Exhibit 2.1
EXECUTION COPY
PURCHASE AGREEMENT
by and among
FIBERMARK, INC.,
REXAM PLC,
MITEK R-1 HOLDING COMPANY
and
REXAM CFP LIMITED,
dated as of
March 6, 2001
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE OF SHARES AND ASSETS......................................................2
Section 1.1 Share Purchase.............................................................2
Section 1.2 Asset Purchase.............................................................2
Section 1.3 Assumption of Liabilities..................................................6
Section 1.4 Purchase Price.............................................................7
Section 1.5 Net Asset Value Adjustment.................................................7
ARTICLE II THE CLOSING................................................................................9
Section 2.1 Time and Place of Closing..................................................9
Section 2.2 Selling Parties' Deliveries................................................9
Section 2.3 Purchaser's Deliveries....................................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLING PARTIES....................................11
Section 3.1 Organization and Qualification of the Selling Parties.....................11
Section 3.2 Authorization.............................................................12
Section 3.3 Execution, Validity of Agreement..........................................12
Section 3.4 Consents and Approvals, No Violations.....................................12
Section 3.5 Capitalization and Title to the Shares....................................13
Section 3.6 Good Title Conveyed in the Shares.........................................13
Section 3.7 Organization and Qualification of the Acquired Company....................13
Section 3.8 Subsidiaries..............................................................14
Section 3.9 Financial Statements......................................................14
Section 3.10 No Undisclosed Liabilities................................................14
Section 3.11 Absence of Certain Changes................................................14
Section 3.12 Ownership of Assets and Condition of Certain Assets.......................14
Section 3.13 Contracts and Commitments.................................................17
Section 3.14 Customers and Suppliers...................................................18
Section 3.15 Insurance.................................................................18
Section 3.16 Casualties................................................................18
Section 3.17 Litigation................................................................18
Section 3.18 Environmental Matters.....................................................19
Section 3.19 Compliance with Laws......................................................19
Section 3.20 Employee Benefit Plans....................................................20
Section 3.21 Tax Matters...............................................................20
Section 3.22 Intellectual Property.....................................................23
Section 3.23 Labor Matters.............................................................23
Section 3.24 Bank Accounts.............................................................24
Section 3.25 Brokers or Finders........................................................24
Section 3.26 Receivables and Payables..................................................25
Section 3.27 Inventory.................................................................25
Section 3.28 Competition and Fair Trading Laws.........................................25
Section 3.29 Grants....................................................................25
Section 3.30 Insolvency, Etc...........................................................26
Section 3.31 Disclosure................................................................26
Section 3.32 No Other Representations..................................................26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER...............................................27
Section 4.1 Organization..............................................................27
Section 4.2 Authorization; Validity of Agreement......................................27
Section 4.3 Consents and Approvals; No Violations.....................................27
Section 4.4 Acquisition of Shares for Investment; Ability to Evaluate and Bear Risk...28
Section 4.5 Financing Documents, Availability of Funds................................28
Section 4.6 Litigation................................................................28
Section 4.8 Brokers or Finders........................................................29
Section 4.9 Disclosure................................................................29
ARTICLE V CERTAIN COVENANTS AND AGREEMENTS...........................................................29
Section 5.1 Interim Operations of the Subject Companies...............................29
Section 5.2 Access; Confidentiality...................................................31
Section 5.3 Efforts and Actions to Cause Closing to Occur.............................31
Section 5.4 Publicity.................................................................33
Section 5.5 Employees; Employee Benefits..............................................33
Section 5.6 Product Warranty and Liability Obligations................................38
Section 5.7 Intercompany Arrangements.................................................39
Section 5.8 Maintenance of Books and Records..........................................40
Section 5.9 Environmental Responsibilities............................................40
Section 5.10 Assignment of Contracts...................................................44
Section 5.11 Cooperation in Litigation.................................................44
Section 5.12 Transitional Services.....................................................45
Section 5.13 Insurance.................................................................45
Section 5.14 Hedging Contracts.........................................................45
Section 5.15 Intercompany Receivables and Payables.....................................46
Section 5.16 Updating Schedules........................................................46
Section 5.17 Name Change...............................................................46
ARTICLE VI CONDITIONS................................................................................46
Section 6.1 Conditions to Each Party's Obligation to Effect the Closing...............46
Section 6.2 Conditions to Obligations of Purchaser to Effect the Closing..............47
Section 6.3 Conditions to Obligations of the Selling Parties to Effect the Closing....47
ARTICLE VII TERMINATION..............................................................................48
Section 7.1 Termination...............................................................48
Section 7.2 Effect of Termination.....................................................49
ARTICLE VIII TAX MATTERS.............................................................................49
Section 8.1 Tax Sharing Agreements with the Acquired Company..........................49
Section 8.2 Taxes of Other Persons....................................................49
Section 8.3 Returns for Periods Through the Closing Date..............................50
Section 8.4 Audits....................................................................50
Section 8.5 Taxes Related to the Asset Seller.........................................50
Section 8.6 Cooperation...............................................................53
Section 8.7 General Principles........................................................53
Section 8.8 FIRPTA Tax Certificates...................................................53
ARTICLE IX DEFINITIONS AND INTERPRETATION............................................................53
Section 9.1 Definitions...............................................................53
Section 9.2 Interpretation............................................................63
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ARTICLE X SURVIVAL AND INDEMNIFICATION...............................................................64
Section 10.1 Survival..................................................................64
Section 10.2 Indemnification by Rexam PLC..............................................64
Section 10.3 Indemnification by Purchaser..............................................64
Section 10.4 Method of Asserting Claims................................................65
Section 10.5 Monetary Limitations on Indemnification...................................66
Section 10.6 Exclusive Remedies........................................................67
Section 10.7 Time Limits on Claims.....................................................67
Section 10.8 Tax Effect and Insurance..................................................67
ARTICLE XI MISCELLANEOUS.............................................................................68
Section 11.1 Fees and Expenses.........................................................68
Section 11.2. Amendments................................................................68
Section 11.3. Notices...................................................................68
Section 11.4 Counterparts..............................................................69
Section 11.5 Entire Agreement; No Third Party Beneficiaries............................69
Section 11.6 Severability..............................................................70
Section 11.7 Governing Law.............................................................70
Section 11.8 Venue.....................................................................70
Section 11.9 Time of Essence...........................................................70
Section 11.10 Extension; Waiver.........................................................70
Section 11.11. Assignability.............................................................71
Section 11.12 No Survival...............................................................71
Section 11.13 Captions..................................................................71
Section 11.14 Exhibits and Schedules....................................................71
Section 11.15 Risk of Loss..............................................................71
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INDEX TO SCHEDULES
Schedule Numbers Descriptions
1.2(a)(i)...........................................................................Real Property
1.2(a)(ii)......................................................................Personal Property
1.2(a)(viii).............................................................Personal Property Leases
1.2(a)(x)....................................................................Governmental Permits
1.2(a)(xiv)..........................................................................Other Assets
1.2(b)(viii).......................................................Certain Computers and Programs
1.2(b)(xvi).................................................................Other Excluded Assets
1.3(a)(vi)..............................................................Other Assumed Liabilities
1.4..............................................................Allocation of the Purchase Price
1.5(a).......................................................Net Asset Value Calculation Schedule
3.1.............................................Jurisdiction of Formation for the Selling Parties
3.4.................................................Conflicts and Consents of the Selling Parties
3.5............................................................Capitalization and Title to Shares
3.7..........................Jurisdiction of Formation and Qualification for the Acquired Company
3.8..................................................................................Subsidiaries
3.9..........................................................................Financial Statements
3.10...................................................................No Undisclosed Liabilities
3.12(a)...................................................................Scheduled Real Property
3.12(b)..........................................................................Scheduled Leases
3.12(c)............................................................Scheduled Real Property Leases
3.12(d)..............................................................................Encumbrances
3.12(e)...............................................................Condition of Certain Assets
3.13..........................................................................Scheduled Contracts
3.15....................................................................................Insurance
3.17...........................................................................Litigation Matters
3.18........................................................................Environmental Matters
3.19.........................................................................Compliance with Laws
3.20................................................................................Benefit Plans
3.21..................................................................................Tax Matters
3.22........................................................................Intellectual Property
3.23................................................................................Labor Matters
3.24................................................................................Bank Accounts
4.3...........................................................Conflicts and Consents of Purchaser
4.5....................................................Financing Documents, Availability of Funds
5.1...................................................Interim Operations of the Subject Companies
5.5(c)..................................................................Purchaser's Welfare Plans
5.5(g)...................................................Continuing Employees of the Asset Seller
5.9(a)..........................Environmental Responsibilities for the Asset Seller Real Property
5.9(c)..............................................................................Existing RECs
5.10...................................................................English Leasehold Property
5.13.....................................................................Current Insurance Claims
5.14...........................................................................Hedging Contracts
5.15........................................................Intercompany Receivables and Payables
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INDEX TO EXHIBITS
Exhibit Numbers Descriptions
2.2(j)..............................................Form of Certificate of Title
5.9(h)...................................................Form of Reliance Letter
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement"), dated as of March 6, 2001,
is entered into by and among FIBERMARK, INC., a Delaware corporation
("Purchaser"), REXAM PLC, a public limited company organized under the laws of
England and Wales ("Rexam PLC"), MITEK R-1 HOLDING COMPANY, a Delaware
corporation (the "Company Shareholder") and the RED BRIDGE DIVISION of REXAM CFP
LIMITED, a company organized under the laws of England and Wales (as it relates
to the Business, the "Asset Seller"). Rexam PLC, together with the Company
Shareholder and the Asset Seller, are referred to herein collectively as the
"Selling Parties" and individually as a "Selling Party." Capitalized terms not
otherwise defined herein shall have the meaning ascribed to such terms in
Article IX hereof.
RECITALS
WHEREAS, the Asset Seller is an indirect, wholly-owned Subsidiary of
Rexam PLC;
WHEREAS, the Asset Seller is willing to sell, transfer, convey, assign
and deliver to Purchaser substantially all the assets of the Red Bridge Division
of the Asset Seller relating to the operation of the Business, and Purchaser is
willing to purchase such assets of the Red Bridge Division of the Asset Seller
and to assume certain liabilities and obligations of the Red Bridge Division of
Asset Seller, all in accordance with the terms, conditions and agreements herein
contained (the "Asset Purchase");
WHEREAS, the Company Shareholder is an indirect, wholly-owned
Subsidiary of Rexam PLC;
WHEREAS, the Company Shareholder owns all of the outstanding shares of
capital stock of Rexam DSI Inc., a company organized under the laws of the State
of New York (the "Acquired Company");
WHEREAS, the Company Shareholder is willing to sell, transfer and
deliver all the issued and outstanding shares of capital stock of the Acquired
Company (the "Shares" and such purchase of the Shares referred to herein as the
"Share Purchase");
WHEREAS, the Asset Seller, together with the Acquired Company, are
referred to herein collectively as the "Subject Companies" and individually as a
"Subject Company";
WHEREAS, the Subject Companies are engaged in the business of
manufacturing and converting both cloth and latex saturated papers to produce
decorative materials that are used in the publishing, stationery and premium
packaging markets (the "Business"); and
WHEREAS, unless otherwise defined elsewhere herein, capitalized terms
used herein have the respective meanings ascribed to them in Article IX.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein,
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES AND ASSETS
SECTION 1.1 SHARE PURCHASE.
(a) Subject to the terms and conditions of this Agreement, at the
Closing, the Company Shareholder shall sell, convey, assign, transfer and
deliver to Purchaser all of the Shares free and clear of all Encumbrances, and
Purchaser shall purchase, acquire and accept the Shares from the Company
Shareholder.
(b) At Purchaser's election, exercisable by written notice to Rexam PLC
not less than ten (10) Business Days prior to the scheduled Closing Date, this
Agreement in respect of the Share Purchase shall be converted, with only such
modifications as are necessary to give effect to the change in form of the
transaction, into an agreement for the acquisition of the Acquired Company by
means of a reverse merger whereby a wholly owned subsidiary of Purchaser
("Sub"), shall be merged with and into the Acquired Company with the Acquired
Company surviving. Upon such election, all references herein to the Share
Purchase, Share Purchase Price and other matters pertaining to the Share
Purchase shall instead be references to the merger, the merger price, and other
matters pertaining to the merger, respectively; and each party shall take all
steps and do all acts, including the execution and delivery of documents, as are
or may be necessary or appropriate to implement the conversion of this
Agreement, as provided in this Section 1.1(b).
SECTION 1.2 ASSET PURCHASE.
(a) Description of Assets. At the Closing, on the terms and subject to
the conditions set forth in this Agreement, the Asset Seller shall sell,
transfer, convey, assign and deliver to Purchaser, and Purchaser shall purchase
and acquire free and clear of all Encumbrances other than Permitted Encumbrances
(and with the benefit of the same covenants, save in respect of Permitted
Encumbrances, as are implied under Part I of the LMPA where a disposition is
expressed to be made with full title guarantee), all right, title and interest
in, to and under the assets of the Asset Seller, relating to the operation of
the Business including but not limited to the following assets, used or held for
use in connection with the Business as the same shall exist at the Closing Time
(collectively, the "Purchased Assets"), but specifically excluding the Excluded
Assets:
(i) Real Property. All of the Asset Seller's Real Property and
interests therein used in the Business, including any real property
leases, options or similar rights to purchase, real property and
buildings, structures, facilities, fixtures and other improvements
thereon, including without limitation those described in Schedule
1.2(a)(i) hereto;
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(ii) Tangible Personal Property. All of the Asset Seller's
tangible personal property used in the Business (other than
Inventory), including but not limited to those described by asset type
on Schedule 1.2(a)(ii) hereto;
(iii) Inventory. All of the Asset Seller's Inventory used in the
Business as of the Closing Time;
(iv) Receivables. All Receivables of the Asset Seller as of the
Closing Time arising out of sales in connection with the conduct of
the Business;
(v) Intellectual Property. Subject to Section 1.2(b)(xii) hereof,
all rights of the Asset Seller in the Intellectual Property belonging
to, used in or appertaining to the Purchased Assets or the Business,
but subject to applicable grants, restrictions and limitations
contained in the license agreements, grants or assignments in favor of
the Asset Seller relating to the Intellectual Property, including
without limitation, those rights of the Asset Seller in the
Intellectual Property specified in Schedule 3.22 hereto;
(vi) Records. Subject to Section 1.2(b)(iv) hereof, all of the
Asset Seller's business records relating to the Business (other than
those relating exclusively to Excluded Assets and not to the
Business), including, without limitation, all supplier and customer
lists, license lists, distributor lists, bid and quote information,
customer correspondence and employee records for employees employed by
or under contractual arrangements with the Asset Seller at the Closing
Time;
(vii) Prepaid Items. All of the Asset Seller's prepaid and
deferred items or credits and deposits existing at the Closing Time
with respect to the Business, including, without limitation, prepaid
rent, taxes, car leases, computer maintenance contracts and exhibition
shows (other than those prepaid items referred to in Section
1.2(b)(ii));
(viii) Personal Property Leases. Subject to Section 5.10 hereof,
all leases of tangible personal property entered into by the Asset
Seller for or on behalf of the Business, including vehicle leases,
whether as lessor, sublessor, lessee or sublessee, including without
limitation those Leases identified on Schedule 1.2(a)(viii);
(ix) Contracts. Subject to Section 1.2(b) and Section 5.10
hereof, all contracts, agreements, commitments and licenses with
customers, suppliers, vendors, or others appertaining to or entered
into by the Asset Seller for or on behalf of the Business (the
"Assumed Contracts"), including without limitation, sales and purchase
orders, bids, offers or documents submitted in response to bid
requests or solicitations or invitations to bid or quote, any
collective bargaining agreements relating to the Business, hedging
contracts, sales representative, agency, dealer and distributor
agreements, hold harmless or indemnification contracts or covenants
relating to the Business and indemnifying the Asset Seller and all
other contracts, agreements, commitments and licenses entered into by
the Asset Seller for or on behalf of the Business prior to the Closing
Time, including without limitation those Contracts specified on
Schedule 3.13;
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(x) Governmental Permits. Subject to Section 5.10 hereof, all
licenses, certificates, permits, franchises, approvals, rights and
other authorizations from all federal, state or other public
authorities necessary or appropriate for the ownership or use of the
Purchased Assets in the operation of the Business that are held by the
Asset Seller (the "Governmental Permits"), including without
limitation those Governmental Permits identified on Schedule
1.2(a)(x);
(xi) Employment Agreements. The employment agreements between the
Asset Seller and employees of the Asset Seller relating to the
Business, which may be amended prior to Closing in accordance with
Section 5.1 hereof;
(xii) Warranty Claims Against Suppliers. All of the Asset
Seller's causes of action, claims and demands, if any, against third
parties with respect to defective goods, products or services relating
to the Business, including raw material inventory;
(xiii) Goodwill. All of the goodwill of the Asset Seller relating
to the Business; and
(xiv) Other Assets. All of the Asset Seller's other assets
relating to the Business, including without limitation those set forth
on Schedule 1.2(a)(xiv).
(b) Excluded Assets. The Purchased Assets to be purchased and sold
hereunder, and the term "Purchased Assets" as used herein, shall not include the
following assets (the "Excluded Assets") of the Asset Seller in existence at the
Closing Time which have not been set forth and computed in determining the
Baseline Net Asset Value, the Estimated Net Asset Value, the Initial Net Asset
Value or the Closing Date Net Asset Value, as hereinafter defined (together, the
"Net Asset Values"):
(i) Cash. All of the Asset Seller's cash, commercial paper,
certificates of deposit and other bank deposits, treasury bills and
other cash equivalents except ▇▇▇▇▇ cash;
(ii) Insurance Policies Maintained on Behalf of Asset Seller. All
casualty, liability or other policies of insurance maintained on
behalf of the Asset Seller or the Asset Seller's Affiliates and rights
thereunder and any prepaid insurance premiums existing as of the
Closing Time related to such policies;
(iii) Tax Refunds; Claims. All refunds of any Tax for which the
Asset Seller is liable pursuant to Section 8.5(a) including, without
limitation, all claims for refunds arising from tax periods prior to
the Closing Date;
(iv) Corporate Files. All checks and drafts of the Asset Seller
and all of the Asset Seller's records and files, banking records, Tax
Returns, accounting records and such other similar books and records
relating to the Business located at the corporate offices of Rexam PLC
in London, England and the Asset Seller in North Wales, England
4
and of the Asset Seller in ▇▇▇▇▇▇, Lancashire, including, without
limitation, such books and records as may relate to the Business to
the extent the same are archived documents (not stored in actively
maintained or accessed file systems), duplicate documents to those
located at the Asset Seller's facilities, or which constitute
compilations or consolidations of documents located at the Asset
Seller's facilities; provided, however, that the foregoing exclusion
does not apply to any original record or document (other than checks
and drafts) relating exclusively to the Business for which there is no
original counterpart located at a facility owned by or leased to the
Asset Seller, or any copy of any document for which there is no
original or other copy located at such facility; and provided,
further, that the Asset Seller shall be allowed to retain (a) original
personnel files pertaining to employees of the Asset Seller terminated
prior to the Closing Time, (b) copies of all personnel files
pertaining to current employees of the Asset Seller at the Closing
Time, and (c) copies of all employer's liability claim files of the
Asset Seller;
(v) Corporate Rights. The right or franchise of the Asset Seller
to be a limited company and all documents pertaining thereto,
including without limitation Organizational Documents, Operating
Documents, corporate seals, minute books and stock books;
(vi) Indemnity Rights. All indemnity and contribution rights
granted to or owed by third parties to the Asset Seller with respect
to liabilities and obligations that do not constitute Assumed
Liabilities, and any and all rights or assets arising from and
directly related to the defense, release, compromise, discharge or
satisfaction by the Asset Seller of such liabilities and obligations;
(vii) Causes of Action. All of the Asset Seller's causes of
action, judgments, claims and demands of whatever nature against third
parties arising out of or relating to events prior to the Closing Time
other than the defective goods and services claims referred to in
Section 1.2(a)(xii);
(viii) Certain Computers and Programs. The wide area network
servers and all software thereon and the computer programs and
software specified by the parties on Schedule 1.2(b)(viii);
(ix) Guarantees. All guarantees given by the Asset Seller or its
Affiliates for the benefit of the Business;
(x) Deferred Charges. All of the Asset Seller's deferred charges,
advance payments, prepaid items, security and other deposits, claims
for refunds, rights of offset, and credits of all kinds relating
solely to the Excluded Assets or the Excluded Liabilities;
(xi) Rights under this Agreement. The Asset Seller's rights under
this Agreement;
(xii) Rexam Name. All right, title and interest in the Rexam name
and any signage bearing such name;
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(xiii) Benefit Plans. All rights and interest to the Benefit
Plans;
(xiv) Intercompany Receivables. Any intercompany receivables of
the Asset Seller incurred in connection with the Business from Rexam
PLC or an Affiliate of Rexam PLC (other than the Acquired Company),
other than any such receivables set forth and computed in determining
the Closing Date Net Asset Value;
(xv) Bank Accounts. All bank accounts, safe deposit boxes,
checking accounts or other accounts of any nature maintained on behalf
of the Asset Seller by Rexam PLC or another Affiliate; and
(xvi) Other Excluded Assets. Those assets reflected on Schedule
1.2(b)(xvi).
SECTION 1.3 ASSUMPTION OF LIABILITIES.
(a) Liabilities to be Assumed by Purchaser. As partial consideration
for the consummation of the transactions contemplated by this Agreement and
in any related document, instrument, or agreement executed in connection
with this Agreement, at the Closing, Purchaser shall deliver to the Asset
Seller an instrument of assumption in form satisfactory to Rexam PLC and
Purchaser pursuant to which Purchaser shall assume and agree to thereafter
perform when due and discharge in accordance with their respective terms,
and indemnify the Selling Parties and hold the Selling Parties harmless
with respect to the following liabilities and obligations of the Asset
Seller in respect of the Business (the "Assumed Liabilities"):
(i) Accrued Liabilities. All liabilities and obligations of the
Asset Seller in respect of the Business that (A) were set forth on the
Financial Statements or the Interim Management Accounts or (B) have
been incurred since the dates of the Financial Statements or the
Interim Management Accounts of the same kind and nature as those set
forth on the Financial Statements or the Interim Management Accounts,
including, without limitation, in either case, all accounts payable
including intercompany trade accounts, accrued expenses, accrued Taxes
(other than corporation Taxes), customer charge backs, discounts,
commissions, credits and rebates, customer deposits and other
liabilities which shall not have been paid or discharged prior to the
Closing Time, but only to the extent such liabilities and obligations
are finally included in calculating the Closing Date Net Asset Value;
(ii) Leases and Assumed Contracts. All liabilities and
obligations relating to or arising out of performance of the real
property leases, personal property leases and/or Assumed Contracts
referred to in Sections 1.2(a)(i), 1.2(a)(viii) and 1.2(a)(ix) hereof
after the Closing Time or, to the extent such liabilities and
obligations are finally included in calculating the Closing Date Net
Asset Value, prior to the Closing Time;
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(iii) Labor Grievances. All labor grievances brought after the
Closing even if the cause of such grievance arose prior to Closing;
(iv) Product Warranty. Those relating to or arising out of
product warranty claims;
(v) Pending Litigation. All liabilities and obligations in
respect of any litigation pending against the Asset Seller as of the
Closing Time which is disclosed on Schedule 3.17; and
(vi) Other Assumed Liabilities. Those liabilities and
obligations, if any, listed on Schedule 1.3(a)(vi).
(b) Excluded Liabilities. The liabilities to be assumed by Purchaser
and the term "Assumed Liabilities" shall expressly exclude all other
liabilities of the Asset Seller, including without limitation all
liabilities that accrued prior to the Closing Date that were not included
in calculating the Closing Date Net Asset Value (the "Excluded
Liabilities").
SECTION 1.4 PURCHASE PRICE.
Subject to the terms and conditions of this Agreement, in consideration
of the consummation of the Transactions, Purchaser shall, in addition to
assuming the Assumed Liabilities, pay to Rexam PLC (on behalf of the Asset
Seller and the Company Shareholder) in cash $140,000,000 at Closing which amount
shall be increased or decreased at Closing to the extent that the Estimated Net
Asset Value is more or less than the Baseline Net Asset Value (the "Purchase
Price") and shall be further subject to adjustment under Section 1.5. The
Purchase Price shall be allocated between the Asset Purchase (the "Asset
Purchase Price") and the Share Purchase (the "Share Purchase Price") for all
purposes (including financial accounting and Tax purposes) as set forth on
Schedule 1.4. Unless otherwise agreed to in writing by the parties, any
adjustment pursuant to this Section 1.4 or Section 1.5 shall be allocated to the
Share Purchase Price.
SECTION 1.5 NET ASSET VALUE ADJUSTMENT.
(a) Two Business Days prior to the Closing, Rexam PLC shall provide
Purchaser with a certificate prepared in good faith of Rexam PLC's estimate of
the Net Asset Value of the Subject Companies (the "Estimated Net Asset Value")
as of the Closing. Net Asset Value calculations shall be prepared in accordance
with the Net Asset Value Calculation Schedule attached hereto as Schedule
1.5(a). For purposes of calculating the Estimated Net Asset Value, the parties
hereby agree that Rexam PLC shall use the Exchange Rate in effect as of two
Business Days prior to the Closing.
(b) For the purpose of calculating the Closing Date Net Asset Value,
Rexam PLC and the Purchaser shall jointly conduct a physical inventory as of an
agreed upon date of the Subject Companies' raw materials, work in process and
finished goods which shall be valued at the lower of cost or market value
consistent with Rexam Accounting Policies with an appropriate
7
writedown of any damaged, obsolete or otherwise nonconforming raw materials,
work in progress and finished goods. Rexam PLC shall perform the remaining
calculations necessary to determine the Net Asset Value as of the close of
business on the Closing Date. As soon as practical following the Closing Date
and in any event within 30 days thereof, Rexam PLC shall prepare and deliver to
Purchaser a schedule showing Rexam PLC's calculation of the Net Asset Value as
of the Closing Date (the "Initial Net Asset Value Statement"). For purposes of
calculating the Initial Net Asset Value Statement, the parties hereby agree that
Rexam PLC shall use the Exchange Rate in effect as of the Closing Date as
determined in accordance with Rexam Accounting Policies.
(c) Rexam PLC shall provide the Purchaser and its representatives with
full access to the work papers of Rexam PLC used to calculate the Initial Net
Asset Value Statement. If Purchaser disagrees with the Initial Net Asset Value
Statement, Purchaser shall notify Rexam PLC of such disagreement, setting forth
in detail the particulars of such disagreement within 15 days after its receipt
of the Initial Net Asset Value Statement. In the event of any such notice of
disagreement, the Purchaser and Rexam PLC shall use their reasonable efforts for
a period of 30 days to resolve any disagreements with respect to the calculation
of the Closing Date Net Asset Value (as defined below). If at the end of such
period, they are unable to resolve any disagreements, Rexam PLC and Purchaser
shall select an independent accounting firm of nationally recognized standing
other than a firm that is the primary accountant for either Purchaser or the
Selling Parties (the "Accountants"), to resolve such disagreements. The
Accountants shall resolve as promptly as practicable any such disagreements
acting as experts and not as arbitrators. The determination of the Accountants
shall (in the absence of manifest error) be final, binding and conclusive on the
parties. Rexam PLC and Purchaser shall share equally the fees and expenses
incurred by the Accountants in resolving such disagreements. The date of the
final resolution of the Net Asset Value as of the Closing Date shall be referred
to as the "Determination Date". The amount of the Net Asset Value as of the
Closing Date as finally determined pursuant to this Section 1.5(c) is referred
to herein as the "Closing Date Net Asset Value".
(d) The Purchase Price shall be adjusted as follows:
(i) Payment by Rexam PLC. If the Closing Date Net Asset Value is
less than the Estimated Net Asset Value, Rexam PLC shall within five
Business Days after the Determination Date pay to the Purchaser an
amount equal to the Estimated Net Asset Value minus the Closing Date
Net Asset Value.
(ii) Payment by Purchaser. If the Closing Date Net Asset Value is
greater than the Estimated Net Asset Value, Purchaser shall, within
five Business Days after the Determination Date, pay to Rexam PLC an
amount equal to the Closing Date Net Asset Value minus the Estimated
Net Asset Value.
(iii) Undisputed Amounts. If pursuant to Section 1.5(c) above,
there is a dispute as to the final determination of the Closing Date
Net Asset Value, Rexam PLC or Purchaser shall promptly cause to be
paid to the other at the end of the 30-day period provided under
Section 1.5(c) hereof for resolving any disagreements with respect to
the
8
calculation of the Closing Date Net Asset Value, such amounts as are
not in dispute, pending final determination of such dispute pursuant
to Section 1.5(c).
(iv) Interest. Any adjustments in the Purchase Price hereunder
shall bear interest from the Closing Date at the thirty-day Dealer
Commercial Paper rate as reported in the Wall Street Journal (New York
Edition) as of the interest calculation date.
ARTICLE II
THE CLOSING
SECTION 2.1 TIME AND PLACE OF CLOSING.
The consummation of the Transactions (the "Closing") shall be held at
such location(s) in the United States as mutually agreed upon by Rexam PLC and
Purchaser, and shall occur two (2) Business Days following the satisfaction
and/or waiver of all conditions to Closing set forth in Article 6 unless another
date is agreed to by the parties hereto (the "Closing Date"). The Closing as it
relates to each of the Subject Companies shall be effective as of 11:59 p.m.,
local time for such Subject Company, on the Closing Date (the "Closing Time").
At the Closing, Rexam PLC shall cause the sale and conveyance of the Shares, the
Business and the Purchased Assets by appropriate instruments of transfer and
Purchaser shall pay the Purchase Price and evidence its assumption of the
Assumed Liabilities.
SECTION 2.2 SELLING PARTIES' DELIVERIES.
At Closing, the Selling Parties shall deliver to Purchaser the
following:
(a) Share Certificates. Certificates representing the Shares, each such
certificate to be duly and validly endorsed in favor of Purchaser or accompanied
by a separate stock power or assignment duly and validly executed by registered
holders of the Shares and otherwise sufficient to vest in Purchaser good title
to such Shares.
(b) Acquired Company Director Resignations. Resignations of each
director of the Acquired Company.
(c) Consents. Subject to the provisions of Section 5.10 below, the
consents described in Schedule 3.4(c) hereto in form reasonably satisfactory to
Purchaser.
(d) Corporate Approval. Copies, certified by the respective Secretary
or Assistant Secretary of such Selling Party, of the approval by the Board of
Directors of each Selling Party and by the shareholders of the Acquired Company
and of Rexam PLC (if required by law or by rule of any applicable securities
exchange), authorizing the execution, delivery and performance of this Agreement
and all other agreements, documents and instruments relating hereto and the
consummation of the Transactions.
9
(e) Compliance with Law. All permits, approvals and consents of all
governmental bodies or agencies set forth on Schedule 3.4 which are necessary so
that consummation of the Transactions will be in compliance with applicable law.
(f) Other Assurances. Such certificates, assurances and documents as
Purchaser may reasonably request in order to provide evidence of the accuracy of
the Selling Parties' representations and warranties and the performance of their
respective covenants and agreements to be performed at the Closing.
(g) Instruments of Transfer. An instrument of assignment and such other
assignments, bills of sale, certificates of title and other instruments of
transfer, all in form reasonably satisfactory to Purchaser, as are necessary to
convey fully and effectively to Purchaser the Business and the Purchased Assets
in accordance with the terms hereof.
(h) Deeds. Deeds sufficient to transfer and convey good title to any
Real Property owned by the Asset Seller.
(i) Title Insurance Affidavits. Title insurance affidavits in the forms
reasonably required by the applicable title companies and all and any
indemnities reasonably required by such title companies to give Purchaser good,
marketable and insurable title to any Real Property owned by the Acquired
Company.
(j) Title Certificate. Certificate of Title by Messrs. ▇▇▇▇▇▇▇ Suddards
Edge of Leeds, England, in respect of all of the Real Property of the Asset
Seller, in the form entitled "The City of London Law Society Land Law
Sub-Committee - Long Form Certificate (4th Edition, November 1999)," in the form
of Exhibit 2.2(j) hereto (the "Certificate of Title").
(k) Transitional Services Agreement. The Transitional Services
Agreement duly executed by the Selling Parties.
(l) Vacant Possession. Vacant possession of any Real Property of the
Asset Seller or other tangible Purchased Assets, subject to the provisions of
Schedule 5.10.
SECTION 2.3 PURCHASER'S DELIVERIES.
At Closing, Purchaser shall deliver to Rexam PLC the following:
(a) Payment of Purchase Price. The amount set forth in Section 1.3.
(b) Consents. The consents, if any, described in Schedule 4.3(c) hereto
in form reasonably satisfactory to Rexam PLC.
(c) Corporate Approval. Copies, certified by the respective Secretary
or an Assistant Secretary of Purchaser, of the approval by the Board of
Directors of Purchaser authorizing the execution, delivery and performance of
this Agreement and all other agreements, documents or instruments relating
hereto and the consummation of the Transactions.
10
(d) Assumptions. The instrument of assumption referred to in Section
1.3(a) in form reasonably satisfactory to Rexam PLC pursuant to which Purchaser
assumes the Assumed Liabilities.
(e) Compliance with Law. All permits, approvals and consents of all
governmental bodies or agencies set forth on Schedule 4.3 which are necessary so
that consummation of the Transactions will be in compliance with applicable law.
(f) Other Assurances. Such certificates, assurances and documents as
Rexam PLC may reasonably request in order to provide evidence of the accuracy of
Purchaser's representations and warranties, the performance of their respective
covenants and agreements to be performed at or prior to the Closing and the
fulfillment of the conditions to Rexam PLC's and the Subject Companies'
obligations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLING PARTIES
Except as set forth in the attached Schedules prepared by the Selling
Parties and delivered to Purchaser simultaneously with the execution hereof or
as disclosed in, or as readily inferable from, the Financial Statements, the
Selling Parties, jointly and severally, represent and warrant to Purchaser that
all of the statements contained in this Article III are true as of the date of
this Agreement (or, if made as of a specified date, as of such date). For
purposes of the representations and warranties of the Selling Parties contained
herein, disclosure in any of the Schedules attached hereto of any facts or
circumstances shall be deemed to be adequate response and disclosure of such
facts or circumstances with respect to all representations or warranties by the
Selling Parties calling for disclosure of such information, whether or not such
disclosure is specifically associated with or purports to respond to one or more
or all of such representations or warranties if it is reasonably apparent on the
face of the Schedule that such disclosure is applicable. The inclusion of any
information in any Schedule or other document delivered by the Selling Parties
pursuant to this Agreement shall not be deemed to be an admission or evidence of
the materiality of such item, nor shall it establish a standard of materiality
for any purpose whatsoever.
SECTION 3.1 ORGANIZATION AND QUALIFICATION OF THE SELLING PARTIES.
Schedule 3.1 sets forth the name and jurisdiction of formation for each
Selling Party. Each Selling Party is validly existing and in good standing under
the laws of its jurisdiction of formation, and each Selling Party has all
requisite power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on the Business as now being
conducted and to own the Purchased Assets to which it has title, except where
the failure to be so organized, existing and in good standing or to have such
power, authority, and governmental approvals would not have, individually or in
the aggregate, a material adverse effect on the Purchased Assets, the Business
or the Selling Parties' ability to consummate the Transactions. Each of the
Selling Parties and the Acquired Company has heretofore delivered to
11
Purchaser complete and correct copies of its Organizational Document and
Operating Document as presently in effect.
SECTION 3.2 AUTHORIZATION.
Each Selling Party has the requisite power and authority to execute and
deliver this Agreement and to consummate the Transactions. The execution,
delivery and performance by each Selling Party of this Agreement and the
consummation of the Transactions have been duly authorized by the Board of
Directors of such Selling Party, and by the registered holders of the capital
stock of such Selling Party (if required by law or by any applicable securities
exchange), and no other action on the part of any Selling Party or any Affiliate
of the Selling Parties is necessary to authorize the execution and delivery by
the Selling Parties of this Agreement or the consummation of the Transactions.
SECTION 3.3 EXECUTION, VALIDITY OF AGREEMENT.
This Agreement has been duly executed and delivered by each Selling
Party, and, assuming due and valid authorization, execution and delivery hereof
by Purchaser, is a valid and binding obligation of each Selling Party,
enforceable against such Selling Party in accordance with its terms except (a)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws of general application affecting
enforcement of creditors' rights generally and (b) the availability of the
remedy of specific performance or injunctive or other forms of equitable relief
may be subject to equitable defenses and would be subject to the discretion of
the court before which any proceeding therefore may be brought.
SECTION 3.4 CONSENTS AND APPROVALS, NO VIOLATIONS.
Except as set forth in Schedule 3.4 hereto and for the filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of the Securities Act, the HSR Act, any Foreign
Antitrust Laws, and state securities or blue sky laws, none of the execution,
delivery or performance of this Agreement by the Selling Parties, the
consummation by the Selling Parties of the Transactions or compliance by the
Selling Parties with any of the provisions hereof will (a) conflict with or
result in any breach of any provision of the Operating Documents or
Organizational Documents of any Selling Party or the Acquired Company, (b)
require any filing with, or the obtaining of any permit, authorization, consent
or approval of, any Governmental Entity, (c) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration) under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which any Selling Party or the Acquired Company is a party or by which any
Selling Party or the Acquired Company or any of their respective properties or
assets may be bound, or (d) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to any Selling Party or the Acquired
Company or any of their properties or assets, excluding from the foregoing
clauses (b), (c) and (d) such violations, breaches or defaults which (A) would
not, individually or in the aggregate, have a Company Material Adverse Effect or
a material adverse effect on the Selling
12
Parties' ability to consummate the Transactions or (B) would become applicable
as a result of the business or activities in which Purchaser is or proposes to
be engaged other than the Business or as a result of any acts or omissions by,
or the status of any facts pertaining to, Purchaser.
SECTION 3.5 CAPITALIZATION AND TITLE TO THE SHARES.
Schedule 3.5 sets forth the number of shares of capital stock
authorized and the number of shares outstanding for the Acquired Company. The
record and beneficial owner of all the issued and outstanding capital stock of
the Acquired Company is set forth on Schedule 3.5, with Rexam PLC having the
right to deliver and sell, or to cause to be delivered and sold, the same
pursuant to this Agreement. The certificates representing the Shares are free
and clear of all Encumbrances, and all material claims and charges of any kind.
All the outstanding shares of the Acquired Company are duly authorized, validly
issued, fully paid and non-assessable. Except as set forth on Schedule 3.5, as
of the date hereof, there are no shares of capital stock of the Acquired Company
authorized, issued or outstanding. There are no existing options, warrants,
calls, pre-emptive rights, subscriptions or other rights, agreements,
arrangements or commitments of any character, relating to the issued or unissued
capital stock of the Acquired Company obligating the Acquired Company to issue,
transfer or sell or cause to be issued, transferred or sold any of its shares of
capital stock.
SECTION 3.6 GOOD TITLE CONVEYED IN THE SHARES.
Upon the delivery of and payment for the Shares at the Closing as
provided for in this Agreement, the stock certificates, stock powers,
endorsements, assignments and other instruments to be executed and/or delivered
by the Company Shareholder to Purchaser at the Closing will be valid and binding
obligations of the Company Shareholder, enforceable in accordance with their
respective terms, and will effectively vest in Purchaser good title to all the
Shares that are outstanding as of the Closing, free and clear of all
Encumbrances, except restrictions on transfer imposed by the Securities Act and
any applicable state or foreign securities laws, and, assuming the Purchaser
does not have notice of any adverse claim to the Shares within the meaning of
Section 8-303 of the Delaware Uniform Commercial Code, the Purchaser will
acquire all rights of the Company Shareholder in the Shares free of any adverse
claim within the meaning of Section 8-102 of the Delaware Uniform Commercial
Code.
SECTION 3.7 ORGANIZATION AND QUALIFICATION OF THE ACQUIRED COMPANY.
Schedule 3.7 sets forth the name and jurisdiction of formation of the
Acquired Company and the jurisdictions in which it is qualified to do business.
The Acquired Company (a) is a corporation validly existing and in good standing
under the laws of its jurisdiction of formation, (b) has full power and
authority to carry on the Business as it is now being conducted and to own the
properties and assets it now owns, and (c) is duly qualified or licensed to do
business as a foreign entity in good standing in every jurisdiction in which
such qualification is required or, if the Acquired Company is not so qualified
in any such jurisdiction, it can become so qualified in such jurisdiction
without a Company Material Adverse Effect.
13
SECTION 3.8 SUBSIDIARIES.
Except as set forth on Schedule 3.8, neither Subject Company owns,
directly or indirectly, any shares of capital stock or other equity interest (or
any other interest convertible into an equity interest) in any corporation,
partnership, limited liability company, joint venture or other business entity,
and has no commitment to contribute to the capital of, make loans to, or share
in the losses of, any enterprise.
SECTION 3.9 FINANCIAL STATEMENTS.
True and complete copies of the Financial Statements are set forth in
Schedule 3.9 hereto. The Financial Statements have been prepared from, are in
accordance with and accurately reflect, the books and records of the Subject
Companies, have been prepared on the basis of the Rexam Accounting Policies and
are in accordance with GAAP applied on a consistent basis during the periods
involved (except as may be stated in the notes thereto) and fairly present the
combined financial position and the combined results of operations and cash
flows of the Subject Companies, as of the times and for the periods referred to
therein. Rexam PLC has provided to the Purchaser copies of the Interim
Management Accounts which are unaudited statements subject to normal recurring
year-end audit adjustments and which do not have the applicable year-end
footnotes attached thereto, except as included therein. Except as described
above, the Interim Management Accounts have been prepared on the basis of the
Rexam Accounting Policies and are in accordance with GAAP, applied on a
consistent basis.
SECTION 3.10 NO UNDISCLOSED LIABILITIES.
Except as set forth in Schedule 3.10 and except for liabilities and
obligations incurred in the ordinary course of business, between the date of the
Interim Management Accounts and the date hereof, no Subject Company has incurred
any material liabilities or material obligations that, taken as a whole,
contingent or otherwise, would be required to be disclosed, reflected or
reserved against in a combined balance sheet of the Subject Companies (including
the related notes thereto, where applicable) prepared on the basis of the Rexam
Accounting Policies and in accordance with GAAP, applied on a consistent basis.
Notwithstanding any provision herein to the contrary, nothing in this Section
3.10 shall be deemed to apply to, or expand the scope of the representations and
warranties made in Section 3.17 or 3.18 with respect to, any of the matters
referred to in Section 3.17 or Section 3.18.
SECTION 3.11 ABSENCE OF CERTAIN CHANGES.
Except as (a) disclosed in the Interim Management Accounts or (b)
expressly required by this Agreement, since the date of the Interim Management
Accounts, (i) no event or events that would, individually or in the aggregate,
result in a Company Material Adverse Effect has or have occurred and (ii) no
Subject Company has taken any action that, if taken after the date hereof, would
constitute a violation of Sections 5.1(a) through (i).
14
SECTION 3.12 OWNERSHIP OF ASSETS AND CONDITION OF CERTAIN ASSETS.
(a) Real Property. Set forth on Schedule 3.12(a) is a complete list and
the location of all Real Property (the "Scheduled Real Property"). True and
complete copies of (a) all deeds, leases, title insurance policies and surveys
in possession of the Acquired Company relating to the Scheduled Real Property of
the Acquired Company and (b) all documents in possession of the Acquired Company
evidencing any Encumbrances upon the Scheduled Real Property of the Acquired
Company have heretofore been furnished to Purchaser. Except as set forth in
Schedule 3.12(a), with respect to each parcel of Scheduled Real Property:
(i) the Acquired Company has good and clear record and marketable
title to each parcel of its Scheduled Real Property, insurable by a
recognized national title insurance company at standard rates, free
and clear of any security interest, encumbrance, easement, covenant or
other restriction, except for Permitted Encumbrances;
(ii) the Asset Seller has good and marketable fee or leasehold
title (as the case may be) to each parcel of its Scheduled Real
Property, free of all leases, tenancies, mortgages, charges, liens, or
rent charges, except for Permitted Encumbrances;
(iii) there are no (A) pending or, to the Selling Parties'
Knowledge, threatened condemnation proceedings relating to such
parcel, (B) pending or, to the Selling Parties' Knowledge, threatened
litigation or administrative actions relating to such parcel, or (C)
other matters affecting adversely the current use of such parcel or
the occupancy or value thereof;
(iv) there are no leases, subleases, licenses or agreements,
written or oral, granting to any party or parties the right of use or
occupancy of any portion of such parcel;
(v) there are no outstanding options or rights of first refusal
to purchase such parcel, or any portion thereof or interest therein;
(vi) all facilities located on such parcel are supplied with
utilities and other services necessary for the operation of such
facilities, including gas, electricity, water, telephone, sanitary
sewer and storm sewer, all of which services are adequate for the
Business as currently conducted;
(vii) such parcel abuts on and has direct vehicular access to a
public road or access to a public road via a permanent, irrevocable,
appurtenant easement benefiting such parcel; and
(viii) no Selling Party has received notice of any noncompliance
of the Scheduled Real Property with any applicable zoning law, code or
ordinance and, to the Selling Parties' Knowledge, there is no proposed
or pending proceeding to change or redefine the zoning classification
of all or any portion of the parcels.
(b) Leases. Set forth on Schedule 3.12(b) is a complete list of all
Leases (the "Scheduled Leases"). A true and complete copy of each Scheduled
Lease (and, if a Scheduled Lease is a sublease, a true and complete copy of the
lease(s) which relates to such Scheduled Lease) has heretofore been delivered to
Purchaser. Each Scheduled Lease is valid, binding, in
15
full force and effect and enforceable against the applicable Subject Company
and, to the Selling Parties' Knowledge, the other parties thereto and there is
no existing default by any Subject Company under any of the Scheduled Leases
which constitutes a Company Material Adverse Effect;
(c) Real Property Leases. Set forth on Schedule 3.12(c) is a complete
list of all Real Property Leases (the "Scheduled Real Property Leases"). A true
and complete copy of each Scheduled Real Property Lease (and if the Scheduled
Real Property Lease is a sublease, a true and complete copy of the lease(s)
which relates to such Scheduled Real Property Lease) has heretofore been
delivered to Purchaser, except in the case of the Scheduled Real Property Lease
described in item 2 of Schedule 1.2(a)(i) for which no copy of such lease has
been delivered to the Purchaser. Except as set forth on Schedule 3.12(c):
(i) each Scheduled Real Property Lease is valid, binding, in full
force and effect and enforceable against the applicable Subject
Company and, to the Selling Parties' Knowledge, the other parties
thereto;
(ii) except as set forth on Schedule 3.4, no Scheduled Real
Property Lease to which a Subject Company is a party requires a
Subject Company to obtain the consent or approval of another party as
a result of either the Asset Seller assigning a Scheduled Real
Property Lease to Purchaser or a "change in control" of the Acquired
Company occurring and, assuming any consent or approval listed on
Schedule 3.4 is obtained, each Scheduled Real Property Lease will
continue to be valid, in full force and effect and enforceable against
such Subject Company and/or the Purchaser, as the case may be, and to
the Selling Parties' Knowledge, the other parties thereto, immediately
following the Closing in accordance with the terms thereof as in
effect prior to the Closing;
(iii) there is not and, to the Selling Parties' Knowledge, there
has not been claimed or alleged by any Person with respect to a
Scheduled Real Property Lease any existing default or event that, with
notice or lapse of time or both, would constitute a default or event
of default on the part of a Subject Company, or, to the Selling
Parties' Knowledge, on the part of any other party thereto, except
such defaults, events of default and other events that would not
result in a material adverse effect of any Scheduled Real Property
Lease;
(iv) there are no disputes, oral agreements or forbearance
programs in effect as to any Scheduled Real Property Lease;
(v) neither the Selling Party nor any Subject Company has
assigned, subleased, transferred, conveyed, mortgaged, deeded in trust
or encumbered any interest in the leasehold or subleasehold; and
(vi) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of the
Business as currently conducted.
(d) Title to Properties, Encumbrances. Except for property sold since
the date of the Interim Management Accounts in the ordinary course of business,
each Subject Company has
16
good title to all the properties and assets reflected on the Interim Management
Accounts free and clear of all material Encumbrances not disclosed in the
Interim Management Accounts or set forth in Schedule 3.12(d).
(e) Condition of Certain Assets. Except as set forth on Schedule
3.12(e), considered in the aggregate, the buildings and equipment used by the
Subject Companies in the conduct of the Business are structurally sound, are in
reasonable operating condition and reasonable state of repair, and are adequate
for the uses for which they are intended, provided that, individually no such
building or equipment is in need of maintenance or repair except for ordinary,
routine maintenance and repairs that are not material in nature or cost. The
buildings and equipment used by the Subject Companies are sufficient for the
continued conduct of the Business after the Closing in substantially the same
manner as conducted prior to the Closing, subject to the need for certain
services and or assets provided to the Subject Companies under the Transitional
Services Agreement. Except as set forth on Schedule 3.12(e), the buildings,
equipment and other assets owned or leased by the Subject Companies are
sufficient for the conduct of the Business after the Closing in substantially
the same manner as conducted prior to the Closing, subject to the need for
certain services and assets provided to the Subject Companies under the
Transitional Services Agreement.
SECTION 3.13 CONTRACTS AND COMMITMENTS.
(a) Schedule 3.13 hereto sets forth, as of the date hereof, a true,
complete and correct list of every contract, agreement, sales agency or
representative arrangement, loan, lease, license, guarantee, understanding or
commitment of the Subject Companies relating to the conduct of the Business
("Scheduled Contracts") that (i) provides for aggregate future payments by a
Subject Company, or to a Subject Company, of more than $250,000 and has an
unexpired term exceeding six months and may not be canceled upon 60 days' notice
without any liability, penalty or premium (excluding purchase orders, invoices,
banking contracts and leasing transactions entered into or incurred in the
ordinary course of business); (ii) was entered into by a Subject Company with a
stockholder, officer, director or significant employee of a Subject Company;
(iii) is a collective bargaining or similar agreement; (iv) involves an
agreement with any bank, finance company or similar organization for
Indebtedness of a Subject Company; (v) materially restricts a Subject Company
from engaging in any business or activity anywhere in the world; (vi) is an
employment agreement, consulting agreement or similar arrangement to which a
Subject Company is a party or (vii) involves a partnership, joint venture or
other revenue-sharing, cost-sharing or income-sharing arrangement, manufacturing
rights, exclusive marketing or distribution rights, "most favored nation"
pricing provisions, exclusive purchasing of goods or services from a third
party, goods or services for which a third party is a Subject Company's sole
practicable source of supply, confidentiality restrictions or guarantee,
suretyship or indemnification obligations on the part of a Subject Company.
(b) As of the date hereof, (i) each Scheduled Contract is valid, in
full force and effect and enforceable against the applicable Subject Company
and, to the Selling Parties' Knowledge, the other parties thereto (ii) there is
not, and no Person has made any claim or allegation to any Subject Company or
the Selling Parties with respect to, any existing default with respect to a
Scheduled Contract or event that, with notice or lapse of time or both, would
constitute a default
17
or event of default on the part of a Subject Company, or, to the Selling
Parties' Knowledge, on the part of any other party thereto, except such
defaults, events of default and other events that would not result in a material
adverse effect on any Scheduled Contract; and (iii) no consent, approval,
authorization or waiver from, or notice to, any Governmental Entity or other
Person is required in order to maintain in full force and effect any of the
Scheduled Contracts, other than (A) such consents and waivers that have been
obtained and are unconditional and in full force and effect and such notices
that have been duly given, (B) such consents, approvals, authorizations, waivers
or notices the failure of which to have or give would not have a material
adverse effect on any Scheduled Contract, and (C) such consents as disclosed on
Schedule 3.4(c) hereto. For avoidance of doubt no claim has been made or, to the
Selling Parties' Knowledge, threatened or otherwise alleged by any employee of
the Asset Seller or by any representative of such employee against the Asset
Seller relating in any way to the employee's employment with the Asset Seller as
it relates to the Business, whether such claims arise under or in connection
with the employee's contract of employment or under statute or otherwise.
SECTION 3.14 CUSTOMERS AND SUPPLIERS.
Since the date of the Interim Management Accounts, to the Selling
Parties' Knowledge, there has not been any material adverse change in the
business relationship of a Subject Company relating to the conduct of the
Business with any customer who accounted for more than 5% of the Subject
Companies' sales relating to the conduct of the Business (on a combined basis)
during the period since the date of the Interim Management Accounts, or any
supplier from whom the Subject Companies purchased more than 5% of the goods or
services relating to the conduct of the Business (on a combined basis) which
they purchased during the same period or which is the Subject Companies' sole
practicable source of supply for any product or service.
SECTION 3.15 INSURANCE.
Rexam PLC and its Subsidiaries maintain for the benefit of the Subject
Companies relating to the conduct of the Business policies of fire and casualty,
liability and other forms of insurance in such amounts, with such deductibles
and against such risks and losses as are listed on Schedule 3.15. No notice of
cancellation or nonrenewal with respect to, or disallowance of any claim under,
or increase of the premium for any such insurance policy listed on Schedule 3.15
has been received by any Selling Party. Purchaser acknowledges that no such
policy or coverage applicable to the Subject Companies will be assigned to
Purchaser.
SECTION 3.16 CASUALTIES.
Since the date of the Interim Management Accounts, the Subject
Companies have not been affected as a result of flood, fire or explosion
relating to the Business which constitutes a Company Material Adverse Effect.
SECTION 3.17 LITIGATION.
Except as set forth in Schedule 3.17, there is no action, suit,
inquiry, proceeding or investigation by or before any court tribunal or
Governmental Entity or statutory agency or body
18
(including but not limited to the Health and Safety Executive or the Equal
Opportunities Commission or the Disability Rights Commission) pending or, to the
Selling Parties' Knowledge, threatened against or involving a Selling Party or
the Acquired Company relating to the conduct of the Business that has a
reasonable possibility of having a Company Material Adverse Effect or that
questions or challenges the validity of this Agreement or any action to be taken
by a Selling Party or the Acquired Company pursuant to this Agreement or in
connection with the Transactions. Further, no facts or circumstances exist
relating to the conduct of the Business by the Subject Companies prior to the
Closing which will result in any action, suit, inquiry, proceeding or
investigation by or before any court tribunal or Governmental Entity or
statutory agency or body (including but not limited to the Health and Safety
Executive or the Equal Opportunities Commission or the Disability Rights
Commission).
SECTION 3.18 ENVIRONMENTAL MATTERS.
Except as set forth in Schedule 3.18, (a) to the Selling Parties'
Knowledge, each Subject Company is, with respect to the conduct of the Business,
in material compliance with all applicable Environmental Laws in effect as of
the Closing Date, (b) no Subject Company has received any written notice with
respect to the Business of, or any property now or previously owned or leased
by, a Subject Company relating to the conduct of the Business from any
Governmental Entity or third party alleging that a Subject Company is not in
material compliance with any Environmental Law, (c) to the Selling Parties'
Knowledge, with respect to any Real Property now or previously owned or used by
a Subject Company with respect to the conduct of the Business, there has been no
"release" of a "hazardous substance," as those terms are defined in the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
Section 9601 et seq., or comparable foreign law (as applicable) in excess of a
reportable quantity which release remains unresolved or imposes any continuing
obligation under any Environmental Law in effect as of the Closing Date on any
real property owned or formerly owned by such Subject Company that is or was
used with respect to the conduct of the Business, (d) the Subject Company has no
liability under Environmental Law in effect as of the Closing Date arising from
waste disposed of or released at any location other than a Real Property now or
previously owned by a Subject Company, and (e) there are not presently
outstanding any past or present claims, actions or causes of action,
assessments, losses, damages, liabilities, costs and expenses, including
interest, penalties, reasonable attorney's fees, disbursements and expenses
arising out of or in connection with any non-compliance with any Environmental
Law in effect as of the Closing Date, which arise out of the Subject Companies'
management, use, control, ownership or operation of the Business by the Subject
Companies and which commenced before the Closing.
SECTION 3.19 COMPLIANCE WITH LAWS.
Except as set forth in Schedule 3.19, to the Selling Parties'
Knowledge, the Subject Companies have complied in a timely manner and in all
material respects with all laws, rules and regulations, codes of practice,
ordinances, judgments, awards, decrees, orders, writs and injunctions of all
United States federal, state, local, foreign governments and agencies thereof
that apply to the Business or the properties or assets of a Subject Company
relating to the conduct of the Business, except for violations that in the
aggregate would not constitute a
19
Company Material Adverse Effect; provided that, nothing contained in this
Section 3.19 shall be deemed to apply to, or expand the scope of the
representations and warranties made in Section 3.18 with respect to, any of the
matters referred to in Section 3.18.
SECTION 3.20 EMPLOYEE BENEFIT PLANS.
(a) Schedule 3.20 hereto contains a true and complete list of all
Benefit Plans maintained by or on behalf of the Subject Companies relating to
the conduct of the Business. Rexam PLC has heretofore made available to
Purchaser a true and complete copy of each written Benefit Plan and any
amendments thereto and each agreement creating or modifying any related trust or
other funding vehicle.
(b) Except as set forth on Schedule 3.20, to the extent that any
Benefit Plan is subject to United States laws:
(i) No liability under Title IV or Section 302 of ERISA has been
incurred by a Subject Company or any ERISA Affiliate that has not been
satisfied in full.
(ii) The PBGC has not instituted proceedings to terminate any
Title IV Plan and no condition exists that presents a material risk
that such proceedings will be instituted.
(iii) No Title IV Plan is a "multi-employer pension plan," as
defined in Section 3(37) of ERISA, nor is any Title IV Plan a plan
described in Section 4063(a) of ERISA.
(iv) Each Benefit Plan has been operated and administered in
accordance with its terms and applicable law, including ERISA and the
Code, except as would not have a Company Material Adverse Effect.
(v) Each Benefit Plan intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified.
(c) Each Benefit Plan that is subject to laws other than United States
laws has been operated and administered in all material respects in accordance
with such applicable laws, except as would not have a Company Material Adverse
Effect.
SECTION 3.21 TAX MATTERS.
(a) Each Tax Return of the Acquired Company, and each VAT (sales tax)
return of the Asset Seller, that was required to be filed by such Subject
Company has been filed on a timely basis, and all such Tax Returns were correct
and complete in all material respects. All Taxes of the Acquired Company and all
VAT (sales tax) of the Asset Seller have been paid on a timely basis, whether or
not shown on the Acquired Company's or any Selling Party's Tax Returns, that
were due and payable. All Taxes that each Subject Company is or was required by
law to withhold or collect have been withheld or collected and, to the extent
required, have been paid on a timely basis to the proper Governmental Entity.
20
(b) The unpaid Taxes of each Subject Company for Tax Periods through
the date of the Interim Management Accounts do not exceed the accruals and
reserves for Taxes (excluding reserves for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the Interim
Management Accounts. All Taxes attributable to the period from and after the
date of the Interim Management Accounts and continuing through the Closing Date
are attributable to the conduct by each Subject Company of their respective
operations in the ordinary course of business. For purposes of determining the
amount of Taxes attributable to a specified period (e.g., the period from the
date of the Interim Management Accounts through the Closing Date) other than a
Tax Period, each Tax shall be computed as if the specified period were a Tax
Period.
(c) The Acquired Company has delivered or made available to the
Purchaser correct and complete copies of all income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by the
Acquired Company since 1997. Except as set forth in Schedule 3.21(c), no
examination or audit of any Tax Return of the Acquired Company or of any Selling
Party insofar as it relates to the Acquired Company by any Governmental Entity
is currently in progress or, to the Selling Parties' Knowledge, threatened or
contemplated. The Acquired Company does not have any outstanding issues pursuant
to notification by any jurisdiction that the jurisdiction believes that the
Acquired Company or any Selling Party insofar as it relates to the Acquired
Company was required to file any Tax Return that was not filed. The Acquired
Company has no actual or potential liability for any Taxes of any Person (other
than the Acquired Company) under Treasury Regulation Section 1.1502-6 (or any
similar or comparable provision of state, local or foreign law), or as a
transferee or successor, by contract, or otherwise.
(d) No Subject Company has waived any statute of limitations with
respect to Taxes or agreed to an extension of time with respect to an assessment
of or deficiency in Taxes.
(e) Except as set forth in Schedule 3.21(e), no Subject Company is a
party to any Tax litigation or is the subject of any Tax audit. No Subject
Company is or has been a party to any specific transaction the main purpose of
which has been to avoid, defer, or reduce Taxes. Classifications, definitions,
valuation, and principles used in the accounts of each Subject Company are in
accordance with the classifications, definitions, valuations, and principles
used in the Tax Returns of the Subject Company, as the case may be. No Subject
Company is or has been a party to any transaction or agreement that is in
conflict with the Tax rules on transfer pricing in any relevant jurisdiction.
(f) There are no liens or other encumbrances with respect to Taxes upon
any of the assets or properties of a Subject Company, other than with respect to
Taxes not yet due and payable.
(g) The Acquired Company is not a "consenting corporation" within the
meaning of Section 341(f) of the Code, and none of the assets of the Acquired
Company are subject an election under Section 341(f) of the Code.
21
(h) The Acquired Company has not been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(i) The Acquired Company has not made any payments, is not obligated to
make any payments, and is not a party to any agreement, contract, arrangement,
or plan that could obligate it to make any payments, that are or will be,
separately or in the aggregate, "excess parachute payments" within the meaning
of Section 280G of the Code.
(j) None of the assets of the Acquired Company (i) is property that is
required to be treated as being owned by any other person pursuant to the
provisions of former Section 168(f)(8) of the Code, (ii) is "tax-exempt use
property" within the meaning of Section 168(h) of the Code, or (iii) directly or
indirectly secures any debt the interest on which is tax exempt under Section
103(a) of the Code.
(k) The Acquired Company has not undergone and is not required to
undergo a change in its method of accounting resulting in an adjustment to its
taxable income pursuant to Section 481 of the Code.
(l) The Acquired Company has not participated in or cooperated with an
international boycott within the meaning of Section 999 of the Code.
(m) There is no limitation on the utilization by the Acquired Company
of its net operating losses, built-in losses, Tax credits, or similar items
under Section 382, 383, or 384 of the Code or comparable provisions of state law
(other than any such limitation arising as a result of the consummation of the
Transactions contemplated by this Agreement).
(n) The Acquired Company has not distributed to its stockholders or
security holders stock or securities of a controlled corporation, nor have stock
or securities of the Acquired Company been distributed, in a transaction to
which Section 355 of the Code applies (i) in the two years prior to the date of
this Agreement or (ii) in a distribution that could otherwise constitute part of
a "plan" or "series of related transactions" (within the meaning of Section
355(e) of the Code) that includes the transactions contemplated by this
Agreement.
(o) The Acquired Company is not and has not been required to make a
basis reduction pursuant to Treasury Regulation Section 1.1502-20(b) or Treasury
Regulation Section 1.337(d)-2(b).
(p) All documents (other than those which have ceased to have any legal
effect) to which the Asset Seller is a party and which are material to the title
of the Purchased Assets have been duly stamped and no such documents which are
outside the U.K. would attract stamp duty if they were brought into the U.K.
(q) All tax payable upon the importation of goods, and all excise
duties payable to H.M. Customs and Excise payable in respect of the Purchased
Assets, have been paid in full, and none of the Purchased Assets is liable to
confiscation, forfeiture or distress.
22
(r) All National Insurance Contributions and sums payable by the Asset
Seller to the Inland Revenue under the Pay As You Earn ("PAYE") system have been
duly and properly paid. Proper records have been maintained in respect of all
such matters. The Asset Seller has deducted all tax required by law to be
deducted from all other payments to or treated as made to employees and
ex-employees of the Asset Seller. The Asset Seller has accounted to the Inland
Revenue for all tax so deducted together with all tax chargeable on benefits
provided for its employees and ex-employees.
SECTION 3.22 INTELLECTUAL PROPERTY.
Except as set forth on Schedule 3.22 hereto, Rexam PLC or a Subject
Company owns, or is licensed to use or otherwise possesses legally enforceable
rights in, the Company Intellectual Property and on the Closing Date the
Purchaser shall obtain from the Selling Parties ownership of (or rights, legally
enforceable directly by the Purchaser and not through any Selling Party in) the
Company Intellectual Property. Except as set forth on Schedule 3.22 hereto or as
covered by the Transitional Services Agreement, the Company Intellectual
Property is sufficient for the conduct of the Business as presently conducted
and as proposed to be conducted. Except as set forth on Schedule 3.22 hereto, to
the Selling Parties' Knowledge, there are no oppositions, cancellations,
invalidity proceedings, interferences or re-examination proceedings presently
pending with respect to the Company Intellectual Property. Except as set forth
on Schedule 3.22 hereto, the conduct of the Business and the Company
Intellectual Property do not infringe, violate or misappropriate any
Intellectual Property rights of any Person, and no Selling Party has received
any written notice from any other Person pertaining to or challenging the right
of a Subject Company to use any of the Company Intellectual Property. The
Selling Parties have taken all reasonable measures to protect the proprietary
nature of each item of Company Intellectual Property which is owned by a Subject
Company. To the Selling Parties' Knowledge: (a) no other Person has any rights
to any of the Company Intellectual Property owned by (and not licensed to) a
Subject Company (except pursuant to agreements or licenses specified in Schedule
3.22), and (b) no other Person is infringing, violating or misappropriating any
of the Company Intellectual Property owned by (and not licensed to) a Subject
Company.
SECTION 3.23 LABOR MATTERS.
Except as set forth on Schedule 3.23 hereto:
(a) there is no labor strike, dispute, slowdown, stoppage or lockout
actually pending, or to the Selling Parties' Knowledge, threatened against a
Subject Company with respect to the conduct of the Business;
(b) no Subject Company is a party to or bound by any collective
bargaining agreement with any labor organization applicable to employees of a
Subject Company with respect to the conduct of the Business;
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(c) no labor union has been certified by the National Labor Relations
Board, to the extent applicable, as bargaining agent for any of the employees of
the Acquired Company with respect to the conduct of the Business;
(d) no Subject Company has experienced any material work stoppage or
other material labor difficulty with respect to the conduct of the Business
during the two-year period ending on the date hereof;
(e) there is no unfair labor practice charge or complaint against the
Acquired Company with respect to the conduct of the Business pending or
threatened before the National Labor Relations Board, to the extent applicable;
(f) since January 1, 2000, the Acquired Company has not effectuated a
"plant closing" (as defined in the WARN Act) affecting any site of employment or
one or more facilities or operating units within any site of employment or
facility, and there has not occurred a "mass layoff" (as defined in the WARN
Act) affecting any site of employment or facility of the Acquired Company;
(g) no application has been made to the Selling Parties or to the
Central Arbitration Committee seeking union recognition in respect of some or
all of the Selling Parties' employees in the UK;
(h) the Selling Parties have complied with their obligations under
Regulation 10 of the Transfer of Undertakings (Protection of Employment)
Regulations 1981; and
(i) for the avoidance of doubt, no claim has been made or, to the
Selling Parties' Knowledge, threatened or otherwise alleged by any employee of
the Asset Seller or by any representative of such employee against the Asset
Seller relating in any way to the employee's employment with the Asset Seller
whether such claims arise under or in connection with the employee's contract or
under any statute or otherwise howsoever.
SECTION 3.24 BANK ACCOUNTS.
Schedule 3.24 sets forth (a) the names and locations of all banks,
trust companies, savings and loan associations and other financial institutions
at which a Subject Company maintains lockboxes, safe deposit boxes, checking
accounts or other accounts of any nature, the available balance or overdrawn
balance of which customarily exceeds $25,000 (other than those accounts of the
Acquired Company that are being closed prior to Closing), and (b) the names of
all Persons authorized to draw thereon, make withdrawals therefrom or have
access thereto.
SECTION 3.25 BROKERS OR FINDERS.
No Selling Party has entered into any agreement or arrangement
entitling any agent, broker, investment banker, financial advisor or other firm
or person to any brokers' or finder's fee or any other commission or similar fee
in connection with any of the Transactions except for
24
Credit Suisse First Boston, whose fees and expenses will be paid by Rexam PLC in
accordance with Rexam PLC's agreements with such firm.
SECTION 3.26 RECEIVABLES AND PAYABLES.
All Receivables and all trade accounts payable of the Subject Companies
relating to the conduct of the Business have arisen, and as of the Closing Date
will have arisen, from bona fide transactions in the ordinary course of business
consistent with past practice and are valued based upon the Rexam Accounting
Policies and in accordance with GAAP.
SECTION 3.27 INVENTORY.
All Inventory of the Subject Companies relating to the conduct of the
Business is merchantable and is valued based on Rexam Accounting Policies in
accordance with GAAP. All such inventory consists of a quality and quantity
usable and saleable in the ordinary course of business, except for obsolete
items and items of below-standard quality, all of which have been written-off or
written-down to net realizable value on the Interim Management Accounts and the
Financial Statements. All inventories not written-off have been priced at the
lower of cost or net realizable value on a first-in, first out basis.
SECTION 3.28 COMPETITION AND FAIR TRADING LAWS.
(a) Insofar as it relates to the Business, no Selling Party is a party
to (or concerned in) any agreement, arrangement, concerted practice or course of
conduct which: (i) is registrable under applicable laws in any relevant
jurisdictions; or (ii) contravenes any such laws, or (iii) falls within Article
81 and/or Articles 82 of the EC Treaty; or (iv) falls within Article 53 and/or
Article 54 of the Agreement on the European Economic Area; or (v) contravenes,
or, to the Selling Parties' Knowledge, is likely to contravene, the prohibitions
of the Competition ▇▇▇ ▇▇▇▇; or (vi) otherwise infringes the competition
legislation or practice of any other jurisdiction.
(b) No Selling Party has received or, to the Selling Parties'
Knowledge, is likely to receive any process, notice or other communication
(formal or informal) by or on behalf of the Commission of the European
Communities, the EFTA Surveillance Authority or any other authority having
jurisdiction in competition matters in relation to any aspect of the Business or
any agreement, arrangement, concerted practice or course of conduct to which any
of them is, or is alleged to be, a party in relation to the Business.
(c) No Selling Party is subject to any order or judgment given by any
court or governmental or regulatory authority, or party to any undertaking or
assurance given to any such court or authority, in relation to competition
matters in respect of the Business which is still in force.
SECTION 3.29 GRANTS.
To the Selling Parties' Knowledge, nothing has been done, agreed to be
done or omitted to be done as a result of which either (i) any investment or
other grant paid for use in the Business is liable to be refunded in whole or in
part or (ii) any such grant for which application
25
has been made will or may not be paid or may be reduced (as a result of the
transaction contemplated by this Agreement).
SECTION 3.30 INSOLVENCY, ETC.
(a) No order has been made, petition presented or meeting convened for
the winding up of any Selling Party or for the appointment of any provisional
liquidatory (or equivalent in the jurisdiction of its incorporation) (or other
process whereby the business is terminated and the assets of the company
concerned are distributed amongst the creditors and/or shareholders or other
contributors), and there are no cases or proceedings pending against a Selling
Party under any applicable insolvency, reorganization or similar laws in any
relevant jurisdiction, and, to the Selling Parties' Knowledge, no events have
occurred which, under applicable laws, would justify any such cases or
proceedings.
(b) No petition has been presented for an administration order to be
made in relation to any Selling Party, and no receiver (including, without
limitation, any administrative receiver), or the equivalent in the relevant
jurisdiction of incorporation, has been appointed in respect of the whole or any
part of any of the property, assets and/or undertaking of any Selling Party nor
has any such order been made (including, in any relevant jurisdiction, any other
order by which, during the period it is in force, the affairs, business and
assets of the company concerned are managed by a person appointed for the
purpose) by any Governmental Entity.
(c) No Selling Party is insolvent or unable to pay its debts as they
fall due.
SECTION 3.31 DISCLOSURE.
None of the representations and warranties made by the Selling Parties
contained in this Agreement or any Schedule hereto or in any other document,
certificate or other instrument executed by or on behalf of the Selling Parties
at Closing contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary in light of the
circumstances which it was or will be made, in order to make the statements
herein or therein not misleading. The Selling Parties shall promptly either (i)
give all consents required by the Confidentiality Agreement to the inclusion of
information about the Subject Companies in drafts of the Financing Documents
that shall be delivered to them or (ii) provide all corrections necessary to
enable them to give such consents. The Selling Parties have obtained the
agreement of Ernst & Young to be named as an expert in any Financing Document
and to provide comfort letters to UBS Warburg in a form mutually acceptable to
Ernst & Young and UBS Warburg.
SECTION 3.32 NO OTHER REPRESENTATIONS.
Except for the representations and warranties expressly contained in
this Article III, no Selling Party nor any other Person acting on behalf of a
Selling Party makes any representation or warranty, express or implied.
26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby makes the following representations and warranties to
the Selling Parties, each of which is true and correct as of the date hereof.
SECTION 4.1 ORGANIZATION.
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of Delaware and has all requisite corporate or other
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority, and governmental approvals would not have,
individually or in the aggregate, a material adverse effect on Purchaser's
ability to consummate the Transactions.
SECTION 4.2 AUTHORIZATION; VALIDITY OF AGREEMENT.
Purchaser has full corporate power and authority to execute and deliver
this Agreement and to consummate the Transactions. The execution, delivery and
performance by Purchaser of this Agreement and the consummation of the
Transactions have been duly authorized by all requisite corporate action on the
part of Purchaser and no other corporate action on the part of Purchaser is
necessary to authorize the execution and delivery by Purchaser of this Agreement
or the consummation of the Transactions. No vote of, or consent by, the holders
of any class or series of stock or other equity issued by Purchaser is necessary
to authorize the execution and delivery by Purchaser of this Agreement or the
consummation by it of the Transactions. This Agreement has been duly executed
and delivered by Purchaser, and, assuming due and valid authorization, execution
and delivery hereof by the Selling Parties, is a valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms except (a)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws of general application affecting
enforcement of creditors' rights generally and (b) the availability of the
remedy of specific performance or injunctive or other forms of equitable relief
may be subject to equitable defenses and would be subject to the discretion of
the court before which any proceeding therefore may be brought.
SECTION 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS.
Except as set forth on Schedule 4.3 hereto and for the filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, the HSR Act, any Foreign
Antitrust Law and state and foreign securities or blue sky laws, none of the
execution, delivery or performance of this Agreement by Purchaser, the
consummation by Purchaser of the Transactions or compliance by Purchaser with
any of the provisions hereof will (a) conflict with or result in any breach of
any provision of the Operating Document or Organizational Document of Purchaser,
(b) require any filing with, or permit, authorization, consent or approval of,
any Governmental Entity, (c) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under, any of the terms,
conditions or
27
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Purchaser or any of its
Subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound, or (d) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Purchaser, any of its
Subsidiaries or any of their properties or assets, excluding from the foregoing
clauses (b), (c) and (d) such violations, breaches or defaults which would not,
individually or in the aggregate, have a material adverse effect on Purchaser's
ability to consummate the Transactions.
SECTION 4.4 ACQUISITION OF SHARES FOR INVESTMENT; ABILITY TO EVALUATE AND
BEAR RISK.
(a) Purchaser is acquiring the Shares for investment and not with a
view toward, or for sale in connection with, any distribution thereof, nor with
any present intention of distributing or selling the Shares. Purchaser agrees
that the Shares may not be sold, transferred, offered for sale, pledged,
hypothecated or otherwise disposed of without registration under the Securities
Act and any applicable state or foreign securities laws, except pursuant to an
exemption from such registration under such act and such laws.
(b) Purchaser is able to bear the economic risk of holding the Shares
for an indefinite period, and has knowledge and experience in financial and
business matters such that it is capable of evaluating the risks of the
investment in the Shares.
SECTION 4.5 FINANCING DOCUMENTS, AVAILABILITY OF FUNDS.
Schedule 4.5 sets forth each registration statement, highly confident
letter, credit rating letter, underwriting agreement or offering memorandum (the
"Financing Documents") relating to the Purchaser's plans at the date hereof to
secure the financing necessary to consummate the Transactions, including without
limitation, any plans to issue debt or equity securities in a private placement
which is exempt from registration under the Securities Act or to issue publicly
registered debt securities in exchange for privately issued debt securities.
Purchaser shall make available to the Selling Parties copies of each draft of
each Financing Document no later than five (5) Business Days (and the
substantially final draft of each such Financing Document no later than 24
hours) before its first use for their review and consent pursuant to the terms
of the Confidentiality Agreement and shall make any factual corrections in the
information regarding the Subject Companies that the Selling Parties indicate
are required in order to obtain such consent.
SECTION 4.6 LITIGATION.
There is no claim, action, suit, proceeding or governmental
investigation pending or, to Purchaser's Knowledge, threatened against Purchaser
or any of its Subsidiaries by or before any court or Governmental Entity that,
individually or in the aggregate, would have or would reasonably be expected to
impede the ability of Purchaser to complete the Closing in all material
respects.
28
SECTION 4.7 LABOR MATTERS.
The Purchaser has complied with its obligations under Regulation 10 of
the Transfer of Undertakings (Protection of Employment) Regulations 1981 and has
provided the Asset Seller with such information as is necessary to enable the
Asset Seller to comply with its obligations under Regulation 10(3) of such
regulations.
SECTION 4.8 BROKERS OR FINDERS.
Neither Purchaser nor any of its Affiliates, nor any of their
respective officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions, or finder's fees in
connection with the Transactions except for any firm whose fees and expenses
will be paid by the Purchaser in accordance with the Purchaser's agreements with
such firm.
SECTION 4.9 DISCLOSURE.
All of the representations and warranties made by the Purchaser
contained in this Agreement and in any schedule to this Agreement are true,
correct and complete in all material respects and do not omit to state any
material fact necessary to make the statements contained herein or therein not
misleading.
ARTICLE V
CERTAIN COVENANTS AND AGREEMENTS
SECTION 5.1 INTERIM OPERATIONS OF THE SUBJECT COMPANIES.
Except (i) as expressly provided in this Agreement, (ii) as set forth
in the Schedules hereto and (iii) as may be consented to in writing by Purchaser
(such consent not to be unreasonably withheld or conditioned) Rexam PLC shall
assure that, after the date hereof and prior to the Closing Date, in respect of
the Business:
(a) the Subject Companies shall conduct the Business in the same
manner as heretofore conducted and only in the ordinary course;
(b) no Subject Company shall: (i) amend its Operating Document or
Organizational Document, (ii) issue, sell, transfer, pledge, dispose
of or encumber any shares of any class or series of its capital stock,
or securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any
shares of any class or series of its capital stock, (iii) declare, set
aside or pay any dividend or other distribution payable in cash, stock
or property with respect to any shares of any class or series of its
capital stock, except cash dividends payable on or before the Closing
Date, (iv) split, combine or reclassify any shares of any class or
series of its stock, (v) redeem, purchase or otherwise acquire
directly or indirectly any shares of any class or series of its
capital stock, or any instrument or security which consists of or
includes a right to acquire such shares or (vi) make or authorize any
capital expenditure
29
in excess of $250,000 in any four or five week accounting period
following the date hereof (other than capital expenditures set forth
on Schedule 5.1(b) which have already been budgeted for by a Subject
Company);
(c) no Subject Company shall: (i) incur or assume any long-term
debt, (ii) modify the terms of any Indebtedness or other liability,
other than modifications of short term debt in the ordinary and usual
course of business and consistent with past practice, or (iii) assume
or guarantee the obligations of any other Person, except in the
ordinary course of business consistent with past practice;
(d) no Subject Company shall make any change in the compensation
payable or to become payable to any of its employees (other than
normal recurring increases in the ordinary course of business or
required by the current terms of any Benefit Plan existing on the date
hereof) nor shall any Subject Company make any other changes to the
employment contracts of any of its employees; provided however, that
the Acquired Company (i) shall have the right to amend any employment
agreement with any of its employees or officers existing as of the
Closing Date in order to modify or eliminate (A) any requirement of
continuing employment after the Closing Date, (B) the terms and manner
of payment of any "stay pay" bonus and/or (C) any noncompetition
provision, and (ii) shall amend such employment agreements so that
they do not contain any obligations of the types described in
subsection (i)(A) and (i)(B) above that are binding on the Acquired
Company or the Purchaser (as purchaser of the Shares) at or after the
Closing Time;
(e) no Subject Company shall voluntarily permit any insurance
policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated prior to the Closing Date without notice to
Purchaser, except policies providing coverage for losses not in excess
of $5,000,000 which are replaced without diminution of or gaps in
coverage;
(f) no Subject Company shall adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization;
(g) no Subject Company shall change in any material respect any
of the accounting methods used by it unless required by GAAP, as
applied on a consistent basis, as applicable;
(h) no Subject Company shall take, or agree to or commit to take,
any action that would result in any of the conditions to the Closing
set forth in Article VI not being satisfied, or would make any
representation or warranty of the Selling Parties contained herein
inaccurate in any material respect at, or as of any time prior to, the
Closing Date, or that would materially impair the ability of Purchaser
or the Selling Parties to consummate the Closing in accordance with
the terms hereof or materially delay such consummation; and
30
(i) no Subject Company shall enter into any agreement, contract,
commitment or arrangement to do any of the things described in
Subsections (a) through (h) above.
SECTION 5.2 ACCESS; CONFIDENTIALITY.
(a) Rexam PLC shall cause the Subject Companies prior to the Closing to
(i) give Purchaser and its authorized representatives reasonable access to all
books, records, personnel, offices and other facilities and properties of the
Subject Companies relating to the Business, (ii) permit Purchaser to make such
copies and inspections thereof as Purchaser may reasonably request and (iii)
cause the officers of the Subject Companies to furnish Purchaser with such
financial and operating data and other information with respect to the Business
and the properties of the Subject Companies as Purchaser may from time to time
reasonably request; provided that any such access shall be conducted at
Purchaser's expense, at a reasonable time, under the observation of the Subject
Companies' personnel and in such a manner as to maintain the confidentiality of
this Agreement and the Transactions and not to interfere with the normal
operation of the business of the Subject Companies or the Business.
Notwithstanding anything contained in this Agreement or any other agreement
between Purchaser and any Selling Party executed prior to the date hereof,
neither Rexam PLC, the Subject Companies, nor any Affiliate of Rexam PLC shall
have any obligation to make available to Purchaser or its representatives, or
provide Purchaser or its representatives with, any consolidated, combined or
unitary Tax Return filed by Rexam PLC or any of its Affiliates or their
respective predecessors, or any related material (provided, that all information
used in such Unitary Tax Return that pertains solely to the Subject Companies
shall be provided to the Purchaser). Nothing herein shall require any Selling
Party to disclose any information to Purchaser if such disclosure would
contravene any applicable laws, fiduciary duty or binding agreement entered into
prior to the date of this Agreement (including any confidentiality agreement to
which a Selling Party or any Affiliate of a Selling Party is a party but
excluding any legal restriction arising solely from the lack of written consent
from employees to Purchaser's review of their personnel data outside the
European Union).
(b) The provisions of the Confidentiality Agreement shall remain
binding and in full force and effect. The information contained herein, in the
schedules hereto or delivered to Purchaser or its authorized representatives
pursuant hereto shall be deemed to be Confidential Information (as defined and
subject to the exceptions contained in the Confidentiality Agreement) until the
Closing. Except as otherwise provided in Section 5.4, Purchaser shall cause its
consultants, advisors and representatives to treat the terms of this Agreement
after the date hereof as strictly confidential (unless compelled to disclose by
judicial or administrative process or, based upon the advice of legal counsel,
by other requirements of law and then still subject to the provisions of the
Confidentiality Agreement to the extent permitted by law).
SECTION 5.3 EFFORTS AND ACTIONS TO CAUSE CLOSING TO OCCUR.
(a) Prior to the Closing, upon the terms and subject to the conditions
of this Agreement, Purchaser and Rexam PLC shall use their respective
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done and cooperate with each other in order to do, all
things necessary, proper or advisable (subject to any applicable laws) to
31
consummate the Closing of the Transactions as promptly as practicable, including
the preparation and filing of all forms, registrations and notices required to
be filed to consummate the Closing and the other Transactions and the taking of
such actions as are necessary to obtain any requisite approvals, authorizations,
consents, orders, licenses, permits, qualifications, exemptions or waivers by
any third party or Governmental Entity. In addition, no party hereto shall take
any action after the date hereof that could reasonably be expected to materially
delay the obtaining of, or result in not obtaining, any permission, approval or
consent from any Governmental Entity or other Person required to be obtained
prior to Closing. Nothing contained in this Agreement shall require any Selling
Party to pay any consideration to any other Person from whom any such approvals,
authorizations, consents, orders, licenses, permits, qualifications, exemptions
or waiver is requested.
(b) Prior to the Closing, each party shall promptly consult with the
other party hereto with respect to, provide any necessary information with
respect to, and provide the other parties (or their respective counsel) with
copies of, all filings made by such party with any Governmental Entity or any
other information supplied by such party to a Governmental Entity in connection
with this Agreement and the Transactions. Each party hereto shall promptly
inform each other party of any communication received by such party from any
Governmental Entity regarding any of the Transactions. If any party hereto or
Affiliate thereof receives a request for information or documentary material
from any such Governmental Entity with respect to any of the Transactions, then
such party shall endeavor in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other parties, an
appropriate response in compliance with such request.
(c) In addition to and without limiting the agreements of the parties
contained above, Purchaser and Rexam PLC shall (i) take promptly all actions
necessary to make the filings required of them or any of their respective
Affiliates under the HSR Act and any Foreign Antitrust Law, (ii) comply at the
earliest practicable date with any request for additional information or
documentary material received by Purchaser, Rexam PLC or any of their respective
Affiliates from the FTC, the DOJ or any Foreign Antitrust Administrator pursuant
to the HSR Act or any Foreign Antitrust Law or from any state attorney general
or other Governmental Entity in connection with antitrust matters, (iii)
cooperate with each other in connection with any filing under the HSR Act or any
Foreign Antitrust Law and in connection with resolving any investigation or
other inquiry concerning the Transactions commenced by the FTC, DOJ, any Foreign
Antitrust Administrator, any state attorney general or any other Governmental
Entity, (iv) use their best efforts to resolve such objections, if any, as may
be asserted with respect to the Transactions under any antitrust law and (v)
advise the other parties promptly of any material communication received by such
party from the FTC, DOJ, any Foreign Antitrust Administrator, any state attorney
general or any other Governmental Entity regarding any of the Transactions, and
of any understandings, undertakings or agreements (oral or written) such party
proposes to make or enter into with the FTC, DOJ, any Foreign Antitrust
Administrator, any state attorney general or any other Governmental Entity in
connection with the Transactions. Concurrently with the filing of notifications
under the HSR Act or any Foreign Antitrust Law or as soon thereafter as
practicable, Rexam PLC and Purchaser shall each request early termination of the
HSR Act waiting period or any corresponding provision of any Foreign Antitrust
Law. With regard to Purchaser, "best efforts" for purposes of Section 5.3(c)(iv)
shall
32
not include (x) proffering Purchaser's willingness to accept an order providing
for the divestiture by Purchaser of such properties, assets, operations, or
businesses of Purchaser or the Business (as are necessary to permit Purchaser to
consummate the Transactions, including an offer to hold separate such
properties, assets, operations or businesses pending any such divestiture), or
(y) Purchaser's willingness to accept such other conditions, restrictions,
limitations, or agreements affecting Purchaser's full rights or ownership of the
Purchased Assets and the assets of the Acquired Company as may be necessary to
resolve such objections, if any, as may be asserted by the FTC, DOJ, any Foreign
Antitrust Administrator, any state attorney general or any other Governmental
Entity with respect to the Transactions under any antitrust law. Purchaser shall
engage appropriate experts with experience in antitrust matters to advise them
regarding any comments or objections or requests for additional information
received or anticipated from the FTC, DOJ, any Foreign Antitrust Administrator,
any state attorney general or any other Governmental Entity in connection with
the Transactions. Purchaser shall consult regularly with the Selling Parties in
advance and from time to time regarding the conduct and status of any filings
with Governmental Entities and provide the Selling Parties with copies of such
filings in sufficient time for the Selling Parties to provide meaningful input
as to strategy and content (provided that Purchaser shall be entitled to redact
any of its confidential information contained in such filings before providing
copies to the Selling Parties) and any significant strategies, approaches or
other actions that Purchaser expects or intends to adopt or take in connection
therewith.
SECTION 5.4 PUBLICITY.
From the date of this Agreement until the Closing, or the date the
Transactions are terminated or abandoned pursuant to Article VII, neither Rexam
PLC, the Purchaser nor any of their respective Affiliates shall issue or cause
the publication of any press release or other internal or external announcement
with respect to this Agreement or the Transactions without prior consultation
with Rexam PLC and Purchaser, except as legal counsel shall advise may be
required by law or by any listing agreement with a national securities exchange
or trading market and then only after Rexam PLC and Purchaser have been afforded
a reasonable opportunity to review and comment on the same.
SECTION 5.5 EMPLOYEES; EMPLOYEE BENEFITS.
(a) For the purposes of this Agreement, the term "Active Employees"
shall mean each person employed by a Subject Company as of the Closing Time who
is performing work duties in connection with the Business for such Subject
Company or is absent from work (1) by reason of a scheduled day off; (2) by
reason of a sick day or a paid vacation day, personal day or holiday; (3) by
reason of a family or medical leave covered under Section 102 of the Family and
Medical Leave Act of 1993 or any comparable foreign law; or (4) due to any
short-term disability or other authorized leave or suspension under such Subject
Company's policies or practices. Purchaser shall, as of the Closing Time, offer
employment to all Active Employees of the Asset Seller who are not employed in
the United Kingdom. Such employment may be employment at will. For the avoidance
of doubt, the parties intend that the contracts of employment of those Active
Employees of the Asset Seller who are employed in the United Kingdom and all
rights and duties and obligations of the Asset Seller thereunder shall be
33
automatically transferred to the Purchaser with effect from the Closing Time.
Active Employees of the Asset Seller who accept employment with Purchaser
pursuant to this Section 5.5(a) together with the Active Employees of the
Acquired Company are referred to collectively as "Continuing Employees." If any
Continuing Employee is discharged by Purchaser or Purchaser's Affiliates, then
Purchaser shall be responsible for any and all severance costs for such
Continuing Employee under any severance benefit plan or arrangement maintained
or entered into by Purchaser, Purchaser's Affiliates or the Acquired Company.
Purchaser shall be responsible and assume all liability for all notices or
payments due to any Continuing Employees, and all notices, payments, fines or
assessments due to any Governmental Entity, pursuant to any applicable foreign,
federal, state or local law, common law, statute, rule or regulation with
respect to the employment, discharge or layoff of the Continuing Employees,
including without limitation, the WARN Act, Section 4980B of the Internal
Revenue Code, Title X of the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA"), and any rules or regulations as have been issued in
connection with the foregoing. The Asset Seller acknowledges and assumes all
liabilities, if any, under any comparable foreign law with respect to all of its
employees as of the Closing Time who do not become Continuing Employees. The
Purchaser and the Asset Seller shall cooperate in signing and sending to each of
the Continuing Employees who were Active Employees employed in the United
Kingdom forthwith after the Closing Time a notice of transfer of employment in
the agreed form. The parties' cooperation in this respect shall not constitute
an admission that the other party has complied with its duties under Regulation
10 of the Transfer of Undertakings (Protection of Employment) Regulation 1981.
(b) From and after the Closing Time, Purchaser shall provide, or cause
to be provided, benefits for Continuing Employees who are covered by the
Collective Bargaining Agreements in accordance with the terms of the Collective
Bargaining Agreements. Continuing Employees who are covered by the Collective
Bargaining Agreements participate in one or both of (i) the Rexam Pension Plan
for Collectively Bargained Employees (the "Union Pension Plan") and (ii) the
Rexam Retirement Savings Plan for Collectively Bargained Employees (the "Union
401(k) Plan" and together with the Union Pension Plan, the "Union Qualified
Plans"). Continuing Employees participating in the Union Qualified Plans shall
terminate as participants and become fully vested in their accrued benefits
under such plans on the day prior to the Closing Date. Purchaser shall permit
any such employees who become Continuing Employees to directly roll over any
eligible rollover distributions from the Union Qualified Plans to a defined
contribution plan of Purchaser.
(c) On and for a period of not less than one year following the
Closing, Purchaser shall provide, or shall cause to be provided, welfare
benefits for Continuing Employees who are not covered by the Collective
Bargaining Agreements that are substantially equivalent to the welfare benefits
provided to such employees under such benefit plans as Purchaser makes available
to similarly situated employees of Purchaser on the day prior to the Closing
Date ("Purchaser's Welfare Plans"), which benefits are described in Schedule
5.5(c), except as otherwise required under applicable law with respect to
Continuing Employees who are employed in the United Kingdom. Purchaser shall be
liable for and shall pay all health and dental care and short-term disability
benefits due and payable to or for the benefit of Continuing Employees under
Purchaser's welfare benefit plans with respect to claims incurred from and after
34
the Closing Date. Continuing Employees who are not covered by the Collective
Bargaining Agreements shall receive service credit for their service with the
Subject Companies and their predecessors for purposes of participation and
vesting (but not for benefit accrual purposes except to the extent required by
Section 5.5(f) below) under Purchaser's Welfare Plans (but only to the extent
such service was taken into account under the Benefit Plans made available to
the employees of the Subject Companies on the day prior to the Closing Date).
Purchaser shall provide that no additional waiting periods, deductibles,
exclusions or benefit limitations for pre-existing conditions shall be imposed
or assessed against such Continuing Employees (or their dependents) under
Purchaser's Welfare Plans (other than as would have been applicable to such
Continuing Employees or their dependents under the Benefit Plans made available
to the employees of the Subject Companies on the day prior to the Closing Date).
Purchaser shall provide that Purchaser's Welfare Plans shall recognize any
expenses paid by such Continuing Employees (or their dependents) which were
applied to meet deductibles and maximum out-of-pocket limits under the Benefit
Plans for the calendar year of the Closing as if such expenses had been paid
under Purchaser's Welfare Plans for purposes of applying the deductible and
maximum out-of-pocket limits of Purchaser's Welfare Plans for such calendar
year.
(d) (i) The Acquired Company's employees who are not covered by
the Collective Bargaining Agreements participate in one or more of:
(A) the Rexam Retirement Income Pension Plan (the "Salaried
Pension Plan"); and
(B) the Rexam Retirement Savings Plan (the "Salaried 401(k)
Plan" and together with the Salaried Pension Plan, the "Non-Union
Qualified Plans").
Acquired Company employees participating in the Non-Union Qualified
Plans shall terminate as participants and become fully vested in their
accrued benefits under such plans on the day prior to the Closing
Date. Purchaser shall permit any such employees who become Continuing
Employees to directly roll over any eligible rollover distributions
from such plans to a defined contribution plan of Purchaser.
(ii) Purchaser acknowledges that certain participants in the
Salaried 401(k) Plan and the Union 401(k) Plan have loans outstanding
thereunder, and to the extent permitted under the Code, Purchaser
agrees to accept the notes evidencing such loans as part of any
"eligible rollover distributions," as defined in Section 402(c)(4) of
the Code, to a defined contribution plan of Purchaser, subject to such
procedures as Purchaser may reasonably require. Within sixty (60) days
following the Closing Date, the Selling Parties shall cause to be
provided to Purchaser a list of such loans outstanding on the Closing
Date.
(e) Continuing Employees of the Acquired Company who are participants
in the medical care and dependent care spending account plan maintained by the
Selling Parties ("DSI's Spending Accounts") as of the day prior to the Closing
Date shall become participants in a substantially equivalent medical care and
dependent care spending account plan established for Continuing U.S. Employees
by Purchaser ("Purchaser's Spending Accounts"). Any elections
35
made by such Continuing Employees with respect to DSI's Spending Accounts shall
remain in effect and no change in elections shall be effected as a result of
such Continuing Employees' becoming participants in Purchaser's Spending
Accounts. Within fourteen (14) days following the Closing Date, the Selling
Parties shall cause Purchaser to be provided with information concerning the
amount elected by each Continuing Employee to be contributed to each of DSI's
Spending Accounts for the plan year of the Closing, the amount of all benefit
payments made on behalf of or to such Continuing Employees from DSI's Spending
Accounts for such plan year through the day prior to the Closing Date and the
outstanding balances in each of DSI's Spending Accounts for each Continuing
Employee as of the day prior to the Closing Date. Purchaser shall pay from
Purchaser's Spending Accounts all eligible expenses incurred during the plan
year of the Closing by Continuing Employees (whether before or after the Closing
Date) which are unpaid as of the day prior to the Closing Date in accordance
with the policies in effect with respect to Purchaser's Spending Accounts for
all participants.
(f) Effective as of the Closing Date, Purchaser shall adopt and
establish a post-retirement welfare benefits plan for the benefit of Continuing
Employees of the Acquired Company ("Purchaser's OPEB Plan") the terms and
provisions of which are substantially equivalent to the post-retirement welfare
benefits plan maintained immediately prior to the Closing by the Selling Parties
(or their ERISA Affiliate) for the benefit of such employees ("Rexam's OPEB
Plan"). Such Continuing Employees shall receive credit under Purchaser's OPEB
Plan for their service with the Acquired Company and its predecessors for
purposes of determining eligibility for post-retirement welfare benefits under
Purchaser's OPEB Plan and the amount or level of benefits under such plan. In
addition, Purchaser shall cause Purchaser's OPEB Plan to assume and fully
perform, pay and discharge all obligations and liabilities accrued through the
Closing under Rexam's OPEB Plan by (i) Continuing Employees of the Acquired
Company and (ii) all retired employees of the Acquired Company. Purchaser and
the Selling Parties acknowledge that the Selling Parties maintain a retiree
medical plan (the "Access 2000 Plan") for employees of the Acquired Company who
were first employed after December 31, 1992 (the "Access 2000 Participants").
Access 2000 Participants may purchase group medical coverage under the Access
2000 Plan following retirement, but receive no other employer-provided benefit
under the Access 2000 Plan. Neither Purchaser nor any of its Affiliates shall be
obligated to adopt or establish any plan or program that provides access to
group medical coverage to any Access 2000 Participant or assume any liability or
obligation of the Selling Parties or the Acquired Companies under the Access
2000 Plan. On or within sixty (60) days after the Closing Date, Purchaser shall
communicate the terms and conditions of Purchaser's OPEB Plan to all Active
Employees of the Acquired Company and all retired employees of the Acquired
Company who will be entitled to benefits under Purchaser's OPEB Plan.
(g) Notwithstanding any provisions herein to the contrary, Schedule
5.5(g) hereto sets forth the parties' respective rights, liabilities and
obligations as they relate to the pension plans maintained by the Selling
Parties for Active Employees of the Asset Seller in the United Kingdom.
(h) The Selling Parties shall be responsible for including annual bonus
plan awards with respect to full year performance by Continuing Employees as an
accrual in the calculations
36
of the Closing Date Net Asset Value, and Purchaser shall be responsible for the
payment of such awards, to the extent so accrued, in accordance with the terms
of such plans.
(i) The Selling Parties shall take all actions that are necessary or
appropriate to ensure that Purchaser shall have no obligation or liability under
WARN or any comparable foreign law or otherwise with respect to any employees or
former employees of the Subject Companies whose employment is terminated prior
to the Closing Time and who are not Continuing Employees as a result of the
transactions contemplated by this Agreement, and Purchaser shall take all such
actions to ensure that the Selling Parties have no such liability with respect
to Continuing Employees who are terminated by Purchaser or any of Purchaser's
Affiliates after the Closing Time, including, without limitation, providing to
such employees and former employees any notifications required by WARN in a
timely manner. Without prejudice to Section 2.4 of Schedule 5.5(g), the Selling
Parties shall indemnify and hold harmless Purchaser from and against any
liability incurred by Purchaser arising out of the termination of employment of
any of the Subject Companies' employees prior to the Closing Time and who are
not Continuing Employees; and Purchaser shall indemnify and hold harmless the
Selling Parties from and against any liability incurred by, or alleged to be an
obligation of, the Selling Parties arising out of the termination of employment
of a Continuing Employee by Purchaser or Purchaser's Affiliates after the
Closing Time.
(j) All information and records regarding employment and personnel
matters of Continuing Employees shall be transferred to Purchaser on the Closing
Date.
(k) Subject to Section 5.5(n) hereof, the parties acknowledge and agree
that all obligations and liabilities of the Subject Companies to pay to certain
of their employees the "stay pay" and sale completion bonuses (including all
taxes and 401(k) contributions (for employees of the Acquired Company)
associated therewith) shall be the responsibility of the Selling Parties who
shall indemnify and hold Purchaser harmless for any and all such obligations and
liabilities of the Subject Companies referred to in this Section 5.5(k).
(l) From and after the Closing, Purchaser shall be responsible for, and
shall indemnify and hold harmless the Selling Parties and their Affiliates and
their officers, directors and employees from and against any and all claims,
losses, damages, costs and expenses (including attorneys' fees and expenses) and
other liabilities and obligations relating to or arising out of (i) all
salaries, wages, commissions, employee incentive or other compensation,
severance, personal leave, or vacation benefits of Continuing U.S. Employees
accrued but unpaid as of the Closing and taken into account in the determination
of Closing Date Net Asset Value, and (ii) the liabilities assumed by Purchaser
under this Section 5.5 or any failure by Purchaser to comply with the provisions
of this Section 5.5. In the event that after the Closing Date, Rexam PLC or any
Affiliate of Rexam PLC pays any claim made by a Continuing Employee for medical
or dental benefits or for workers' compensation, which claim is attributable to
events occurring from and after the Closing, Purchaser hereby acknowledges and
agrees that it shall reimburse Rexam PLC or its Affiliate within ten (10)
Business Days of delivery of notice of such payment.
(m) From and after the Closing the Non-Union Qualified Plans and the
Union Qualified Plans shall be responsible for, and the Selling Parties shall
indemnify and hold
37
harmless Purchaser and its Affiliates and their officers, directors and
employees from and against, any and all claims, losses, damages, costs and
expenses (including attorneys' fees and expenses) and other liabilities and
obligations relating to or arising out of the participation in such plans by
Continuing Employees of the Acquired Company or the termination of such
participation as of the Closing Date. From and after the Closing, Benefit Plans
maintained by the Selling Parties (including without limitation the Access 2000
Plan) shall be responsible for all post-termination of employment medical,
dental and life insurance benefits for current and former employees of the
Acquired Company arising out of any Benefit Plan, and the Selling Parties shall
indemnify and hold harmless Purchaser and its Affiliates and their officers,
directors and employees from and against any and all claims, losses, damages,
costs and expenses (including attorneys' fees and expenses) and other
liabilities and obligations relating to post-termination of employment medical,
dental and life insurance benefits under any of the Benefit Plans. The preceding
sentence shall not apply to COBRA benefits to the Continuing Employees or to the
obligations and liabilities assumed by Purchaser's OPEB Plan pursuant to Section
5.5(f).
(n) Notwithstanding any provision herein to the contrary, neither the
employment agreement of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ nor the letter agreement addressed to
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ dated April 12, 2000 shall be amended prior to the Closing.
The Selling Parties shall be responsible for including any "stay pay" and sale
completion bonus awards (including all taxes associated therewith) owing to
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ under such agreements as an accrual in the calculations of
the Closing Date Net Asset Value, and Purchaser shall be responsible for the
payment of such bonus in accordance with the terms of such agreements.
(o) No Continuing Employee or other current or former employee of any
of the Subject Companies, any Affiliate of any of the Subject Companies (or
his/her spouse or beneficiary), or any other person not a party to this
Agreement, shall be entitled to assert any claim hereunder. This Agreement shall
be binding upon and inure to the benefit only of the parties hereto and their
respective successors and permitted assigns in accordance with Section 10.5
hereof. Notwithstanding any other provision of this Agreement, except with
respect to such successors or permitted assigns this Agreement is not intended
and shall not be construed for the benefit of any third party or any person not
a signatory hereto. In no event shall this Agreement constitute a third party
beneficiary contract.
SECTION 5.6 PRODUCT WARRANTY AND LIABILITY OBLIGATIONS.
(a) As of the Closing Time, Purchaser shall assume and thereafter
discharge all responsibilities, liabilities and obligations of the Subject
Companies for Rework and Refunds (as hereafter defined) arising out of products
manufactured or shipped by the Subject Companies on or prior to the Closing Time
("Pre-Closing Products"); provided however, Purchaser shall assume no other
liability with respect to Pre-Closing Products, including without limitation,
any claims by third parties for special, consequential or punitive damages
arising out of sales of Pre-Closing Products. The Selling Parties shall have no
responsibility, obligation or liability for any products or finished goods
inventory manufactured after the Closing Time, all of which shall be the
responsibility, obligation and liability of Purchaser. The Selling Parties shall
provide Purchaser with a certificate promptly following the Closing setting
forth which roll numbers and sheet skid numbers constitute Pre-Closing Products.
38
(b) The Selling Parties jointly and severally, agree to pay to
Purchaser the value for all Rework and the amount of all Refunds incurred or
granted by the Business during the period ending on the date which is ninety
(90) days after the Closing Date (the "Limitation Date"). The issuance of credit
memos and customer accommodations for any Rework or Refund and the payment of
any Refund shall conform to historical practices of the Business and shall be
for the Selling Parties' account. The Selling Parties shall have approval rights
with respect to any such credit or accommodation over Five Thousand Dollars
($5,000.00), such approval not to be unreasonably withheld. Within twenty (20)
days after the Limitation Date, Purchaser shall deliver to the Selling Parties
written notice (the "Payment Notice") of the amount of Rework and Refunds which
it incurred on and prior to the Limitation Date. During the twenty (20) day
period following their receipt of the Payment Notice, the Selling Parties shall
be entitled to access to the books and records of the Business for the purpose
of verifying the amounts of Rework and Refunds; provided, however, that
notwithstanding the foregoing, the Purchaser shall not be required to disclose
to the Selling Parties any information required under this Section 5.6(b), if
such disclosure would contravene any applicable laws, fiduciary duty or binding
agreement. The amount due hereunder by the Selling Parties to Purchaser shall be
paid to Purchaser within thirty (30) days following the Selling Parties' receipt
of the Payment Notice.
(c) For purposes hereof:
(i) "Rework" shall refer to Pre-Closing Products identified as
defective by customers of the Subject Companies in respect of the Business which
require replacement with a new production order. Rework shall be valued at the
cost to the Subject Companies of direct materials, labor, manufacturing overhead
and freight; and
(ii) "Refunds" shall mean refunds given to customers of
the Subject Companies in respect of the Business for defective Pre-Closing
Products which do not require replacement with a new production order, which
refunds shall be in amounts equal to the original sales price (including
applicable freight) and which shall be given in accordance with such Subject
Company's prior refund policies.
(d) All amounts due from the Selling Parties to Purchaser under this
Section 5.6 shall be reduced from time to time by the salvage value or other
value recovered by Purchaser from any Pre-Closing Products with respect to which
Rework or Refunds are provided hereunder. Purchaser shall grant credits and pay
refunds to customers in a manner consistent with the pre-Closing conduct of the
Business by the Subject Companies. The Selling Parties shall be entitled to
audit such payments to confirm the amounts actually paid and the reasons for
payment, provided that such audit shall be on reasonable notice and during
normal business hours and is conducted so as to not unreasonably interfere with
Purchaser's business.
SECTION 5.7 INTERCOMPANY ARRANGEMENTS.
Except as provided in Sections 5.12, 5.14 and 5.15 or as otherwise
expressly contemplated by this Agreement, all agreements and commitments,
whether written, oral or otherwise, relating to the conduct of the Business
which are solely between a Subject Company,
39
on the one hand, and Rexam PLC and any of its Affiliates (excluding agreements
between the Acquired Company), on the other hand, shall be terminated and of no
further effect, simultaneously with the Closing without any further action or
liability on the part of the parties thereto.
SECTION 5.8 MAINTENANCE OF BOOKS AND RECORDS.
Each of the parties hereto shall preserve, until at least the eighth
anniversary of the Closing Date, all pre-Closing Date records possessed or to be
possessed by such party relating to the Business. After the Closing Date and up
until at least the eighth anniversary of the Closing Date, upon any reasonable
request from a party hereto or its representatives, the party holding such
records shall (a) provide to the requesting party or its representatives
reasonable access to such records during normal business hours and (b) permit
the requesting party or its representatives to make copies of such records, in
each case at no cost to the requesting party or its representatives (other than
for reasonable out-of-pocket expenses); provided that nothing herein shall
require either party to disclose any information to the other if such disclosure
would jeopardize any attorney-client or other legal privilege or contravene any
applicable law. Such records may be sought under this Section for any reasonable
purpose, including to the extent reasonably required in connection with the
audit, accounting, tax, litigation, federal securities disclosure or other
similar needs of the party seeking such records. Notwithstanding the foregoing,
any and all such records may be destroyed by a party if such destroying party
sends to the other parties hereto written notice of its intent to destroy such
records, specifying in reasonable detail the contents of the records to be
destroyed; such records may then be destroyed after the 30th day following such
notice unless the other party hereto notifies the destroying party that such
other party desires to obtain possession of such records, in which event the
destroying party shall transfer the records to such requesting party and such
requesting party shall pay all reasonable expenses of the destroying party in
connection therewith.
SECTION 5.9 ENVIRONMENTAL RESPONSIBILITIES.
(a) Notwithstanding any provision herein to the contrary, including
without limitation, the representations and warranties contained in Section 3.18
hereof and the provisions of Article X hereof, the responsibilities of the
parties in respect of environmental matters relating to the Asset Seller's Real
Property referenced on Schedule 1.2(a)(i) hereto shall be governed by Schedule
5.9(a) hereto.
(b) Notwithstanding any provision herein to the contrary, including
without limitation, the representations and warranties contained in Section 3.18
hereof and the provisions of Article X hereof, the parties agree that the
responsibility of the parties in respect of any investigation, clean-up,
remediation and/or monitoring activities related to environmental conditions
("Environmental Activities") that are (A) set forth on Schedule 5.9(c), (B)
determined within three (3) years from the Closing Date to have been created by
the Acquired Company at its facility in Lowville, New York (the "Lowville Site")
during the period from February 28, 1998 through the Closing Date or (C)
determined within three (3) years from the Closing Date to have been present as
of the Closing Date at any of the Acquired Company's facilities in South ▇▇▇▇▇▇,
Massachusetts; Brownville, New York; West Springfield, Massachusetts; ▇▇▇▇▇▇▇▇,
40
Rhode Island; or Reading, Pennsylvania, (the "Other Sites" and together with the
Lowville Site, the "US Sites") shall be governed by this Section 5.9. The
parties agree and acknowledge that nothing set forth in this Section 5.9 shall
be construed as to invalidate, annul, amend or alter Purchaser's
responsibilities with respect to the Acquired Company's facility in Lowville,
New York as set forth in that certain Landlord Estoppel dated as of February 20,
1998 by and between Purchaser and the Acquired Company (as successor in interest
to Pajco Products, L.P.).
(c) Schedule 5.9(c) sets forth a list of Environmental Site Assessment
Reports that identify certain Recognized Environmental Conditions for which the
Selling Parties shall be responsible for payment of 100% of the actual costs of
all Environmental Activities related to or arising from such condition (the
"Existing RECs").
(d) In the event that written notice is delivered to the Selling
Parties within three (3) years from the Closing Date, which notice states either
that (A) a Recognized Environmental Condition was caused by the Acquired Company
during the period from February 20, 1998 through the Closing Date at the
Lowville Site or (B) a Recognized Environmental Condition existed as of the
Closing Date on an Other Site but was not listed in the Environmental Site
Assessment Reports listed on Schedule 5.9(c) (an "Unknown REC" and together with
the Existing RECs, the "Covered RECs"), the parties agree to allocate the actual
costs of any Environmental Activity related to such Unknown REC in accordance
with the following (such allocation to be based on the date on which written
notice of the Unknown REC is delivered to the Selling Parties and not on the
date on which the work is actually performed):
Notice Delivered Selling Parties Purchaser
Within one year 100% 0%
Within two years 75% 25%
Within three years 50% 50%
The actual costs of a party shall only include third party costs and shall not
include any costs attributable to a party's employees or management or any
allocation of overhead. Purchaser agrees to reimburse the Selling Parties in the
event that the results of Environmental Activities related to an Unknown REC
reveal that the Recognized Environmental Condition was not present at such US
Site as of the Closing Date. Except for any Existing REC and for any
Environmental Activity relating to an Unknown REC for which written notice has
been delivered to the Selling Parties prior to the end of three years from the
Closing Date, the Selling Parties shall have no responsibility for the payment
or the performance of any Environmental Activity after three years from the
Closing Date.
(e) The parties acknowledge and agree that the calculations used to
determine the Closing Date Net Asset Value shall not include any reserves for
any Environmental Activity for US Sites.
(f) The Selling Parties shall have the initiative in carrying out any
Environmental Activity relating to an Existing REC. The Selling Parties shall
also have the initiative in carrying out the Environmental Activities relating
to any Unknown REC about which the Selling Parties
41
received written notice of within two years following the Closing Date. The
Selling Parties shall decide the approach and pace of such activities, subject
to the limits stated herein. The Selling Parties shall use commercially
reasonable efforts to accomplish the Environmental Activities within two years
from the date hereof (or the date of any subsequently delivered notice regarding
an Unknown REC), and whether or not such activities are completed during the two
year period, shall diligently pursue such activities during such two year period
and thereafter as required to complete the activities. The Purchaser shall have
the initiative in carrying out Environmental Activities for any Unknown REC for
which the Selling Parties are notified after the date which is the second
anniversary of the Closing Date. As used herein, the term "Control Party" shall
mean the party which has the initiative in carrying out an Environmental
Activity in respect of a Covered REC.
(g) The Control Party shall determine in consultation with the
non-Control Party, whether applicable Law requires that any Covered REC be
reported to a Governmental Entity charged with protecting the environment (an
"Agency Notification"). To the extent an Agency Notification of a Covered REC is
required, then the Control Party shall: (i) make such Agency Notification, (ii)
perform, or cause to be performed, the appropriate Environmental Activity, and
(iii) obtain the written concurrence of the appropriate Governmental Entity that
no further action is necessary in respect of such Covered REC; provided,
however, that nothing in this Section 5.9(g) shall prohibit a party having a
reporting obligation pursuant to any law from fulfilling such obligation.
(h) In the event an Agency Notification of a Covered REC is not
required by applicable law, then the Control Party shall perform, or cause to be
performed, the related Environmental Activity until such time as its
environmental consultant delivers a reliance letter to the non-Control Party, in
substantially the form of Exhibit 5.9(h) hereto, which indicates that, in such
consultant's opinion, no further action is necessary; provided, however, in the
event that a Governmental Entity subsequently determines that additional
Environmental Activities relating to the Covered REC are required, then the
parties shall resume sharing costs consistent with this Section 5.9 as if the
consultant had never delivered said reliance letter.
(i) The Selling Parties shall not consent to any institutional control,
restriction or use limitation (individually or collectively, an "Imposition")
with respect to the US Sites in connection with obtaining the no further action
determination required in Section 5.9(g) unless the Selling Parties shall have
first consulted with the Purchaser regarding such Imposition and first obtained
the prior written consent of the Purchaser, which consent shall not be
unreasonably withheld or delayed unless it would materially impair the continued
operations of the Acquired Company or anticipated future industrial use of the
Real Property. The Purchaser shall promptly execute such documents identified by
the Selling Parties as reasonably necessary to effectuate an Imposition which is
imposed in accordance with the terms hereof.
(j) To the extent the Selling Parties are the Control Party, then the
parties agree to the following:
(A) Subject to the terms and conditions of this Agreement,
Purchaser hereby grants the Selling Parties and their authorized
employees, agents, representatives, consultants, contractors and
subcontractors, (collectively the
42
"Representatives") a license to enter the US Sites at reasonable times
after providing notice for the purpose of performing the Environmental
Activities at the US Sites. Purchaser further grants to the Selling
Parties a license to place, store and operate all equipment necessary
for the Environmental Activities; provided that such placement,
storage and operation shall remain no longer than necessary and
complies with all applicable laws and regulations and do not
materially interfere with or disrupt Purchaser's operations.
(B) For each phase of Environmental Activities, the Selling
Parties shall provide to Purchaser reasonable advance notice (not less
that 3 days) that the Selling Parties or Representatives will commence
that phase of the Environmental Activities at the US Site. The notice
to be provided by the Selling Parties shall generally describe the
phase and nature of the Environmental Activities which the Selling
Parties propose to commence and shall detail, to the extent the
Selling Parties are able, the amount of space which the Selling
Parties anticipate that will be needed to place, store and/or operate
equipment necessary for the Environmental Activities and any other
needs for the operation and/or conduct of the Environmental
Activities. For each phase of the Environmental Activities, the
Selling Parties and the Representatives shall not materially interfere
with the use of the US Sites by Purchaser.
(C) Purchaser shall reasonably cooperate with the Selling Parties
in performing the Environmental Activities, including, without
limitation, providing space at the US Sites for the installation and
operation of any system necessary to implement such Environmental
Activities. Selling Parties shall obtain all permits or approvals
necessary to perform the Environmental Activities. To the extent
available, Purchaser shall allow the Representatives to use existing
utilities, including, without limitation, water and electrical power
necessary to operate such systems, provided, however, that the Selling
Parties shall reimburse Purchaser for such utility expenses to the
extent they can be reasonably ascertained.
(D) The Selling Parties shall indemnify Purchaser for all
injuries or claims resulting from or relating to the actions conducted
by the Selling Parties pursuant to this Section 5.9(j).
(k) The Control Party shall provide to the non-Control Party copies of
all correspondence between the Control Party and any Governmental Entity
concerning the Environmental Activities or other matters related to this Section
5.9, and all measurements, data, samplings, analysis and/or other materials
resulting from, or produced pursuant to, the Environmental Activities as soon as
the same are available to the Control Party.
(l) The parties agree to cooperate reasonably with each other, directly
and through their respective consultants, to effect the successful completion of
the Environmental Activities. However, subject to the Control Party's
obligations to communicate with and receive consents or approvals from the
non-Control Party as provided herein, the parties agree that the Control Party
shall reasonably control and lead the Environmental Activities and shall
coordinate all communications with any authority regarding the same. The
non-Control Party shall not
43
communicate with any Governmental Entity regarding the Environmental Activities
or the Covered RECs without the prior notice to, consultation with and obtaining
the consent of the Control Party, which shall not be unreasonably withheld or
delayed, and without allowing the Control Party to participate in and lead any
such communications.
(m) Following Closing and for three (3) years thereafter, Purchaser may
not instigate, initiate or cause any other Person to initiate, any investigative
or remedial action relating to the US Sites unless (i) Purchaser gives the
Selling Parties no less than thirty (30) days advance written notice that it has
reasonably determined such action is required by an applicable Environmental
Law, or (ii) such action is required by Purchaser's lender, by a purchaser of
such US Site or the business conducted there, in connection with a third party
claim or when the outcome of an environmental audit performed by the Purchaser
in accordance with this Section indicates that such action is warranted. Any
investigation or remediation conducted by Purchaser during such period shall be
conducted so as to achieve a no further action determination by the Control
Party's consultant or appropriate Governmental Entity, as the case may be,
consistent with the then existing or anticipated future industrial use of the
Real Property.
SECTION 5.10 ASSIGNMENT OF CONTRACTS.
The assignment of any Contract, Lease, Governmental Permit or other
asset to be assigned to Purchaser pursuant to the provisions hereof shall not
constitute a contract to assign the same to the extent that an attempted
assignment would constitute a breach thereof or give rise to any right of
acceleration or termination. The Selling Parties shall use their reasonable
efforts to procure consents to any such assignment; provided, however, that the
Selling Parties' refusal to provide economic incentives to induce consent to
such assignment or their failure to commence litigation to compel consent to
such assignment shall not be deemed to be a failure by Rexam PLC to use
reasonable efforts to secure such consent. If any such consent is not obtained,
the Selling Parties shall cooperate with Purchaser in any reasonable arrangement
designed to provide Purchaser the benefit of any such Contract, Lease,
Governmental Permit or other asset, including the enforcement of any and all
rights of any Selling Party against the other party thereto arising out of
breach or cancellation thereof by such party or otherwise. Notwithstanding any
provision herein to the contrary, the parties agree that the procurement of the
Deed of Consent in respect of the Lease dated 22 August 2000 between ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and Rexam CFP Limited shall be governed by the provisions of Schedule
5.10.
SECTION 5.11 COOPERATION IN LITIGATION.
Each party will cooperate with the other in the defense or prosecution
of any litigation or proceeding already instituted or which may be instituted
hereafter against or by such party relating to or arising out of the conduct of
the Business prior to the Closing Time (other than litigation arising out of the
Transactions). The party requesting such cooperation shall pay the out-of-pocket
expenses (including reasonable legal fees and disbursements) of the party
providing such cooperation and of its employees and agents reasonably incurred
in connection with providing such cooperation, but shall not be responsible to
reimburse the party providing such cooperation for the salaries or costs of
fringe benefits or other similar expenses paid by the party providing such
cooperation to its employees and agents while assisting in the defense or
prosecution of any such litigation or proceeding.
44
SECTION 5.12 TRANSITIONAL SERVICES.
The parties acknowledge that certain of the Subject Companies (i)
participate in Rexam PLC's wide area network, (ii) utilize the payroll services
of Rexam Inc., which is an Affiliate of Rexam PLC and the Subject Companies,
(iii) utilize information technology services in ▇▇▇▇▇▇, Lancashire provided by
an Affiliate, (iv) utilize office and research and development space and
equipment in South ▇▇▇▇▇▇, MA owned by an Affiliate, (v) utilize services of
Rexam Japan for sales support in Japan and (vi) utilize office space in Hong
Kong owned by Rexam Asia HK Limited. The parties hereto agree to provide, or
cause to be provided, these aforementioned services for up to a one-year period
after the Closing pursuant to a mutually satisfactory Transitional Services
Agreement (the "Transitional Services Agreement").
SECTION 5.13 INSURANCE.
(a) Purchaser acknowledges and agrees that effective with the
Closing all Insurance Policies provided to the Subject Companies by
Rexam PLC or any Affiliate of Rexam PLC shall terminate and no further
liability shall arise under any of such policies except that the
Acquired Company and the Purchaser, as successor owner of the
Purchased Assets, shall have the economic benefits of coverage under
such policies with respect to insured events occurring before the
Closing. With respect to any insured claims made before the Closing
(or made after the Closing under occurrence policies), Purchaser shall
bear the economic burden of any deductibles or self-insured retention.
(b) Rexam PLC and Purchaser agree that all claims with respect to
insured events occurring prior to the Closing shall be administered in
accordance with the terms of the policies applicable to such claims.
Such presently pending claims are listed on Schedule 5.13. Rexam PLC
shall file all claims known to it prior to the expiration dates of all
policies. Purchaser shall cooperate fully with Rexam PLC to enable
Rexam PLC to comply with the requirements of the relevant insurance
carrier and Purchaser shall provide such information and assistance as
Rexam PLC may reasonably request in connection with any such claim.
Any monies received by Rexam PLC or any Affiliate of Rexam PLC as a
result of such a claim shall be promptly paid over to Purchaser.
(c) Rexam PLC shall be responsible for all personal injury and
workers compensation claims made prior to the Closing and for all
workers compensation claims made after the Closing based upon
incidents which occurred prior to the Closing.
SECTION 5.14 HEDGING CONTRACTS.
Any foreign exchange hedging contract or forward euro contract set
forth in Schedule 5.14 held by or for the benefit of a Subject Company in the
operation of the Business shall continue in effect after the Closing until the
termination of said contract in accordance with its terms the provisions of
Section 5.7 notwithstanding.
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SECTION 5.15 INTERCOMPANY RECEIVABLES AND PAYABLES.
Except as set forth on Schedule 5.15 or as to any balance arising from
the intercompany supply of goods or services (trading balances) which has been
determined based on the Rexam Accounting Policies, all receivables and payables
between Rexam PLC or any Affiliate of Rexam PLC (other than the Subject
Companies), on the one hand, and either Subject Company, on the other hand,
shall be cancelled as of the Closing Date without payment and, to the extent it
represents indebtedness of the Acquired Company or of an Affiliate of Rexam PLC
domiciled in the United States, the amount of such cancellation shall be treated
as a contribution to capital prior to Closing.
SECTION 5.16 UPDATING SCHEDULES.
The Selling Parties shall be entitled to update, amend or modify the
schedules to this Agreement after the date hereof to the Closing Date (the
"Update Period") to reflect factors, circumstances or events first arising or,
in the case of representations given to the Selling Parties' Knowledge, becoming
known to the Selling Parties during the Update Period by providing Purchaser
with written notice setting forth the proposed update and specifying the
schedule or schedules to be updated thereby; provided, however, that if any such
Schedules are updated, amended or modified in a manner that discloses any matter
or circumstance that has or could reasonably be likely to have, either
individually or in the aggregate with all prior updates, amendments or
modifications made to the Schedules pursuant to this Section 5.16, a Company
Material Adverse Effect, Purchaser may immediately terminate this Agreement
pursuant to Section 7.1(f). To the extent any such update causes a Subject
Company to incur a Loss and Purchaser does not elect to terminate this
Agreement, Purchaser shall be entitled to seek indemnification for such Loss
pursuant to Article X hereof.
SECTION 5.17 NAME CHANGE.
Purchaser hereby acknowledges that it shall have no rights in the name
"Rexam" or "Bowater" and covenants that it shall cause the Acquired Company to
change its corporate name within fifteen (15) days after the Closing Date to a
corporate name that does not include the word "Rexam" or "Bowater" or any
similar words that would raise a reasonable likelihood of confusion with those
terms.
ARTICLE VI
CONDITIONS
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE CLOSING.
The respective obligation of each of the parties to effect the Closing
shall be subject to the satisfaction at or prior to the Closing Date of each of
the following conditions:
(a) Statutes, Court Orders. No statute, rule or regulation shall have
been enacted or promulgated by any Governmental Entity which prohibits the
consummation of the Closing; there shall be no order or injunction of a court of
competent jurisdiction in effect precluding
46
consummation of the Closing; provided that the parties shall use their
commercially reasonable efforts to have any such order or injunction vacated or
lifted; and there shall not be pending any suit, action or proceeding by any
Governmental Entity seeking to restrain or prohibit the consummation of the
Closing or the performance of any of the other Transactions;
(b) Antitrust Approval. The applicable waiting period under the HSR Act
or any Foreign Antitrust Law shall have expired or been terminated; and
(c) Consents Obtained. The third-party consents identified in Schedules
3.4 and 4.3 shall have been obtained.
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF PURCHASER TO EFFECT THE CLOSING.
The obligations of Purchaser to consummate the Closing shall be subject
to the satisfaction on or prior to the Closing Date of each of the following
conditions:
(a) Representations and Warranties. All of the representations and
warranties of the Selling Parties set forth in this Agreement shall be true and
complete as of the date of this Agreement and as of the Closing Date (or if made
as of a specified date, only as of such date) (i) after giving effect to any
materiality qualifications contained in particular representations and
warranties, and (ii) without giving effect to any such particular materiality
qualifications but after giving effect to a single materiality qualification
which states that all matters which would cause particular representations and
warranties to be inaccurate (if one did not give effect to such particular
materiality qualifications) shall be disregarded if all such inaccuracies in the
aggregate do not have a Company Material Adverse Effect).
(b) Breach by the Selling Parties. No Selling Party shall have failed
to perform in any material respect any obligation or to comply in any material
respect with any covenant to be performed or complied with by it under this
Agreement.
(c) No Company Material Adverse Effect. Nothing shall have occurred
prior to the Closing Date which, individually or in the aggregate, has a Company
Material Adverse Effect.
(d) Deliveries by Selling Parties. The Selling Parties shall have
delivered to Purchaser those items required by Section 2.2 hereof.
(e) Financing. Purchaser shall have obtained third-party debt or equity
financing in amounts and on terms and conditions reasonably satisfactory to
Purchaser.
SECTION 6.3 CONDITIONS TO OBLIGATIONS OF THE SELLING PARTIES TO EFFECT THE
CLOSING.
The obligations of the Selling Parties to consummate the Closing shall
be subject to the satisfaction on or prior to the Closing Date of each of the
following conditions:
(a) Representations and Warranties. All of the representations and
warranties of Purchaser set forth in this Agreement shall be true and complete
in all material respects as of the
47
date of this Agreement and as of the Closing Date (or if made as of a specified
date, as of such date); and
(b) Breach by Purchaser. Purchaser shall not have failed to perform in
any material respect any material obligation or to comply in any material
respect with any covenant to be performed or complied with by it under this
Agreement.
(c) Deliveries by Purchaser. Purchaser shall have delivered to Selling
Parties those items required by Section 2.3 hereof.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION.
This Agreement may be terminated or the Transactions may be abandoned
at any time prior to the Closing Date:
(a) By the mutual written consent of Purchaser and Rexam PLC;
(b) By Purchaser or Rexam PLC if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties hereto shall use their commercially
reasonable efforts to lift) which permanently restrains, enjoins or otherwise
prohibits the consummation of the Transactions and such order, decree, ruling or
other action shall have become final and non-appealable;
(c) By either Purchaser or Rexam PLC if the Closing shall not have
occurred on or prior to 90 days after this Agreement is executed, and such party
is not in material breach of its representations, warranties, obligations and
covenants under this Agreement at the time such party terminates this Agreement;
(d) By Rexam PLC if Purchaser shall have breached in any material
respect any of its representations, warranties, covenants or other agreements
contained in this Agreement, which breach cannot be or has not been cured within
30 days after the giving of written notice by Rexam PLC to Purchaser specifying
such breach;
(e) By Purchaser if a Selling Party shall have breached any
representation, warranty, covenant or other agreement contained in this
Agreement which would give rise to the failure of a condition set forth in
Article VI, which breach cannot be or has not been cured within 30 days as to
the giving of written notice by Purchaser to Rexam PLC specifying such breach;
(f) By Purchaser pursuant to Section 5.16; or
48
(g) By Purchaser or Rexam PLC if all of the conditions of the other
party's obligation to effect the Closing pursuant to Article VI have been
satisfied and such other party fails to consummate the Closing within five days
after such conditions are satisfied.
SECTION 7.2 EFFECT OF TERMINATION.
(a) In the event of the termination of this Agreement or abandonment of
the Transactions by any party hereto pursuant to the terms of this Agreement,
written notice thereof shall forthwith be given to the other party or parties
specifying the provision hereof pursuant to which such termination of this
Agreement or abandonment of the Transactions is made.
(b) In the event such termination or abandonment is made pursuant to
Section 7.1(a), 7.1(b), 7.1(c) or 7.1(f), there shall be no liability or
obligation thereafter on the part of any party hereto except for fraud or for
willful breach of this Agreement prior to such termination of this Agreement or
abandonment of the Transactions.
(c) In the event such termination or abandonment is made pursuant to
Section 7.1(d), 7.1(e) or 7.1(g), then the non-breaching party shall be entitled
only to receive reimbursement for its out-of-pocket costs and expenses incurred
in connection with this Agreement, the financing contemplated by Section 6.2(e)
and the other transactions contemplated hereby, including without limitation the
reasonable fees and expenses of its advisors, accountants and legal counsel,
subject to a maximum amount of $1,000,000 in respect of the expenses of the
Selling Parties and of $2,100,000 in respect of the expenses of the Purchaser,
from the breaching party within ten days after submission of an invoice.
ARTICLE VIII
TAX MATTERS
SECTION 8.1 TAX SHARING AGREEMENTS WITH THE ACQUIRED COMPANY.
Any tax sharing agreement between Rexam PLC and any Affiliate of Rexam
PLC on the one hand, and the Acquired Company, on the other hand, is terminated
as of the Closing Date and will have no further effect for any taxable year
(whether the current year, a future year, or a past year).
SECTION 8.2 TAXES OF OTHER PERSONS.
Rexam PLC agrees to indemnify the Purchaser and the Acquired Company
from and against their allocable portion of any Taxes, interest on Taxes or Tax
penalties, which they may suffer resulting from, arising out of, relating to, in
the nature of, or caused by any liability of the Acquired Company for Taxes of
any Person, other than the Acquired Company under Treasury Reg. Section 1.1502-6
(or any comparable or similar provision of state, local or foreign law), as
transferee or successor, or pursuant to any contractual obligation, with respect
to any taxable period, or portion of a Straddle Period as defined in Section
8.5(a) below, ending on or before the Closing Date.
49
SECTION 8.3 RETURNS FOR PERIODS THROUGH THE CLOSING DATE.
Rexam, Inc., an Affiliate of the Selling Parties, will include the
income of the Acquired Company (including any deferred income triggered into
income by IRS Reg. Section 1.1502-13 and IRS Reg. Section 1.1502-14 and any
excess loss accounts taken into income under IRS Reg. Section 1.1502-19) on
Rexam Inc.'s consolidated federal and state income and franchise Tax Returns for
all periods through the Closing Date and pay any federal and state income and
franchise Taxes attributable to such income. Purchaser shall cause the Acquired
Company to furnish Tax information to Rexam PLC or an Affiliate of Rexam PLC for
inclusion in any consolidated income or franchise Tax Return of Rexam PLC or an
Affiliate of Rexam PLC for the period which includes the Closing Date in
accordance with the past custom and practice of the Acquired Company. The income
of the Acquired Company will be apportioned to the period up to and including
the Closing Date and the period after the Closing Date by closing the books of
the Acquired Company as of the end of the Closing Date (subject to adjustments
required because of any post-Closing Purchase Price adjustments). Rexam PLC
shall indemnify the Purchaser and the Acquired Company in respect of, and hold
the Purchaser and the Acquired Company harmless against, all Taxes of the
Acquired Company with respect to any taxable period, or portion of a Straddle
Period as defined in Section 8.5(a) below, ending on or before the Closing Date
to the extent such Taxes exceed the accruals or reserves for taxes set forth in
the Closing Date Net Asset Value.
SECTION 8.4 AUDITS.
Subject to Section 5.2(a) hereof, Rexam PLC will allow Purchaser and
its counsel to participate at its own expense in any audits of a consolidated
income Tax Return of Rexam PLC or an Affiliate of Rexam PLC to the extent that
such return relates to the Acquired Company. Rexam PLC will cause such Affiliate
to not settle any such audit in a manner which would adversely affect the
Acquired Company after the Closing Date without the prior written consent of
Purchaser. Purchaser will allow Rexam PLC and its counsel to participate at its
own expense in any audits of a sales and use Tax Return of Purchaser or the
Acquired Company to the extent that such return relates to the Acquired Company.
SECTION 8.5 TAXES RELATED TO THE ASSET SELLER.
(a) The Asset Seller shall be liable for and pay all corporation Taxes
(whether assessed or unassessed) applicable to the Business of the Asset Seller
and the Purchased Assets, in each case attributable to taxable years or periods
ending prior to the Closing Time and, with respect to any taxable year or period
beginning before and ending after the Closing Time (a "Straddle Period"), the
portion of such Straddle Period ending at the Closing Time; provided, however,
that no Selling Party shall be liable for or pay any accrued Taxes assumed by
Purchaser pursuant to Section 1.3(a)(i) or any other Taxes for which Purchaser
is liable under this Agreement. Purchaser shall be liable for and shall pay all
Taxes (whether assessed or unassessed) applicable to the Business of the Asset
Seller, the Purchased Assets and the
50
Assumed Liabilities that are attributable to taxable years or periods beginning
after the Closing Time and, with respect to any Straddle Period, the portion of
such Straddle Period beginning after the Closing Time; provided, however, that
Purchaser shall not be liable for or pay any Taxes for which the Asset Seller is
liable under this Agreement; including without limitation, pursuant to the
preceding sentence or Section 3.21. For purposes of this Section 8.5, any
Straddle Period shall be treated on a "closing of the books" basis as two
partial periods, one ending at the Closing Time.
(b) The Asset Seller or Purchaser, as the case may be, shall provide
reimbursement for any Tax paid by one party, all or a portion of which is the
responsibility of the other party, in accordance with the terms of this Section
8.5. Not later than 30 days prior to the payment of any such Tax, the party
paying such Tax shall give notice to the other party of the Tax payable and the
portion which is the liability of each party, although failure to do so will not
relieve the other party from its liability hereunder.
(c) Value Added Tax
(i) Rexam PLC and the Purchaser intend that Article 5 of the
Value Added Tax (Special Provisions) Order 1995 shall apply to the
sale of the Purchased Assets under this Agreement and agree to use all
reasonable endeavours to secure that the sale is treated as neither a
supply of goods nor a supply of services under that article.
(ii) If nevertheless any VAT is payable on the sale of the
Purchased Assets under this Agreement, then the Purchaser shall pay to
Rexam PLC the amount of that VAT (plus any interest or penalties
imposed by HM Customs & Excise ("Customs")), following the issue by
Rexam PLC of a proper VAT invoice in respect of that VAT to the
Purchaser.
(iii) Without limiting Section 8.5(c)(ii), where Customs agrees
to give a ruling on the VAT treatment of the sale of the Purchased
Assets, VAT shall be treated as payable if Customs rule that it is
payable. Before sending any relevant letter (or other communication)
to Customs, Rexam PLC shall give the Purchaser a reasonable
opportunity to comment on it, and shall make such amendments as the
Purchaser reasonably requires.
(iv) In determining its obligations under subsections 8.5(c)(i)
and 8.5(c)(ii) the Purchaser is entitled to assume that no election to
waive exemption from VAT has been made with respect to any Real
Property or Lease and that the Real Property or Lease does not fall
within paragraph (a) of item 1 of Group 1 of Schedule 9 to the Value
Added Tax ▇▇▇ ▇▇▇▇ (freehold transfer of new or uncompleted building
or civil engineering work). Accordingly:
(A) notwithstanding subsection 8.5(c)(i), the Purchaser is
not obliged to make any election to waive exemption; and
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(B) notwithstanding subsection 8.5 (c)(ii), the Purchaser is
not liable to pay any amount in respect of VAT which would not
have arisen but for the making of an election to waive exemption
or but for the supply of a Real Property or Lease falling within
paragraph (a) of that item 1.
(v) Rexam PLC and the Purchaser intend that s. 49 of the Value
Added Tax Act 1994 shall apply to the sale of the Purchased Assets
under this Agreement and accordingly:
(A) Rexam PLC shall on or promptly following the Closing
Date deliver or cause to be delivered to the Purchaser all
records referred to in s. 49;
(B) Neither the Asset Seller nor Rexam PLC shall make any
request to Customs for those records to be preserved by the Asset
Seller or Rexam PLC rather than the Purchaser;
(C) the Purchaser shall ensure that it is registered for VAT
prior to the Closing Date;
(D) the Purchaser warrants that the Purchased Assets are to
be used by the Purchaser in carrying on the same kind of business
as that carried on by the Asset Seller;
(E) the Purchaser shall preserve those records for such
period as may be required by law and during that period permit
the Asset Seller and Rexam PLC reasonable access to them to
inspect or make copies of them;
(F) the Purchaser may fulfill its obligations under
paragraph (E) by procuring that a future transferee of the
Business or any other person preserves the records and permits
reasonable access as mentioned in that paragraph, in which case
the Purchaser shall notify Rexam PLC of the name of that person;
and
(G) Rexam PLC (or any person for the time being nominated
under this paragraph) may by written notice to the Purchaser
nominate another person for the purposes of paragraphs E and F of
this subsection 8.5(c)(vi), in which case the reference in that
paragraph to Rexam PLC shall be read as a reference to the person
nominated.
(vi) If the Purchaser pays Rexam PLC an amount in respect of VAT
under subsection 8.5(c)(ii) above and Customs note that all or part of
it was not properly chargeable, Rexam PLC shall repay the amount or
relevant part of it to the Purchaser. Rexam PLC shall make the
repayment promptly after the ruling, unless it has already accounted
to Customs for the VAT. In that case, Rexam PLC shall apply for a
refund of the VAT (plus any interest payable by Customs), use
reasonable endeavours to obtain it as speedily as practicable, and pay
to the Purchaser the amount of the refund and any interest when and to
the extent received from Customs.
52
SECTION 8.6 COOPERATION.
After the Closing Date, Purchaser and Rexam PLC shall make available to
the other, as reasonably requested, and to any taxing authority in the event
requested by the other, all information, records or documents relating to Tax
liabilities or potential Tax liabilities of the Subject Companies for all
periods ending prior to or including the Closing Date and shall preserve all
such information, records, and documents until the expiration of any applicable
statute of limitations or extensions thereof. Purchaser shall prepare and
provide to Rexam PLC, or an Affiliate of Rexam PLC, any federal, state, local or
foreign Tax information package requested by Rexam PLC or its Affiliate in
accordance with past practice for their use in preparing the returns required to
be filed by Rexam PLC or an Affiliate of Rexam PLC. Such Tax information
packages shall be completed by Purchaser and provided to Rexam PLC within 60
days after the Closing Date. Each party will compensate the other for the
reasonable out of pocket costs and expenses of providing information, rendering
assistance or preparing returns for taxable periods (or portions thereof) for
which the other is responsible.
SECTION 8.7 GENERAL PRINCIPLES.
To the extent not specifically addressed herein, all taxes of the
Acquired Company for periods prior to the Closing shall be for the account of
Rexam PLC or its applicable Affiliates, and Rexam PLC or its applicable
Affiliates shall prepare and timely file the returns and pay the Taxes for such
periods. To the extent that income of the Acquired Company for periods through
the Closing Date is reportable on Tax Returns for periods after the Closing Date
required to be filed by Purchaser or the Acquired Company, the Taxes on such
income through the Closing Date shall be excluded in the calculation of the
Closing Date Net Asset Value.
SECTION 8.8 FIRPTA TAX CERTIFICATES.
If requested by Purchaser, (i) on or before the Closing Date the Acquired
Company will deliver to the Purchaser and to the Internal Revenue Service
notices that the Shares are not a "US real property interest" in accordance with
the Treasury Regulations under Sections 897 and 1445 of the Code, or (ii) on or
before the Closing Date the Company Shareholder will deliver to Purchaser a
certification that it is not a foreign person in accordance with the Treasury
Regulations under Section 1445 of the Code. If, upon request, Purchaser does not
receive either the notice or certification described above on or before the
Closing Date, Purchaser shall be permitted to withhold from the Share Purchase
Price any required withholding tax under Section 1445 of the Code.
ARTICLE IX
DEFINITIONS AND INTERPRETATION
SECTION 9.1 DEFINITIONS.
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context clearly requires otherwise:
53
"Accountants" is defined in Section 1.5(c) hereof.
"Acquired Company" is defined in the Recitals hereto.
"Active Employees" is defined in Section 5.5(a) hereof.
"Affiliate" of any Person means a Person that directly or indirectly
through one or more intermediaries controls, is controlled by, or is under
common control with, the first Person. For purposes of this definition, the term
"control", "controlled by" or "under common control with" means the power,
direct or indirect, to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, as trustee or executor, or otherwise.
"Agency Notification" is defined in Section 5.9(g) hereof.
"Agreement" or "this Agreement" means this Purchase Agreement, together
with the Exhibits and Schedules hereto.
"Asset Purchase" is defined in the Recitals hereto.
"Assumed Liabilities" is defined in Section 1.3(a) hereof.
"Audits" is defined in Section 3.21(d) hereof.
"Baseline Net Asset Value" means $79,667,000 U.S. Dollars which is
based on the Interim Management Accounts at September 30, 2000 and the
assumptions and methodology set forth in Schedule 1.5(a) hereto.
"Benefit Plan" means each deferred compensation and each incentive
compensation, stock purchase, stock option and other equity compensation plan,
program, agreement or arrangement; each severance or termination pay, medical,
surgical, hospitalization, life insurance and other "welfare" plan, fund or
program (within the meaning of Section 3(1) of ERISA with respect to the
Acquired Company); each profit-sharing, stock bonus or other "pension" plan,
fund or program (within the meaning of Section 3(2) of ERISA with respect to the
Acquired Company); each employment, termination or severance agreement; and each
other employee benefit plan, fund, program, agreement or arrangement, in each
case, that is sponsored, maintained or contributed to or required to be
contributed to by a Subject Company or by any ERISA Affiliate, or to which a
Subject Company or an ERISA Affiliate is party, whether written or oral, for the
benefit of any director, employee or former employee of a Subject Company.
"Board of Directors" means, as applicable, the board of directors, the
supervisory board, or any other similar body charged with supervisory
responsibility over the establishment and implementation of corporate policies.
"Business" is defined in the Recitals hereto.
54
"Business Day" means a day (other than Saturday or Sunday) on which
banks are generally open in the State of New York, USA or in London, England for
ordinary business (other than operation only of business in euros).
"Casualty Loss Shortfall" means the amount, if any, of any casualty
losses affecting the Purchased Assets or the Acquired Company which are not
covered by insurance proceeds payable to the Purchaser or to the Acquired
Company and which occur during the period between the date of the Interim
Management Accounts and the Closing Date.
"Certificate of Title" is defined in Section 2.2(j) hereto.
"Claim Notice Period" is defined in Section 10.4(b) hereof.
"Closing" means the closing referred to in Section 2.1 hereof.
"Closing Date" is defined in Section 2.1 hereof.
"Closing Date Net Asset Value" is defined in Section 1.5(c) hereof.
"Closing Time" is defined in Section 2.1 hereof.
"COBRA" is defined in Section 5.5(a) hereof.
"Collective Bargaining Agreements" mean (i) the Collective Bargaining
Agreement between Rexam/DSI, Lowville, NY and Paper Allied Industrial, Chemical
& Energy Workers International Union Local Number 1-1988; (ii) the Collective
Bargaining Agreement between Rexam/DSI, West Springfield, Massachusetts and
Paper, Allied-Industrial, Chemical & Energy Workers International Union,
A.F.L.-C.I.O. & Local Union 1487; (iii) the Collective Bargaining Agreement
between Rexam/DSI Reading, PA, and United Steel Workers of America AFL-CIO Local
6996 Unit 2. Term 02-20-00 through 05/08/05; and (iv) the Collective Bargaining
Agreement between Rexam/DSI of Rhode Island and Union of Needle Trades,
Industrial and Textile Employees AFL-CIO CLC Local 1712T.
"Company Intellectual Property" means all Intellectual Property of the
Subject Companies that is currently used in the Business or that is necessary to
conduct the Business as presently conducted or as currently proposed to be
conducted.
"Company Material Adverse Effect" means any material adverse change in,
or material adverse effect on, the business, financial condition or operations
of the Subject Companies; provided, that the effects of changes that are
generally applicable to (a) the specific industry segments and specific markets,
if any, in which both the Purchaser and which the Subject Companies operate, or
(b) the United States and/or European economy having a substantially similar
effect on the Purchaser and the Subject Companies shall be included in the
determination of Company Material Adverse Effect for purposes of the Purchaser's
closing condition set forth in Section 6.2(c) but shall be excluded from the
determination of Company Material Adverse
55
Effect for the purposes of Rexam PLC's indemnification obligations under Article
X; and provided, further, that any adverse effect on the Subject Companies
resulting from the execution of this Agreement, any public announcement relating
to this Agreement or the Transactions or consummation of the Transactions shall,
other than the assertion of legal claims against the Subject Companies
pertaining to the operation of the Business prior to the Closing, also be
included in the determination of Company Material Adverse Effect for the
purposes of Purchaser's closing condition set forth in Section 6.2(c) but shall
be excluded from the determination of Company Material Adverse Effect for
purposes of Rexam PLC's indemnification obligations under Article X.
"Company Shareholders" is defined in the Introduction hereto.
"Computer Software" means computer software programs, databases and all
documentation related thereto other than the UltiPro payroll software (including
Citrix), the Hyperion financial consolidation software, and all software used in
the operation of the wide area network routers and e-mail servers.
"Confidentiality Agreement" means a letter agreement dated August 2,
2000 between Credit Suisse First Boston on behalf of Rexam PLC and Purchaser.
"Continuing Employee" is defined in Section 5.5(a) hereof.
"Contract" means any written or oral contract, agreement, loan, lease,
license, guarantee, purchase order, sales order, offer to sell, distribution
agreement, understanding or commitment relating to the conduct of the Business.
"Control Party" is defined in Section 5.9 hereof.
"Copyrights" means U.S. and foreign registered and unregistered
copyrights (including those in Computer Software and databases), rights of
publicity and all registrations and applications to register the same.
"Covered REC" is defined in Section 5.9 hereof.
"Customs" is defined in Section 8.5(c) hereof.
"Deductible Amount" is defined in Section 10.5 hereof.
"Determination Date" is defined in Section 1.5(c) hereof.
"DOJ" means the Antitrust Division of the United States Department of
Justice.
"EC Treaty" means Article 81 and 82 of the treaty establishing the
European Union.
56
"Encumbrances" means any and all liens, charges, security interests,
options, claims, mortgages, pledges, proxies, voting trusts or agreements,
obligations, understandings or arrangements or other restrictions on title or
transfer of any nature whatsoever.
"Environmental Activities" is defined in Section 5.9 hereof.
"Environmental Law" means all federal, state, local or foreign laws
governing pollution or the protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any trade or business, whether or not
incorporated, that together with the Acquired Company would be deemed a "single
employer" within the meaning of Section 4001(b) of ERISA.
"Estimated Net Asset Value" is defined in Section 1.5(a) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Rate" means the rate as determined in accordance with Rexam
Accounting Policies, and where the spot rate of exchange is to be used, it shall
be that spot rate of exchange in the relevant currency against US$ on the
relevant date as reported in the Wall Street Journal (New York Edition) as the
"closing mid-point" rate for dealings in the relevant currency on the relevant
date, noting that such report is of the previous business day's trading and is
the rate for value two business days after the trade date.
"Excluded Assets" is defined in Section 1.2(b) hereof.
"Excluded Liabilities" is defined in Section 1.3(b) hereof.
"Existing REC" is defined in Section 5.9 hereof.
"Financial Statements" means the audited combined balance sheets of the
Subject Companies relating to the Business, as at December 31 in each of the
fiscal years 1997, 1998, 1999 and 2000 together with combined statements of
income, owner's net investment and cash flows for each of the twelve-month
periods then-ended.
"Financing Documents" is defined in Section 4.5 hereof.
"Foreign Antitrust Laws" means the antitrust and competition laws of
the European Union and any country other than the United States.
"Foreign Antitrust Administrator" means any Governmental Entity
administering any Foreign Antitrust Laws.
"FTC" means the United States Federal Trade Commission.
57
"GAAP" means United States generally accepted accounting principles.
"Governmental Entity" means a court, arbitral tribunal, administrative
agency or commission or other governmental or other regulatory authority or
agency.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Imposition" is defined in Section 5.9 hereof.
"Indebtedness" means (a) all indebtedness for borrowed money or for the
deferred purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), (b) any other indebtedness that is
evidenced by a note, bond, debenture or similar instrument, (c) all obligations
under financing leases, (d) all obligations in respect of acceptances issued or
created, and (e) all liabilities secured by any lien on any property.
"Indemnified Party" means any Person claiming indemnification under any
provision of Article X hereof.
"Indemnifying Party" means any Person against whom a claim for
indemnification is being asserted under any provision of Article X hereof.
"Indemnity Notice" has the meaning set forth in Section 10.4(b).
"Initial Net Asset Value Statement" is defined in Section 1.5(b)
hereof.
"Insurance Policy" means any insurance policy maintained by, or on
behalf of, a Subject Company or any of their respective Affiliates, other than
any State Workers' Compensation Policy, the premiums of which are paid directly
by the Subject Companies.
"Intellectual Property" means Trademarks, Patents, Copyrights, Trade
Secrets and Licenses.
"Interim Management Accounts" means an unaudited pro forma combined
balance sheet of the Subject Companies on a pro forma basis, as at September 30,
2000 and unaudited pro forma combined statements of income, owner's net
investment and cash flows for the interim period then ended each as prepared on
the basis of the Rexam Accounting Policies and in accordance with GAAP.
"Inventory" means raw materials, work-in-process, finished goods and
all supplies (including fuel oil) held for consumption in the Business wherever
located, including consignment inventory and inventory on order for or in
transit to or from the Business.
58
"Lease" means each lease pursuant to which a Subject Company leases any
personal property in connection with the conduct of the Business, including any
finance or operating lease (excluding leases relating solely to personal
property calling for rental or similar periodic payments not exceeding $25,000
per annum).
"Licenses" means all licenses and agreements pursuant to which a
Subject Company has acquired rights in or to any Trademarks, Patents, Copyrights
or Computer Software, or licenses and agreements pursuant to which a Subject
Company has licensed or transferred the right to use any of the foregoing.
"LMPA" means the Law of Property (Miscellaneous Provisions) ▇▇▇ ▇▇▇▇.
"Losses" means any and all damages, awards, fines, costs, fees,
penalties, deficiencies, losses, amounts paid or incurred in defense and/or
settlement and related expenses, including without limitation interest, court
and other legal proceeding costs, reasonable fees of attorneys, accountants, and
other experts or other expenses of litigation or other proceedings or of any
claim, default or assessment.
"Lowville Site" is defined in Section 5.9 hereof.
"Net Asset Value" means (a) total assets (exclusive of Excluded Assets)
less (b) total liabilities (exclusive of Excluded Liabilities), both as shown on
the balance sheet of the Subject Companies as of the Closing Date prepared in
accordance with Rexam Accounting Policies and converted into US $ in accordance
with the Exchange Rate, less (c) any Casualty Loss Shortfall. All Net Asset
Calculations shall be prepared in accordance with Section 1.5 and the Net Asset
Value Calculation Schedule attached hereto as Schedule 1.5(a).
"Operating Document" means with respect to any corporation, public
limited company, limited company, limited liability company, partnership, or
other legally authorized incorporated or unincorporated entity, the bylaws,
operating agreement, partnership agreement, or other applicable documents
relating to the operation, governance or management of such entity.
"Organizational Document" means with respect to any corporation, public
limited company, limited company, limited liability company, partnership, or
other legally authorized incorporated or unincorporated entity, the articles of
incorporation, certificate of incorporation, articles of organization, articles
of association or other applicable organizational or charter documents relating
to the creation of such entity.
"Other Site" is defined in Section 5.9 hereof.
"Patents" means issued U.S. and foreign patents and pending patent
applications, patent disclosures, and any and all divisions, continuations,
continuations-in-part, reissues, reexaminations, and extensions thereof, any
counterparts claiming priority therefrom, utility models, patents of
importation/confirmation, certificates of invention and similar statutory
rights.
"PBGC" means the Pension Benefit Guaranty Corporation.
59
"Permitted Encumbrances" with respect to any real property shall mean
(i) liens for local property taxes arising in the ordinary course of business
assessed by state or local jurisdictions not yet due and payable; (ii)
imperfections of title, easements and encumbrances, if any, which do not
materially and adversely affect the marketability of title to such real property
or materially detract from the value of or materially interfere with the present
use of such real property subject thereto or affected thereby or otherwise
materially interfere with the business conducted at such real property, and do
not interfere with, and are not violated by, the consummation of the
Transactions; (iii) all other matters affecting title which have been waived in
writing or consented to in writing by Purchaser, and (iv) Encumbrances described
in the Certificate of Title; provided, however, that Permitted Encumbrances
shall not include any mortgages, deeds of trust, deeds to secure debt, debts,
monetary liens or other monetary encumbrances of any nature whatsoever other
than as set forth in clause (i) above with respect to local property taxes.
"Person" means a natural person, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Entity or other entity or organization.
"Purchased Assets" is defined in Section 1.2(a) hereof.
"Purchaser" is defined in the Introduction hereto.
"Purchaser's Knowledge" means the actual (and not constructive or
imputed) knowledge of the following individuals: ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and
▇▇▇▇▇▇ ▇▇▇▇▇▇.
"Purchaser's Retirement Plans" is defined in Section 5.5(d) hereof.
"Purchaser's Spending Accounts" is defined in Section 5.5 hereof.
"Purchaser Indemnified Parties" is defined in Section 10.2 hereof.
"Purchase Price" is defined in Section 1.4 hereof.
"Receivables" means all notes and trade accounts receivable arising out
of sales in connection with the conduct of the Business, which shall include
without limitation trade accounts receivable from Affiliates of Rexam PLC and
all balances due from employees of the Subject Companies relating to the
Business.
"Real Property" means all real property and improvements or structures
situated thereon associated with the Business that is (i) owned by a Subject
Company with respect to the Business or (ii) otherwise reflected as an asset of
a Subject Company on the Interim Management Accounts.
"Real Property Leases" means all real property leased by a Subject
Company with respect to the Business and has annual lease payments of over
$25,000.
60
"Recognized Environmental Condition" shall have the meaning set forth
in the American Society for Testing and Materials Standard E1527 as of the
Closing Date.
"Representatives" is defined in Section 5.9 hereof.
"Rexam Accounting Policies" means Rexam PLC's accounting policies and
procedures disclosed in its 1999 Annual Report and Accounts and used in the
preparation of the financial statements contained therein, provided that the
Acquired Company's United States internal accounting policies and procedures, a
copy of which has been made available to the Purchaser, shall apply to the
extent they are different from Rexam Accounting Policies.
"Rexam Inc." means Rexam Inc., a Delaware corporation and Affiliate of
Rexam PLC.
"Rexam PLC" is defined in the Introduction hereto.
"Scheduled Contract" is defined in Section 3.13(a) hereof.
"Scheduled Lease" is defined in Section 3.12(b) hereof.
"Scheduled Real Property" is defined in Section 3.12(a) hereof.
"Scheduled Real Property Leases" is defined in Section 3.12(c) hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Parties" is defined in the Introduction hereto.
"Selling Parties' Knowledge" means the actual (and not constructive or
imputed) knowledge of the following individuals: ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ ▇▇▇▇.
"Share Purchase" is defined in the Recitals hereto.
"Shares" is defined in the Recitals hereto.
"Sites" is defined in Section 5.9(a) hereof.
"Straddle Period" is defined in Section 8.5 hereof.
"Subject Company" is defined in the Introduction hereto.
"Subsidiary" means, with respect to any Person, any corporation or
other organization, whether incorporated or unincorporated, of which (a) at
least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person or by
any one or more
61
of its Subsidiaries, or by such Person and one or more of its Subsidiaries or
(b) such Person or any other Subsidiary of such Person is a general partner
(excluding any such partnership where such Person or any Subsidiary of such
party does not have a majority of the voting interest in such partnership).
"Taxes" means (x) any and all taxes, charges, fees, levies, duties,
deficiencies, or other similar assessments or liabilities, including, without
limitation, any income, gross income, gross receipts, ad valorem, net worth,
premium, VAT, excise, severance, stamp, recording, occupation, profits, windfall
profits, real property, personal property, sales, use, transfer, transfer gains,
withholding, employment, unemployment, insurance, social security, retirement,
business license, business organization, environment, payroll, license, lease,
service, service use, minimum, and franchise taxes imposed by any federal,
state, local, or foreign government, or any agency thereof, or any other
political subdivision of the United States or any such government, (y) any
interest, fines, penalties, assessments, or additions resulting from,
attributable to, or incurred in connection with any items described in this
paragraph or any contest or dispute thereof, and (z) any items described in this
paragraph that are attributable to another Person but that a Subject Company is
liable to pay by law, by contract, or otherwise.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any such
document prepared on a consolidated, combined or unitary basis and also
including any schedule or attachment thereto, and including any amendment
thereof.
"Third Party Claim" has the meaning set forth in Section 10.4(a)
hereof.
"Third Party Claim Notice" has the meaning set forth in Section 10.4(a)
hereof.
"Third Party Claim Notice Period" has the meaning set forth in Section
10.4(a) hereof.
"Title IV Plan" means a Benefit Plan that is subject to Section 302 or
Title IV of ERISA or Section 412 of the Code.
"Trademarks" means U.S. and foreign registered and unregistered
trademarks, trade dress, service marks, logos, trade names, corporate names and
all registrations and applications to register the same.
"Trade Secrets" means all categories of trade secrets as defined in the
Uniform Trade Secrets Act, including business information.
"Transactions" means the Asset Purchase, the Share Purchase and all the
transactions provided for or contemplated by this Agreement.
"Transitional Services Agreement" is defined in Section 5.12 hereof.
"Update Period" is defined in Section 5.16 hereof.
62
"Unknown REC" is defined in Section 5.9 hereof.
"US Site" is defined in Section 5.9 hereof.
"VAT" means any value added tax or its equivalent.
"WARN Act" means the Worker Adjustment and Retraining Notification Act.
SECTION 9.2 INTERPRETATION.
(a) The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(b) Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the
words "without limitation."
(c) The words "hereof," "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer
to this Agreement as a whole and not to any particular provision of
this Agreement, and article, section, paragraph, exhibit and schedule
references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified.
(d) The meaning assigned to each term defined herein shall be
equally applicable to both the singular and the plural forms of such
term, and words denoting any gender shall include all genders. Where a
word or phrase is defined herein, each of its other grammatical forms
shall have a corresponding meaning.
(e) A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and
permitted assigns.
(f) A reference to any legislation or to any provision of any
legislation shall include any amendment to, and any modification or
re-enactment thereof, any legislative provision substituted therefore
and all regulations and statutory instruments issued thereunder or
pursuant thereto.
(g) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as
if drafted jointly by the parties, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
63
ARTICLE X
SURVIVAL AND INDEMNIFICATION
SECTION 10.1 SURVIVAL.
Subject to Section 10.7 hereof, the parties hereto agree that their
respective representations and warranties, covenants and agreements contained in
this Agreement shall survive the Closing.
SECTION 10.2 INDEMNIFICATION BY REXAM PLC.
Subject to the other provisions of this Article X, Rexam PLC shall
indemnify and hold harmless and defend Purchaser and its stockholders,
directors, officers, employees, representatives and agents (collectively, in
this Article hereof referred to as the "Purchaser Indemnified Parties") from and
against any and all Losses suffered or incurred by the Purchaser Indemnified
Parties after the Closing as a result of or arising out of:
(a) The falsity or incorrectness of or breach of any
representation or warranty of the Selling Parties in this Agreement or
in any schedule, certificate or agreement furnished to Purchaser by a
Selling Party pursuant to this Agreement;
(b) The failure by a Selling Party to perform any covenant or
agreement of such Selling Party under this Agreement or under any
schedule, certificate or agreement furnished to Purchaser by a Selling
Party pursuant to this Agreement; or
(c) The failure by the Selling Parties to discharge any claims,
liabilities or obligations arising prior to the Closing Time not
specifically assumed by the Purchaser pursuant to this Agreement,
including the Excluded Liabilities;
provided, that, in respect of the Acquired Company's facility at
Lowville, New York, nothing in this Agreement shall be construed as to
invalidate, annul, amend or alter Purchaser's responsibilities with
respect to such facility as set forth in that certain Landlord
Estoppel dated as of February 20, 1998 by and between Purchaser and
the Acquired Company (as successor in interest to Pajco Products,
L.P.).
SECTION 10.3 INDEMNIFICATION BY PURCHASER.
Subject to the other provisions of this Article X, Purchaser shall
indemnify and hold harmless the Selling Parties and each of their stockholders,
directors, officers, employees, representatives and agents from and against any
and all Losses suffered or incurred by such Indemnified Party after the Closing
as a result of or arising out of:
(a) The falsity or incorrectness of or breach of any
representation or warranty of Purchaser in this Agreement or under any
schedule, certificate or agreement furnished to the Selling Parties by
Purchaser pursuant to this Agreement;
64
(b) The failure by Purchaser to perform any covenant or agreement
of Purchaser under this Agreement or under any schedule, certificate
or agreement furnished to a Selling Party by Purchaser pursuant to
this Agreement;
(c) The failure by Purchaser to perform or discharge any Assumed
Liability; or
(d) The failure by Purchaser to discharge any claims, liabilities
or obligations arising from the operations of the Business after the
Closing Time.
SECTION 10.4 METHOD OF ASSERTING CLAIMS.
All claims for indemnification by any Indemnified Party under this
Article X shall be asserted and resolved as follows:
(a) Third Party Claims. If any claim or demand in respect of
which an Indemnified Party might seek indemnity under this Article X
is asserted against such Indemnified Party by a Person (a "Third Party
Claim"), the Indemnified Party shall give written notice (the "Third
Party Claim Notice") and the details thereof including an estimate of
the claimed Losses, copies of all relevant pleadings, documents and
information to the Indemnifying Party within a period of 30 days
following the assertion of the Third Party Claim against the
Indemnified Party (the "Third Party Claim Notice Period"). If the
Indemnified Party fails to provide the Third Party Claim Notice within
the Third Party Claim Notice Period, the Indemnifying Party will not
be obligated to indemnify the Indemnified Party with respect to such
Third Party Claim to the extent that the Indemnifying Party's ability
to defend has been prejudiced by such failure of the Indemnified
Party. Within 20 days after its receipt of the Third Party Claim
Notice by the Indemnifying Party, the Indemnifying Party shall, in
writing, either acknowledge or deny its obligations to indemnify and
defend under this Article X.
If the Indemnifying Party acknowledges its obligations to
indemnify and defend the Indemnified Party against the Third Party
Claim, then the Indemnifying Party shall defend such Third Party Claim
by all appropriate proceedings, which proceedings will be diligently
prosecuted to a final conclusion or will be settled, at the discretion
of the Indemnifying Party; provided, however, that the Indemnifying
Party shall not enter into any settlement that does not fully and
finally release the Indemnified Party from all claims, unless
consented to by the Indemnified Party. The Indemnifying Party may only
assume control of such defense if (i) it acknowledges in writing to
the Indemnified Party that any damages, fines, costs or other
liabilities that may be assessed against the Indemnified Party in
connection with such suit or proceeding constitute Losses for which
the Indemnified Party shall be indemnified pursuant to this Article X
and (ii) the AD DAMNUM is less than or equal to the amount of Losses
for which the Indemnifying Party is liable under this Article X and
(iii) the Indemnifying Party may not assume control of the defense of
a suit or proceeding involving criminal liability or in which
equitable relief is sought against the Indemnified Party. If the
Indemnifying Party does not so assume control of such defense, the
Indemnified Party shall control such defense. The party not
65
controlling such defense may participate therein at its own expense;
provided that if the Indemnifying Party assumes control of such
defense and the Indemnified Party reasonably concludes that the
Indemnified Party and the Indemnifying Party have conflicting
interests or different defenses available with respect to such suit or
proceedings, the reasonable fees and expenses of one counsel to the
Indemnified Party shall be considered "Losses" for purposes of this
Agreement. The Indemnified Party will cooperate fully in such defense,
including without limitation by making available to the Indemnifying
Party all books, records and documents within the Indemnified Party's
control or that it can reasonably obtain relating to the Third Party
Claim, and all costs or expenses incurred by it at the request of the
Indemnifying Party shall be paid by the Indemnifying Party. The
Indemnified Party may, at the Indemnifying Party's cost and expense,
at any time to prevent default or protect its interests file any
pleadings or take any other action that the Indemnified Party
reasonably believes to be necessary or appropriate to protect its
interests due to the failure of the Indemnified Party to diligently
defend such action. The Indemnified Party, at its expense, may
participate in, but not control, any defense or settlement of any
Third Party Claim conducted by the Indemnifying Party pursuant to this
Section 10.4(a).
(b) Other Claims. In the event any Indemnified Party should have
a claim under this Article X against any Indemnifying Party that does
not involve a Third Party Claim, the Indemnified Party shall promptly
give written notice (the "Indemnity Notice") and the details thereof,
including an estimate of the claimed Losses, copies of all relevant
information and documents to the Indemnifying Party within a period of
30 days following the discovery of the claim by the Indemnified Party
(the "Claim Notice Period"). The failure by any Indemnified Party to
give the Indemnity Notice within the Claim Notice Period shall not
impair the Indemnified Party's rights hereunder except to the extent
that an Indemnifying Party demonstrates that it has been prejudiced
thereby. The Indemnifying Party will notify the Indemnified Party
within a period of 20 days after the receipt of the Indemnity Notice
by the Indemnifying Party whether the Indemnifying Party disputes its
liability to the Indemnified Party under this Article X with respect
to such claim.
SECTION 10.5 MONETARY LIMITATIONS ON INDEMNIFICATION.
No amount of indemnity shall be payable by an Indemnifying Party in the
case of a claim by any Indemnified Party under Section 10.2(a) or Section
10.3(a) unless, until and only to the extent that such Indemnified Party has
suffered or incurred Losses consisting of actual damages aggregating in excess
of Four Hundred Thousand Dollars ($400,000) (the "Deductible Amount") whereupon
such Indemnified Party shall be entitled to claim indemnification for the amount
in excess of the Deductible Amount, provided that, except for claims relating to
Environmental Clean-Up Activities or for fraud, in no event shall the aggregate
indemnity amount payable by any Indemnifying Party under Section 10.2(a) and
10.2(b), in the case of Rexam PLC, and 10.3(a) and 10.3(b), in the case of the
Purchaser, exceed Twenty Five Million Dollars ($25,000,000). Notwithstanding the
foregoing, nothing in this Section 10.5 shall be construed to limit the right of
either party to enforce the provisions of Section 5.9 hereof or provisions of
Sections 5.5(b), (c), (e), (g), (h), (k) and (l), 5.6(b), 5.9(c) and (d),
5.13(b), 7.2(b), (c) and (d) or
66
any other payment or indemnification covenant contained in this Agreement, in
each case in accordance with its respective terms.
SECTION 10.6 EXCLUSIVE REMEDIES.
The sole and exclusive remedies for any party hereto with respect to
any claim relating to this Agreement or the transactions contemplated hereby and
the facts and circumstances relating and pertaining hereto shall be governed by
this Agreement (whether any such claim shall be made in contract, breach of
warranty, tort or otherwise); provided, however, that, in the event of a breach
of the Agreement that does not result in termination of the Agreement by the
non-breaching party, the foregoing shall not limit the availability to any party
hereof of injunctive and other equitable relief, including specific performance.
The parties recognize and agree that if for any reason any of the provisions of
this Agreement are not performed in accordance with their specific terms or are
otherwise breached, immediate and irreparable harm or injury would be caused for
which money damages would not be an adequate remedy. Accordingly, each party
agrees that, in addition to other remedies, the other party shall be entitled to
seek an injunction restraining any violation or threatened violation of the
provisions of this Agreement. In the event that any action should be brought in
equity to enforce the provisions of this Agreement, neither party will allege,
and each party hereby waives the defense, that there is adequate remedy at law.
SECTION 10.7 TIME LIMITS ON CLAIMS.
No claim or action shall be brought under this Article X hereto for
breach of a representation or warranty more than one year following the Closing
Date. Notwithstanding the foregoing, however, or any other provision of this
Agreement:
(i) There shall be no time limitation on claims or actions brought for
breach of any representation or warranty made in or pursuant to Section 3.5
(title to shares).
(ii) Any claim pursuant to Section 3.18 (environmental) may be brought
at any time within three years after the Closing Date.
(iii) Any claim or action brought for breach of any representation or
warranty made in or pursuant to Section 3.21 (taxes) may be brought at any time
until the underlying Tax obligation is barred by the applicable period of
limitation under applicable laws relating thereto.
Any claim not made within the foregoing relevant time period shall
expire and be forever barred thereafter.
SECTION 10.8 TAX EFFECT AND INSURANCE.
The liability of the Indemnifying Party with respect to any Loss shall
be reduced by the Tax benefit actually realized and any insurance proceeds
received by the Indemnified Party as a result of any such Losses and shall
include any tax detriment actually suffered by the Indemnified Party as a result
of such Losses. The amount of any such Tax benefit or detriment shall be
determined by taking into account the effect, if any and to the extent
determinable, of
67
timing differences resulting from the acceleration or deferral of items of gain
or loss resulting from such Losses and shall otherwise be determined so that
payment by the Indemnifying Party, as adjusted to give effect to any such Tax
benefit or detriment, will make the Indemnified Party as economically whole as
is reasonably practical with respect to the Losses upon which the Indemnified
Party's claim is based.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 FEES AND EXPENSES.
All costs and expenses incurred in connection with the negotiation and
preparation of this Agreement and the consummation of the Transactions shall be
paid by the party incurring such expenses, except as specifically provided to
the contrary in this Agreement; provided that Purchaser will pay for (i) all
recording fees, title insurance premiums for any title insurance, surveyor's
fees for any survey, title examination, escrow and other fees charged by any
title insurer (but not transfer taxes, deed stamps or similar costs in
connection with the conveyance of real property), (ii) any sales tax payable as
a result of the Transactions, and (iii) all filing fees incurred in connection
with filings required of Purchaser or any Selling Party or any of their
respective Affiliates under the HSR Act or any Foreign Antitrust Law.
SECTION 11.2. AMENDMENTS.
This Agreement may be amended, modified and supplemented in any and all
respects, but only by a written instrument signed by all of the parties hereto
expressly stating that such instrument is intended to amend, modify or
supplement this Agreement.
SECTION 11.3. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed given if mailed, delivered personally, telecopied (which is
confirmed) or sent by an overnight courier service, such as FedEx, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
IF TO PURCHASER: FiberMark, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇, President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
COPY TO: ▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
68
IF TO REXAM PLC OR TO Rexam PLC
A SELLING PARTY: ▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Facsimile: 44 207 227 4139
and
Rexam Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
COPY TO: ▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇ PLLC
Bank of America Corporate Center
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. Hope
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change the address to which notices to it are to be sent by giving
notice of such change to the other party in accordance with this Section.
SECTION 11.4 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties.
SECTION 11.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
This Agreement, the Confidentiality Agreement, the Exhibits and
Schedules hereto, and the agreements, documents and instruments delivered
pursuant hereto contain the final, complete and exclusive statement of the
agreement between the parties with respect to the Transactions and all prior or
contemporaneous written or oral agreements with respect to the subject matter
hereof are superseded hereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This
69
Agreement shall not confer any rights or benefits upon any person or entity
other than the parties hereto and their respective successors and permitted
assigns.
SECTION 11.6 SEVERABILITY.
Any term or provision of this Agreement that is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable
in any situation in any jurisdiction shall not affect the validity or
enforceability of the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other situation or in
any other jurisdiction. If the final judgment of a court of competent
jurisdiction or other authority declares that any term or provision hereof is
invalid, void or unenforceable, the parties agree that the court making such
determination shall have the power to reduce the scope, duration, area or
applicability of the term or provision, to delete specific words or phrases, or
to replace any invalid, void or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision.
SECTION 11.7 GOVERNING LAW.
This Agreement shall be construed interpreted, enforced and governed by
and under the laws of the State of Delaware without regard to its choice of law
rules.
SECTION 11.8 VENUE.
Each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of the state and federal courts of the State of Delaware
in the event any dispute that the parties fail to resolve arises out of this
Agreement or any of the Transactions, (b) agrees that it shall not attempt to
deny or defeat such personal jurisdiction by motion or other request for leave
from any such court, and (c) agrees that it shall not bring any action relating
to this Agreement or any of the Transactions in any court other than courts set
forth above. In any such proceeding, the parties agree to accept service of
process by mail at the addresses herein provided for notice.
SECTION 11.9 TIME OF ESSENCE.
Each of the parties hereto hereby agrees that, with regard to all dates
and time periods set forth or referred to in this Agreement, time is of the
essence.
SECTION 11.10 EXTENSION; WAIVER.
At any time prior to the Closing Date, either party hereto may (a)
extend the time for the performance of any of the obligations or other acts of
the other party, (b) waive any inaccuracies in the representations and
warranties of the other party contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) waive compliance by the other
parties with any of the agreements or conditions contained in this Agreement.
Any agreement on the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing
70
signed by or on behalf of such party. The failure of any party to this Agreement
to assert any of its rights under this Agreement or otherwise shall not
constitute a waiver of those rights.
SECTION 11.11. ASSIGNABILITY.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written content of the other parties,
except that Purchaser may assign any or all of its rights and interests
hereunder to any direct or indirect wholly owned Subsidiary of Purchaser,
provided that no such assignment shall release Purchaser from its obligations
under this Agreement. Subject to the preceding sentences, this Agreement shall
be binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
SECTION 11.12 NO SURVIVAL.
None of the representations, warranties, covenants and agreements in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Closing, except as provided in Section 10.1 and except for those
covenants and agreements contained herein or therein which by their terms apply
in whole or in part after the Closing.
SECTION 11.13 CAPTIONS.
The captions herein are for convenience of reference only and shall not
be construed as a part of this Agreement.
SECTION 11.14 EXHIBITS AND SCHEDULES.
Each Exhibit and Schedule hereto referred to in this Agreement is
hereby incorporated herein by reference and shall be deemed and construed to be
a part of this Agreement for all purposes. Disclosures made in the Schedules, or
any part thereof, shall be deemed to be disclosures with respect to all
representations and warranties made by the Selling Parties with respect to this
Agreement.
SECTION 11.15 RISK OF LOSS.
After each Closing Time, all risk of loss or damage to the Purchased
Assets relating to such Closing Time shall be borne by Purchaser.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, each of the below parties has executed this
Purchase Agreement as of the date first written above.
FIBERMARK, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
------------------------------
Title: Vice President and Chief Financial
Officer
-----------------------------
REXAM PLC
By:/s/ ▇▇▇▇▇▇▇ Kalveks
------------------------
Name: ▇▇▇▇▇▇▇ Kalveks
----------------------
Title: Director - Corporate Development
-----------------------------------
MITEK R-1 HOLDING COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
Title: President
-----------------------------
REXAM CFP LIMITED
By: /s/ S.A. Bull
--------------------------------
Name: S.A. Bull
------------------------------
Title: Director
---------------------
72
SCHEDULE 5.5(G)
SECTION 1 DEFINITIONS. For the purposes of this Schedule 5.5(g), the
following terms shall have the following meanings:
"Actuary" means the actuary appointed by the Rexam Scheme from
time to time under the Pensions ▇▇▇ ▇▇▇▇.
"AVCs" means additional voluntary contributions paid by Members
to the Rexam Scheme.
"claim" includes a claim by any person (including a trade union,
a governmental or statutory or local authority or commission).
"Continuing U.K. Employee" is defined in Section 2.1 of this
Schedule 5.5(g).
"Employment Regulations" means the Transfer of Undertakings
(Protection of Employment) Regulations 1981.
"Exempt Approved Scheme" shall have the meaning as set forth in
▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ and "Exempt Approved" shall be construed
accordingly.
"liability" and "liabilities" includes any award, compensation,
damages, fine, loss, order, payment made by way of settlement, costs
and expenses (including legal expenses on an indemnity basis) properly
incurred in connection with a claim and also includes the costs and
expenses of any investigation by the Equal Opportunities Commission,
the Commission for Racial Equality or an officer appointed by the
Secretary of State under The Employment Rights ▇▇▇ ▇▇▇▇, Part II and
of implementing any requirements which may arise from any such
investigation.
"Member" means, at any time or during any period specified in
this Schedule 5.5(g), a contributing member of the Rexam Scheme.
"Membership Transfer Date" means the three month anniversary of
the Closing Date or such other date as the parties may agree in
writing.
"Purchaser's Scheme" means the retirement benefits scheme
referred to in Section 3.3 of this Schedule and, where the context
requires, includes the trustees thereof.
"Rexam Scheme" means the Rexam Pension Plan established by a deed
dated March 27, 2000, and where the context requires, the trustees or
managers thereof.
"Rules" means the trust deeds and rules and other documents
governing the Rexam Scheme as set forth in this Schedule 5.5(g).
"Transitional Period" means the period from and including the
Closing Date of up to but excluding the Membership Transfer Date.
Capitalized terms used in this Schedule 5.5(g) that are not defined in this
Agreement shall have the meanings set forth in the Rules or if not defined
herein or therein shall have the meanings, where the context allows, as in the
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇.
SECTION 2. ASSET SELLER ACTIVE EMPLOYEES
2.1 The Selling Parties and Purchaser acknowledge and agree that as
required by the Employment Regulations the contracts of employment
between the Asset Seller and the Asset Seller's Active Employees and
the Terms of Settlement - Wages and Conditions Application 2000/2001
between the Asset Seller and the Transport and General Workers Union
covering the Active Employees of the Asset Seller will remain in effect
after the Closing as if originally made between Purchaser and such
Active Employees or between Purchaser and the relevant trade union (as
the case may be) and that at the Closing such Active Employees shall
become "Continuing U.K. Employees" for purposes of this Agreement.
2.2 The Asset Seller shall discharge all its obligations in respect of its
Active Employees up to the Closing and Rexam PLC shall indemnify
Purchaser against all liabilities arising from the Assets Seller's
failure to do so.
2.3 Purchaser shall from and after the Closing discharge all the
obligations of the employer in relation to the Continuing U.K.
Employees and shall indemnify Rexam PLC and its Affiliates against all
liabilities arising from Purchaser's failure to do so.
2.4 Rexam PLC shall indemnify Purchaser against any liability relating to a
Continuing U.K. Employee or former employee of the Asset Seller which
arises out of any act or omission by the Asset Seller or any other
event, matter or circumstance (including any failure by the Asset
Seller to comply with Regulation 10 of the Employment Regulations or in
respect of an award of compensation under Regulation 11 thereof arising
from such failure; provided that Rexam PLC shall not be obligated to
defend Purchaser for any failure or award of compensation which results
from Purchaser's failure to comply with its obligations under such
Employment Regulations and/or to provide the Selling Parties with
information necessary for Rexam PLC to comply with such Employment
Regulations) occurring before the Closing excluding any liability
referred to in Section 2.5 of this Schedule.
2.5 Purchaser shall indemnify Rexam PLC and its Affiliates against any
liability relating to a Continuing U.K. Employee which arises out of or
in connection with:
(a) the termination of his employment, a change to a term of his
employment (including removal of or a change to a benefit
under an occupational pension scheme), any act or omission by
Purchaser or any other event, matter or circumstance in each
case occurring at or after the Closing; or
(b) a complaint or failure by Purchaser to comply with Regulation
10(3) of the Employment Regulations or in respect of an award
of compensation under Regulation 11 thereof arising from such
complaint.
2.6 If the contract of employment of any Continuing U.K. Employee is found
or alleged not to have effect after the Closing as if originally made
with Purchaser as a consequence of the transactions under this
Agreement other than by virtue of Regulation 5(4A) of the Employment
Regulations, Purchaser agrees that:
(a) in consultation with the Asset Seller (which for the purpose
of this clause shall mean the Asset Seller or any of its
Affiliates where appropriate), it will, within 14 days of
being so requested by the Asset Seller (as long as the request
is made no later than 14 days after the Asset Seller becomes
aware of such finding or allegation), make to that Continuing
U.K. Employee an offer in writing to employ him under a new
contract of employment to take effect upon the termination
referred to below; and
(b) the offer to be made will be such that none of the terms and
conditions of the new contract (other than any terms and
conditions relating to the identity of the employer) will
differ from the corresponding provision of the Continuing U.K.
Employee's contract of employment immediately before the
Closing.
Upon that offer being made (or at any time after the expiry of the 14
days if the offer is not made as requested), the Asset Seller shall
terminate the employment of the Continuing U.K. Employee by giving due
notice and or making an appropriate payment in lieu of notice and
complying with all relevant dismissal procedures required by law and
taking all reasonable steps to mitigate any damages or compensation
which might be awarded to the persons concerned and subject to the
Asset Seller acting in that way Purchaser shall indemnify the Selling
Parties against any liability which arises out of or in connection with
the employment of that Continuing U.K. Employee after the Closing until
such termination and against any liability which arises out of or in
connection with such termination.
2.7 If the contract of employment of any person who is not a Continuing
U.K. Employee is found or alleged to have effect after the Closing as
if originally made with Purchaser as a consequence of the transactions
under this Agreement, the Asset Seller or any its Affiliates where
appropriate agrees that:
(a) in consultation with Purchaser, it will, within 14
days of being so requested by Purchaser (as long as
the request is made no later than 14 days after
Purchaser becomes aware of such finding or
allegation) make to that person an offer in writing
to employ him under a new contract of employment to
take effect upon the termination referred to below;
and
(b) the offer to be made will be such that none of the
terms and conditions of the new contract will differ
from the corresponding provision of that person's
contract of employment immediately before the
Closing.
Upon that offer being made (or at any time after the expiry of the 14
days if the offer is not made as requested), Purchaser shall terminate
the employment of the person concerned by giving due notice and or
making an appropriate payment in lieu of notice and complying with all
relevant dismissal procedures required by law and taking all
reasonable steps to mitigate any damages or compensation which might
be awarded to the persons concerned and subject to Purchaser acting in
that way the Asset Seller or any of its Affiliates where appropriate
shall indemnify Purchaser against any liability which arises out of or
in connection with the employment of such person after the Closing
until such termination and against any liability which arises out of
or in connection with such termination.
SECTION 3. ASSET SELLER PENSION PLAN
3.1 If during the Transitional Period any of the Continuing U.K. Employees
are transferred from the employment of Purchaser to an Affiliate of
Purchaser (the "New Employer"), Rexam PLC shall, at the request of
Purchaser, use all reasonable efforts to cause the New Employer to be
duly admitted to participation in the Rexam Scheme with effect from the
date of such transfer or if more than one such transfer occurs with
effect from the date of the first such transfer. If for any reason the
New Employer is not duly admitted to participation in the Rexam Scheme
then in respect of the Continuing U.K. Employees transferred to it the
day next following the date of such transfer shall be the Membership
Transfer Date in relation to those Continuing U.K. Employees and this
Schedule 5.5(g) shall take effect accordingly. Subject to the New
Employer being so admitted, the New Employer and Purchaser shall be
treated as one of the purposes of this Schedule 5.5(g).
3.2 (A) Purchaser will participate in the Rexam Scheme throughout the
Transitional Period in respect of those Continuing U.K. Employees who
are or are entitled to be Members subject to the treatment of the Rexam
Scheme as an Exempt Approved Scheme not being prejudiced (which consent
Rexam PLC shall use its reasonable efforts to obtain) and to Purchaser
complying with the terms of this Schedule 5.5(g) and the Rules in all
material respects.
(B) Purchaser and Rexam PLC shall use their respective
reasonable efforts to procure that the Continuing U.K. Employees who
are Members remain in contracted-out employment by reference to the
Rexam Scheme through the Transitional Period.
(C) Purchaser undertakes that it will not, and will procure
that none of Purchaser's Affiliates will, during or in respect of the
Transitional Period:
(1) do or omit to do any act or thing whereby the
approval of the Rexam Scheme as an Exempt Approved Scheme or
the Rexam Scheme as a contracted-out scheme would or might be
prejudiced;
(2) exercise any power or discretion under the Rules
except on payment of such additional contribution as the
Actuary determines and on such other terms as the Rexam Scheme
may reasonably require;
(3) increase the pensionable earnings of any
Continuing UK Employees who are Members without the consent of
Rexam PLC.
(D) Purchaser shall procure the prompt payment to or to the
order of the Rexam Scheme of the following in respect of the
Transitional Period or the part thereof
in which Purchaser is participating in respect of those of the
Continuing U.K. Employees who are Members from time to time:
(1) In respect of employer's contribution to the
Rexam Scheme from Closing Date: 19.9% of Gross Earnings;
(2) Members' contributions at the rate required under
the Rules; and
(3) the Members' AVCs.
Purchaser acknowledges that these contributions are paid
monthly to the Trustees on or before the 19th of the month following
the month of collection.
(E) Rexam PLC undertakes that:
(1) it will not do or omit to do anything during or
in relation to the Transitional Period which would or might
prejudice the approval of the Rexam Scheme as an Exempt
Approved Scheme;
(2) it will indemnify and keep indemnified and hold
harmless on a continuing basis Purchaser against all and any
liability to make any contribution or payment to or in
connection with the Rexam Scheme with respect to the
Transitional Period other than to pay contributions pursuant
to Section 3.2(D) of this Schedule;
(3) it will maintain the Rexam Scheme in full force
and effect; and
(4) it will give at least one month's written notice
to Purchaser of the exercise of a power or discretion under
the Rexam Scheme in a way that would adversely affect in a
material way Purchaser and/or all or any of its Employees.
The parties to this Agreement do not intend that any part of this
Schedule 5.5(g) will be enforceable by virtue of the Contracts (Right
of Third Parties) ▇▇▇ ▇▇▇▇ by any person not a party to it.
3.3 (A) Not later than two months before the Membership Transfer Date
Purchaser will provide to Rexam PLC particulars of one or more proposed
pension schemes which Purchaser intends to be Purchaser's Scheme for
the purposes of this Schedule 5.5(g). The scheme (or each such scheme)
must be a scheme which satisfies the terms of this Section 3.3.
(B) Purchaser will procure that Purchaser's Scheme:
(1) is established and wholly administered in this
United Kingdom;
(2) is Exempt Approved (or designed so as to be
capable of such approval) or approved under section 630, Taxes
▇▇▇ ▇▇▇▇; and
(3) is contracted-out within the meaning of the
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ and a scheme to which the Rexam
Scheme is permitted by law to make a transfer payment in
respect of the entire rights under the Rexam Scheme of the
Members (including contracted-out rights).
(C) Without restricting the Purchaser's ability to amend the
Purchaser's Scheme after the Membership Transfer Date, Purchaser will
at the outset offer to each Continuing U.K. Employee who is a Member
immediately before the Membership Transfer Date, membership in
Purchaser's Scheme with benefits and on terms that are substantially no
less favorable overall in value for the generality of the members than
those which would have applied under the Rexam Scheme if he had
continued in membership after the Membership Transfer Date (assuming
that the Rexam Scheme is not altered after the Closing except as
mentioned in any document referred to in this Schedule 5.5(g)).
3.4 Purchaser will not, and will procure that Purchaser's Affiliates and
Purchaser's Scheme will not, take any action or provide any assistance
to any person which might or would result in a claim or in the Rexam
Scheme transferring a smaller or a larger amount than the cash
equivalent to Purchaser's Scheme.
3.5 (A) In this Section 3.5, the "Statutory Provisions" means
those provisions of the Pensions ▇▇▇ ▇▇▇▇ and the regulations which are
listed below.
(B) Purchaser hereby irrevocably nominates Rexam PLC to act on
its behalf in relation to the Statutory Provisions and the Rexam Scheme
or, where the relevant provision of the Statutory Provision does not
allow for such nomination, Purchaser waives any right it may have under
the provision.
(C) Pursuant to Section 3.2 of this Schedule, Rexam PLC may do
all such reasonable acts (including, without limitation, the giving of
such consents and the execution of all such documents on behalf of, in
the name of, Purchaser) as Rexam PLC may consider necessary in
connection with the Statutory Provisions.
(D) The provisions of this Section 3.5 may be amended or
revoked in whole or in part at any time by agreement in writing between
Purchaser and Rexam PLC.
(E) Purchaser will observe and perform the provisions set out
in this Section 3.5 as if they were included in the deed under which
Purchaser participates in the Rexam Scheme provided it does not impose
any financial obligations or liability on Purchaser.
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PROVISIONS SUMMARY OF SUBJECT MATTER
(The summary is for convenience only and
does not set out any obligation)
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The Occupational Pension Schemes Holding Company (principal employer) may
(Contracting-out) employer) Regulations 1996, give notice required or authorized to be given
Regulation 12 under the Regulations on behalf of subsidiary
(participating
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▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇ ▇▇(▇) ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇. Appointment of "appropriate person"
The Occupational Pension Schemes (Member- nominated by the employers o a multi-
nominated Trustees and Directors) Regulations employer scheme to act for them for the
1996 Schedule 3 paragraph 1(1)(g) purpose of making proposals for an
procedure for adopting alternative arrangements
under the member-nominated director provisions.
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Section 35(5)(b) Pensions ▇▇▇ ▇▇▇▇ Consultation required by the trustees with the employer
in relation to the written statement of investment
The Occupational Pension Schemes (Investment) Regulations principles. Nomination of a person by the employers to
1996, Regulation 11(1)(a). act as their representative for the above purpose.
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Section 37(4)(c) Pensions ▇▇▇ ▇▇▇▇. The Occupational Payment of surplus to employer from ongoing scheme.
Pension Schemes (Payments to Employers) Regulations 1996, Where power to pay surplus is conferred on the
Regulation 13. employer, it is exercisable by the trustees but only
when the employer has asked for or consented to its
exercise in the manner proposed. Nomination of a
person by the employers to act as their representative for
the above purpose.
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Section 58 Pensions ▇▇▇ ▇▇▇▇. The Occupational Pension Minimum funding requirement, consultation over contents
Schemes (Minimum Funding Requirement and Actuarial of schedule of contributions. Schedule to show matters
Valuations) Regulations 1996 Schedule 5 paragraph 2. agreed by the trustees an employer Agreement of
revision of schedule. Application to OPRA to extend
schedule period. Nomination by the employers of a
person to act as their representative.
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