buyer hereby agrees to indemnify, defend and hold harmless Seller from
and against and in respect of all Claims asserted against, imposed upon,
resulting to or incurred by Seller or its Affiliates arising out of or
resulting from any breach of any representation, warranty, covenant or
agreement given or made by Buyer in this Agreement. In the event that
Seller makes any claim hereunder in respect of Buyer's indemnity set
forth in this Section 10, Buyer shall be entitled, for a period of 30
days following receipt of any such claim, to try to put Seller in the
same position that Seller would have been in had the breach of
representation, warranty, covenant or underlying such claim not
occurred. If Buyer fails to do so within such 30 day period, Seller
shall be entitled to make a claim for indemnification pursuant hereto.
10.4 Indemnification Thresholds
a. Except as set forth below, neither party shall have any
indemnification obligations under this Section 10 in respect of a
breach of any representation, warranty, covenant or agreement set
forth in this Agreement, unless (i) the Claim arising from such
breach is
<PAGE> 50
in an amount of not less than DM 50,000 (a "QUALIFYING
INDEMNIFICATION CLAIM") and (ii) the aggregate Qualifying
Indemnification Claims by Buyer against Seller exceed DM 1,000,000
(the "AGGREGATE THRESHOLD"), provided that these thresholds shall
not apply to any Claim based on a breach of the warranties set
forth in Sections 8.6 (Ownership), 8.7 (Ownership Subsidiaries),
8.19 (Tax) and 8.23 (Envasur); and provided, further, that clauses
(b) and (c) shall, to the extent provided therein, apply instead
of the foregoing with respect to Claims arising out of breaches of
Sections 8.12(a) (Year 2000 Compliance) and 8.20 (Environmental).
In the event that the aggregate Qualifying Indemnification Claims
by one party against the other exceed the Aggregate Threshold, the
indemnifying party shall indemnify the other party in respect of
the amount exceeding the Aggregate Threshold.
b. In the case of any Claim arising from a breach of Section 8.12(a)
(Year 2000 Compliance) with respect to the SAP System, there shall
be no minimum amount for a Qualifying Indemnification Claim and no
minimum amount for the Aggregate Threshold. In the case of any
Claim arising from a breach of Section 8.12(a) (Year 2000
Compliance) other than as provided in the preceding sentence,
there shall be no minimum amount for a Qualifying Indemnification
Claim and the Aggregate Threshold shall be DM 100,000. In the case
of any Claim arising from a breach of Section 8.20
(Environmental), a Qualifying Indemnification Claim must be not
less than DM 200,000 (and, for the avoidance of doubt, such
environmental Claims must also satisfy the same Aggregate
Threshold of DM 1,000,000 applicable to other Claims pursuant to
clause (a)).
c. In the case of any Claim arising from a breach of Section 8.20
(Environmental) in connection with air emissions from the coating
of the opening grove of the 73 0 easy-opening end machine, a
Qualifying Indemnification Claim must be not less than DM 500,000
and there shall be no Aggregate Threshold.
d. In the event Buyer makes a claim arising from a breach of Section
8.12(a) (Year 2000 Compliance) and Seller and Buyer cannot agree
that such claim arises from a breach of Section 8.12(a) (Year 2000
Compliance), then Buyer may either withdraw such claim or cause
the Company to engage TUV Rhineland to evaluate the facts and
circumstances underlying such Claim to confirm that it relates to
a "Year 2000 Compliance" problem
<PAGE> 51
referred to in such Section. The decision of TUV Rhineland with
respect thereto shall, absent demonstrable error, be final and
binding on the parties. The party against whom the TUV Rhineland
decision is made shall pay for the costs and expenses of TUV
Rhineland in conducting such evaluation.
e. Notwithstanding the foregoing, no limitation shall apply to a
claim for indemnification hereunder involving fraud or intentional
or willful misconduct of a party, and the amount of any such
claims for indemnification shall not be aggregated with any other
claims for indemnification for purposes of determining a party's
indemnification obligations under this Section 10.
10.5 Limitations
Notwithstanding Sections 10.2 and 10.3 above, neither party shall have
liability for claims for indemnification asserted by the other party
with respect to any claim for indemnification under this Section 10 (a
"RELEVANT CLAIM"):
a. to the extent the Relevant Claim is correctly reflected as a
liability or covered by accruals in the Effective Date Financial
Statements;
b. to the extent any Relevant Claim, other than a Relevant Claim
based on a breach of the warranties set forth in Sections 8.6
(Ownership), 8.7 (Ownership Subsidiaries), 8.19 (Tax), 8.20
(Environmental) or 8.23 (Envasur), is asserted more than two years
following the Closing Date; to the extent any Relevant Claim based
on a breach of the warranties set forth in Sections 8.6
(Ownership) and 8.7 (Ownership Subsidiaries) is asserted more than
thirty years following the Closing Date; to the extent any
Relevant Claim based on a breach of the warranties set forth in
Section 8.19 (Tax) is asserted more than six months following the
date on which the relevant tax assessment has become final (nicht
mehr aufheb- und anderbar) and unappealable (bestandskraftig); to
the extent any Relevant Claim based on a breach of the warranties
set forth in Section 8.20 (Environmental) is asserted more than
five years following the Closing Date; and to the extent any
Relevant Claim based on a breach of the warranties set forth in
Section 8.23 (Envasur) is asserted after the statute of
limitations with respect to claims that can be brought against the
Company arising out of the circumstances described therein;
<PAGE> 52
c. to the extent that the amount of such Relevant Claim, other than a
Relevant Claim based on a breach of the warranties set forth in
Sections 8.6 (Ownership) or 8.7 (Ownership Subsidiaries) shall
exceed (i) together with all indemnification claims previously
paid by such party and its guarantor pursuant to this Section 10,
DM 50,000,000 until the first anniversary of the Closing Date, and
(ii) together with all claims previously paid by such party and
its guarantor pursuant to this Section 10, DM 30,000,000 from and
after the first anniversary following the Closing Date; and to the
extent that the amount of such Relevant Claim based on a breach of
the warranties set forth in Sections 8.6 (Ownership) or 8.7
(Ownership Subsidiaries), together with all indemnification claims
previously paid by such party and its guarantor pursuant to this
Section 10, exceed the Purchase Price;
d. to the extent of any reasonable current value of any Taxes benefit
that the party claiming indemnification or any of its Affiliates
receives as a result of the matter giving rise to the Relevant
Claim;
e. to the extent of any reasonable current value of any savings or
net benefit that the party claiming indemnification or any of its
Affiliates receives as a result of the matter giving rise to the
Relevant Claim; or
f. to the extent a Relevant Claim arising out of a breach of Section
8.20 is caused by a change in the general type of use of the Real
Property or the land subject to the Real Property Lease (e.g.
change from manufacturing to use by the public) after the Closing
Date which imposes additional requirements or burdens under
applicable Environmental Law.
For the avoidance of doubt, nothing in this Section 10 shall limit the
legal obligation of either party to mitigate its losses in connection
with any Claims subject to indemnification hereunder.
10.6 Third Party Claims
The parties shall observe the following procedures with respect to any
indemnification or other claims made hereunder by one party against the
other party that arise from claims, demands, actions or causes of action
made by third parties against Buyer, the Group Companies, Seller or any
of their respective Affiliates ("THIRD PARTY CLAIMS"):
<PAGE> 53
a. The indemnified party hereunder shall notify the indemnifying
party hereunder in writing promptly following the indemnified
party's discovery of any Third Party Claim, describing such Third
Party Claim in reasonable detail and providing copies of materials
received from the third party relating thereto.
b. In the event that the indemnifying party confirms its liability
with respect to such Third Party Claim, the indemnifying party
shall be entitled to assume the defense of, negotiate or otherwise
resolve such claim. The indemnified party shall have the right
(but not the obligation) to participate in the defense,
negotiation or resolution thereof, and to employ counsel at its
own cost and expense separate from the counsel employed by the
indemnifying party. No such claim may be finally settled without
the prior consent of the indemnified party if such settlement
would have a direct financial effect on it for which it is not
indemnified, such consent not to be unreasonably withheld or
delayed.
c. Until such time as the indemnifying party has confirmed to the
indemnified party its liability with respect to such Third Party
Claim, the indemnified party may engage counsel or representatives
of its own choosing with respect to any such Third Party Claim,
such representation (including the compromise or settlement of any
such Third Party Claim and all other costs related thereto) to be
undertaken on behalf of and for the account and risk of the
indemnifying party; provided that, subject as provided in the
following sentence, the compromise or settlement of any such Third
Party Claim shall not be agreed by the indemnified party without
prior notice to the indemnifying party of such intended compromise
or settlement giving the indemnifying party reasonable opportunity
to comment thereon and/or confirm liability and assume the defense
of such Third Party Claim pursuant to clause (b); and provided,
further, that the indemnified party shall permit the indemnifying
party, upon the latter's written request, to participate in the
defense, negotiation or resolution of any such Third Party Claim,
or of such portion thereof as involves such party's obligation to
indemnify, at the indemnifying party's cost and expense.
d. The party undertaking the defense of any Third Party Claim shall
keep the other party reasonably informed of the progress of the
defense of, or other action taken in respect of, such Third Party
Claim.
<PAGE> 54
e. Whether or not the indemnified party chooses to defend or
prosecute any such claim, suit, action or proceeding, all of the
parties hereto shall co-operate in the defense or prosecution
thereof. Any settlement or compromise made or caused to be made in
accordance with this Section 10.6 of any Third Party Claim shall
also be binding upon each party hereto in the same manner as if a
final judgment or decree had been entered by court of competent
jurisdiction in the amount of such settlement or compromise.
10.7 Participation of Seller in Tax Proceedings
Buyer and the Group Companies shall notify Seller promptly after receipt
of the issuance of any tax assessments and/or any order announcing a tax
audit or any other audit ordered by a Governmental Authority that may
relate to the period up the Effective Date, such notice to include
complete copies of all documents received with respect thereto by Buyer
or the relevant Group Company. Seller shall be given the opportunity to
examine all correspondence with respect to any such matter and may
participate in all proceedings relating thereto. If requested by Seller,
Buyer shall, and shall cause each Group Company to, contest any tax
assessment relating to any liability for Taxes for which Buyer is
indemnified hereunder (a "COVERED TAX CLAIM"). Seller shall reimburse to
Buyer all costs and expenses reasonably incurred by Buyer, the Company
or its Subsidiaries in connection therewith as and when incurred. If
Seller requests Buyer or any Group Company to commence legal proceedings
against any Governmental Authorities with respect to any Covered Tax
Claim, Buyer or such Group Company, as the case may be, may elect
instead to authorize Seller or a person designated by Seller to commence
such proceedings and to pursue, at Seller's own cost and expense, all
legal remedies with respect thereto, including contesting such claim,
handling any legal proceeding with respect thereto, contesting or
appealing any judgment or order with respect thereto, entering into
negotiations to settle such claims and concluding settlement agreements
with respect thereto, or taking any other measures with regard to such
claims as Seller shall in its reasonable judgment deem appropriate;
provided that Seller shall hold harmless Buyer and the Group Companies
from any and all liabilities arising out of such authorization.
10.8 Tax Refunds
To the extent that the amount reserved for the payment of Taxes in the
Financial Statements and
<PAGE> 55
the Effective Date Financial Statements exceeds the total amount of
Taxes finally paid by the Group Companies after the last date on which
all relevant tax assessment have become final (nicht mehr aufheb- und
anderbar) and unappealable (bestandskraftig), Buyer shall repay to
Seller the amount of such excess.
10.9 Exclusive Remedy
Except as expressly provided herein, the indemnification provided in
this Section 10 shall be the exclusive remedies of Buyer and Seller as
among themselves with respect to any Claims asserted against, imposed
upon, resulting to or incurred by any of them arising out of or
resulting from any breach of any representation, warranty, covenant or
agreement given or made by any of them in this Agreement; provided that,
notwithstanding the foregoing, the foregoing limitation shall not apply
to any claim brought on the basis of the fraud or intentional or willful
misconduct of a party, and Buyer and Seller shall be entitled to seek
specific performance, injunctive or other equitable relief where money
damages may not be an adequate remedy.
10.10 Continuity of Indemnities and Undertakings.
Seller and Seller's Guarantor agree that all indemnities and
undertakings provided by them in this Agreement shall inure to the
benefit of and be enforceable by all subsequent purchasers of the
Company Interest from Buyer, directly and indirectly.
10.11 Subrogation
Upon settlement of Seller's liability under this Agreement, Buyer shall,
and shall cause the Company and its Subsidiaries to, assign to Seller,
Seller's Guarantor or any person designated by Seller any rights and
claims that they may have against third parties with respect to the
matters indemnified up to the amount of indemnification by Seller or
Seller's Guarantor, if such claims were not assigned by operation of
law. All such claims, whether assigned or transferred by operation of
law, shall be subordinated to all remaining claims of Buyer, the Company
and the Subsidiaries against such third party, in the event such
remaining claims could have not been recovered from Seller pursuant to
the limitations in this Section 10.
11. TRADEMARK AND NAME
<PAGE> 56
11.1 License
Subject to Sections 11.2 through 11.5, inclusive, Seller's Guarantor
hereby grants to the Company a non-exclusive, royalty-free license for
the bona fide use of the "May" trademark set forth on Schedule 11 (the
"MAY TRADEMARK") on a world-wide basis for a period of five years
following the Closing Date. The license is restricted to the scope of
the present use of the May Trademark by the Group Companies.
11.2 Use of Name
Buyer and its Affiliates are allowed to make bona fide use of the terms
"May Verpackungen", "May Metallverpackungen" and 'May Can" as part of
and in materials referring to their names for the period for which the
license provided in Section 11.1 is effective pursuant to this Section
11. Neither Buyer nor any of its Affiliates may use the term "May" in
its name without using the term "Verpackungen", "Metallverpackungen" ,
"Metal Packaging" or "Can" therewith.
11.3 Bona Fide Use
The use of the May Trademark and names will be considered to be bona
fide if used in good faith to market metal packaging products and
services.
11.4 Revocation
If Buyer or any of its Affiliates makes use of the May Trademark in
breach of the bona fide requirement in Section 11.3, Seller's Guarantor
is entitled to revoke the license wholly or partly at its own
discretion.
11.5 Indemnification
Buyer shall indemnify, defend and hold harmless Seller and its
Affiliates from and against any and all fines, suits, claims, demands,
penalties, losses and actions (including the reasonable fees and
expenses of lawyers) arising from any non-bona fide use of the May
Trademark or the term "May" as part of the company name pursuant to
Section 11.2 by Buyer or its Affiliates.
12. TERMINATION
<PAGE> 57
12.1 Termination
This Agreement may be terminated at any time before the Closing Date
under any one or more of the following circumstances:
a. by the mutual consent of Buyer and Seller; or
b. by Seller or Buyer pursuant to Section 4.3.
12.2 Effect of Termination
In the event this Agreement is terminated as provided in this Section
12, this Agreement shall, except as expressly provided herein, forthwith
become wholly void and of no effect, and the parties shall be released
from all future obligations hereunder; provided that the provisions of
Section 23 relating to Arbitration shall not be extinguished but shall
survive such termination in accordance with their respective terms.
13. RESCISSION
13.1 Rescission
This Agreement may be rescinded by Seller, but only in accordance with
this Section 13.
13.2 Buyer Notice
On or prior to January 31, 2000, Buyer shall deliver to Seller written
notice to the effect of one of the following:
a. Buyer has no Claims to make against Seller under Section 10
arising out of Seller's representation and warranty in Section
8.12(a); or
b. Buyer has or may have Claims to make against Seller under Section
10 arising out of Seller's representation and warranty in Section
8.12(a), which notice shall itemize the nature and estimated cost
of repairing or compensating Buyer for such Claims, to the
greatest extent practicable, and which estimated costs are less
than DM 10,000,000; or
<PAGE> 58
c. Buyer has Claims to make against Seller under Section 10 arising
out of Seller's representation and warranty in Section 8.12(a),
which notice shall itemize the nature and estimated cost of
repairing or compensating Buyer for such Claims, and which
estimated costs equal or exceed DM 10,000,000.
In the event that Buyer fails to give notice by January 31, 2000 in
accordance with the foregoing, Buyer shall be deemed to have delivered
the notice described in Section 13.2(a).
13.3 Seller Response
Following receipt or deemed receipt of Buyer's notice pursuant to
Section 13.2, the following shall occur:
a. upon Seller's receipt or deemed receipt of a notice of the nature
described in Section 13.2(a) or (b), Seller shall forthwith become
entitled to receive all of the funds then on deposit in the Joint
Account, together with all interest accrued thereon; and
b. upon Seller's receipt of a notice of the nature described in
Section 13.2(c), Seller shall be entitled to either:
i. confirm that its indemnity undertaking set forth in Section 10
covers the Claims identified in Buyer's notice, whereupon
Seller shall forthwith become entitled to receive all of the
funds then on deposit in the Joint Account, together with all
interest accrued thereon, or
ii. state by written notice to Buyer and to Bank One that it
rescinds this Agreement, whereupon this Agreement shall
forthwith be rescinded and Buyer shall become entitled to
receive all of the funds then on deposit in the Joint Account,
together with all interest accrued thereon.
In the event that Seller fails to deliver any notice of the nature
referred to in Section 13.3(b) or fails to deliver a notice
conforming with either clause (b)(i) or (b)(ii), in either case on
or prior to March 1, 2000, then Seller shall be deemed to have
delivered a notice of the nature described in Section 13.3(b)(ii)
with the effects set forth therein and in Section 3.4; provided
that such deadline shall be postponed until a date which is 10
days
<PAGE> 59
following the completion of the TUV Rhineland evaluation set forth
in Section 10.4(d) in the event that such an evaluation is
demanded by Seller by notice to Buyer on or prior to February 15,
2000.
13.4 Effect of Rescission
In the event this Agreement is rescinded as provided in this Section 13,
(a) this Agreement shall, except as expressly provided herein, forthwith
become wholly void and of no effect, and the parties shall be released
from all future obligations hereunder; provided that the provisions of
Section 23 relating to Arbitration shall not be extinguished but shall
survive such termination in accordance with their respective terms, and
(b) title to the Company Interest shall revert to Seller, with effect
from the Effective Date, free and clear of all Encumbrances pursuant to
the condition subsequent in the deed of transfer referred to in Section
5.2(a). In the case of rescission under this Section 13, Seller shall
hold Buyer harmless without limitation for any and all Claims which may
be brought against Buyer and its Affiliates resulting from Buyer owning
the Company Interest for the period from the Closing Date until the
effective date of such rescission.
13.5 Irrevocable Instruction
In the event that Buyer at any time becomes entitled to receive the
amounts on deposit in the Joint Account pursuant to this Section 13,
Buyer hereby irrevocably instructs Bank One to transfer and apply such
amounts directly toward repayment of obligations of Buyer owing to such
bank or to any bank syndicate in which such bank is a member. Except as
provided in this Section 13, including the foregoing sentence, each of
Buyer and Seller agree not to create any Encumbrance over amounts on
deposit in the Joint Account.
<PAGE> 60
14. COSTS
Except where this Agreement provides otherwise, each party shall pay its
own costs and expenses (and any value added tax thereon), including,
without limitation, its legal and accounting costs and expenses,
relating to the negotiation, preparation, execution and performance by
it of this Agreement and of each Related Document referred to herein;
provided that Buyer shall bear all notarial costs and court fees
incurred in connection with the execution of this Agreement and each
Related Document, as well as all real estate transfer taxes, fees of
merger control authorities and other duties, fees and taxes whatsoever
in connection with the transfer of the Company Interest to Buyer in the
manner contemplated herein.
15. NO WAIVERS
The failure to exercise or delay in exercising a right, power, or remedy
provided by this Agreement or by law does not impair or constitute a
waiver of the right, power, or remedy or a waiver of other rights or
remedies. No single or partial exercise of a right or remedy provided by
this Agreement or by law prevents further exercise of the right or
remedy or the exercise of another right or remedy.
16. ASSIGNMENT
16.1 Restriction on Assignment
Subject to Sections 16.3 and 16.4 and except as provided in Section
10.10, this Agreement is personal to the parties to it. Accordingly, no
party may, without the prior written consent of the others, assign or
delegate its rights, duties or obligations arising under or out of this
Agreement.
16.2 Seller's Guarantor
a. Until five years following the Closing Date, Seller's Guarantor
agrees that it shall promptly notify Buyer if at any time Seller's
Guarantor learns that its consolidated shareholder capital
(Eigenkapital) is less than twice the amount of the relevant
aggregate maximum liability of Seller's indemnity obligations set
forth in Section 10.5(c)(i) and (ii),
<PAGE> 61
as the case may be.
b. Without limiting the foregoing, Seller's Guarantor agrees that it
shall not suffer or permit to occur any transaction involving the
sale, distribution or other transfer of its assets if, after
giving effect to transaction, the consolidated shareholder capital
(Eigenkapital) of Seller's Guarantor would be less than the
relevant minimum amount referred to in clause (a)(i) unless, prior
to the effectiveness of any such transaction, Seller's Guarantor
either, at its election (i) delivers to Buyer a first demand bank
guarantee from a commercial bank and on terms reasonably
acceptable to Buyer against which Buyer may draw to satisfy
Relevant Claims hereunder, or (ii) procures that the person
obtaining such assets (A) has a consolidated shareholder capital
(Eigenkapital) of not less than the relevant minimum amount
referred to in clause (a)(i) and (B) enters into an assumption
agreement expressly assuming and agreeing to perform in accordance
herewith all of Sellers' Guarantor's obligations hereunder.
16.3 Assignment to Affiliates
Notwithstanding any other provision of this Agreement, Buyer may,
without the consent of Seller, assign or delegate its rights, duties or
obligations arising under or out of this Agreement to any Affiliate of
Buyer, provided that Buyer shall remain responsible for such assignee's
performance of Buyer's obligations under this Agreement and for any
Taxes arising out of such assignment. Notwithstanding any other
provision of this Agreement, Seller may, without the consent of Buyer,
assign or delegate its rights, duties or obligations arising under or
out of this Agreement to any Affiliate of Seller owning at the time of
such assignment the Company Interest, provided that Seller shall remain
responsible for such assignee's performance of Seller's obligations
under this Agreement and for any Taxes arising out of such assignment.
16.4 Assignment to Financing Banks
Buyer is permitted to assign all of its rights hereunder, including
without limitation Buyer's right to receive funds on deposit in the
Joint Account pursuant to Sections 3.4 and 13, to one or more banking
institutions as security for Buyer's obligations from time to time owing
to such bank or banks in respect of loans obtained by Buyer to finance
the Purchase Price payable hereunder.
<PAGE> 62
16.5 Binding on Successors and Assigns.
Subject to any provisions hereof restricting assignment, this Agreement
shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors, heirs, legal representatives and
permitted assigns.
17. GUARANTEE
Seller's Guarantor hereby undertakes to perform jointly and severally
(gesamtschuldnerisch) with Seller all obligations of Seller under this
Agreement. Buyer's Guarantor hereby undertakes to perform jointly and
severally (gesamtschuldnerisch) with Buyer all obligations of Buyer
under this Agreement.
18. ENTIRE AGREEMENT
18.1 This Agreement and each Related Document constitute the whole and only
agreement between the parties relating to the subject matter of this
Agreement and the Related Documents.
18.2 Except to the extent repeated in this Agreement or any of the Related
Documents, this Agreement and the Related Documents supersede and
extinguish all prior agreements, understandings and pre-contractual
statements between the parties and their Affiliates relating thereto,
including without limitation the offer letter dated October 8, 1999 as
amended; provided that the parties agree that the Confidentiality
Agreement between them, dated 19 October 1999, shall remain in full
force and effect.
18.3 Each party acknowledges that in entering into this Agreement and the
Related Documents or any of them on the terms set out therein, it is not
relying upon any pre-contractual statement which is not expressly set
out therein.
19. TIME OF ESSENCE
Except as otherwise expressly provided, time is of the essence of this
Agreement.
20. LANGUAGE
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20.1 Each notice, or other material communication given, delivered or made by
one party to another under or in connection with this Agreement shall
be:
a. in English; or
b. if not in English, accompanied by an English translation.
20.2 The receiving party shall be entitled to assume the accuracy of, and to
rely upon, any English translation of any document provided pursuant to
this Agreement.
20.3 German terms used in this Agreement shall prevail over their English
translation.
21. NOTICES
21.1 A notice or other material communication under or in connection with
this Agreement shall be in writing and shall be delivered by hand,
courier, or facsimile to the address or facsimile number and for the
attention of the relevant party as set out in this Agreement or another
address specified by that party by written notice to the other parties.
21.2 In the absence of evidence of earlier receipt, a notice or other
communication is deemed given:
a. if delivered personally, when left at the following addresses;
Buyer: USC May Verpackungen Holding Inc.
900 Commerce Drive
Oak Brook, Illinois 60523
U.S.A.
Fax: +1-630-572-0822
For the attention of: Steven K. Sims
General Counsel
Copy to: U.S. Can Corporation
900 Commerce Drive
Oak Brook, Illinois 60523
U.S.A.
<PAGE> 64
Fax: +1-630-572-0822
For the attention of: Steven K. Sims
General Counsel
Copy to: Mayer, Brown & Platt
Kaiser-Wilhelm-Ring 27-29
59672 Cologne
Germany
Fax: +49-221-577-1199
For the attention of: Christof Gaudig
Seller: Lucretia GmbH
Peter-May-Strasse 45
50374 Erftstadt
Germany,
Fax: +49-2235-808-261
For the attention of: Thomas May
Copy to: Deringer Tessin Herrmann & Sedemund
Heumarkt 14
50667 Cologne
Germany
Fax: +49-221-205-0790
For the attention of: Dr. Bernd Mertens
Seller's Guarantor: May Holding GmbH & Co. KG
Peter-May-Strasse 45
50374 Erftstadt
Germany,
Fax: +49-2235-808-261
For the attention of: Thomas May
Buyers Guarantor: U.S. Can Corporation
900 Commerce Drive
<PAGE> 65
Oak Brook, Illinois 60523
U.S.A.
Fax: +1-630-572-0822
For the attention of: Steven K. Sims
General Counsel
b. if sent by courier two days after sending it;
c. if sent by fax, on completion of its transmission to the numbers
given above and deposit of a copy of such notice or communication
in the mail.
21.3 Any party shall be entitled to change the identity of the party or
contact information to whom notices or other communications under or in
connection with this Agreement should be given or directed at any time
by notice in writing to the other parties.
22. EXCLUSIVITY
In consideration of Buyer entering into this Agreement, Seller undertakes
that, for the period between the date hereof and the Closing Date or, if
earlier, the termination of this Agreement in accordance with its terms,
it will not, nor will it permit any of its officers, directors,
employees, financial advisers, brokers, stockholders or any person
acting on its behalf, to solicit or negotiate, or cause to be solicited
or negotiated on behalf of Seller or its Affiliates, or provide or cause
to be provided information to any third party in connection with, any
proposal or offer from a third party with respect to the acquisition of
the Company Interest, all or substantially all of the assets of the
Group Companies or any indirect interest in such Company Interest or
such assets.
<PAGE> 66
23. ARBITRATION
23.1 Arbitrable Dispute
Any and all disputes, controversies and claims between the parties,
arising under or with respect to the application, interpretation and
enforceability of this Agreement, shall be amicably and promptly settled
by negotiation and consultation between the parties, or otherwise in
accordance with this Section 23. In the event the parties are unable to
resolve the dispute, controversy or claim by negotiation, then any party
may request that a formal mediation (a "MEDIATION") be held in a
mutually convenient location in London, United Kingdom. The costs and
fees of the mediator shall be shared among the involved parties equally,
and each party shall bear its own costs and expenses with respect to any
Mediation. If the parties are unable within thirty (30) days of the
commencement of Mediation to settle such a dispute controversy or claim,
any party may declare the matter an "ARBITRABLE DISPUTE" and submit the
matter to arbitration in accordance with the terms of this Section 23.
23.2 Locale and Rules
Any matter submitted to arbitration in accordance with this Section 23
shall be determined by binding arbitration in accordance with the Rules
of Conciliation and Arbitration of the International Chamber of
Commerce. The venue of the arbitration shall be London, England or at
such other location as the parties may agree. The parties agree on the
use of English as the single language in any arbitration proceeding;
provided that documents existing in the German language can be produced
in their original German language (together with an English translation
thereof) and the original language version thereof shall be decisive.
23.3 Enforcement
All decisions of the panel of arbitrators on any matter submitted for
arbitration in accordance with this Agreement shall be final and binding
on the parties. Any award rendered therein shall specify the findings of
fact of the arbitrators and the reason for such award, with reference to
and reliance on relevant law. Any party involved in the arbitration may
submit the final decision of the arbitrators to any court of law having
jurisdiction for enforcement and execution.
<PAGE> 67
23.4 Currency
Any award of damages made pursuant to this Section 23 shall be payable
in the lawful currency for the time being of the Federal Republic of
Germany or such other currency as may be agreed on.
23.5 Submission to Jurisdiction
Each party agrees that it shall submit to the jurisdiction, procedures
and authority of (i) any arbitral tribunal duly formed under this
Section 23 in accordance with the Rules of Conciliation and Arbitration
of the International Chamber of Commerce, and (ii) the courts of any
applicable jurisdiction with respect to the enforcement or execution of
an arbitration award made in conformance with this Section 23.
23.6 Costs
The reasonable costs and expenses (including attorneys and accountants
fees) of the arbitration proceeding pursuant to this Section 23 shall be
paid by the parties in inverse proportion to the extent to which the
parties succeed upon the merits of the matter in dispute.
24. NON-COMPETITION UNDERTAKING
24.1 Except as Buyer may expressly agree in writing, and except for persons
working for a Group Company pursuant to an employment contract disclosed
to Buyer prior to the Closing, each of Seller and Seller's Guarantor
agrees that, from and after the date of this Agreement until five years
after the Closing Date, Seller and Seller's Guarantor shall not, and
shall not permit any of their Affiliates, directly or indirectly, to:
a. compete in the metal packaging business in the Territory with the
Company or any of its Affiliates or engage in, control, advise,
manage, serve as a director, officer, or employee of, act as a
consultant to, receive any economic benefit from or exert any
influence upon, any business which conducts metal packaging
activities in the Territory;
b. solicit, divert or attempt to solicit or divert any party who is,
was, or was solicited to become, a customer or supplier of the
Company or any of its Affiliates at any time prior
<PAGE> 68
to the Closing Date;
c. solicit for employment or encourage to leave their employment, any
person who was during the two-year period prior to such
solicitation or encouragement or is an officer or employee of the
Company or any of its Affiliates;
d. avail itself of or invest in any business opportunity which is
related to the activities conducted by the Company or any of its
Affiliates, other than as provided in Section 24.2; or
e. make any disparaging statement to any third party, including the
press or media, regarding the Company or any of its Affiliates.
For purposes of this Section 24, the term "directly or indirectly" shall
include acts or omissions of any proprietor, partner, joint venturer,
employer, salesman, agent, employee, officer, director, lender or
consultant of, or owner of any interest in, any person acting on such
person's behalf or behest. "TERRITORY" shall mean the Federal Republic
of Germany and all other countries in which any Group Company has
transacted material business prior to the Closing Date.
24.2 Nothing in Section 24.1 shall prevent Seller and its Affiliates from:
a. acquiring or holding for investment purposes a financial interest
in a publicly traded company not involving board or management
representation (or comparable rights) in a amount of less than 5%
of the total capital stock of the company involved;
b. acquiring or holding an entity whose revenues attributable to
competing activities amount to less than 5% of the Company's
consolidated revenues in such activities on the date hereof; or
c. acquiring an entity whose revenues attributable to competing
activities amount to at least 5% but not more than 20% of the
Company's consolidated revenues in such activities on the date
hereof; provided that Seller shall divest within 6 months of
acquisition the division of the entity acquired to which such
revenues are attributed.
24.3 The parties agree that the production of PET plastic products comparable
to the products currently
<PAGE> 69
produced by the Group Companies shall constitute activities competing
with the metal packaging business for any purpose of Section 24.1, and
that the production of all other PET plastic products shall not
constitute activities competing with the metal packaging business for
any purpose of Section 24.1.
24.4 Except as Seller may expressly agree in writing, Buyer agrees that, from
and after the date of this Agreement until two years after the Closing
Date, Buyer shall not, directly or indirectly, solicit for employment or
encourage to leave their employment, any person who was during the two-
year-period prior to such solicitation or encouragement or is an officer
or employee of Seller or any of its Affiliates excluding the Company and
its Subsidiaries.
24.5 In the event of actual or threatened breach of the provisions of this
Section 24, Buyer and Seller, as the case may be, in addition to any
other remedies available to it for such breach or threatened breach,
including the recovery of damages, shall be entitled to an injunction
restraining Seller or Buyer, as the case may be, from such conduct.
24.6 If at any time any of the provisions of this Section shall be determined
to be invalid or unenforceable by reason of being vague or unreasonable
as to duration, area, scope of activity or otherwise, then this Section
24 shall be considered divisible (with the other provisions to remain in
full force and effect) and the invalid or unenforceable provisions shall
become and be deemed to be immediately amended to include only such
time, area, scope of activity and other restrictions, as shall be
determined to be reasonable and enforceable by the court or other body
having jurisdiction over the matter, and the parties expressly agree
that this Agreement, as so amended, shall be valid and binding as though
any invalid or unenforceable provision had not been included herein.
24.7 The provisions of this Section shall be in addition to, and not in
limitation of, any other provisions contained in any other agreement
restricting competition by Seller.
25. COUNTERPARTS
This Agreement may be executed in any number of counterparts each of
which when executed and delivered is an original, but all the
counterparts together constitute the same document.
<PAGE> 70
26. AMENDMENT
Any term or provision of this Agreement, or this Agreement in its
entirety, may be amended, modified, waived, superseded, canceled,
renewed or extended only by a written instrument executed by Buyer and
Seller.
27. SEVERABILITY
If any one or more provisions of this Agreement, other than provisions
constituting a material consideration to a party, shall be invalid or
unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remainder of this Agreement shall not
be affected or impaired; provided that, in such event, the parties shall
use their reasonable best efforts to achieve the purpose of the invalid
or unenforceable provision by a new legally valid stipulation.
28. NO BROKERS
Each of the parties represents and warrants to the other that, except
for the parties' respective financial advisers, such party has not
engaged any broker, finder or agent in connection with the transactions
contemplated by this Agreement and has not incurred (and will not incur)
any unpaid liability to any broker, finder or agent for any brokerage
fees, finders' fees or commissions, with respect to the transactions
contemplated by this Agreement. Each party agrees to indemnify, defend
and hold harmless the other party from and against any and all claims
asserted against such other party for any such fees or commissions by
any persons purporting to act or to have acted for or on behalf of the
indemnifying party.
29. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the Federal Republic of Germany.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives as of the date first mentioned above.
BUYER
<PAGE> 71
USC MAY VERPACKUNGEN HOLDING INC.
By: /s/ C. Mark Nicolaides
Name: C. Mark Nicolaides
Title: Attorney-in-Fact
SELLER
LUCRETIA GMBH
By: /s/ Jurgen May By: /s/ Thomas May
Name: Jurgen May Name: Thomas May
Title: Geschaftsfuhrer Title: Geschaftsfuhrer
BUYER'S GUARANTOR
U.S. CAN CORPORATION
By: /s/ C. Mark Nicolaides
Name: C. Mark Nicolaides
Title: Attorney-in-Fact
SELLER'S GUARANTOR
MAY HOLDING GMBH & CO. KG
By: /s/ Jurgen May By: /s/ Thomas May
Name: Jurgen May Name: Thomas May
Title: Geschaftsfuhrer Title: Geschaftsfuhrer
