EXHIBIT 2
ASSET PURCHASE AGREEMENT
by and among
Ball Corporation,
Ball Metal Beverage Container Corp.
and
Reynolds Metals Company
dated as of April 22, 1998
i
TABLE OF CONTENTS
Page
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1 Purchase and Sale of Assets............................2
Section 1.2 Excluded Assets........................................6
Section 1.3 Assumption of Liabilities..............................9
Section 1.4 Purchase Price........................................11
Section 1.5 Cash Purchase Price Adjustment........................12
Section 1.6 Adjustment for Periodic Items.........................14
Section 1.7 Closing...............................................15
Section 1.8 Further Assurances....................................18
Section 1.9 Allocation of Purchase Price..........................18
Section 1.10 Torrance, California Site............................19
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 2.1 Disclosure Schedule...................................23
Section 2.2 Corporate Organization................................24
Section 2.3 Operation of the Business.............................24
Section 2.4 Authorization.........................................24
Section 2.5 No Violation..........................................25
Section 2.6 Consents and Approvals................................25
Section 2.7 Financial Statements..................................26
Section 2.8 Accounts Receivable...................................27
Section 2.9 Inventory and Working Capital.........................27
Section 2.10 Absence of Certain Changes...........................27
Section 2.11 Title to Properties; Encumbrances....................29
Section 2.12 Equipment............................................30
Section 2.13 Intellectual Property Rights.........................31
Section 2.14 Certain Contracts....................................32
Section 2.15 Orders and Commitments...............................33
Section 2.16 Taxes................................................34
Section 2.17 Litigation...........................................35
Section 2.18 Compliance with Law..................................35
ii
Page
Section 2.19 Environmental Protection.............................36
Section 2.20 Labor Relations......................................37
Section 2.21 Employee Benefit Matters.............................39
Section 2.22 Customers and Suppliers..............................41
Section 2.23 Brokers and Finders..................................41
Section 2.24 Investment...........................................41
Section 2.25 Capitalization of Subsidiaries.......................42
Section 2.26 Latasa Agreements....................................44
Section 2.27 Latasa Offering Statement............................44
Section 2.28 Latasa Financial Statements..........................45
Section 2.29 SVE Agreement........................................45
Section 2.30 Seller's Exposure Estimates..........................45
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BALL AND BUYER
Section 3.1 Corporate Organization, etc...........................45
Section 3.2 Authorization, etc....................................46
Section 3.3 No Violation..........................................46
Section 3.4 Litigation............................................47
Section 3.5 SEC Reports...........................................47
Section 3.6 Brokers and Finders...................................47
Section 3.7 Authorization of Shares...............................47
Section 3.8 Consents and Approvals................................48
Section 3.9 Financing.............................................48
ARTICLE IV
COVENANTS OF SELLER
Section 4.1 Conduct of the Business...............................49
Section 4.2 Access................................................51
Section 4.3 Consents..............................................51
Section 4.4 Title to Real Property................................52
Section 4.5 No Solicitation.......................................54
Section 4.6 Supplements to Disclosure Schedule....................55
Section 4.7 Bulk Sales Laws.......................................55
iii
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
Section 5.1 Reasonable Efforts....................................55
Section 5.2 WARN Act..............................................56
Section 5.3 Regulatory and Other Authorizations; Consents.........56
Section 5.4 Employee Matters for Represented Employees............57
Section 5.5 General Employee Matters, Employee Matters for
Nonrepresented Employees and Welfare Benefit
Provisions for All Employees..........................70
Section 5.6 Special Employment and Transition Rules for
Salaried Employees....................................83
Section 5.7 Tax Matters...........................................87
Section 5.8 Non-Competition.......................................92
Section 5.9 Confidentiality.......................................94
Section 5.10 Materials Received After Closing.....................95
Section 5.11 Access to Books and Records..........................95
Section 5.12 Actions by Ball......................................97
Section 5.13 Delivery of Financial Statements.....................97
Section 5.14 Litigation Support...................................97
Section 5.15 Returns..............................................98
Section 5.16 Accounts Receivable..................................98
Section 5.17 Inadvertently Retained Information...................98
ARTICLE VI
SURVIVAL AND INDEMNIFICATION
Section 6.1 Survival of Representations, Warranties
and Covenants.......................................99
Section 6.2 Indemnification by Ball and Buyer.....................99
Section 6.3 Indemnification by Seller............................100
Section 6.4 Claims for Indemnification...........................100
Section 6.5 Environmental Indemnification........................103
iv
Page
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATION
Section 7.1 Representations and Warranties True..................105
Section 7.2 Performance..........................................105
Section 7.3 No Injunction, Litigation, etc.......................105
Section 7.4 Stockholder's Agreement..............................105
Section 7.5 Legal Opinion........................................106
Section 7.6 HSR Act Waiting Periods..............................106
Section 7.7 Certificates.........................................106
Section 7.8 Consents.............................................106
ARTICLE VIII
CONDITIONS TO BUYER'S OBLIGATION
Section 8.1 Representations and Warranties True..................106
Section 8.2 Performance..........................................107
Section 8.3 No Injunction, Litigation, etc.......................107
Section 8.4 Governmental Filings and Consents; Third
Party Consents.....................................107
Section 8.5 Stockholder's Agreement..............................107
Section 8.6 HSR Act Waiting Periods..............................107
Section 8.7 No Material Adverse Change...........................107
Section 8.8 Certificates.........................................108
Section 8.9 Financing Conditions.................................108
Section 8.10 Actions by Seller....................................108
ARTICLE IX
TERMINATION AND ABANDONMENT
Section 9.1 Methods of Termination...............................108
Section 9.2 Procedure upon Termination...........................109
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 Amendment and Modification..........................110
v
Page
Section 10.2 Waiver of Compliance................................110
Section 10.3 Expenses, etc.......................................110
Section 10.4 Notices.............................................110
Section 10.5 Assignment..........................................112
Section 10.6 Publicity...........................................112
Section 10.7 Governing Law.......................................112
Section 10.8 Counterparts........................................112
Section 10.9 Headings............................................112
Section 10.10 Entire Agreement...................................112
Section 10.11 Third Parties......................................113
Section 10.12 Dispute Resolution.................................113
vi
ANNEXES
A Defined Terms
1.1(a) Real Property
1.1(c) Intellectual Property Rights
1.1(e) Permits and Environmental Permits
1.1(q) Other Assets
1.1(aa) Seller's Equity Interests
1.2(f) Retained Contracts
1.2(g) Excluded Claims Against Third Parties
1.2(j) Headquarters Assets
1.2(m) Excluded Assets
1.2(s) Torrance Extrusion Plant
1.3(a)(vii) Other Assumed Liabilities
1.3(b)(iv) Other Excluded Liabilities
8.10 Actions by Seller
EXHIBITS
A Stockholder's Agreement
1.2(t) Data Processing Services Agreement
1.7(b)(ii) Bill of Sale
1.7(b)(ix) Assignment and Assumption of Leases
1.7(c)(ii) Assignment and Assumption Agreement
1.7(c)(viii) Agreement Regarding Performance of Technical Services
1.7(d)(ii) Transitional Trademark License Agreement
1.7(d)(iii) Supply Program Agreement
1.7(d)(iv) Incentive Loan Agreement
1.7(d)(v) Transition Services Agreement
1.7(d)(vi) Payroll Services Agreement
1.7(d)(vii) [intentionally omitted]
1.7(d)(viii) Trademark License Agreement
1.7(d)(ix) Cross-License Agreement
1.7(d)(x) Transportation Services Agreement
1.7(d)(xi) Human Resources Services Agreement
1.9 Allocation of Purchase Price
1.10(a) Subdivision
1.10(b) Lease of Torrance Can Plant
vii
4.4(b) Forms (Model Deed Certificate; Moultrie and Hayward
Easements)
5.4(f) Offset Procedure Examples
6.5 Environmental Indemnification Procedures
7.5 Opinion of Ball General Counsel
viii
DISCLOSURE SCHEDULE
2.3 Operation of Business
2.4 Authorization
2.5 Non-Contravention
2.6 Consents and Approvals
2.7 Financial Statements
2.8 Accounts Receivable
2.9 Inventory
2.10 Absence of Certain Changes
2.11 Title to Properties; Encumbrances
2.12 Equipment
2.13 Intellectual Property
2.13(e) Year 2000 Program
2.13(f) Excluded Trademarks
2.13(g) Non-Transferred Patents, Trademarks and Copyrights
2.14(a) Material Contracts
2.14(b) Other Material Contract Matters
2.15 Orders and Commitments
2.16 Taxes
2.17 Litigation
2.18 Non-Compliance with Laws
2.19 Environmental Matters
2.19(a) Environmental Permits
2.19(c) Final Environmental Studies
2.20 Labor Relations
2.20(a) Written Policies, Rules and Procedures
2.21(a) Employee Benefit Matters and Plans
2.22 Customers and Suppliers
2.25(a) Capitalization of Domestic Subsidiaries
2.25(b) Capitalization of RIB
2.25(c) Capitalization of Latasa and Latasa Subsidiaries
2.25(d) Other Subsidiary Issues
2.26(d) Latasa Agreements and Non-Contravention
2.27 Latasa Offering Statement
2.28 Latasa Financial Statements
2.30 Seller's Exposure Estimates
3.7 Ball Shares
3.8 Buyer and Ball Consents and Approvals
4.4(b) Title Commitments and Permitted Exceptions
ix
5.5(a) Employee Benefits Data
5.5(c)(2) List of Headquarter Employees
5.6(a)(1) Reimbursement for Seconded Employee Expenses
5.6(c) Retained Seller Employees
7.8 Consents and Approvals that are a Condition
to Seller's Obligation to Close
8.4 Consents and Approvals that are a Condition
to Buyer's and Ball's Obligation to Close
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of April 22, 1998 (the
"Agreement"), is by and among Ball Corporation, an Indiana corporation
("Ball"), Ball Metal Beverage Container Corp., a Colorado corporation and
an indirect wholly-owned subsidiary of Ball ("Buyer") and Reynolds Metals
Company, a Delaware corporation ("Seller"). Capitalized terms not otherwise
defined in the text of this Agreement are used as defined in Annex A
hereto.
W I T N E S S E T H:
WHEREAS, Seller and its majority-owned subsidiaries are engaged
on a global basis in the design, manufacture, distribution and sale of
aluminum beverage can bodies and ends (such business, as conducted
throughout the world directly by Seller and its majority-owned subsidiaries
(including licensing, directly or indirectly, of intellectual property and
know-how used in the manufacture and sale of aluminum can bodies and ends
but excluding (i) Seller's operations engaged in the manufacture and sale
of aluminum can, end and tab sheet, the recycling and reclamation of
aluminum cans and the design, manufacture and sale of printing cylinders,
printing plates and color separations that act as suppliers to, or
customers of, Seller's global can business, (ii) Seller's operations
engaged in the design, manufacture, distribution and sale of machinery,
equipment and components and parts therefor used in the manufacture of
metal beverage can bodies and ends and certain can filling operations (the
"Machinery Operations") and (iii) "parent company" finance and
administration activities conducted at Seller's corporate headquarters at
6601 West Broad Street, Richmond, Virginia) is hereinafter referred to as
the "Business"); and, in connection with the development of the Business on
a global basis, Seller and its majority-owned subsidiaries have acquired,
directly or indirectly, minority interests in, and entered into technical
services and/or management agreements with, Latas de Aluminio, S.A.-LATASA
("Latasa") and its subsidiaries, Superenvases Envalic C.A. ("SVE") and
United Arab Can Manufacturing Company, Limited ("UAC");
WHEREAS, Seller's interest in Latasa is held by two indirect
subsidiaries, Reynolds International do Brasil Participacoes, Ltda, a
Brazilian corporation ("RIB"), and Reynolds International Latin America
S.A., a Panamanian corporation ("RILA");
2
WHEREAS, Seller has reached agreement with Ball and Buyer to
sell to them or their Designees the Business (including Seller's interest
in Seller's wholly-owned subsidiaries, Latas de Aluminio Reynolds, Inc., a
Delaware corporation ("LAR") and RCAL Cans, Inc., a Delaware corporation
("RCAL"), together with RCAL's wholly-owned subsidiary, RIND Cans, Inc., a
Delaware corporation ("RIND")) and Seller's interests in RIB and SVE and
the equity securities of Latasa held by RILA, all on the terms and
conditions set forth in this Agreement; and
WHEREAS, concurrently with the closing of the transactions
contemplated hereby, if Ball elects to issue Ball Shares to Seller pursuant
to the terms of this Agreement, Ball and Seller will enter into a
stockholder's agreement, substantially in the form of Exhibit A (the
"Stockholder's Agreement").
NOW, THEREFORE, in consideration of the mutual agreements and
the representations and warranties contained herein and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1 Purchase and Sale of Assets. Subject to the terms
and conditions of this Agreement, at the closing of the transactions
contemplated by this Agreement (the "Closing"), Seller shall sell,
transfer, convey, assign and deliver, or cause to be sold, transferred,
conveyed, assigned and delivered, to Buyer, Ball or their Designees, as
provided below, and Buyer, Ball or their Designees shall purchase, acquire
and accept from Seller and its majority-owned subsidiaries, either directly
or indirectly through the acquisition of all of Seller's interests in LAR
and RCAL, all assets, rights and interests in assets, other than the
Excluded Assets, which are held or owned by Seller or its majority-owned
subsidiaries as of the Closing and which are used or held for use
exclusively or primarily in the conduct of the Business, including, without
limitation, the following (collectively, the "Business Assets"):
(a) Real Property: The owned real properties described in
Annex 1.1(a), together with the plants, buildings, fixtures and
improvements thereon and all tenements, hereditaments and appurtenances
thereto (the "Owned Real Property"), as well as Seller's leasehold
interests (or those of any Affiliate of Seller)
3
as lessee under the real
property leases described in Annex 1.1(a) (the "Real Property Leases" and
the property covered thereby, together with Seller's (or such Affiliate's)
interests in all plants, buildings, fixtures and improvements thereon, the
"Leased Premises"). The Owned Real Property and the Leased Premises
together are sometimes referred to herein as the "Business Locations."
(b) Personal Property Other Than Inventory: The
furniture, fixtures, machinery, equipment, equipment subassemblies,
furnishings, vehicles, tools, dies, jigs, printing plates, physical
embodiments of label films and color standards, service, spare and
replacement parts, stores, packaging materials, pallets, slip sheets and
top frames, office and other supplies and other tangible personal property
(other than Inventory) that is either (i) located at the Business
Locations, (ii) reflected on the most recent balance sheet included in the
Audited Financial Statements (other than Excluded Assets and any assets
sold or disposed of in the ordinary course of business and consistent with
the terms of this Agreement since the date of such balance sheet) or (iii)
otherwise used or held for use exclusively or primarily in the Business,
whether or not such property is reflected as an asset on the books and
records of Seller (the "Equipment").
(c) Intellectual Property Rights: Except as otherwise
specifically identified as excluded in Annex 1.1(c), (i) the Patents,
Trademarks, and Copyrights listed or described in Annex 1.1(c), (ii)
Technology, and (iii) all agreements (whether or not with related parties)
under which Seller or its majority-owned subsidiaries have granted, or have
been granted, the right to use Technology or the Patents, Trademarks and
Copyrights listed or described in Annex 1.1(c) (the Business Assets
described in this Section 1.1(c), collectively, the "Intellectual Property
Rights").
(d) Business Information: All books and records (i)
customarily located at the Business Locations (other than those exclusively
related to Excluded Assets or Excluded Liabilities) or (ii) customarily
located at locations other than the Business Locations which are used
exclusively or primarily in the Business, including, without limitation,
files, computer disks and tapes, telephone directories, invoices, credit
and sales records, personnel records (subject to applicable law), customer
lists (including addresses and phone numbers), supplier lists, manuals
(including policy manuals), drawings, accounting books and records,
detailed fixed- asset ledgers and records, sales literature, current price
lists and discounts, promotional signs and literature, marketing and sales
programs, manufacturing and quality control records and procedures and
compliance policies and procedures; and access
4
to and, if requested by Ball
or Buyer, copies of such other books and records to the extent relating to
the Business or Business Assets or Assumed Liabilities which are
customarily located at locations other than the Business Locations;
provided that Seller may retain and provide Buyer with copies of any
records necessary for Seller's ongoing business or tax purposes or for
performance of obligations retained by Seller hereunder (collectively,
"Business Information").
(e) Governmental Permits: To the extent assignable, (i)
the Permits and the Environmental Permits that relate exclusively to the
Business, as more particularly described in Annex 1.1(e) and (ii) any
Business-related portions of any Permits and Environmental Permits that are
used in the Business but do not relate exclusively to the Business (the
Permits described in this clause (ii), the "NonExclusive Permits").
(f) Leases and Contracts: The rights of Seller and its
Affiliates in, to and under (i) all contracts, leases of personal property,
agreements, licenses, commitments and warranties related exclusively or
primarily to the Business, (ii) sales orders, purchase orders and
quotations and bids generated by the Business, and (iii) all material
agreements to which Seller or any of its Affiliates is a party, and which
relate to the ownership, management, governance and financing of, as well
as technical assistance to, Latasa and its subsidiaries (the "Latasa
Agreements") and the contracts and agreements relating to ownership,
management and governance of, and provision of know-how and technical
assistance to SVE.
(g) Inventory: The inventories of raw materials,
work-in-process and finished products carried on the books of the Business
(including any such inventories that have been written off or written down
on the books of the Business), located at the Business Locations or related
exclusively or primarily to the Business (excluding the inventories
described in Section 1.1(m), the "Inventory").
(h) Accounts Receivable and Prepaid Expenses: All notes
and accounts receivable on the books of or generated by the Business as of
the Closing (the "Accounts Receivable"), including, without limitation, all
trade notes and trade accounts receivable and receivables from employees of
Seller who are Transferred Employees, and all deposits and prepaid rents,
license fees and other expenses to the extent related to the Business or
the Business Assets.
(i) Computer Software: All computer software related
exclusively to the Business, including all documentation and source codes
with
5
respect to such software (to the extent Seller or
any Affiliate of Seller possesses such documents or source codes) and, to
the extent they relate exclusively to the Business and they are legally
assignable or transferable by Seller, licenses and leases of software.
(j) Non-Exclusive Contracts: Any Business-related
portions of any contract, claim, lease, sales/purchase order, quotation,
bid, agreement, license or contractual right to which Seller or any
Affiliate of Seller is a party with respect to operations or activities
beyond those exclusively or primarily related to the Business (each, a
"Non-Exclusive Contract"), to the extent that such portions are legally
assignable or transferable to Buyer.
(k) Single Location Plans: All assets of any Single
Location Plans that are transferred to, or assumed by, Buyer under Section
5.4.
(l) Petty Cash: All petty cash on hand at the Business
Locations.
(m) Consigned Inventories: Seller's rights to inventories
of supplies and raw materials at the Business Locations consigned as of the
Closing by (x) third parties or (y) other businesses of Seller or any
Affiliate of Seller that act as suppliers to the Business (to the extent
such inventories have not been included on the Closing Statement); provided
that (i) Seller is not hereby conveying to Buyer an ownership interest in
such inventories, (ii) such inventories shall not be deemed a part of the
Inventory for purposes of Section 1.5 or otherwise and (iii) the rights
conveyed under clause (y) are only Seller's rights as owner of the Business
and not as owner of such business acting as supplier.
(n) Restrictions on Competition and Confidentiality: To
the extent assignable, all rights of Seller or any Affiliate of Seller to
enforce restrictions on competition and obligations regarding
confidentiality or limited use of information imposed on third parties and
present and former officers, executives and employees of Seller and its
Affiliates to the extent such restrictions and obligations relate to the
Business; provided, however, that Seller shall retain the right to seek
relief on behalf of itself and its majority-owned subsidiaries for any
damages suffered by any of them as a result of any breach of any such
restriction or obligation.
6
(o) Claims: All claims, causes of action, choses in
action, rights of recovery and rights of setoff of any kind (including,
without limitation, warranty rights against suppliers to the Business),
known or unknown, liquidated or unliquidated, to the extent they relate to
or arise out of the Business Assets, or the condition of the Business
Assets, existing at the Closing Date or the conduct of the Business prior
to the Closing; provided that any of the foregoing that arise from acts,
omissions or conditions that gave rise, or shall give rise, to an Excluded
Liability shall, to the extent arising from the Excluded Liability and
Seller discharges such Excluded Liability, accrue to the benefit of Seller.
(p) Goodwill and Associated Assets: Any and all goodwill,
customer lists, going concern value and similar assets related exclusively
or primarily to, or used exclusively or primarily in, the Business.
(q) Other Assets: Such other assets as are specifically
identified in Annex 1.1(q).
In addition to the Business Assets, subject to the terms and
conditions of this Agreement, at Closing, Seller and its Affiliates shall
sell, transfer, convey, assign and deliver, or cause to be sold,
transferred, conveyed, assigned and delivered, to Buyer, Ball or its
Designees, and Buyer, Ball or its Designees shall purchase, acquire and
accept from Seller and its Affiliates, Seller's and its Affiliates' rights,
title and interest in (x) any equity securities of or other equity
interests in SVE and RIB and (y) the equity securities of Latasa held by
RILA, all as listed in Annex 1.1(aa). Such equity securities, together with
the equity securities of LAR and RCAL being transferred to Ball, Buyer or
their Designees pursuant hereto, are sometimes referred to herein as the
"Shares."
The parties agree that the Business Assets and Shares shall be
purchased by Ball, Buyer or their Designees as directed by Buyer in writing
at least five days prior to the Closing.
Section 1.2 Excluded Assets. Notwithstanding the provisions of
Section 1.1, the following properties, assets and rights used in, or
related to, Seller's operation of the Business are excluded from the
Business Assets (the "Excluded Assets"):
(a) The name "Reynolds" and all variations thereof;
7
(b) Except as provided in Section 1.1(h) and (l), cash,
financial instruments and marketable securities on hand and in banks, cash
deposits with respect to workers' compensation and insurance, cash
equivalents, and investments;
(c) Accounts Receivable owed to Seller from any of its
employees who are not Transferred Employees;
(d) Aluminum can sheet inventory that is, consistent with
past practice and the terms of existing supply agreements, carried on the
books of Seller's Mill Products Division and not included on the Closing
Statement, whether or not located at a Business Location; provided that
Buyer will receive Seller's rights as a consignee of any such inventory
that is located at a Business Location as if Seller's Mill Products
Division were a third party supplier to the Business;
(e) Seller's checkbooks and canceled checks;
(f) Subject to Sections 1.1(j) and 1.7(e), all
Non-Exclusive Contracts and any agreements specifically identified in Annex
1.2(f) (the "Retained Contracts");
(g) All claims and litigation against third parties (and
benefits to the extent they arise therefrom) to the extent that such claims
and litigation relate in whole or in part to Excluded Liabilities or
Excluded Assets or are set forth in Annex 1.2(g);
(h) Seller's insurance policies and rights in connection
therewith;
(i) Rights arising from any refunds due with respect to
insurance premium payments and deposits;
(j) Except for any assets specifically enumerated in
Annex 1.2(j), any and all tangible assets located at Seller's corporate
headquarters at 6601 West Broad Street in Henrico County, Virginia;
(k) All of Seller's right, title and interest in, to and
under trademarks and trademark rights, trade names and trade name rights,
service marks and service mark rights, service names and service name
rights, brand names,
8
copyright rights, trade dress, business and product
names, logos, slogans, and all pending applications for and registrations
of trademarks and service marks, which (i) are neither used exclusively in
the Business nor applicable exclusively to the Business or (ii) include one
or more of the following marks: the trademarks REYNOLDS; Knight, Horse and
Dragon Design or the names "Reynolds," "Reynolds Metals Company," "Reynolds
Aluminum" or any variation thereof or any trademark containing REYNOLDS,
REY, REYNO, or a Knight Horse and Dragon design (the trademarks described
in this clause (ii) are referred to herein as the "Reynolds Marks");
(l) Except for assets in Single Location Plans assumed by
Buyer under Section 5.4, all assets held in or for the Plans;
(m) Any assets identified in Annex 1.2(m);
(n) Books and records exclusively relating to Excluded
Assets and Excluded Liabilities;
(o) Any Tax refunds, credits or rights arising therefrom,
for all periods or portions of periods ending before the Closing Date;
provided that none of Ball, Buyer or their Affiliates has incurred or will
incur an increased Tax burden as a result of such refund;
(p) Except for those assets identified in Annex 1.1(q),
Seller's former Houston, Texas, and Fulton, New York, can plants;
(q) Seller's or its Affiliates' interests in, and
contracts relating to, UAC;
(r) Seller's rights under this Agreement and under any
agreement, instrument or document delivered in connection herewith;
(s) The portion of the Owned Real Property located in
Torrance, California which constitutes Seller's extrusion plant as more
specifically described in Annex 1.2(s) subject to minor adjustment of the
boundary lines thereof in accordance with Section 1.10; and
(t) Except as specifically provided in Section 1.1 (a),
(e), (i), and (o), and subject to Section 1.7(e) and the data processing
services agreement
9
substantially in the form of Exhibit 1.2(t) (the "Data
Processing Services Agreement"), any owned or leased premises, Permits,
Environmental Permits, computer software, claims, causes of action, choses
in action, rights of recovery and rights of setoff.
Section 1.3 Assumption of Liabilities.
(a) On the Closing Date, except as otherwise specifically
provided in this Agreement or in any agreement, instrument or document
delivered in connection herewith, subject to the terms and conditions of
this Agreement, Buyer shall assume the following liabilities (the "Assumed
Liabilities") and no others:
(i) Liabilities relating to Transferred Employees
and employee benefits to the extent set forth in Sections 5.4, 5.5
and 5.6, including, without limitation, all liabilities and
obligations related to the Single Location Plans assumed by Buyer
under Section 5.4 and under Collective Bargaining Agreements in
accordance with Sections 5.4 and 5.5;
(ii) All trade accounts payable of the Business
(including trade payables to other divisions of Seller for aluminum
can sheet) to the extent set forth on the Closing Statement and other
current liabilities of the Business to the extent set forth on the
Closing Statement;
(iii) All liabilities and obligations of Seller and
its majority-owned subsidiaries to deliver goods or services to
customers of the Business arising from orders placed in the normal
course of business of the Business which are assigned to Buyer
pursuant hereto;
(iv) All obligations of Seller or any of its
majority-owned subsidiaries to be performed from and after the
Closing Date under any contract, lease, commitment, license, permit,
approval, authorization or other agreement or arrangement
constituting part of the Business Assets to the extent assigned to
Buyer pursuant hereto;
10
(v) Subject to Ball's and Buyer's right to
indemnification from Seller set forth in Article VI, liabilities and
obligations under Environmental Laws with respect to Environmental
Conditions;
(vi) All liabilities that constitute matters of
record relating to Seller's ownership of the Owned Real Property to
the extent specifically disclosed in Section 4.4(b) of the Disclosure
Schedule and subject to the limitations set forth therein or accepted
by Ball or Buyer under Section 4.4; and
(vii) All other liabilities to the extent set forth in
or specifically reserved against on the Closing Statement or to the
extent specifically described in Annex 1.3(a)(vii).
(b) Except as expressly provided in Section 1.3(a), Buyer
will not assume or be liable for the following liabilities and obligations
(the "Excluded Liabilities"):
(i) Except as otherwise provided in this Agreement
(including, without limitation, in Section 1.6, which shall control
to the extent of any conflict with this Section 1.3(b)), (x) any
federal, state, local or foreign taxes including, without limitation,
any net income, alternative or add-on minimum tax, gross income,
gross receipts, excise, sales, use, ad valorem, franchise, capital,
paid-up capital, profits, greenmail, license, withholding, payroll,
environmental, windfall profits tax or other tax or any custom or
duty, or any other charges, fees, levies, penalties or other
assessments imposed by any Taxing Authority, including, in each case,
any interest, penalties or additions thereto ("Taxes"), that are
attributable to any period or portion thereof ending on or before the
Closing Date imposed on Seller or its Affiliates or related to the
Business or the Shares and (y) any liability for Taxes of any other
person under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise;
(ii) All liabilities and obligations relating to any
employee or any employee benefits which are not to be assumed by
Buyer under Section 1.3(a)(i) or Sections 5.4, 5.5 and 5.6;
11
(iii) All liabilities or obligations to the extent
relating to the acquisition, ownership or use of any of the Excluded
Assets (including the Retained Contracts);
(iv) Any liabilities listed in Annex 1.3(b)(iv);
(v) All liabilities or obligations arising under
Environmental Laws other than those expressly assumed by Buyer
pursuant to Section 1.3(a)(v), including, without limitation, all
liabilities or obligations arising under Environmental Laws in
connection with facts, events, conditions, actions or omissions
existing or occurring before Closing at any location other than the
Business Locations ("Offsite Obligations");
(vi) Except as otherwise provided in Section
1.3(a)(vii), any liability or claim for injury to person or property
or warranty claim which arises out of the operation of the Business
or the sale of any product before the Closing Date; and
(vii) Any other liabilities, debts, commitments or
obligations, known or unknown, contingent or otherwise, of Seller or
its Affiliates other than those specified in Section 1.3(a).
Section 1.4 Purchase Price. Subject to the terms and conditions
of this Agreement, in reliance on the representations, warranties and
agreements contained herein, and in consideration of the sale, assignment,
transfer and delivery of the Business Assets and the Shares referred to in
Section 1.1 and Seller's other obligations set forth herein (including in
Section 5.8), Ball and Buyer agree to pay or cause to be paid to Seller at
the Closing, and Seller agrees to accept the sum of $820 million (the
"Purchase Price") payable as follows: (i) shares of common stock, no par
value, of Ball having an aggregate Designated Value, determined as set
forth below, of up to $100 million (the "Ball Shares") plus (ii) an amount
in cash equal to the Purchase Price minus the aggregate Designated Value of
the Ball Shares (the "Cash Price"), plus or minus the adjustment set forth
in Section 1.5. Not later than the close of business on the fourth day
prior to the Closing Date, Ball shall notify Seller whether it intends to
pay a portion of the Purchase Price in Ball Shares and the number of Ball
Shares and the per Share and aggregate Designated Value of the Ball Shares
to be so issued. If Ball elects to pay a portion of the Purchase Price in
Ball
12
Shares, the shares so issued shall have an aggregate Designated Value
of no less than $25 million and no more than $100 million. The per Share
"Designated Value" of Ball Shares shall mean the average of the daily
volume weighted average trading price of Ball Shares as reported in the
Bloomberg Financial Markets for the 20 consecutive trading days ending five
days prior to the Closing Date; provided that in no event shall the per
Share Designated Value of Ball Shares used to determine the number of Ball
Shares to be issued in payment of a portion of the Purchase Price exceed
$42 or be less than $25.25.
Section 1.5 Cash Purchase Price Adjustment.
(a) As soon as practicable, but in no event later than 60
days following the Closing Date, Seller shall prepare and deliver to Buyer
a working capital statement of the Business as of 12:01 a.m. on the Closing
Date (the "Closing Statement"), setting forth the current assets included
in the Business Assets less the current liabilities included in the Assumed
Liabilities (such difference being referred to herein as the "Working
Capital") in conformity with United States Generally Accepted Accounting
Principles ("GAAP") determined on a basis consistent with the balance sheet
included in the Audited Financial Statements (the "Audited Balance Sheet")
except that a current liability of (i) $250,000 shall be recorded as a
reserve on the Closing Statement for title insurance payments and (ii)
$250,000 shall be recorded as a reserve for SUB liability in accordance
with Section 5.4(c). For greater certainty, the parties acknowledge and
agree that both the Closing Statement and the Audited Balance Sheet exclude
spare or replacement parts from current assets.
(b) After receipt of the Closing Statement, Buyer shall
have 30 days to review it. Buyer and its authorized representatives shall
have reasonable access to all relevant books and records and employees of
Seller and Seller's accountants to the extent required to complete their
review of the Closing Statement, including, without limitation, the
accountants' work papers used in preparation thereof. Unless Buyer delivers
written notice to Seller on or prior to the 30th day after receipt of the
Closing Statement specifying in reasonable detail its objections to the
Closing Statement on the grounds that the Closing Statement was not
prepared in accordance with GAAP, consistently applied with the Audited
Balance Sheet or with respect to any arithmetic errors, the parties shall
be deemed to have accepted and agreed to the Closing Statement. If Buyer so
notifies Seller of such an objection to the Closing Statement, the parties
shall within 30 days following the date of such notice (the "Resolution
Period") attempt to resolve their differences. Any resolution by them as to
any disputed amount shall be final, binding, conclusive and
13
nonappealable, provided, however, that agreement by Seller and Buyer as to
the Final Closing Statement or a determination pursuant to Section 1.5(c)
shall not prevent either party from making any claims under Article VI hereof.
The term "Final Closing Statement" shall mean the definitive Closing Statement
agreed to by Seller and Buyer in accordance with this Section 1.5(b) or the
definitive Closing Statement resulting from the determination made by the
Neutral Auditor in accordance with Section 1.5(c) (in addition to those
items theretofore agreed to by Seller and Buyer).
(c) If at the conclusion of the Resolution Period, the
parties have not resolved the disputes, then all amounts remaining in
dispute shall, at the election of either party, be submitted to an auditor
who shall be selected by Ball and Seller (the "Neutral Auditor"). The
Neutral Auditor shall be engaged no later than three business days after an
election by either party to submit its objections to the Neutral Auditor,
and each party agrees to execute, if requested by the Neutral Auditor, a
reasonable engagement letter. The Neutral Auditor shall be a nationally
recognized certified public accounting firm that is not rendering (and
during the preceding two-year period has not rendered) audit services to
either Seller or Ball in North America. If the parties are unable to agree
on such Neutral Auditor, then the respective accounting firms of each of
Ball and Seller shall choose the Neutral Auditor. All fees and expenses of
the Neutral Auditor shall be borne equally by Seller and Buyer. The Neutral
Auditor shall act as an arbitrator to determine, based solely on the
presentations by Seller and Buyer, and not by independent review, only
those issues still in dispute. The Neutral Auditor's determination shall be
made within 30 days of its engagement or as soon thereafter as possible,
shall be set forth in a written statement delivered to Seller and Buyer and
shall be final, binding, conclusive and nonappealable.
(d) All Inventory reflected on the Closing Statement
shall be based upon a physical count of the Inventory taken by Seller (with
Buyer and its independent auditors being permitted to observe such count
and take additional test counts as Buyer reasonably deems appropriate) as
of 12:01 a.m. on the Closing Date. Such physical inventory shall be
conducted in accordance with procedures to be mutually agreed and shall be
taken immediately prior to the Closing Date. The physical inventory shall
include all products of Seller and list the type and quantity of the
inventory as of the date the physical count was taken. For purposes of the
Closing Statement, the Inventory shall include only finished goods,
work-in-process and raw materials (which are either currently used in
production of products or are products currently offered for sale by
Seller). In connection with the physical
14
inventory, no later than 90 days
after the Closing Date, Buyer shall prepare, with assistance from Seller, a
listing of Inventory deemed to be potentially obsolete and the book value
thereof as reflected on the Closing Statement (the "Inventory Carrying
Value"). If any Inventory so identified is not sold by Buyer within twelve
months after the Closing Date, then Seller shall promptly pay to Buyer an
amount equal to the Inventory Carrying Value of such Inventory less the
scrap value thereof, provided that such payment, in the aggregate, shall
not exceed $1,000,000. Notwithstanding any other provision hereof to the
contrary, no other reserve for obsolete and slow-moving inventory shall be
included in the Closing Statement.
(e) The Purchase Price shall be (i) increased
dollar-for-dollar to the extent the Working Capital as reflected on the
Final Closing Statement is greater than $78 million and (ii) decreased
dollar-for-dollar to the extent the Working Capital as reflected on the
Final Closing Statement is less than $78 million. The amount of any such
change in the Purchase Price pursuant to this Section 1.5(e) shall be paid
by Buyer to Seller, in the case of an increase, or by Seller to Buyer, in
the case of a decrease, in each case in cash plus interest on such amount
from the Closing Date through the date of payment at the Prime Rate within
five business days after the Final Closing Statement is agreed to by Seller
and Buyer or is determined by the Neutral Auditor. The "Prime Rate" means
the prime lending rate as announced by First Chicago-NBD, or its successor,
as in effect on the Closing Date.
Section 1.6 Adjustment for Periodic Items.
(a) Any sales, transfer, stamp or use Tax or fee
applicable to the sale of the Business Assets or Shares to Buyer, Ball or
their Designees pursuant to this Agreement shall be borne as follows. Buyer
shall bear the first $150,000 of the aggregate of such Taxes and fees and
the remainder of such Taxes and fees shall be borne equally by Buyer and
Seller. Any such Taxes or fees applicable to the sale of the Business
Assets pursuant to this Agreement shall initially be paid by the party
legally liable under the laws applicable to each taxing jurisdiction, and
the parties shall from time to time remit payments to one another to effect
the sharing arrangements provided in the first sentence of this Section
1.6(a). Under no circumstances shall this article be construed to include,
nor shall Ball, Buyer or their Affiliates be liable for, any income,
franchise, gross income, gross receipts or excise Tax or any other similar
liability of Seller related to the sale of the Business Assets. Buyer shall
provide Seller with resale exemption certificates or similar documents, as
appropriate. Buyer and Seller shall cooperate in using reasonable efforts
of legal means to
15
minimize, to the extent permitted by law, the aggregate amount of Taxes,
fees and other charges imposed on the transactions contemplated in this
Agreement.
(b) On the Closing Date or as promptly thereafter as
practicable, the parties shall adjust the other annualized or periodic
items related to the Business (to the extent not reserved or accrued for in
the Final Closing Statement) as of the Closing Date, with Seller
responsible for matters up to and including the Closing Date and Buyer
responsible for matters from and after the Closing Date. Such adjustable
items shall include, without limitation, electric, gas, telephone and
utility charges of the operations of Seller related to the Business
Locations, either paid or accrued, and amounts paid under leases and loans;
provided, however, that nothing in this Section 1.6 shall increase the
liabilities and obligations of Seller assumed by Buyer pursuant to this
Agreement. Such adjustable items shall also include customer volume rebates
and vendor volume rebates and incentives, which will be attributed to
Seller to the extent such rebates and incentives relate to items purchased
prior to the Closing and to Buyer to the extent such rebates and incentives
relate to items purchased on or after the Closing.
Section 1.7 Closing.
(a) The Closing will take place at the offices of
Skadden, Arps, Slate, Meagher & Flom (Illinois), 333 West Wacker Drive,
Chicago, Illinois 60606, within seven days after all conditions set forth
in Articles VII and VIII (other than those requiring only performance by
the parties at Closing) have been satisfied or waived or such other time
and place as the parties may agree upon but in no event earlier than 7 days
after the expiration or termination of the waiting period under the HSR Act
(the "Closing Date") and shall be effective as of 12:01 a.m. on the Closing
Date.
(b) At the Closing, Seller will deliver to Ball, Buyer or
their Designees (i) if any Ball Shares are issued pursuant hereto, an
executed copy of the Stockholder's Agreement, (ii) all documents of title
necessary to transfer ownership to Buyer of the Business Assets other than
the Real Property, including a duly executed bill of sale substantially in
the form of Exhibit 1.7(b)(ii) (the "Bill of Sale"), (iii) executed copies
of the consents referred to in Section 2.6 hereof, (iv) certificates
representing the Shares, accompanied by appropriate stock powers or other
transfer instruments duly executed in blank or such other evidence of
ownership and instruments of transfer as are appropriate in the applicable
jurisdiction, (v) with respect to Patents, Trademarks and Copyrights
included in the Business Assets (the "Filed
16
Intellectual Property"), (A)
one "global assignment" of the Filed Intellectual Property containing a
schedule of all applications therefor and registrations thereof and (B)
individual assignments of Filed Intellectual Property, applications
therefor and registrations thereof, in recordable form for each
jurisdiction in which such Filed Intellectual Property is subsisting, (vi)
all assignments of Permits and Environmental Permits to be acquired by
Buyer pursuant hereto, (vii) duly executed and acknowledged special
warranty deeds conveying title to the Owned Real Property, subject only to
the Permitted Exceptions, (viii) any documents required of Seller by the
title company to issue the title insurance policies and endorsements in
accordance with the provisions of Section 4.4(b) of this Agreement, (ix)
duly executed assignment and assumption agreements with respect to the Real
Property Leases substantially in the form of Exhibit 1.7(b)(ix) (the
"Assignment and Assumption of Leases"), (x) if subdivision of the Torrance,
California, parcel of Owned Real Property has not been completed prior to
the Closing, a lease and license of the can plant portion of such parcel as
provided in Section 1.10, (xi) all such other deeds, consents,
endorsements, assignments and other instruments as are necessary to vest in
Buyer, Ball or their Designees title to the Business Assets and the Shares
to be transferred to Buyer, Ball or their Designees and (xii) all other
previously undelivered documents required to be delivered by Seller to
Ball, Buyer or their Designees at or prior to the Closing in connection
with the transactions contemplated by this Agreement.
(c) At the Closing, Ball and Buyer will deliver to Seller
(i) cash in the amount specified in Section 1.4 by wire transfer of
immediately available funds to an account designated in writing by Seller,
(ii) a duly executed assignment and assumption agreement substantially in
the form of Exhibit 1.7(c)(ii) (the "Assignment and Assumption Agreement")
for all Assumed Liabilities, (iii) a duly executed Assignment and
Assumption of Leases for the Real Property Leases, (iv) if any Ball Shares
are issued pursuant hereto, a duly executed Stockholder's Agreement; (v) if
any Ball Shares are issued pursuant hereto, certificates representing the
Ball Shares in accordance with Section 1.4, such certificates bearing a
legend to the effect set forth in the Stockholder's Agreement, (vi) if
requested by Seller, the agreement regarding performance of technical
services with respect to UAC in substantially the form of Exhibit
1.7(c)(iii) (the "Agreement Regarding Performance of Technical Services")
and (vi) all previously undelivered documents required to be delivered by
Ball or Buyer to Seller at or prior to the Closing.
(d) At the Closing, Seller, Ball and Buyer shall, or
shall cause their respective Affiliates to, execute and deliver (i) the
Data Processing Services Agreement, (ii) the transitional trademark license
agreement in substantially the form
17
of Exhibit 1.7(d)(ii) (the
"Transitional Trademark License Agreement"), (iii) the supply program
agreement in substantially the form of Exhibit 1.7(d)(iii) (the "Supply
Program Agreement"), (iv) an incentive loan agreement in substantially the
form of Exhibit 1.7(d)(iv) (the "Incentive Loan Agreement"), (v) the
transition service agreement in substantially the form of Exhibit 1.7(d)(v)
(the "Transition Services Agreement"), (vi) the payroll services agreement
in substantially the form of Exhibit 1.7(d)(vi) (the "Payroll Services
Agreement"), (vii) [intentionally omitted], (viii) the trademark license
agreement in substantially the form of Exhibit 1.7(d)(viii) (the "Trademark
License Agreement"), (ix) the cross-license agreement in substantially the
form of Exhibit 1.7(d)(ix)(the "Cross-License Agreement"), (x) the
transportation services agreement in substantially the form of Exhibit
1.7(d)(x)(the "Transportation Services Agreement") and (xi) the human
resources services agreement in substantially the form of Exhibit
1.7(d)(xi)(the "Human Resources Services Agreement") and, together with the
Stockholder's Agreement (if executed), the Data Processing Services
Agreement, the Transitional Trademark License Agreement, the Transition
Services Agreement, the Payroll Services Agreement, the Agreement Regarding
Performance of Technical Services (if executed), the Trademark License
Agreement, the Cross-License Agreement, and the Supply Program Agreement,
the "Ancillary Agreements").
(e) To the extent that the sale, conveyance, transfer or
assignment of any agreement, lease, contract or other document or
instrument (including, but not limited to, the Business related portion of
any Non-Exclusive Contract or Non-Exclusive Permit) requires the consent of
any person other than Buyer, Ball or Seller, this Agreement shall not
constitute an agreement to effect such sale, conveyance, transfer or
assignment if such action would constitute a breach thereof unless and
until such consent or waiver of such person has been obtained; provided
that the foregoing shall not limit or affect Seller's representations and
warranties in this Agreement or the condition set forth in Section 8.4
hereof. To the extent that any such consent or waiver is not obtained by
Seller, Seller shall (i) use all reasonable efforts to provide or cause to
be provided to Buyer (or Ball, as the case may be) the benefits of any such
agreement, lease, contract or other document or instrument for which
consent or waiver has not been obtained, (ii) cooperate in any arrangement,
reasonable and lawful as to both Seller and Ball, Buyer or their Designees
designed to provide such benefits to Buyer, Ball or their Designees (in the
case of Business Assets and Shares transferred to such party pursuant to
Section 1.1) after the Closing and (iii) enforce for the account of Buyer,
Ball or their Designees (in the case of Business Assets and Shares
transferred to such party pursuant to Section 1.1 (at Ball's or Buyer's
expense, as the case may be)), any rights of Seller
18
arising from such
agreement, lease, contract or other document or instrument for which
consent or waiver has not been obtained against the other party, including,
without limitation, the right to elect to terminate in accordance with the
terms thereof on the advice of Buyer. Subject to Section 6.4(b), Seller
shall hold Ball and Buyer harmless from any Loss suffered by Ball or Buyer
as a result of any failure of Seller to obtain such consent or waiver.
Buyer, Ball or their Designees (in the case of Business Assets and Shares
transferred to such party pursuant to Section 1.1) shall use all reasonable
efforts to perform the obligations of Seller arising under such agreement,
lease, contract or other document or instrument for which consent or waiver
has not been obtained, to the extent that by reason of the transactions
consummated pursuant to this Agreement, Buyer, Ball or their Designees (in
the case of Business Assets and Shares transferred to such party pursuant
to Section 1.1) has control over the resources necessary to perform such
obligations.
Section 1.8 Further Assurances. After the Closing, each party
shall, from time to time, at the request of the other party and without
further cost or expense to the other party, execute and deliver such other
instruments of conveyance, assignment, transfer and assumption and take
such other actions as the other party may reasonably request, to consummate
more effectively the transactions contemplated hereby and to vest in Ball,
Buyer and their Designees title to the Business Assets and the Shares as
contemplated by this Agreement, or to cause Buyer to assume the Assumed
Liabilities, as the case may be. As to any of such licenses, registrations
and permits which are transferable to Ball, Buyer or their Designees,
Seller shall cooperate with Ball, Buyer or their Designees, to effect the
transfer of such licenses, registrations and permits. Notwithstanding the
foregoing, no party shall be required under this Section 1.8 to make any
payment or to incur any economic burden other than customary costs and
expenses arising from the performance of such party's obligations under
this Section 1.8.
Section 1.9 Allocation of Purchase Price. The Purchase Price
(plus Assumed Liabilities to the extent properly taken into account under
section 1060 of the Code) shall be allocated among the Business Assets, the
Shares and the covenant not to compete in Section 5.8 hereof in accordance
with Exhibit 1.9. Buyer, Ball and Seller shall use their best efforts to
agree, as soon as practical after the Closing, but in no event later than
30 days after the determination of the Cash Purchase Price Adjustment in
Section 1.5, on the allocation of the Purchase Price, including any
adjustment pursuant to Section 1.5 (or such time as is mutually agreed by
Seller and Buyer), among the Business Assets, the Shares, and the covenant
not to compete, and prepare and attach a completed Exhibit 1.9 accordingly.
Each of Buyer and Seller
19
shall prepare and timely file Internal Revenue
Service Form 8594, reasonably cooperate with the other party in the
preparation of such forms and furnish the other party with copies of such
forms prepared in draft form within a reasonable period before the filing
due date. Any disputes resulting from disagreement upon the allocation of
the Purchase Price shall be resolved by the Neutral Auditor in accordance
with procedures outlined in Section 1.5(c). Buyer, Ball and Seller agree to
(i) be bound by the allocation in Exhibit 1.9, (ii) act in accordance with
such allocation in filing of all Tax Returns (including, without
limitation, filing Form 8594 with its federal income Tax Return for the
year that includes the Closing Date) and in the course of any Tax audit,
Tax review, or Tax litigation relating thereto and (iii) take no position,
and cause all Affiliates not to take a position, that is inconsistent with
such allocation for federal or state income Tax purposes.
Section 1.10 Torrance, California Site.
(a) Seller's can plant in the City of Torrance,
California is currently a part of an unsubdivided parcel of real estate
(the "Parcel") on which Seller's extrusion plant (which is not part of the
Business Assets) (the "Extrusion Land") is also located. Seller, at its
sole cost and expense, shall use its best efforts to subdivide the Parcel
such that the can plant portion of the site, together with the improvements
located thereon depicted as such on Exhibit 1.10(a) (the "Plant Land"), is
a separate legally subdivided lot (the "Subdivision"). Seller anticipates
that such Subdivision may not be completed until after the Closing Date.
Accordingly, if the Subdivision has not been completed by the Closing Date,
Seller and Buyer shall, at the Closing Date, enter into a lease and license
substantially in the form of Exhibit 1.10(b) (the "Torrance Lease"). Upon
completion of the Subdivision process, Seller shall deliver to Buyer, and
Buyer shall accept, a special warranty deed to the Plant Land in compliance
with the title and survey requirements set forth in Section 4.4. Seller
will pay any and all costs associated with the Subdivision, including,
without limitation, costs associated with satisfying the conditions of the
Subdivision, the separation of utilities and new utility hook-ups, and
required site modifications such as drainage, fire protection and access.
Buyer shall cooperate with Seller at no out-of-pocket cost to Buyer or Ball
(other than such internal and administrative costs as appearing at
hearings, providing information and executing documents, such as any
declaration of easements, covenants and restrictions required in connection
with such Subdivision and Buyer's and Ball's attorneys' fees). Seller shall
provide to Buyer copies of all notices and material correspondence between
the applicable Authority and Seller regarding the Subdivision, as well as
copies of any
20
parcel maps or other documents submitted to such Authority.
Buyer and Ball may participate in any and all meetings and hearings with or
at the applicable Authority regarding the Subdivision. Seller shall consult
with Buyer prior to making official submissions to any Authority in
connection with the Subdivision. In no event shall Seller execute any
documents which create, or agree with any Authority to impose, any
conditions, restrictions or easements which affect the Plant Land without
first obtaining Buyer's written approval, which approval shall not be
unreasonably withheld or delayed. If during the Subdivision process, the
applicable Authority requests changes to the description of the Plant Land
from that described on Exhibit 1.10(a) as a condition to approval of the
Subdivision, the parties shall work cooperatively and in good faith to
respond to such changes so as to maintain, to the greatest degree possible,
the business deal embodied in this Agreement and the related documents and
to provide each party the benefits contemplated herein; provided, that in
no event shall Seller modify the legal description of the Plant Land
without first obtaining the written approval of Buyer, which approval shall
not be unreasonably withheld or delayed.
(b) If the Subdivision is not completed and title to the
Plant Land in fee simple has not been transferred to Buyer on or before the
second anniversary of the Closing Date, then except to the extent that
Seller's failure to complete the Subdivision is directly attributable to
Buyer's act or failure to act as required under the Torrance Lease, Seller
will indemnify and hold harmless Buyer from all Losses arising: (i) from
Buyer's inability to operate the Plant Land in a manner reasonably
consistent with Seller's prior operation, where such inability is directly
attributable to Buyer's not holding title to the Plant Land in fee simple,
including all such Losses incurred after the Closing or (ii) from any bona
fide sale or mortgage, or attempt to sell or mortgage, the Leased Premises
(as defined in section 1.1 of the Torrance Lease) to an independent third
party, attributable to the "Differential." The "Differential" equals the
excess of the fair market value of a fee simple interest in the Plant Land
as if the Subdivision had occurred over the fair market value of the Leased
Premises as if the Subdivision had not occurred. Buyer will promptly notify
Seller of any inability to operate as described in clause (b)(i) above.
(c) Until the first to occur of (i) the fourth
anniversary of the Closing Date or (ii) the conveyance of the Plant Land to
Buyer, Seller will not sell, transfer or otherwise convey the Parcel to any
third party other than (w) to Buyer, (x) to an Affiliate of Seller, (y) in
connection with a taking by eminent domain or deed in lieu thereof or (z)
as reasonably required to effect the Subdivision and thereafter,
21
Seller may
only sell such property subject to the Torrance Lease and the right of
first refusal set forth below. If at any time after the fourth anniversary
of the Closing Date but before the conveyance of the Plant Land to Buyer,
Seller receives a bona fide offer from any Person to purchase the Parcel
subject to the Torrance Lease or any interest therein, which offer Seller
intends to accept, or Seller intends to execute a contract with respect to
such sale, Seller shall notify Buyer of the terms and provisions of such
offer or contract in reasonable detail and of the intention of Seller to
accept such offer or execute such contract. Buyer shall have the right
within thirty (30) days after such notice to accept the offer to purchase
the Parcel on the same terms and conditions (with appropriate reduction of
the purchase price for any part thereof allocated to the Plant Land, if
indeed any reduction is appropriate given the observation in Section
1.10(g)) and on the other terms and conditions specified in such offer or
contract, subject to the provisions of Section 1.10(f) below. If Buyer
shall not so exercise its right or shall reject the terms and conditions of
such offer or contract within such thirty (30) day period, Seller may then
sell the Parcel, subject to the Torrance Lease, to said third party
purchaser, provided that such sale is for the purchase price and on the
same terms and conditions set forth in the notification to Buyer. If for
any reason, however, such sale to said purchaser is not consummated within
12 months from the initial notification to Buyer, any subsequent sale shall
again be subject to this right of first refusal. Following any such sale to
a third party purchaser and the assumption by the third party purchaser of
all of the obligations of Seller under the Torrance Lease, Buyer will
thereafter look to the third party purchaser for performance of the
Torrance Lease, and Seller will thereafter have no further obligations with
respect to the Plant Land except for the indemnity obligations of Seller as
provided in this Agreement. If Buyer exercises its right of first refusal
under this Section 1.10(c) to purchase the Parcel, or its Option under
Section 1.10(e) to purchase the Parcel, upon the closing of such sale, the
Torrance Lease will terminate, and Seller will have no further obligations
with respect to the Plant Land or the Extrusion Land, except as set forth
in the purchase agreement for the Parcel and in this Agreement. Buyer's
right of first refusal hereunder will not apply to any conveyance described
in clauses (w) - (z) above. If Seller makes a conveyance pursuant to clause
(x), Seller will remain liable for all of its duties and obligations
hereunder, and Buyer may exercise its right of first refusal and its Option
vis-a-vis the Affiliate.
(d) Buyer's right of first refusal is personal to Buyer
but may be assigned by Buyer to Ball or a Designee of Buyer and, to the
extent so assigned,
22
the references in Section 1.10(c) to Buyer shall
include references to Ball or the Designee of Buyer, where appropriate.
(e) After the date which is three years and six months
after the Closing Date, and before the Plant Land has been conveyed to
Buyer, and provided that Seller's failure to complete the Subdivision is
not directly attributable to Buyer's act or failure to act as required
under the Torrance Lease, Buyer shall have the option to purchase (the
"Option") the Parcel at the fair market value of the Extrusion Land, as
determined by an independent M.A.I. appraiser chosen by the parties. In
estimating such fair market value, the appraiser will take into account
that the Parcel is not subdivided, is being sold "as-is" without
environmental indemnification of any kind pursuant to Section 1.10(f) but
shall ignore the effect of the Torrance Lease. The Option will be suspended
during the 12-month sale period described in Section 1.10(c) unless during
such period, (i) such sale is consummated, in which case the Option will
expire or (ii) such sale is terminated, in which case the Option will no
longer be suspended. At any time after the date which is three years and
five months after the Closing Date, and before the Plant Land has been
conveyed to Buyer, Buyer shall have the right to enter, or cause its
consultants to enter, upon the Extrusion Land to make physical inspections,
tests and surveys thereof, including environmental reports and audits,
soil, geology, boring, sampling and other tests, for the purpose of
determining whether Buyer will elect to exercise its Option. Buyer shall
indemnify Seller for any damage to the Extrusion Land and any liability for
personal injury or damage to other property of Seller or its tenants
directly caused by such inspection and testing and shall require its
consultants to leave the Extrusion Land in the same condition it was in
prior to such inspection and testing. Buyer shall provide Seller with
copies of the written results of all such tests and inspections but shall
otherwise keep the results of any such inspection or testing confidential
except to the extent that disclosure is required by law, judicial or
administrative process or, in the event Buyer elects to exercise its
Option, the results of such inspection and testing may be shared with the
appraiser (provided the appraiser also agrees to keep such results
confidential) to aid in its determination of fair market value of the
Extrusion Land.
(f) Any purchase of the Parcel by Buyer, whether pursuant
to its right of first refusal or the exercise of the Option, shall, as to
the Plant Land only, be governed by and in compliance with the terms of
this Agreement, including the title and survey requirements of Section 4.4
and the indemnities of Seller in Article VI. The purchase of the Parcel by
Buyer pursuant to the Option shall, as to the Extrusion Land, be "as-is"
without environmental or any other indemnities from
23
Seller, provided Seller
will deliver to Buyer a special warranty deed, and, at Buyer's expense, an
ALTA form owner's title policy (Form B-1992 with extended coverage insuring
over the general or standard exceptions) and, at Seller's expense, a survey
meeting the requirements of Section 4.4(c) for the Parcel.
(g) The parties intend that Buyer will not have to pay
for the value of the Plant Land but once and only at the Closing Date. The
parties acknowledge that because the Torrance Lease is for a term of up to
99 years and calls for payment of only $1.00 in rent, no third party
purchaser or appraiser is likely to attribute any value to the Plant Land
and may, in fact, discount its offer for the Extrusion Land due to the
obligations imposed by the Torrance Lease.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Ball and Buyer as follows:
Section 2.1 Disclosure Schedule. All representations and
warranties in this Agreement shall survive the Closing to the extent
provided in Section 6.1 (and, except as otherwise provided herein, none
shall merge into any instrument of conveyance), regardless of any
investigation or lack of investigation by any of the parties to this
Agreement. Seller shall have no liability for any breach or alleged breach
of any representation or warranty relating to an Excluded Liability to the
extent Seller fully and timely discharges such Excluded Liability, without
Buyer incurring any cost of investigation or defense with respect thereto.
Each representation and warranty of Seller is made subject to the
exceptions which are noted in the corresponding section of the Disclosure
Schedule. For the purposes of this Agreement, the "Disclosure Schedule" is
the schedule delivered by Seller and Ball concurrently herewith and
identified by the parties as such. Seller shall number all exceptions noted
in the Disclosure Schedule to correspond to the applicable section of
Article II to which such exception refers. EXCEPT AS SPECIFICALLY SET FORTH
IN THIS AGREEMENT, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES TO BALL,
BUYER OR THEIR DESIGNEES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. Except as otherwise expressly noted therein, the disclosures in
any subsection of the
24
Disclosure Schedule thereof shall not constitute disclosure for purposes
of any other subsection.
Section 2.2 Corporate Organization. Each of Seller, RIB, and
LAR is (and at the Closing, each of RCAL and RIND will be) a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all necessary corporate power and
authority to carry on its business as it is now being conducted and to own
or lease and operate its assets. The copies of the charter, bylaws, or
corresponding organizational documents of Seller, RIB, RCAL, RIND and LAR
heretofore delivered to Buyer are true, complete and correct copies of such
instruments as in effect as of the date of this Agreement.
Section 2.3 Operation of the Business. Except for the license
agreements listed in Section 2.3 of the Disclosure Schedule, the Business
is conducted only through Seller, RCAL, RIND and LAR. Except for the
Business, and for the disposition of certain surplus equipment formerly
used in the Business at Seller's Houston can plant, and for interests held
by its majority-owned subsidiaries in Latasa, SVE, and UAC, Seller and its
Affiliates are not engaged in the design, manufacture, distribution and
sale of beverage can bodies and ends. The Business Assets taken as a whole,
together with the licenses being granted and the services being provided to
Buyer under the Ancillary Agreements, constitute all of the rights,
properties and assets (tangible and intangible) necessary for the continued
conduct of the Business by Ball and Buyer as such Business has been
conducted by Seller.
Section 2.4 Authorization. Except as set forth in Section 2.4
of the Disclosure Schedule, Seller has all necessary corporate power and
authority to enter into this Agreement and the Ancillary Agreements and to
carry out the transactions contemplated hereby and thereby. Seller's Board
of Directors has taken all corporate action required by law, Seller's
Certificate of Incorporation, its Bylaws or otherwise required to be taken
by it to authorize the execution and delivery of this Agreement and the
Ancillary Agreements and the consummation of the transactions contemplated
hereby and thereby. This Agreement constitutes, and the Ancillary
Agreements to be executed by Seller (when duly executed and delivered by
Seller at or before the Closing, assuming this Agreement and the Ancillary
Agreements constitute the valid and binding obligation of Ball and Buyer)
will constitute, the valid and binding obligation of Seller, each
enforceable in accordance with its terms, except that (i) such enforcement
may be subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors'
25
rights and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be
brought.
Section 2.5 No Violation. Except as set forth in Section 2.5 of
the Disclosure Schedule, neither the execution, delivery and performance of
this Agreement and the Ancillary Agreements nor the consummation of the
transactions contemplated hereby or thereby will (i) violate or be in
conflict with any provision of the charter, bylaws or similar
organizational document of Seller, RIB, RCAL, RIND or LAR, (ii) be in
conflict with, or constitute a default (or an event which, with the giving
of due notice or lapse of time, or both, would constitute such a default)
under, or cause the acceleration of the maturity of, or give rise to any
right of termination, imposition of fees or penalties on Ball, Buyer or
their Designees under any debt, lease, mortgage, indenture, license,
contract, instrument or other obligation to which Seller, RIB, RCAL, RIND
or LAR is a party or by which the Business Assets or the Shares are bound
or result in the creation of any Encumbrance upon any Business Assets or
the Shares, which would (A) have a Material Adverse Effect or (B) interfere
with Seller's ability to consummate the transactions contemplated by this
Agreement or any of the Ancillary Agreements, or (iii) violate any law,
judgment, order, regulation, rule, ordinance or decree (hereinafter
sometimes separately referred to as a "Law") of any foreign, federal, state
or local governmental or quasi-governmental, administrative, regulatory or
judicial court, department, commission, agency, board, bureau,
instrumentality or other authority (hereinafter sometimes referred to as an
"Authority") which violation would (A) have a Material Adverse Effect or
(B) interfere with Seller's ability to consummate the transactions
contemplated by this Agreement.
Section 2.6 Consents and Approvals. Except as set forth in
Section 2.6 of the Disclosure Schedule, no filing or registration with,
notice to, or authorization, consent or approval of, any third party under
any Contract or any Authority, or any required filings with, or clearance
from, any Authority, is necessary for execution and delivery of this
Agreement or the Ancillary Agreements or the consummation by Seller of the
transactions contemplated hereby or thereby or to enable Ball or Buyer to
conduct the Business at its present locations immediately after the Closing
Date in a manner which is consistent with that in which the Business is
presently conducted, except for compliance with the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the
Administrative Council for Economic Defense in Brazil ("Cade").
26
Section 2.7 Financial Statements.
(a) The unaudited balance sheets of Seller's global can
operations (consisting of the Business, Seller's interests in Latasa and
SVE, together with certain other Excluded Assets and Excluded Liabilities
as described in Section 2.7 of the Disclosure Schedule) as of December 31,
1997 and December 31, 1996, and the related unaudited statements of income
and cash flows for the years ended December 31, 1997, 1996 and 1995
(including the notes thereto, the "Unaudited Financial Statements"), are
set forth in Section 2.7 of the Disclosure Schedule; provided that Buyer
acknowledges that the footnotes contained in the Unaudited Financial
Statements are incomplete with respect to disclosures to be included
relating to Latasa. Such financial statements (i) have been derived from
the books and records of Seller, (ii) have been prepared in conformity with
GAAP consistently applied for all periods, and (iii) present fairly the
results of operations, cash flows and financial condition of Seller's
global can operations as of the dates and for the periods specified
therein.
(b) The unaudited quarterly financial statements (balance
sheet and statements of income and cash flow) for Seller's global can
operations to be prepared and delivered to Buyer for periods after December
31, 1997 (the "Interim Financial Statements") (x) will be derived from the
books and records of Seller, (y), except as indicated below, will be
prepared in conformity with GAAP consistently applied for all periods and
consistently with the principles applied in preparation of the Audited
Financial Statements and (z) will present fairly the results of operations,
cash flows and financial condition of Seller's global can operations as of
the dates and for the periods specified therein; provided, however, that in
the preparation of the Interim Financial Statements.
(i) U.S. federal, state and local and Puerto
Rican income Taxes will not be included;
(ii) debt and interest expense will not be included;
(iii) Seller's corporate-level general and
administrative expenses will not be allocated to the Business;
27
(iv) restructuring and environmental reserves
and costs will not be included; and
(v) footnotes will not be included, except to the
extent that quarterly financial statements on a Quarterly Report on
Form 10-Q filed under the Exchange Act in accordance with the rules
and regulations thereunder would be required to include footnotes.
Section 2.8 Accounts Receivable. All Accounts Receivable
reflected on the Closing Statement (a) arose in the ordinary course of
business and (b) are collectible in the ordinary course of business and are
not subject to counterclaims or setoffs, subject in either case to reserves
reflected on the Closing Statement. Except as set forth in Section 2.8 of
the Disclosure Schedule, Seller is not presently a party to and has not
entered into any agreement to factor, sell, pledge or otherwise dispose of
any Accounts Receivable.
Section 2.9 Inventory and Working Capital. Except as set forth
in Section 2.9 of the Disclosure Schedule, the Inventory (a) consists of
items of a quantity and quality which are usable or saleable in the
ordinary course of Seller's business, except for items of obsolete material
which have been written down on the Closing Statement to estimated net
realizable value and (b) is sufficient but not excessive in kind or amount
for the conduct of the Business as it is presently being conducted.
Based on Seller's current operating practices which, to the
Knowledge of Seller, may be continued after Closing at the discretion of
Ball and Buyer, the aggregate working capital of the Business is sufficient
to meet the current operating requirements of the Business and the sales
volume of the Business currently anticipated by Seller.
Section 2.10 Absence of Certain Changes. Except as set forth in
Section 2.10 of the Disclosure Schedule and as permitted by this Agreement,
since December 31, 1997, Seller has not, with respect to the Business,
(a) suffered any adverse change in its business,
operations, properties, assets, working capital, liabilities or condition
(financial or otherwise) which resulted in or is reasonably likely to
result in a Material Adverse Effect, and
28
there has not been any damage,
destruction, loss or other event which resulted in, or is reasonably likely
to result in, a Material Adverse Effect;
(b) paid, discharged or satisfied any claims, liabilities
or obligations (absolute, accrued, contingent or otherwise) involving more
than $100,000 with respect to the Business, other than the payment,
discharge or satisfaction in the ordinary course of business and consistent
with past practices of liabilities and obligations reflected or reserved
against in the Audited Balance Sheet or incurred in the ordinary course of
business and consistent with past practice since the date of the Audited
Balance Sheet other than payment, discharge and satisfaction of Excluded
Liabilities;
(c) permitted or allowed any of the Business Assets to be
subject to any Encumbrance other than Permitted Exceptions;
(d) cancelled any debts of more than $100,000 or waived
any claims or rights of the Business having a value in excess of $100,000;
(e) sold, transferred or otherwise disposed of any of the
Business Assets other than sales of Inventory and other items described in
Section 4.1(a)(ii) in the ordinary course of business;
(f) granted any general increase in the compensation of
officers, senior executives or employees of the Business (including any
such increase pursuant to any bonus, pension, profit-sharing or other plan
or commitment) other than in the ordinary course of business;
(g) made capital expenditures or commitments for
additions to property, plant, equipment or intangible capital assets of the
Business totaling more than $1,000,000;
(h) made any change in any method of financial or Tax
accounting or financial or Tax accounting practice;
(i) except for travel advances in the ordinary course of
business, loaned or advanced amounts in excess of $10,000 to, or sold,
transferred or leased any Business Assets to, any of the officers or
employees of the Business or any affiliate or associate of any of the
officers or employees of the Business or
29
entered into any agreement or
arrangement with respect to the foregoing or with respect to any payments
or acceleration of payments to such parties in connection with the
transactions contemplated hereby; or
(j) agreed to take any action described in this Section.
Section 2.11 Title to Properties; Encumbrances. Except as set
forth in Section 2.11 of the Disclosure Schedule, Seller has (or as of the
Closing, RCAL and RIND will have) good, valid and marketable title to the
Owned Real Property, and valid title, or, in the case of leased Business
Assets (including, without limitation, the Leased Premises), valid and
effective leases, to all the Business Assets which it purports to own or
lease (real, personal and mixed, tangible and intangible). With respect to
the Business Locations used by Seller in the operation of the Business in
Puerto Rico, except as set forth in Section 2.11 of the Disclosure
Schedule, LAR will, on the Closing Date, have good, valid and marketable
title to the Owned Real Property located in Puerto Rico and valid title,
or, in the case of leased Business Assets (including, without limitation,
the Leased Premises), valid and effective leases, to all the Business
Assets located in Puerto Rico (real, personal and mixed, tangible and
intangible). Except as set forth in Section 2.11 of the Disclosure
Schedule, the Owned Real Property and Seller's interests in the remaining
Business Assets (including, without limitation, the Shares and Seller's
interests in the Leased Premises but limited in the case of the Real
Property Leases and the Leased Premises to Seller's acts) are free and
clear of all title defects or objections, liens, claims, charges, security
interests or other encumbrances, including, without limitation, leases,
chattel mortgages, conditional sales contracts, collateral security
arrangements and other title or interest retention arrangements
(collectively, "Encumbrances") except for liens for current Taxes that are
not yet due or Taxes that are being contested in good faith by appropriate
proceeding; provided that Seller shall indemnify Ball and Buyer and hold
them harmless from any Encumbrances arising out of any such contests.
Seller has not received written notice of any proceedings, claims or
disputes affecting any Business Locations that are reasonably likely to
curtail or interfere with the present use or adversely affect the value of
such Business Locations in any material respect. There is not any action of
eminent domain or condemnation pending or, to the Knowledge of Seller,
threatened for any portion of any Business Locations.
(a) Seller has not received any written notice in the
last three years or which is currently unresolved from any Authority having
jurisdiction over
30
any Business Locations threatening a suspension,
modification or cancellation of certificates of occupancy or Permits
required under applicable Law to occupy and use lawfully any Business
Location to conduct business as presently conducted.
(b) To the Knowledge of Seller, Seller's use and
operation of the Business Locations in the Business as presently conducted
is not dependent on a nonconforming use or other waiver from an Authority,
the absence of which would materially limit the use of the Business
Locations or the operation of the Business as presently conducted.
(c) To the Knowledge of Seller, no portion of the
Business Locations on which any building is located is in any flood plain
which requires Seller to obtain federal flood hazard insurance.
(d) There is free and uninterrupted ingress and egress
(which in some cases may be via easement which is perpetual or, in the case
of Leased Premises, at least of a duration equal to the term of the Real
Property Lease, and suitable for the operation of the Business as presently
conducted) to the Owned Real Property and, to the Knowledge of Seller,
Leased Premises from a public street, road or highway.
Section 2.12 Equipment. Except as set forth in Section 2.12 of
the Disclosure Schedule, with respect to each Business Location, the
plants, structures, machinery, vehicles, equipment and other tangible
personal property included in the Business Assets and located at such
Business Location (including, without limitation, any Business Assets used
in the operation of the Business at such Business Location and located on
any third party's property), taken as a whole, are in good operating
condition and repair (ordinary wear and tear excepted) and are adequate for
the uses to which they are being put. All water, gas, electrical, steam,
compressed air, telecommunications, sanitary and storm sewage lines and
systems and other similar systems reasonably necessary to operate the
Business as presently operated have been installed and are operating
sufficiently to conduct the Business as presently conducted. Except as
expressly set forth in this Agreement, Seller expressly disclaims any other
representation and warranty of any kind or nature, express or implied, as
to the condition, value or quality of the Business Assets and SPECIFICALLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, OR
FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO ANY OF THE BUSINESS
ASSETS. EXCEPT AS EX-
31
PRESSLY SET FORTH IN THIS AGREEMENT, THE BUSINESS
ASSETS SHALL BE TRANSFERRED TO PURCHASER "AS IS" AND "WHERE IS."
Section 2.13 Intellectual Property Rights.
(a) Section 2.13 of the Disclosure Schedule contains a
complete and accurate list of the following types of Intellectual Property
Rights included in the Business Assets: (i) registrations and applications
to register Trademarks; (ii) Patents; (iii) registrations and applications
to register Copyrights and (iv) license agreements and other material
agreements relating to the development or acquisition of or granting to
others the right to use Intellectual Property Rights. There are no
royalties, honoraria, fees or other payments payable by Seller to any
Person in connection with the ownership, licensure, use, or sale of any
Patents, registered Trademarks, Copyrights or other Intellectual Property
Rights which are material to the Business.
(b) (i) Seller, RIB, RCAL, RIND and LAR collectively own
or have the right to use all of the Intellectual Property Rights included
in the Business Assets, (ii) Seller is the owner of record of the
registrations and applications set forth in Section 2.13 of the Disclosure
Schedule and is listed in the records of the appropriate U.S., state or
foreign agency as the owner of record for each such registration and
application and (iii) no registration or application listed in Section 2.13
of the Disclosure Schedule is the subject of any existing or, to the
Knowledge of Seller, threatened opposition, interference, cancellation or
other proceeding before any registration authority in any jurisdiction. The
registrations listed in Section 2.13 of the Disclosure Schedule are valid
and subsisting, in proper form and enforceable, and have been duly
maintained.
(c) To the Knowledge of Seller, use of the Intellectual
Property Rights included in the Business Assets by Seller, RIB, RCAL, RIND
or LAR does not infringe upon, or misappropriate any intellectual property
right of any third party. There are no claims pending or, to the Knowledge
of Seller, threatened, and Seller has not received any notice of any claim
to such effect. To the Knowledge of Seller, no third party is infringing
upon or misappropriating any Intellectual Property Rights. No such claims
have been made by or on behalf of Seller to such effect within the past
three years.
32
(d) There is no material default (or event which with the
giving of notice and/or passage of time would constitute a material
default) by Seller, RIB, RCAL, RIND or LAR, under any of the license
agreements set forth in Section 2.13 of the Disclosure Schedule and, to the
Knowledge of Seller, by any other party thereto.
(e) Section 2.13(e) of the Disclosure Schedule identifies
the general actions taken by Seller to date as part of a program to enable
software included in the Technology and related hardware to perform during
and after the year 2000 without error relating to date data, including,
without limitation, any error which references the wrong century or more
than one century. Nothing in this Section 2.13(e) or in Section 2.13(e) of
the Disclosure Schedule shall be construed as a guarantee by Seller that
such software or hardware will perform without error relating to such year
2000 date data.
(f) Section 2.13(f) of the Disclosure Schedule identifies
all Trademarks other than the Reynolds Marks that are used in the Business
and not transferred to Ball pursuant to Section 1.2(k).
(g) There are no Patents, Trademarks or Copyrights used
exclusively in the Business and not being transferred to Ball, Buyer or
their Designees hereunder other than those set forth in Section 2.13(g) of
the Disclosure Schedule.
Section 2.14 Certain Contracts.
(a) Section 2.14(a) of the Disclosure Schedule lists all
(i) employment or other contracts (including, without limitation,
consulting, non-competition, severance or indemnification agreements) which
are included in the Business Assets with any employee, agent, consultant or
current or living former officer or employee of Seller providing service to
the Business whose total rate of annual remuneration exceeds $90,000,
except (A) those that are terminable by Seller on 60 days' notice or less
without liability, penalty or premium and (B) at-will employment contracts,
(ii) union or collective bargaining contracts relating to employees of
Seller employed in the Business, (iii) instruments or agreements for money
borrowed (including, without limitation, any indentures, guarantees, loan
agreements, sale and leaseback agreements, or purchase money obligations
incurred in connection with the acquisition of property other than in the
ordinary and usual
33
course of business consistent with past practice) in
excess of $100,000 included in the Assumed Liabilities, (iv) leases or
subleases for personal property included in the Business Assets which
require lease payments in excess of $100,000 annually (other than those
agreements which are terminable on 60 days' notice) and the Real Property
Leases, (v) agreements for acquisitions or dispositions, purchase or sale
of assets or stock or otherwise of a business unit of the Business entered
into within the last five years, (vi) joint venture or partnership
agreements included in the Business Assets, (vii) purchase and supply
contracts in existence (or under negotiation) with a remaining (or
prospective) term of six months or more included in the Business Assets and
calling for aggregate future payments exceeding $250,000, (viii)
guarantees, suretyships, indemnification and contribution agreements
included in the Business Assets and (ix) other agreements, contracts,
notes, security agreements, understandings or commitments that obligate
Seller for an amount in excess of $250,000 in the Business Assets (the
agreements described in clauses (i) through (ix) above are collectively
referred to as the "Contracts"). A true and complete copy of each Contract
(together with all amendments thereto) has been provided or made available
to Buyer. Each Contract is or upon execution will be a valid and binding
obligation of Seller. Seller is not in material breach or default under any
of the Contracts, and to the Knowledge of Seller, there has not been any
material breach or default of any Contract by any party thereto.
(b) The policy of Seller with respect to entering into
confidentiality agreements with its employees is as set forth in Section
2.14(b) of the Disclosure Schedule. Except as set forth in Section 2.14(b)
of the Disclosure Schedule, no Contract, Permit or other understanding that
would be binding upon Ball or Buyer restricts the ability of Seller to own,
possess or use any of the Business Assets or conduct any of Seller's
operations related to the Business in any geographic area.
Section 2.15 Orders and Commitments. Except as set forth in
Section 2.15 of the Disclosure Schedule, all outstanding orders and
commitments of the Business have been made in the ordinary course of the
Business. Returns of product manufactured in the Business as a percentage
of sales for the year 1997 are as set forth in Section 2.15 of the
Disclosure Schedule. As of the date of this Agreement, there are no claims
in excess of $100,000 per claim pending against Seller to return any
merchandise sold by the Business by reason of alleged overshipments,
defective merchandise or otherwise, or of merchandise in the hands of
customers under an understanding that such merchandise would be returnable.
As
34
of the date of this Agreement, such claims in the aggregate do not
exceed $1,000,000.
Section 2.16 Taxes. Except as set forth in Section 2.16 of the
Disclosure Schedule,
(a) Each of Seller, RIB, RCAL, RIND and LAR has duly and
timely filed (or had filed on its behalf) all Tax Returns required to be
filed by it with respect to the Business, and each such Tax Return is true,
correct and complete in all material respects;
(b) Seller (with respect to the Business) and each of
RIB, RCAL, RIND and LAR has duly paid or made adequate provision for the
due and timely payment of all Taxes and other charges, including, without
limitation, deposits required with respect to employee withholdings,
interest, penalties, assessments and deficiencies, due or claimed to be due
from it (other than amounts being contested in good faith, adequate
reserves for which have been established);
(c) There are no liens for Taxes (other than statutory
liens for property Taxes not yet due and payable) or other such charges
upon the Business Assets or the Shares;
(d) All deficiencies and assessments resulting from
examination of the Tax Returns filed by (i) Seller with respect to the
Business Assets or (ii) by RIB, RCAL, RIND and LAR, in either case by any
Authority and declared by such Authority to be due or ordered to be paid,
have been paid (other than amounts being contested in good faith for which
adequate reserves have been established);
(e) There are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any Tax Return
of RIB, RCAL, RIND or LAR for any period;
(f) No federal, state, local or foreign income or other
material Tax audits are pending with respect to RIB, RCAL, RIND and LAR;
(g) None of RIB, RCAL, RIND and LAR is a party to any
Tax-sharing agreement, arrangement or indemnity relating to Taxes;
35
(h) None of RIB, RCAL, RIND and LAR has been a member of
any affiliated group within the meaning of section 1504(a) of the Code, or
any similar affiliated or consolidated group for Tax purposes under state,
local or foreign law, or has any liability for the Taxes of any person
under Treasury Regulation section 1.1502-6 or any similar provision of
state, local or foreign law, as a transferee or successor, by contract or
otherwise; and
(i) None of RIB, RCAL, RIND or LAR is a party to any
contract, agreement, arrangement or plan (and Seller is not a party to any
contract, agreement, arrangement or plan that will be assumed by Buyer,
Ball or any of their Affiliates as a result of this Agreement) that has
resulted or would result in connection with the transactions contemplated
by this Agreement, separately or in the aggregate, in the payment of (x)
any "excess parachute payments" within the meaning of section 280G of the
Code (without regard to the exceptions set forth in section 280G(b)(4) and
(5) of the Code) or (y) any amount for which a compensation deduction would
be disallowed under section 162(m) of the Code.
Section 2.17 Litigation. Except as set forth in Section 2.17 of
the Disclosure Schedule, no claim, demand, action, suit, inquiry,
proceeding or investigation by or before any Authority is pending or, to
the Knowledge of Seller, threatened against or involving Seller with
respect to the Business, the Business Assets or the Shares, or which
questions or challenges the validity of this Agreement or the Ancillary
Agreements or any action taken or to be taken by Seller pursuant to this
Agreement or the Ancillary Agreements or in connection with the
transactions contemplated hereby or thereby. Except as set forth in Section
2.17 of the Disclosure Schedule, Seller is not subject to any judgment,
court order or decree, or any arbitration order issued within six years
prior to the date of this Agreement with respect to the Business or
Business Assets.
Section 2.18 Compliance with Law. Except as set forth in
Section 2.18 of the Disclosure Schedule and excluding those matters
relating to the representations and warranties contained in Sections 2.19,
2.20 and 2.21, the Business has been conducted in compliance in all
material respects with all applicable Laws. Seller has not received any
notification from any Authority of any asserted present failure by Seller
to comply with Laws in regard to the Business. All material Permits held by
Seller in connection with the operation of the Business or the Business
Assets are set forth in Section 2.18 of the Disclosure Schedule.
36
Section 2.19 Environmental Protection. Except as set forth in
Section 2.19 of the Disclosure Schedule,
(a) Seller has obtained (or is in the process of
obtaining) all material Environmental Permits which are required under
applicable Environmental Laws for the ownership, use and operation of each
parcel of Owned Real Property and for the conduct by Seller of its
activities on the Leased Premises. All such material Environmental Permits
previously obtained by Seller are in effect or in the application process.
To the Knowledge of Seller, no action is pending to revoke any such
material Environmental Permits. Seller is in material compliance with the
terms and conditions of such Environmental Permits. All such material
Environmental Permits with respect to the Business are listed in Section
2.19(a) of the Disclosure Schedule. To the extent Seller has not yet
obtained any Environmental Permit for which it is applying, it is not in
violation of any Environmental Law as a result thereof. All material
Environmental Permits for which Seller has applied but has not obtained are
listed in Section 2.19(a) of the Disclosure Schedule.
(b) With respect to the Business, Seller, the Owned Real
Property and Seller's activities on the Leased Premises are in material
compliance with all applicable Environmental Laws.
(c) Seller has made available to Buyer true and complete
copies of all material final environmental studies made or prepared by
third parties in the last five years relating to the Business Locations in
Seller's possession, such studies being listed in Section 2.19(c) of the
Disclosure Schedule.
(d) There is no civil, criminal or administrative action,
claim, investigation, notice or demand letter pending or, to the Knowledge
of Seller, threatened, under any Environmental Laws relating to the Owned
Real Property and Seller's activities on the Leased Premises on which any
substance relating to the Business has been disposed or released.
(e) Since January 1, 1992, to the best Knowledge of
Seller,
(i) except for the generation, storage, disposal and
transportation to offsite facilities in the ordinary course of
business in compliance in all material respects with applicable
Environmental Laws, there has been no generation, storage, disposal,
treat-
37
ment or transportation of any Hazardous Substances at the Owned
Real Property or arising from Seller's activities at the Leased
Premises in violation of, or which could give rise to any material
obligation under, any Environmental Laws; and
(ii) there has been no Release requiring Cleanup at
the Owned Real Property or arising from Seller's activities at the
Leased Premises.
(f) No Release or Cleanup has occurred at any Owned Real
Property resulting in the assertion or creation of an Encumbrance on any
Owned Real Property by any Authority nor, to the Knowledge of Seller, has
any such assertion of an Encumbrance been made in writing by any Authority.
(g) To the Knowledge of Seller, except for matters which
are Excluded Liabilities under Section 1.3(b)(v), Seller has not, within
three years preceding the date of this Agreement or, to the extent
currently unresolved, at any time prior to the date hereof, received any
written notice or any order from any Authority advising it that it is, with
respect to any Business Location, responsible for or potentially
responsible for Cleanup or paying for the cost of Cleanup of Hazardous
Substances, and Seller has not entered into any agreements concerning such
Cleanup.
(h) To the Knowledge of Seller, the Business Locations do
not contain any (i) underground storage tanks, (ii) friable asbestos, (iii)
equipment containing PCBs, (iv) underground injection wells, or (v) septic
tanks in which any Hazardous Substances have been disposed.
Section 2.20 Labor Relations. Except as set forth in Section
2.20 of the Disclosure Schedule,
(a) Section 2.20(a) of the Disclosure Schedule identifies
all collective bargaining agreements (including, without limitation, any
written amendments or written side agreements thereto) to which Seller,
RCAL, RIND or LAR is a party that apply to the employees of the Business
(the "Collective Bargaining Agreements");
(b) each of Seller, RCAL, RIND or LAR is, with respect to
the Business, in compliance with all applicable Laws respecting employment
and
38
employment practices, terms and conditions of employment, occupational
safety and health and wages and hours, except for such noncompliance that
could not reasonably be expected to have a Material Adverse Effect, and is
not engaged in any unfair labor practice as defined in the National Labor
Relations Act or other applicable Law;
(c) there is no unfair labor practice charge or complaint
against Seller, RCAL, RIND or LAR with respect to the Business pending or,
to the Knowledge of Seller, threatened before the National Labor Relations
Board or any similar Authority;
(d) there is no labor strike, dispute, slowdown, lockout
or stoppage pending or, to the Knowledge of Seller, threatened against
Seller, RCAL, RIND or LAR with respect to the Business, and during the past
three years, there has not been any such action;
(e) no written grievance rising to the fourth step of the
grievance procedures under the Collective Bargaining Agreements is pending
against Seller with respect to the Business;
(f) to the Knowledge of Seller, there are no current
union organizing activities among such employees, nor does any question
concerning representation exist concerning such employees;
(g) there are no material written personnel policies,
rules or procedures applicable to employees employed by Seller in the
Business, other than those listed in Section 2.20(a) of the Disclosure
Schedule, true and correct copies of which have been made available to
Buyer;
(h) no charges against or involving Seller, RCAL, RIND or
LAR with respect to the Business are pending or, to the Knowledge of
Seller, threatened before any Authority responsible for the prevention of
unlawful employment practices;
(i) there are no lawsuits or other proceedings pending
or, to the Knowledge of Seller, threatened by or on behalf of any present
or former employee employed by Seller, RCAL, RIND or LAR or alleged to be
employed by Seller, RCAL, RIND or LAR in connection with the operation of
the Business, any
39
applicant for such employment or classes of the foregoing
alleging breach of any express or implied contract of employment, any Law
or regulation governing employment or the termination thereof or other
discriminatory, wrongful or tortious conduct in connection with the
employment relationship; and
(j) none of the employees employed by Seller, RCAL, RIND
or LAR in the Business has suffered an "employment loss" (as defined in the
Worker Adjustment and Retraining Notification Act ("WARN Act")) since three
months before the date of this Agreement.
Section 2.21 Employee Benefit Matters.
(a) Section 2.21(a) of the Disclosure Schedule contains a
true and complete list of each pension, retirement, savings,
profit-sharing, stock bonus, stock purchase, stock option, restricted
stock, deferred compensation, bonus or other incentive compensation, equity
compensation plan, program, policy, agreement, contract, arrangement or
fund, including each pension plan, fund or program within the meaning of
section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), each medical, dental, hospitalization, supplemental
unemployment benefits, life insurance or other welfare plan, program,
policy, agreement, contract, arrangement or fund, including each welfare
plan, fund or program within the meaning of section 3(1) of ERISA, each
employment, termination or severance plan, program, policy, agreement,
contract or arrangement and each other employee benefit plan, program,
policy, agreement, contract, arrangement or fund, in each case, that is
sponsored, maintained or contributed to or required to be contributed to by
Seller, RCAL, RIND or LAR or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that together with Seller would be
deemed a single employer within the meaning of section 4001(b) of ERISA, or
to which Seller or an ERISA Affiliate is party, that are currently
maintained by Seller for the benefit of, or to which Seller contributes on
behalf of, any employee of the Business as a result of such employee's
employment in the Business (each a "Plan"). Section 2.21(a) of the
Disclosure Schedule identifies each of the Plans that is subject to section
302 or Title IV of ERISA or section 412 of the Code (the "Title IV Plans").
Except as set forth in Section 2.21 of the Disclosure
Schedule (with respect to paragraphs (b)-(h)):
40
(b) With respect to each Plan that covers Represented
Employees, Seller has heretofore delivered or made available to Buyer true
and complete copies of the current version of the Plan and any amendments
thereto, any related trust or other funding vehicle, any summaries required
under ERISA or the Code and the most recent determination letter received
from the Internal Revenue Service with respect to each Plan intended to
qualify under section 401(a) of the Code. To the Knowledge of Seller, no
event has occurred since the date of such determination that would affect
such determination.
(c) No liability under Title IV or section 302 of ERISA
has been incurred by Seller or any ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a risk to Seller
or any ERISA Affiliate of incurring any such liability, other than
liability for premiums due the Pension Benefit Guaranty Corporation (which
premiums have been paid when due). To the extent this representation
applies to section 4064, 4069 or 4204 of Title IV of ERISA, it is made not
only with respect to the Title IV Plans but also with respect to any
material employee benefit plan, program, agreement or arrangement subject
to Title IV of ERISA to which Seller or an ERISA Affiliate made, or was
required to make, contributions during the six-year period ending on the
Closing.
(d) Neither Seller, any ERISA Affiliate, any Plan, any
trust created thereunder, nor any trustee or administrator thereof has
engaged in a transaction in connection with which Seller, any ERISA
Affiliate, any Plan, any such trust, or any trustee or administrator
thereof, or any party dealing with any Plan or any such trust could be
subject to either a civil penalty assessed pursuant to section 409 or
502(i) of ERISA or a tax imposed pursuant to section 4975 or 4976 of the
Code.
(e) No Title IV Plan is a "multiemployer pension plan,"
as defined in section 3(37) of ERISA.
(f) All contributions required to be made with respect to
any Plan on or before the Closing Date have been timely made.
(g) Each Plan has been operated and administered in all
material respects in accordance with its terms and applicable Law,
including, without limitation, ERISA and the Code.
41
(h) There are no pending or, to the Knowledge of Seller,
threatened, claims by or on behalf of any Plan by any employee or
beneficiary covered under any such Plan, or otherwise involving any such
Plan (other than routine claims for benefits).
(i) The Employee Lists and the Employee Benefits Data
provided to Buyer by Seller pursuant to Section 5.5 are true and complete
as of the date of such lists.
Section 2.22 Customers and Suppliers. Except as set forth in
Section 2.22 of the Disclosure Schedule, since September 30, 1997, (a)
there has not been any material adverse change in the business relationship
between Seller and any customer of the Business which customer accounts for
annual sales to Seller of $5,000,000 or more on an annualized basis and (b)
to the Knowledge of Seller, no such customer has advised Seller that it
intends to terminate its relationship with Seller or significantly reduce
its purchases from Seller. Since September 30, 1997, there has not been any
material adverse change in the business relationship between Seller and any
supplier of the Business accounting for sales to Seller of $1,000,000 or
more on an annualized basis providing supplies to Seller which are not
readily obtainable from other sources in the ordinary course of business.
Section 2.23 Brokers and Finders. Neither Seller nor any of its
officers, directors or Affiliates has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the transactions contemplated by this Agreement.
Section 2.24 Investment. Seller (i) understands that the Ball
Shares have not been registered under the Securities Act of 1933, as
amended (the "Act"), or under any state securities laws, and are being
offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering, and may not be sold except
in a transaction registered under the Act or exempt from such
registration requirements and (ii) is acquiring the Ball Shares solely for
its own account for investment purposes, and not with a view to the
distribution thereof, other than a sale or distribution which is registered
under the Act or is exempt from such registration or except pursuant to the
registration rights provisions contained in the Stockholder's Agreement.
42
Section 2.25 Capitalization of Subsidiaries.
(a) Section 2.25(a) of the Disclosure Schedule lists
RCAL's, RIND's and LAR's authorized, issued and outstanding capital stock
and all of the owners thereof. Seller's interest in RCAL, RIND or LAR is
free and clear of all Encumbrances and free of any limitation or
restriction on the right to vote, sell or otherwise dispose of such
interests (other than those imposed by foreign, federal and state
securities laws), and there are no outstanding (i) securities of RCAL, RIND
or LAR convertible into or exchangeable for shares of capital stock or
other voting securities or ownership interests in RCAL, RIND or LAR or (ii)
options or other rights to acquire from RCAL, RIND or LAR any capital
stock, voting securities or other ownership interests in, or any securities
convertible into or exchangeable for any capital stock, voting securities
or ownership interests in RCAL, RIND or LAR (the items in clauses (i) and
(ii) being referred to collectively as the "Domestic Subsidiary
Securities"). There are no outstanding obligations to repurchase, redeem or
otherwise acquire any outstanding Domestic Subsidiary Securities. The
issued and outstanding shares of capital stock of RCAL, RIND and LAR are
duly authorized, validly issued, fully paid and nonassessable and have not
been issued in violation of any preemptive rights, including any rights of
first refusal.
(b) Section 2.25(b) of the Disclosure Schedule lists the
authorized, issued and outstanding capital stock of RIB and the direct and
indirect ownership interest of Seller and its Affiliates therein as of the
date hereof. The issued and outstanding shares of capital stock of RIB are
duly authorized, validly issued, fully paid and nonassessable and have not
been issued in violation of any preemptive rights, including any rights of
first refusal. Seller's interest in RIB is free and clear of all
Encumbrances and free of any restriction on the right to vote, sell or
otherwise dispose of such interest (other than those imposed by foreign,
federal and state securities laws), and there are no outstanding (i)
securities of RIB convertible into or exchangeable for shares of capital
stock or other voting securities or ownership interests in RIB, or (ii)
options or other rights to acquire from RIB, any capital stock, voting
securities or other ownership interest in, or any securities convertible
into or exchangeable for any capital stock, voting securities or ownership
interest in RIB. There are no outstanding obligations to repurchase, redeem
or otherwise acquire any outstanding RIB securities.
(c) Section 2.25(c) of the Disclosure Schedule lists the
ownership interests of Seller or its Affiliates in Latasa, each of the
subsidiaries of
43
Latasa (the "Latasa Subsidiaries"), the respective
authorized, issued and outstanding capital stock of each such entity and
all the owners thereof. Except as set forth in Section 2.25(c) of the
Disclosure Schedule, the interests of Seller or its Affiliates in Latasa
and of Latasa in the Latasa Subsidiaries are free and clear of all
Encumbrances and free of any limitation or restriction on the right to
vote, sell or otherwise dispose of such interests (other than those imposed
by foreign, federal and state securities laws), and there are no
outstanding (i) securities of Latasa or any of the Latasa Subsidiaries
owned by Seller or its Affiliates convertible into or exchangeable for
shares of capital stock or other voting securities or ownership interests
in Latasa or the Latasa Subsidiaries and (ii) options or other rights to
acquire from Latasa or the Latasa Subsidiaries any capital stock, voting
securities or other ownership interests in, or any securities convertible
into or exchangeable for any capital stock, voting securities or ownership
interests in Latasa or the Latasa Subsidiaries independent of the assets
transferred to Buyer. There are no outstanding obligations to repurchase,
redeem or otherwise reacquire any outstanding securities of Latasa or the
Latasa Subsidiaries. The issued and outstanding shares of capital stock of
each of Latasa and the Latasa Subsidiaries are duly authorized, validly
issued, fully paid and nonassessable and have not been issued in violation
of any preemptive rights, including any rights of first refusal.
(d) Section 2.25(d) of the Disclosure Schedule lists all
agreements, arrangements or commitments to which Seller or any of its
Affiliates is a party relating to the holding, voting or transfer of any of
RIB, RCAL, RIND and LAR securities or the governance of any of such
subsidiaries.
(e) The execution, delivery and performance of this
Agreement and the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby will not create an Encumbrance
on the Shares.
(f) RIB and RILA own 11,504,994 and 5,159,250 shares,
respectively, of capital stock in Latasa, which shares are duly authorized,
validly issued, fully paid and nonassessable.
(g) Reynolds and its Affiliates own 123,840 shares of
capital stock of SVE.
44
Section 2.26 Latasa Agreements.
(a) Seller has previously delivered to Buyer true and
complete copies of all the Latasa Agreements.
(b) Seller is not in material breach of any of the Latasa
Agreements.
(c) Other than the transactions contemplated by this
Agreement, to the Knowledge of Seller, there is no fact that would allow a
party to the Latasa Agreements to terminate any such agreement or that
would result in an Encumbrance on the Shares.
(d) Except as set forth in Section 2.26(d) of the
Disclosure Schedule, neither the execution, delivery and performance of
this Agreement and the Ancillary Agreements nor the consummation of the
transactions contemplated hereby or thereby will (i) violate or be in
conflict with any provision of the charter, bylaws or similar
organizational document of Latasa or any of the Latasa Subsidiaries or (ii)
be in conflict with, or constitute a default (or an event which, with the
giving of due notice or lapse of time, or both, would constitute such a
default) under, or cause the acceleration of the maturity of, or give rise
to any right of termination, imposition of fees or penalties on Ball or
Buyer under any debt, lease, mortgage, indenture, license, contract,
instrument or other obligation to which Latasa or any of the Latasa
Subsidiaries is a party or by which the Business Assets or the Shares are
bound or result in the creation of any Encumbrance upon any Business Assets
or the Shares, which would (A) have a Material Adverse Effect or (B)
interfere with Seller's ability to consummate the transactions contemplated
by this Agreement or the Ancillary Agreements; or (iii) violate any law,
judgment, order, regulation, rule, ordinance or decree of any Authority
which violation would (A) have a Material Adverse Effect or (B) interfere
with Seller's ability to consummate the transactions contemplated by this
Agreement.
Section 2.27 Latasa Offering Statement. The Latasa offering
statement dated May 14, 1997 (the "Latasa Offering Statement"), a copy of
which has been previously delivered to Buyer, does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances in which they
were made, not misleading. Except as set forth in Section 2.27 of the
Disclosure Schedule, to the Knowledge of Seller, since
45
the date of the
Offering Statement, no event has occurred which could reasonably be
expected to have a material adverse effect on Latasa.
Section 2.28 Latasa Financial Statements. The unaudited balance
sheets of Latasa as of December 31, 1997 and 1996 and the related unaudited
statements of income and cash flows for the years then ended, including the
related notes thereto (in English) are set forth in Section 2.28 of the
Disclosure Schedule (the "Unaudited Latasa Financial Statements"). Such
financial statements (i) have been derived from the books and records of
Latasa, (ii) have been prepared in conformity with GAAP consistently
applied for all periods and (iii) present fairly the results of operations,
cash flows and financial condition of Latasa as of the dates and for the
periods specified therein.
Section 2.29 SVE Agreement. Seller has previously delivered to
Buyer a true and complete copy of the Continuing Know-How and Technical
Services Agreement between Seller or its Affiliate and SVE (the "SVE
Technical Services Agreement"). Seller is not in material breach of the SVE
Technical Services Agreement.
Section 2.30 Seller's Exposure Estimates. The information
contained in Section 2.30 of the Disclosure Schedule is based on Seller's
records, Seller's past business experiences and practices and Seller's
current business beliefs and expectations. Assuming the continuation of
Seller's existing business practices and existing, pending and anticipated
contracts related to Seller's existing metals cost programs and can price
programs, the information contained in Section 2.30 of the Disclosure
Schedule is a reasonable estimate of the exposure limits described therein.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BALL AND BUYER
Ball and Buyer jointly and severally represent and warrant to
Seller as follows:
Section 3.1 Corporate Organization, etc. Each of Ball and Buyer
is a corporation duly organized, validly existing and in good standing
under the laws of
46
the state of its incorporation, and
each has full corporate power and authority to carry on its business as
it is now being conducted and to own or lease and operate its assets and,
in the case of Buyer, to operate the Business after the Closing. The
copies of the charter and bylaws of each of Ball and Buyer delivered to Seller
as of the date hereof are true, complete and correct copies of such
instruments as in effect on the date of this Agreement.
Section 3.2 Authorization, etc. Each of Ball and Buyer has all
necessary corporate power and authority to enter into this Agreement and
the Ancillary Agreements and to carry out the transactions contemplated
hereby and thereby. The Board of Directors of each of Ball and Buyer has
taken all action required by law, and the charter and bylaws of each of
Ball and Buyer, and otherwise required to be taken by it to authorize the
execution and delivery of this Agreement and the Ancillary Agreements and
the consummation of the transactions contemplated hereby and thereby. This
Agreement constitutes, and the Ancillary Agreements to be executed by Ball
and Buyer (when duly executed and delivered by Ball and Buyer at or before
Closing, assuming this Agreement and the Ancillary Agreements constitute
the valid and binding obligations of Seller) will constitute, the valid and
binding obligation of Ball and Buyer, each enforceable in accordance with
its terms except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
Section 3.3 No Violation. Neither the execution, delivery and
performance of this Agreement and the Ancillary Agreements nor the
consummation of the transactions contemplated hereby or thereby will (i)
violate or be in conflict with any provision of the charter or bylaws of
Ball or Buyer, (ii) as of the Closing, violate, or be in conflict with, or
constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, or cause the acceleration of the
maturity of or give rise to any right of termination, imposition of fees or
penalties on Ball or Buyer under any debt, lease, mortgage, indenture,
license, contract, instrument or other obligation to which Ball or Buyer is
a party or by which the property or assets of Ball or Buyer are bound or
result in the creation of any Encumbrance upon any property or assets of
Ball or Buyer which violation or Encumbrance would materially (A) adversely
affect the business of Ball or Buyer or (B) interfere with Buyer's or
Ball's ability to consummate the transactions contem-
47
plated by this
Agreement or the Ancillary Agreements, or (iii) violate any Law, which
violation would materially (A) adversely affect the business of Ball or
Buyer or (B) interfere with Buyer's or Ball's ability to consummate the
transactions contemplated by this Agreement or the Ancillary Agreements.
Section 3.4 Litigation. There is no action, suit, inquiry,
proceeding or investigation by or before any court or governmental or other
regulatory or administrative agency or commission pending, or, to the best
knowledge of Ball and Buyer, threatened against or involving Ball or Buyer
which questions or challenges the validity of this Agreement or the
Ancillary Agreements or any action taken or to be taken by Ball or Buyer
pursuant to this Agreement or the Ancillary Agreements or in connection
with the transactions contemplated hereby or thereby; nor, to the best
knowledge of Ball and Buyer, is there any valid basis for any such action,
proceeding or investigation.
Section 3.5 SEC Reports. Ball has filed all periodic reports
required to be filed by it under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") with the U.S. Securities and Exchange
Commission (the "SEC") since January 1, 1996 , all of which, as of their
respective filing dates, complied in all material respects with all
applicable requirements of the Exchange Act (as such documents have been
amended since the time of their filing, collectively, the "Ball SEC
Reports"). None of the Ball SEC Reports, including, without limitation, any
financial statements or schedules included therein, as of their respective
dates or, if amended, as of the date of the last such amendment, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Section 3.6 Brokers and Finders. Except for the fees and
expenses of Lehman Brothers (which shall be paid by Ball), neither Ball nor
Buyer nor any of their officers, directors or employees has employed any
broker or finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated by this Agreement.
Section 3.7 Authorization of Shares. The issuance of the Ball
Shares has been duly authorized by all requisite corporate action on the
part of Ball, and upon issuance in accordance with the terms hereof, the
Ball Shares will be validly issued, fully paid, and nonassessable free and
clear of all encumbrances (other than
48
under applicable federal or state
securities laws) and shall not have been issued in violation of any
preemptive rights. The authorized, issued and outstanding shares of capital
stock of Ball, all of which are validly issued and outstanding, fully paid
and non-assessable, are set forth in Section 3.7 of the Disclosure
Schedule. Except as disclosed in Section 3.7 of the Disclosure Schedule,
there are no (a) options, warrants, conversion privileges or other rights,
agreements, arrangements or other commitments obligating Ball to issue,
sell, purchase or redeem any shares of its capital stock or (b) any stock
appreciation, phantom or similar rights outstanding based upon the book
value, earnings or any other attribute of any of the capital stock of Ball.
Section 3.7 of the Disclosure Schedule lists all agreements, arrangements
or commitments to which Ball or Buyer is a party relating to the holding,
voting or transfer of any of the shares in Ball or the operations or
governance of Ball. Ball owns all of the outstanding capital stock of each
of its subsidiaries, including Buyer, free of Encumbrances other than (i)
liens for taxes not yet due or taxes being contested in good faith by
appropriate proceedings and (ii) any other encumbrances incurred as a
result of the Financing (as defined in Section 3.9).
Section 3.8 Consents and Approvals. Except as set forth in
Section 3.8 of the Disclosure Schedule, no filing or registration with,
notice to or authorization, consent or approval of, any third party under
any material contract to which Ball or Buyer is a party or any Authority,
or any required filings with, or clearance from, any Authority, is
necessary for execution and delivery of this Agreement or the Ancillary
Agreements by Ball or Buyer or the consummation by Ball or Buyer of the
transactions contemplated hereby or thereby except for compliance with the
HSR Act or Cade.
Section 3.9 Financing. Ball has received a commitment letter
(the "Commitment Letter"), dated April 22, 1998, from The First National
Bank of Chicago, First Chicago Capital Markets, Inc., Bank of America
National Trust and Savings Association, BancAmerica Robertson Stephens,
Inc., Lehman Brothers Inc. and Lehman Commercial Paper Inc. to provide $1.8
billion of debt financing (the "Financing") to Ball and Buyer in connection
with the transactions contemplated hereby and the refinancing of other
indebtedness of Ball on the terms set forth in the Commitment Letter. A
true and complete copy of the Commitment Letter has been delivered to
Seller.
49
ARTICLE IV
COVENANTS OF SELLER
Seller hereby covenants and agrees with Buyer:
Section 4.1 Conduct of the Business.
(a) From the date hereof until the Closing Date, Seller
shall conduct the Business in the ordinary course consistent with past
practice and use all reasonable efforts to preserve intact the present
business organization and its relationships with suppliers, dealers,
customers and third parties having business relationships with the Business
and keep available the services of the present employees of the Business.
Without limiting the generality of the foregoing, from the date hereof
until the Closing Date, Seller will not, without the prior written consent
of the Chairman, Vice Chairman or President of Ball:
(i) acquire assets valued in excess of $250,000 in
the aggregate from any Person other than in the ordinary course
consistent with past practice or as provided in the capital
expenditure plan included in Section 2.10 of the Disclosure Schedule;
(ii) sell, lease, license or otherwise dispose of any
Business Assets except for sales of Inventory and the following other
items in the ordinary course consistent with past practice: (A)
aluminum scrap generated by the production process; (B) other scrap
metal; (C) used beverage cans; (D) waste oil; (E) recyclable paper,
chipboards and separators; (F) non-usable pallets; (G) corrugated
cardboard; (H) waste water treatment room slurry accumulation; and
(I) packing materials and plant process materials sold to other can
and end manufacturers who are experiencing emergency shortages;
(iii) enter into any material agreement or contract
with respect to the Business or any of the Business Assets which is
not assignable (or which requires the consent of a third party to
assign which consent has not been obtained) to Ball or Buyer;
50
(iv) cancel any debts in excess of $200,000
individually or $1,000,000 in the aggregate, or waive any claims or
rights of material value related to the Business or the Business
Assets;
(v) grant any increase in the rates or terms of
compensation payable or to become payable to officers or employees of
Seller related to the Business (including any such increase pursuant
to any benefit plan), except in the ordinary and usual course of
business consistent with past practice or required by any labor or
other agreement in effect as of the date hereof or as described in
Section 2.10 of the Disclosure Schedule;
(vi) enter into, extend, amend, or renew any material
contract, agreement, purchase or supply agreement or commitment or
other obligation of the Business to which Seller is a party, except
in the ordinary and usual course of business consistent with past
practice;
(vii) make any material change in any management,
operation, financial, Tax or accounting principles, methods,
practices or procedures of the Business;
(viii) enter into any collective bargaining agreement
or labor contract of any kind related to the Business; or
(ix) agree or commit to do any of the foregoing.
(b) From the date hereof until Closing, Seller shall not,
without the prior written consent of the Chairman, Vice Chairman or
President of Ball or Buyer:
(i) vote, or allow any of its subsidiaries to vote,
the equity interests in Latasa held by RIB and RILA so as to
materially change the nature of the business conducted by Latasa; or
(ii) allow any of its subsidiaries to (A) dispose of,
(B) grant any rights, options or warrants with respect to or (C)
51
create any Encumbrances on any shares owned directly or indirectly by
Seller which represent or hold equity interests in Latasa or SVE.
Section 4.2 Access. Seller shall afford to Buyer, Ball, and
their counsel, accountants, other representatives and financing sources,
reasonable access during normal business hours and subject to Seller's
safety regulations, as Ball or Buyer may reasonably request, to the plants,
offices, warehouses, properties, advisors, auditors, officers, employees
and the books and records of Seller related to the Business, the Business
Assets and the Shares, and with Seller's consent, material customers,
suppliers and joint venture partners, so that Buyer may investigate the
Business (including, without limitation, conducting environmental
investigations) and obtain information requested by financing sources.
Seller will cooperate with Ball and Buyer in their investigation and
furnish to Buyer such additional financial, operating and other information
related to the Business, Business Assets or the Shares as Buyer shall from
time to time reasonably request. If employee consent is required for Buyer
to review any personnel file, at Buyer's reasonable request Seller shall
use reasonable efforts to obtain such consent. Such investigations shall be
conducted so as not to interfere unreasonably with the operation of the
Business. Notwithstanding anything contained herein to the contrary, Seller
shall not be required to make available to Buyer, Ball or their Affiliates,
agents, or representatives any information relating to existing or
contemplated pricing, price discount, and customer rebate information or
other similar sensitive information relating to the Business. From and
after the date hereof, Seller will provide to Buyer, promptly following the
end of each month, monthly financial reports consistent with those
currently provided to management of the Business and, as available,
quarterly financial statements of the Business consistent with the
representations set forth in Section 2.7.
Section 4.3 Consents. Seller shall use all reasonable efforts
to obtain all consents necessary to consummate the transactions
contemplated hereby, including those approvals set forth in Section 2.6 of
the Disclosure Schedule. Seller will provide to Buyer copies of each such
consent promptly after it is obtained. Ball and Buyer will cooperate with
Seller in obtaining such consents and shall use all reasonable efforts to
obtain all consents from parties to agreements with Ball or Buyer necessary
to consummate the transactions contemplated hereby (including those
approvals referred to in Section 3.8).
52
Section 4.4 Title to Real Property.
(a) Except as contemplated by Section 1.10, Seller shall
convey to Buyer, at the Closing, by special warranty deeds, in a form
reasonably acceptable to Buyer, title in fee simple to all of the Owned
Real Property subject only to (i) liens for real estate taxes and
assessments and other governmental charges which are a lien but which are
not yet due and payable and (ii) Permitted Exceptions and such additional
title and survey matters as are contemplated by Section 4.4(b) and (c)
below or, in the case of Torrance, California, as are contemplated herein
or in the Torrance Lease.
(b) Seller has previously delivered to Buyer title
commitments (the "Title Commitments"), which are described in Section
4.4(b) of the Disclosure Schedule, issued by Lawyers' Title Insurance
Company (the "Title Company"), along with copies of all documents creating
exceptions, as listed in the Title Commitments and surveys of the Owned
Real Property and any other document with respect to Real Property
reasonably requested by Buyer. Buyer hereby approves the following as
"Permitted Exceptions": (i) the matters shown on the Title Commitments and
on the surveys heretofore delivered to Buyer which are specifically
identified as Permitted Exceptions in Section 4.4(b) of the Disclosure
Schedule; (ii) a deed restriction applicable to burden the Fort Worth,
Texas parcel substantially as contemplated by the Model Deed Certificate
Language set forth as part of Exhibit 4.4(b); (iii) a 20-foot utility
easement for electric lines to burden the Moultrie, Georgia parcel
substantially in the form contemplated as a part of Exhibit 4.4(b); (iv) a
railroad easement to burden the Hayward, California parcel for the benefit
of the surplus property to be retained by Seller as shown on the drawing
attached as a part of Exhibit 4.4(b); (v) such matters as are to relate to
the Torrance, California parcel as are contemplated herein or in the
Torrance Lease; and (vi) such matters as to which Buyer does not timely
object as set forth in Section 4.4(b) or 4.4(c) or which are otherwise
resolved either by affirmative insurance from the Title Company or Seller's
indemnity or which are waived by Buyer all as hereinafter provided. No less
than 20 days prior to Closing, Seller shall deliver to Buyer date downs of
the Title Commitments. At the Closing, Seller, provided that Buyer pays the
cost thereof, shall cause the Title Company to furnish to Buyer ALTA form
owner's policies of title insurance (Form B-1992 with extended coverage
insuring over the general or standard exceptions), or "marked-up" Title
Commitments, in amounts equal to the value of the Owned Real Property
designated by Buyer. In connection with the issuance of such title
insurance, Seller shall furnish such reasonable and customary
53
affidavits or
documents requested by the Title Company which do not expand Seller's
special warranty covenant so as to enable the Title Company to issue to
Buyer owner's policies of title insurance. The cost of such title insurance
shall be borne by Buyer. Buyer, at its sole expense, may obtain such
endorsements as Buyer may desire (including, without limitation, survey
endorsement, contiguity endorsement (if applicable), subdivision
endorsement, zoning 3.1 endorsement (or equivalent), access endorsement and
tax parcel endorsement); however, the obtaining of such endorsements shall
not be a condition of Closing and, in connection therewith, Seller shall
furnish such reasonable and customary affidavits requested by the Title
Company which do not expand Seller's special warranty covenant. If any such
date downs of the Title Commitments reveal any exceptions which are not
already Permitted Exceptions and which have an "Adverse Effect" (which
term, for purposes of this Section 4.4(b), shall mean having an effect on
the applicable parcel of Owned Real Property as a whole that is reasonably
expected to be materially adverse to the use of the Owned Real Property for
industrial purposes, except that exceptions resulting from the acts of
Seller after the date of the Title Commitments and not otherwise
specifically permitted by the terms of this Agreement or the Torrance Lease
shall be deemed to have an "Adverse Effect"), then Buyer shall give Seller
notice of objection within ten days after receipt of the date downs of the
Title Commitments (otherwise the objection shall be deemed waived). If any
survey described in Section 4.4(c) reveals any exceptions which are not
already Permitted Exceptions and which have an Adverse Effect, then Buyer
shall give Seller notice of objection within ten days after receipt of the
survey (otherwise the objection shall be deemed waived). If Buyer gives
notice of objection to matters shown on the date downs or the surveys and
if the Title Company is not willing to provide Buyer with adequate
affirmative coverage insuring over the same then Ball and Buyer may either
(A) waive the exception, (B) cause Seller to indemnify and hold harmless
Buyer for any loss, claim, cause of action or damage arising from such
objections having an Adverse Effect or (C) in the event such matters have a
Material Adverse Effect, terminate the Agreement in accordance with Article
IX, including without limitation, Section 9.2(e) hereof. The cost of
affirmative title insurance over such matters shall be paid by Seller to
the extent that the cost of the title policies required by this Section 4.4
(b), with extended coverage over general or standard exceptions, but not
the cost of additional endorsements Buyer elects to obtain (the "Title
Costs"), exceeds $250,000. Buyer shall pay all costs of affirmative
insurance until the cost thereof, when added to the Title Costs, equals
$250,000. In the event Seller is required to pay additional sums for
affirmative insurance pursuant to the preceding two sentences, Seller, at
its option, may elect to indemnify Buyer for any loss, claim,
54
cause of
action or damage arising from such objections in lieu of paying the cost of
such affirmative insurance.
(c) Seller has ordered surveys of the Owned Real Property
(other than Torrance, California, which survey shall not be provided until
that Owned Real Property has been subdivided) as hereinafter described. The
surveys shall (i) be prepared and certified by a Registered Public Surveyor
or Registered Professional Engineer, (ii) comply with 1997 ALTA/ACSM
minimum detail requirements for Urban Land Title Surveys including Table A,
items 1-4, 6-11 and 13, (iii) locate all improvements, building lines,
rights-of-way and easements (identified by appropriate recording reference)
and other matters of record, evidenced by on-site observation or as
determined by the surveyor's examination of Seller's records affecting the
Owned Real Property, (iv) contain a legal description of the Owned Real
Property and (v) be certified to Buyer and the Title Company and Buyer's
lender, if such name is provided prior to Closing. To the extent Seller has
not already delivered any such surveys on or before the date of execution
of this Agreement, Seller shall do so promptly following receipt and review
thereof, but in any event Seller shall deliver the remaining surveys to
Buyer at least 20 days before Closing.
Section 4.5 No Solicitation.
(a) Until Closing or the earlier termination or
expiration of this Agreement, Seller shall not, directly or indirectly,
without the consent of Buyer, through any officer, director, employee,
investment banker, attorney or agent, (i) solicit, initiate, or encourage
any inquiries or proposals regarding the sale, lease or other disposition
of the Business or any substantial part of the Business or Business Assets
or the Shares other than the transactions contemplated by or described in
this Agreement (any of the foregoing inquiries or proposals being referred
to in this Agreement as an "Acquisition Proposal"), (ii) engage in
negotiations or discussions concerning, or provide any non-public
information or data to any person or entity relating to, any Acquisition
Proposal or (iii) agree to any Acquisition Proposal or otherwise facilitate
any effort to make an Acquisition Proposal. Seller will immediately
terminate any existing activities with any parties conducted heretofore
with respect to any of the foregoing and secure the return of confidential
information regarding the Business provided to any party other than Ball
and Buyer in connection therewith.
55
(b) Seller shall promptly notify Buyer after receipt by
Seller of any Acquisition Proposal or any inquiries indicating that any
person is considering making or wishes to make an Acquisition Proposal,
identifying such person and the details thereof.
Section 4.6 Supplements to Disclosure Schedule. From time to
time prior to the Closing, Seller will promptly supplement or amend the
Disclosure Schedule with respect to any matter hereafter arising which, if
existing at the date of this Agreement, would have been required to be set
forth in the Disclosure Schedule. Except for supplements and amendments
reflecting transactions permitted by this Agreement (including, for
example, and not by way of limitation, the execution of contracts permitted
by Section 4.1), no such supplement to or amendment shall be deemed to
qualify or amend any representation or warranty or cure any breach of any
representation or warranty made in this Agreement; provided, that if any
such breach arising out of events occurring after the date hereof and prior
to the Closing is sufficiently material that Ball and Buyer would not be
obligated to close under Section 8.1 as a result thereof, their remedy for
such breach, unless the parties otherwise agree, shall be to elect not to
close.
Section 4.7 Bulk Sales Laws. Each party hereby waives
compliance by Seller with the provisions of the "bulk sales," "bulk
transfer" and similar laws of any state. Seller agrees to indemnify and
hold Ball, Buyer and their respective Affiliates (including, after the
Closing, LAR, RCAL and RIND) harmless against any and all claims, losses,
damages, liabilities (including Tax liabilities), costs and expenses
incurred by Buyer, Ball or any of their respective Affiliates (including,
after the Closing, LAR, RCAL and RIND) as a result of any failure to comply
with any such "bulk sales," "bulk transfer" or similar laws.
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
Section 5.1 Reasonable Efforts. Subject to the terms and
conditions of this Agreement, the parties will use all reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done,
all things necessary or desirable to consummate, as promptly as
practicable, the transactions contemplated by this Agreement; provided that
Ball may, in its discretion upon written notice to Seller,
56
extend the 7 day
time period referred to in Section 1.7(a) by up to 21 days in order to
complete its financing arrangements with respect to the transactions
contemplated hereby. In addition, subject to the terms and conditions of
this Agreement, Ball and Buyer will use their best reasonable efforts to
consummate the Financing in accordance with the terms of the Commitment
Letter. Each party agrees to cooperate fully with the other parties in
assisting them to comply with the provisions of this Section 5.1. Each
party agrees to execute and deliver such other documents, certificates,
agreements and other writings and to take such other actions as may be
reasonably necessary or desirable to consummate the transactions
contemplated by this Agreement.
Section 5.2 WARN Act. The parties agree to cooperate in good
faith to determine whether any notification may be required under the WARN
Act as a result of the transactions contemplated by this Agreement. Seller
will be responsible for providing any notification that may be required
under the WARN Act with respect to any employees of the Business.
Section 5.3 Regulatory and Other Authorizations; Consents.
(a) Each party will use all reasonable efforts to obtain
all authorizations, consents, orders and approvals of Authorities
(including from Cade) and all third party consents that may be or become
necessary for the execution and delivery of, and the performance of its
respective obligations pursuant to, this Agreement and the Ancillary
Agreements, provided that neither Ball nor Buyer shall be under any
obligation to divest itself of any assets, to hold assets separate or to
agree to alter the manner in which Ball operates its business, the Business
is operated or the business of Latasa is operated. As soon as practicable
and in any event no more than 5 business days after the date hereof,
Seller, Ball and Buyer will each file with the United States Federal Trade
Commission and the Antitrust Division of the United States Department of
Justice, pursuant to the HSR Act, Notification and Report Forms (FTC Form
C4, Rev. 9/95) with respect to the transactions contemplated by this
Agreement and respond as promptly as is practicable to all inquiries
received from either agency for additional information or documentation.
The parties agree that no filing will be made with Cade until after the
Closing.
(b) The parties will consult with one another, and
consider in good faith the views of one another, in determining whether any
action by or in respect of, or filing with, any Authority is required or in
connection with any filings,
57
analyses, appearances, representations,
memoranda, briefs, arguments, opinions and proposals made, or required to
be made or submitted by or on behalf of any party in connection with
proceedings under or relating to the HSR Act or any other federal, state or
foreign antitrust or fair trade law. Each party shall promptly notify the
other party of any communication to that party from any Authority in
connection with any required filing with, or approval or review by, such
Authority in connection with the transactions contemplated by this
Agreement.
(c) Seller, Ball and Buyer shall each use its best
efforts to (i) lift, rescind or appeal any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate
the transactions contemplated hereby and (ii) defend any litigation seeking
to enjoin, prevent or delay the consummation of the transactions
contemplated hereby or seeking material damages as a result thereof;
provided, that no party shall be required to take any such action to the
extent there is not a reasonable chance of prevailing with respect thereto.
Section 5.4 Employee Matters for Represented Employees.
(a) The term "Represented Employees" means all of the
employees of the Business represented in collective bargaining units
pursuant to the Collective Bargaining Agreements, including those employees
("Absent Represented Employees") on lay-off, disability or leave of
absence, whether paid or unpaid, including without limitation under the
Family Medical Leave Act of 1993 ("FMLA"), military leaves or workers'
compensation, and the term "Transferred Represented Employees" shall mean
all of the Represented Employees (including Absent Represented Employees)
employed by Buyer pursuant to this Section 5.4.
(b) Effective at Closing, Buyer shall offer employment to
all Represented Employees as of the Closing Date. At Closing, except as
otherwise provided in this Section 5.4, Buyer shall also assume Seller's
obligations under the Collective Bargaining Agreements, other than with
respect to plans maintained by Seller as of the Closing Date (all such
plans, collectively, "Seller's Plans"), it being acknowledged and agreed
that (i) Seller shall remain liable to all Transferred Represented
Employees for benefits under Seller's Plans in which such employees are or
will become vested as of the Closing Date and that Buyer shall provide to
Transferred Represented Employees the benefits under the Collective
Bargaining Agreements from and after the Closing Date under the Replacement
Plan (as defined in Section 5.4(f) below), and other plans of Buyer,
subject to the remainder of this
58
Section 5.4, and (ii) Seller shall amend
Seller's Plans to provide that all Represented Employees shall be 100%
vested in their benefits accrued as of the Closing Date under all
tax-qualified plans maintained or contributed to by Seller on behalf of
Represented Employees. Seller hereby represents that it neither maintains
nor contributes to any other employee benefit plan under which Represented
Employees may be eligible to receive benefits that have the potential to
vest, but not including for purposes of this sentence any vacation pay
plan.
Buyer and Seller shall cooperate and shall use their reasonable
efforts to enable all Transferred Represented Employees to commence
participation in employee benefit plans maintained by, or on behalf of,
Buyer commencing effective as of the Closing Date.
Notwithstanding the foregoing, with respect to (i) any
gainsharing plan, (ii) any plan based in whole or in part on either
Seller's or Buyer's profits, earnings, returns or revenues, or (iii) any
provision of a plan pursuant to which provision benefits or plan assets are
distributed or invested (including investments directed by plan
participants or beneficiaries) in employer securities or other forms of
investment in which it would be impracticable or infeasible for Buyer to
distribute or invest (as the case may be), or plan assets that Buyer
determines should be invested, in whole or in part, in investments
different from the plan investments immediately prior to the Closing Date,
such benefits, provisions, investments or any similar modifications or
adaptations shall be subject to good faith negotiations between Buyer and
the applicable unions. Because it would be inappropriate or impracticable
for Buyer to assume the foregoing plans and provisions in their entirety,
Buyer, after negotiating with the appropriate unions, shall provide
reasonably comparable alternative benefits for Transferred Represented
Employees to replicate or substitute for Seller's profit sharing and
gainsharing plans and those provisions of the employee benefit plans that
are described in clause (iii) of the preceding sentence.
Seller represents that, to the best of its knowledge and belief
the interplant transfer provisions in Article XXXV of the Collective
Bargaining Agreements at the Bristol, Kansas City, Seattle and Tampa can
plants (the "Interplant Transfer Provisions") and, the plans and
provisions described in the preceding paragraph represent the only
obligations (other than procedural or administrative obligations) under the
Collective Bargaining Agreements that would be impracticable or
inappropriate for another reasonable party to assume. Buyer shall not
assume the Interplant Transfer Provisions.
59
Notwithstanding anything in this Agreement to the contrary,
Seller shall reimburse Buyer for all liabilities and obligations incurred
by Buyer with respect to all Absent Represented Employees unless and until
such employees commence active employment with Buyer.
Seller shall retain (i) all liabilities and obligations with
respect to severance, termination pay and related liabilities for all
Represented Employees who terminate or are terminated by Seller on or prior
to the Closing Date, or arising in connection with the Closing by reason of
any action, omission or failure to take action by, or on behalf of, Seller,
(ii) all liabilities and obligations incurred by Buyer relating to the
failure of any of Seller's Plans to conform to, or be administered in
accordance with, the Collective Bargaining Agreement to which it relates,
if applicable.
Buyer, however, shall assume and be solely responsible for any
Losses incurred by Seller as a result of any equal employment opportunity
claims, disability discrimination claims and/or claims under the Collective
Bargaining Agreements alleging a violation arising solely from Buyer's
decision not to restore an Absent Represented Employee to active
employment.
(c) There will be no transfer of any funds at Closing
from Seller to Buyer regarding the contractual supplemental unemployment
benefit plans. Buyer shall assume the obligation to pay supplemental
unemployment benefits under its own plan or plans (collectively, if more
than one, "Buyer's SUB Plan") in accordance with the terms of the
Collective Bargaining Agreements, with respect to benefits payable from and
after the Closing Date.
Seller, however, shall reimburse Buyer for benefits provided by
Buyer under Buyer's SUB Plan to, or on behalf of, Absent Represented
Employees (i) with respect to any restructuring initiated prior to Closing
(e.g., Torrance), for any and all periods prior to the date such employee
first becomes actively employed by Buyer (if ever), and (ii) with respect
to layoffs in the ordinary course, for any and all payment periods
commencing on, or prior to, the 60th day following the Closing Date. Seller
shall include on the Closing Statement $250,000 as an accrued liability for
SUB payments pursuant to Section 1.5(a ). Seller hereby represents that
Seller is not and has not been required to fund (other than on a
pay-as-you-go basis) any supplemental unemployment compensation benefits on
behalf of Seller Employees (as defined in Section 5.5(a)). Seller shall
indemnify and hold Buyer and its Affiliates harmless
60
from and against any
and all Losses with respect to (i) Seller's supplemental unemployment
compensation benefit plans or their funding arrangements or their summary
plan descriptions, (ii) any liability incurred by Buyer as a result of
Seller's breach of the foregoing representation, and (iii) any liabilities
arising out of Seller's obligation to make cash funding contributions to
trusts established pursuant to its supplemental unemployment compensation
benefit plans or to disclose such benefits or funding, or any incidents of
mistakes or noncompliance by Seller with respect to the supplemental
unemployment compensation benefits.
(d) Buyer acknowledges that certain Collective Bargaining
Agreements require Buyer to establish a 401(k) defined contribution plan as
of the Closing Date, and Buyer shall use its reasonable efforts to promptly
implement any such plan. If Buyer is unable to provide a 401(k) defined
contribution plan as of the Closing Date, Buyer shall take such reasonable
steps as may be necessary to contribute to the applicable plan or plans the
required matching or other employer contributions due for the period
between the Closing Date and the date Buyer's plan becomes effective, but
not including any wage deferral contributions pursuant to employee
elections under section 401(k) of the Code.
(e) Buyer shall recognize Transferred Represented
Employees' seniority and service with Seller and any predecessor under
Buyer's employee benefit plans (whether or not funded and whether or not
subject to ERISA), personnel policies and fringe benefit plans, programs
and arrangements established for or offered to Transferred Represented
Employees to the same extent and for the same purposes that Seller is
required to recognize such service pursuant to the Collective Bargaining
Agreements. On and after the Closing Date, Buyer and the applicable unions
are free to negotiate from time to time new terms and conditions of
employment, including without limitation seniority and benefit plans,
consistent with the National Labor Relations Act.
(f) Except as otherwise provided in Section 5.4(g)
regarding the possible assumption of certain Single Location Plans (as
defined therein), on or as soon as practicable following the Closing Date,
but with retroactive effect to the Closing Date, Buyer shall establish a
defined benefit pension plan or plans (collectively, if more than one, the
"Replacement Plan") providing benefits to Transferred Represented Employees
required pursuant to the Collective Bargaining Agreements, which
Replacement Plan shall (x) be designed to qualify under section 401(a) of
the Code, and (y) provide that the Transferred Represented Employees who
were
61
participants in a Union Pension Plan immediately before Closing and
who become Transferred Represented Employees shall commence participation
in the Replacement Plan as of the Closing Date.
Each Replacement Plan shall provide Transferred Represented
Employees with credit for service with Seller for purposes of eligibility
to participate, vesting, eligibility to receive benefits, and benefit
accruals under the Replacement Plan; provided, however, that the benefit
payable to a Transferred Represented Employee under a Replacement Plan
shall be offset by the benefit payable to the Transferred Represented
Employee under the applicable Seller's Plans (collectively, the "Union
Pension Plans"). Such offset (the "Offset") shall be calculated in
accordance with the principles outlined below. The pension benefit examples
set forth in Exhibit 5.4(f) are intended to illustrate the calculations of
the Offset in accordance with these principles, but are not intended to be
exhaustive.
(i) A participant may elect to begin receiving a
benefit under the Union Pension Plan as provided under that plan.
(ii) In the event that a Transferred Represented
Employee is eligible for a monthly retirement benefit (other than a
retirement benefit due to Permanent Shutdown, layoff, accident or
sickness, which benefit is hereinafter referred to as a "Special
Retirement Benefit") or a deferred vested monthly benefit under the
Replacement Plan, the Offset shall be based on the age 65 (or if
later, normal retirement date) benefit payable under the Union
Pension Plan, and the benefit payable under the Replacement Plan
shall be adjusted based on age at benefit commencement under the
Replacement Plan, the participant's form of payment under the
Replacement Plan, the preretirement survivor coverage, if any, under
the Replacement Plan, and preretirement survivor coverage, if any,
under the Union Pension Plan that was in force while such participant
was employed by Buyer. Notwithstanding the foregoing, this
subparagraph (ii) shall not apply for determining the Offset for a
Transferred Represented Employee with a deferred vested monthly
benefit under a Defined Benefit Single Location Plan (as defined in
Section 5.4(g)) that has not been assumed by Buyer, which participant
cannot elect to commence receiving such monthly benefit before age 65
due to having earned fewer than 10 years of vesting service with
Seller. For
62
such Transferred Represented Employee, the Offset shall
be equal to (a) $0 until the date immediately preceding age 65, and
(b) from and after such date, such monthly benefit that is payable
under such Defined Benefit Single Location Plan.
(iii) In the event that a Transferred Represented
Employee is eligible for a monthly retirement benefit (other than a
Special Retirement Benefit) under the Replacement Plan, the Offset
shall include the graded minimum supplement under the Union Pension
Plan if such Transferred Represented Employee is eligible for such
supplement as of the Closing Date.
(iv) In the event that a Transferred Represented
Employee is eligible for a special retirement payment under the
Replacement Plan, the Offset shall include the special, ten week,
payment, if any, payable under the Union Pension Plan but shall not
include weeks of accrued vacation, if any, as of the Closing Date,
and if the special retirement payment payable under the Union Pension
Plan exceeds $0, the Transferred Represented Employee shall commence
to receive a monthly retirement benefit under the Replacement Plan
upon retirement instead of three months following retirement.
(v) In the event that a Transferred Represented
Employee is eligible for a disability benefit or a Special Retirement
Benefit under the Replacement Plan, the Offset shall be equal to (a)
$0 until the date immediately preceding the earliest date that
benefits could commence under the Union Pension Plan, and (b) from
and after such earliest date, the benefit that could be paid under
the Union Pension Plan assuming that the benefit commences on such
earliest date.
(vi) In the event that a Transferred Represented
Employee dies while employed by Buyer and the Transferred Represented
Employee's surviving spouse is eligible for a death benefit under the
Replacement Plan, the Offset shall equal the benefit, if any, which
is payable under the Union Pension Plan on account of such death.
63
(vii) In the event that a Transferred Represented
Employee either (A) separates from service with Buyer at a time when
the participant is eligible for a deferred vested monthly benefit
under the Replacement Plan and subsequently dies prior to the
commencement of benefits under the Replacement Plan, and the
Transferred Represented Employee's surviving spouse is eligible for a
death benefit under the Replacement Plan due to preretirement
survivor coverage under the Replacement Plan, or (B) separates from
service with Buyer at a time when the participant is eligible for a
monthly retirement benefit under the Replacement Plan and
subsequently dies prior to the commencement of benefits under the
Replacement Plan, then in either case, the benefit payable under the
Replacement Plan shall be determined as in (ii) above, and further
reduced by 50% on account of payment to the surviving spouse.
(viii) In the event that a Transferred Represented
Employee dies subsequent to both separation from service with Buyer
and benefit commencement from the Replacement Plan, the death
benefit, if any, payable from the Replacement Plan shall be
determined solely with regard to the form of payment in effect at
death and the monthly benefit under the Replacement Plan.
(ix) Benefits under the Union Pension Plans shall be
paid to Transferred Represented Employees based on the plan
provisions in effect as of the Closing Date, but taking into account
the amendments described below in this Section 5.4(f).
(x) The above principles (i) through (ix) should not
be interpreted to entitle a participant in a Defined Benefit Single
Location Plan to any benefits, including but not limited to Special
Retirement Benefits and special retirement payments under the
Replacement Plan or the Union Pension Plans, other than benefits
expressly contemplated by the applicable Collective Bargaining
Agreement.
Seller shall fund the Union Pension Plans as necessary to
ensure that benefits payable thereunder to Transferred Represented
Employees will be fully paid when due. In addition, Seller shall amend each
Union Pension Plan that is not a
64
Defined Benefit Single Location Plan and
that provides an unreduced benefit upon retirement with 30 years of service
so that Transferred Represented Employees' service with Buyer will be
credited under the Union Pension Plans for purposes of determining a
Transferred Represented Employee's eligibility for, and entitlement to, a
thirty-year pension under the Union Pension Plan upon a Transferred
Represented Employee's termination, resignation, retirement or death from
Buyer following the Closing Date. Further, Seller shall amend each Union
Pension Plan that is not a Defined Benefit Single Location Plan to provide
that (i) a Transferred Represented Employee who retires under a Replacement
Plan shall have his or her benefit under such Union Pension Plan converted
to a joint and 50% survivor annuity using factors applicable to a
participant who retires under such Union Pension Plan irrespective of
whether such Transferred Represented Employee was eligible to retire under
such Union Pension Plan as of the Closing Date, (ii) if a Transferred
Represented Employee elects, or does not opt out of, preretirement survivor
coverage under a Union Pension Plan, and subsequently dies while employed
by Buyer and while such coverage is in effect, the death benefit payable
from the Union Pension Plan shall commence at death in a monthly amount
equal to 50% of the accrued benefit, including the reduction for
preretirement survivor coverage, and (iii) the special retirement payment
payable to a Transferred Represented Employee shall be determined without
regard to any weeks of accrued vacation.
Notwithstanding the foregoing, in the event that Buyer incurs
any additional liabilities or obligations as a result of the failure of the
applicable union or any applicable governmental agency or authority, to
agree to, or approve, the crediting of service, or the timing or
methodology of the Offset, in each case, in the manner and to the extent
described in this Section 5.4(f) and Exhibit 5.4(f), thereby resulting in a
duplication of pension benefits or additional benefits beyond those
contemplated by this Section 5.4(f) and Exhibit 5.4(f), payable to or on
behalf of Transferred Represented Employees, Seller shall reimburse Buyer
for any additional out-of-pocket costs incurred by Buyer to the extent
resulting from such duplication of benefits or additional benefits beyond
those contemplated by this Section 5.4(f) and Exhibit 5.4(f). In addition,
Seller shall reimburse Buyer for any and all Losses suffered by Buyer by
reason of any Permanent Shutdown (as defined in Section 5.4(h)) occurring
as a result of Seller's actions on or before the Closing Date or as a
result of the execution, delivery or performance of this Agreement, or the
consummation of transactions contemplated hereby, provided that Buyer has
assumed Seller's obligations under the Collective Bargaining Agreements as
required by this Section 5.4.
65
(g) Single Location Plans.
(i) With respect to any Business Locations where
separate tax-qualified defined benefit and/or defined contribution
plans are maintained for Transferred Represented Employees and/or
Transferred Nonrepresented Hourly Employees (as defined in Section
5.5(b)) ("Single Location Plans"), Buyer shall have the right, in its
sole discretion, to elect, on or prior to the Closing Date, to assume
sponsorship of one or more of the Single Location Plans that are
defined contribution plans (the "Defined Contribution Single Location
Plans"), and to elect, at the time prescribed in clause (vii) below,
to assume sponsorship of all (or none) of the Single Location Plans
that are defined benefit plans (the "Defined Benefit Single Location
Plans"). In this regard, if Buyer elects to assume sponsorship of any
of the Defined Contribution Single Location Plans, Buyer may elect to
either assume the trust in which the assets of any such plan are
invested, or to receive a transfer of plan assets from the plan's
trust in conjunction with the assumption of the liabilities of such
plan, and if Buyer elects to assume sponsorship of the Defined
Benefit Single Location Plans, Buyer shall receive transfers of plan
assets in conjunction with the assumption of the liabilities from
each of the respective trusts in which assets of the Defined Benefit
Single Location Plans are invested, as described below.
(ii) With respect to each Single Location Plan,
Seller has heretofore delivered to Buyer true and complete copies of
the current version of the plan and any amendments thereto, any
related trust or other funding vehicle, the most recent summary plan
descriptions and summaries of economics provided to participants
under ERISA or the Code, the most recent determination letter
received from the Internal Revenue Service with respect to each such
plan and other related documents. To the knowledge of Seller, no
event has occurred since the date of such determination that would
affect such determination. The plans and related documents provided
to Buyer as of the date hereof pursuant to this Section 5.4(g)(ii)
are herein referred to as the "Initial Document Production."
Commencing as of the date hereof, Seller shall use its reasonable
efforts to provide to Buyer updated plans, related trusts,
amendments, summaries of
66
economics, summary plan descriptions,
summary of material modifications and related information required
under ERISA or the Code. In addition, as of the Closing Date, Seller
shall identify for Buyer those documents required under ERISA or the
Code relating to the Single Location Plans that Seller will not
deliver to Buyer as of the Closing Date. To the extent that Seller
fails to timely provide Buyer with the documents and information that
are reasonably appropriate or needed for Buyer to operate and
administer the Single Location Plans, Seller shall indemnify and hold
harmless Buyer from any and all Losses suffered by Buyer pursuant to
Section 5.4(g)(x) related to such failure, and further, to the extent
that such failure interferes with Buyer's ability to satisfy its
obligations under Section 5.4, 5.5 or 5.6, Buyer shall be relieved of
its obligations to the extent that Buyer's inabilities result from
Seller's failure, until (A) Seller cures such failure and (B) Buyer
has had a reasonable period of time thereafter to satisfy its related
obligations.
(iii) Seller hereby represents that each of the
Single Location Plans is, and has been administered, in compliance
with its terms and, to the extent required, with all applicable law,
including the applicable provisions of ERISA and the Code ;provided,
however, that Seller shall not be deemed to have breached this
representation to the extent that plan documents provided to Buyer
have not been amended to comply with applicable law, but solely with
respect to those amendments that are not required to be made as of
the date hereof, or as of the Closing Date, as the case may be. In
addition, Seller hereby represents that all documents, financial and
census data and reports and other pertinent information provided, or
required to be provided to Buyer pursuant to this Agreement, are true
and complete as of the date so provided, and that, where applicable,
the terms of each Single Location Plans or, if updated by a summary
of economics, then the terms of the applicable summary of economics
are consistent with the terms of the Collective Bargaining Agreements
to which such plan or summary relates as of the date hereof with
respect to the documents provided to Buyer as of the date hereof, and
as of the date provided to Buyer with respect to the documents
provided to Buyer following the date hereof, but prior to the Closing
Date.
67
(iv) With respect to the Defined Contribution Single
Location Plans that Buyer may elect to assume, if any, on, or as soon
as practicable following, the Closing Date, Buyer shall take all
actions necessary and appropriate to assume such plans, and Buyer and
Seller shall cooperate to effectuate the foregoing.
(v) With respect to the Defined Benefit Single
Location Plans that Buyer may elect to assume, no later than the
earlier of (A) June 1, 1998, or (B) 45 days prior to the Closing
Date, Seller or Seller's actuary or the trustee or trustees (the
"Master Trustee") of the master trust or trusts in which the assets
of the Defined Benefit Single Location Plans are invested (the
"Master Trust") shall provide to Buyer (A) a schedule containing the
projected benefit obligations, as of January 1, 1998, or such later
date as Seller shall determine, for each participant, beneficiary and
alternate payee (within the meaning of section 414(p)(8) of the Code)
under each of the Defined Benefit Single Location Plans, (B) such
additional census data for all plan participants and other pertinent
census-related information that Buyer or Buyer's actuary may
reasonably request to enable Buyer to calculate the liabilities under
such plans, in each case, as of January 1, 1998, or such later date
as Seller shall determine, and (C) such other pertinent information
that Buyer or Buyer's actuary may reasonably request to evaluate such
plans from a financial and legal compliance perspective.
(vi) On the day following the last day of the month
coincident with or next following the Closing Date (the "Valuation
Date"), Seller shall provide to Buyer an estimate of the fair market
value of the assets allocable to each of the Defined Benefit Single
Location Plans (the "Guaranteed Pension Asset Value").
(vii) As soon as practicable, but in no event more
than five business days following the Valuation Date, Buyer shall
notify Seller whether or not Buyer has elected to assume the Defined
Benefit Single Location Plans. If Buyer has elected to assume such
plans, then, as soon as practicable, but in no event later than four
business days following the date that Buyer has notified Seller that
it has elected to assume such plans, Seller shall cause the
68
Master Trustee to transfer to a trustee or trustees designated by
Buyer, in cash, assets from the Master Trust equal to 90% of the
Guaranteed Pension Asset Value.
(viii) No later than 60 days following the Valuation
Date, Seller shall cause the Master Trustee to transfer to a trustee
or trustees designated by Buyer, in cash, assets from the Master
Trust equal to the greater of (A) 10% of the Guaranteed Pension Asset
Value or (B) the fair market value of the assets allocable to each of
the Defined Benefit Single Location Plans as of the Valuation Date
minus 90% of the Guaranteed Pension Asset Value. At such time, Seller
(or Seller's actuary or the Master Trustee) shall also provide to
Buyer a report of the fair market value of the assets of each of the
Defined Benefit Single Location Plans as of the Valuation Date,
financial information relating to the calculation of such assets as
of the Valuation Date, and such other pertinent information as Buyer
may reasonably request to evaluate the report on assets prepared by
the Master Trustee, and such other reports, if any, prepared by
Seller or Seller's actuary, and (C) such other pertinent information
that Buyer or Buyer's actuary may reasonably request to evaluate such
plans from a financial and legal compliance perspective, and to
evaluate the calculations prepared by the Master Trustee, and Seller
or Seller's actuary, if applicable. The report prepared valuing the
assets in the Master Trust allocable to the Defined Benefit Single
Location Plans as of the Valuation Date shall be prepared by the
Master Trustee in accordance with such rules, regulations and
procedures governing such preparation.
(ix) Seller hereby represents that the transfer of
assets and liabilities contemplated by this Section 5.4(g) shall be
in compliance with section 414(l) of the Code, to the extent
applicable.
(x) Seller shall indemnify and hold Buyer and its
Affiliates harmless from and against any and all Losses with respect
to all liabilities and obligations arising under the plans that are
assumed by Buyer pursuant to this Section 5.4(g) that result from (A)
the acts or omissions of Seller, any trustee or other fiduciary with
respect to such plans, which acts or omissions occurred, or should
69
have occurred, on or prior to the date the applicable assets are
transferred, including, without limitation, any acts or omissions
relating to any inaccuracies or omissions in the data, documents or
other information that Seller (or Seller's actuary or the Master
Trustee) were required to provide to Buyer pursuant to this Agreement
or that were reasonably appropriate or needed for Buyer to operate
and administer the Single Location Plans, or (B) Buyer's reliance on,
or taking any actions with respect to, the Initial Document
Production, to the extent that the information provided therein
differed from, or failed to conform with, any documents or subsequent
information received by Buyer from Seller, the terms of any
applicable Collective Bargaining Agreement or applicable law.
(xi) Seller and Buyer shall cooperate in the filing
of any required forms, applications or communications, and in taking
all other actions that are necessary or appropriate relating to the
Internal Revenue Service, the Pension Benefit Guaranty Corporation,
the U.S. Department of Labor, and any other regulatory agency that
has jurisdiction over the transfers and assumptions contemplated by
this Section 5.4(g) to consummate such transfers and assumptions.
(xii) To the extent that Buyer elects to assume any or
all of the Defined Contribution Single Location Plans and all of the
Defined Benefit Single Location Plans pursuant to this Section 5.4(g)
(each, an "Assumed Benefit Plan," and collectively, the "Assumed
Benefit Plans"), Buyer shall not be required to establish a plan for
the employees at the applicable Business Locations pursuant to
paragraph (f) above, or Section 5.5 hereof.
(h) The parties to this Agreement intend that this
transaction should not be construed as a "permanent shutdown" either under
the Collective Bargaining Agreements or for purposes of Article III of
Seller's Pension Plans for Hourly Employees or otherwise ("Permanent
Shutdown").
(i) All reimbursements described in this Section 5.4
shall be made in accordance with the reimbursement procedures set forth in
Section 5.5(i) hereof. All references in this Section 5.4 to liabilities or
obligations incurred by Buyer, shall be deemed to include all liabilities
or obligations incurred by any
70
pension plan maintained or sponsored by
Buyer or Ball, or to which Buyer or Ball is obligated to contribute,
including the Replacement Plan.
(j) For purposes of Sections 5.4, 5.5 and 5.6 of this
Agreement, references to Buyer shall be interpreted to include or be
replaced by references to Ball with respect to references to the entity
sponsoring or maintaining an employee benefit plan, the entity taking or
required to take any action with respect to any such plan, the entity for
whom an employee is employed or from whom an employee has terminated
employment, and the entity incurring employee benefit related liability, in
each case, as the context permits.
Section 5.5 General Employee Matters, Employee Matters
for Nonrepresented Employees and Welfare Benefit Provisions for All
Employees.
(a) General. Seller has previously provided to Buyer the
information listed below pertaining to all employees employed by Seller in
the Business, including Headquarter Employees (as defined in Section
5.5(c)) as of the date indicated (the "Employee Lists"). Each such person
is herein referred to individually as a "Seller Employee," and collectively
as the "Seller Employees": name, title, work location, wage grade or Hay
Grade, date of birth, status as salaried or hourly employee and union code,
whether such employee is exempt or non-exempt, monthly salary or hourly
wage rate, employee's current status, status date and reason code if
employee is inactive, service dates and the date definitions for purposes
of vesting and eligibility to participate under any employee benefit plan.
As soon as practicable, but no later than 30 days following the
date hereof, Seller shall provide to Buyer certain employee benefits data
(the "Employee Benefits Data") with respect to all Seller Employees
containing the type of information set forth on Section 5.5(a) of the
Disclosure Schedule. Seller shall provide updated Employee Benefits Data no
later than 14 days following the Closing Date.
No later than 14 days following the Closing Date, Seller shall
provide Buyer with (i) the number of remaining 1998 vacation days accrued
as of the Closing Date for each Transferred Employee (as defined below),
and (ii) Employee Lists updated as of the Closing Date.
In addition, within 180 days following the Closing Date, Seller
shall provide to Buyer (i) for each Transferred Employee, individual
pension service
71
information, including the period of continuous service
with Seller (and including all service that Seller is required to take into
account for purposes of all applicable benefit plans), which information
includes credited service for benefit and vesting purposes, and (ii) such
other information regarding Transferred Represented Employees and
Transferred Nonrepresented Hourly Employees (as defined in Section 5.5(b))
that actuaries would reasonably agree is sufficient and necessary to value
the liabilities of, and/or administer, the Replacement Plans and any
Defined Benefit Single Location Plans that are assumed by Buyer, pursuant
to the terms of such plans, including individual accrued benefits for each
Transferred Represented Employee and Transferred Nonrepresented Hourly
Employees. In the event, however, that any Transferred Employee terminates,
retires, dies or becomes disabled during the 180 day period following the
Closing Date, upon notification of the date of separation of service,
Seller shall provide to Buyer all pension information for such person
within 5 business days of notification.
Commencing as of the date hereof, Seller shall provide to
Buyer, upon Buyer's request, such employee benefits data, including dates
of hire and breaks in service, pertaining to a specific individual or
individuals, reasonably requested by Buyer, as soon as practicable, but in
no event later than 7 days, following the date of such request. In
addition, Seller shall provide to Buyer, within 36 months following the
Closing Date, break in service information with respect to each Transferred
Employee, by individual.
To the extent that Seller fails to satisfy its obligations to
provide Buyer with the information described in the foregoing paragraphs of
this Section 5.5(a) in a timely and accurate manner, Seller shall indemnify
and hold harmless Buyer from any and all Losses related to such failure,
and further, to the extent that such failure interferes with Buyer's
ability to satisfy its obligations under Section 5.4, 5.5 or 5.6 hereof,
Buyer shall be relieved of its obligations to the extent that Buyer's
inabilities result from Seller's failure, until (i) Seller cures such
failure and (ii) Buyer has had a reasonable period of time thereafter to
satisfy its related obligations.
Each Seller Employee (other than any Represented Employee) who
becomes actively employed by Buyer within the time prescribed by Section
5.5 or 5.6, is herein referred to individually as a "Transferred Employee"
and all such Seller Employees collectively as "Transferred Employees," in
each case, as of the date such Transferred Employee commences active
employment with Buyer. Each Transferred Represented Employee is herein
referred to individually as a Transferred Employee
72
and all such Transferred
Represented Employees, collectively as Transferred Employees, as of the
Closing Date. Employment of Transferred Employees by Buyer on or after the
Closing Date, other than those employees covered by a Collective Bargaining
Agreement, shall be employment "at will," and nothing herein shall be
construed to be an employment agreement for the benefit of any such
employee.
Any Absent Nonrepresented Hourly Employee, as defined Section
5.5(b), or Absent Salaried Employee, as defined in Section 5.5(c), shall
not be deemed to be a Transferred Employee until such employee commences
active employment with Buyer.
Except for certain obligations relating to Assumed Benefit
Plans that are assumed by Buyer as of the Closing Date, as described in
Section 5.4(g), and obligations relating to Represented Employees, as
described in Sections 5.4 and 5.5, Seller shall retain all liabilities and
obligations whatsoever pertaining to (i) all Seller Employees, or any
employees of Seller who have retired or terminated, are on lay off,
short-term disability, long-term disability, workers' compensation, leave
of absence or any other inactive status immediately prior to the Closing
Date and, in each case, who do not become Transferred Employees, whether
such liabilities and obligations are incurred prior to, on or after the
Closing Date, and (ii) all Seller Employees, including Transferred
Employees, with respect to all liabilities and obligations incurred prior
to the Closing Date, and Seller shall reimburse Buyer for any and all
liabilities or obligations incurred by Buyer that are described in clauses
(i) or (ii), above. Except as otherwise provided in Sections 5.4, 5.5 and
5.6 hereof, Buyer shall be liable for all obligations incurred with respect
to Transferred Employees from the date such employees become Transferred
Employees.
(b) Nonrepresented Hourly Employees. Effective at
Closing, Buyer shall offer employment to all hourly employees associated
with the Business who are not covered by a Collective Bargaining Agreement
("Seller Nonrepresented Hourly Employees") other than those employees
("Absent Nonrepresented Hourly Employees") on short- and long-term
disability, leaves of absence, including, without limitation, under FMLA or
military leaves, lay off or workers' compensation.
In addition, Buyer shall offer employment to all Absent
Nonrepresented Hourly Employees who are available to commence active
employment on or prior to the 180th day following the Closing Date or such
later date to the extent that Buyer is so required pursuant to applicable
law. Those Seller Nonrepre-
73
sented Hourly Employees who commence active
employment with Buyer as of the Closing Date and those Absent
Nonrepresented Hourly Employees who commence active employment with Buyer
within the time prescribed by this paragraph shall, as of the date such
employees commence active employment with Buyer, be considered Transferred
Employees and shall herein be referred to as the "Transferred
Nonrepresented Hourly Employees."
Buyer shall offer to Transferred Nonrepresented Hourly
Employees who commence active employment on the Closing Date the same
hourly wage rate in effect with Seller immediately prior to the Closing
Date, and benefits substantially comparable to those benefits provided to
such employees by Seller immediately prior to the Closing Date. Buyer shall
offer to Transferred Nonrepresented Hourly Employees who commence active
employment after the Closing Date the same hourly wage rate in effect for
similarly situated employees of Buyer at that location, and benefits
substantially comparable to those benefits provided to similarly situated
employees of Buyer at that location, in each case, as of the date such
employees commence active employment with Buyer. Notwithstanding the
foregoing, Buyer shall have no obligation to guarantee to continue the
hourly wage rate or benefits provided to Transferred Nonrepresented Hourly
Employees pursuant to this paragraph.
Buyer shall recognize Transferred Nonrepresented Hourly
Employees' service with Seller to the same extent and for the same purposes
(other than for purposes of benefit accrual under defined benefit plans)
that Seller is required to recognize such service pursuant to the terms of
Seller's plans, in accordance with the provisions governing crediting of
service from time to time under Buyer's employee benefit plans (whether or
not funded and whether or not subject to ERISA) and personnel policies;
provided, however, that Buyer shall be required to credit service with
Seller under Buyer's employee benefit plans only if, and to the extent
that, Buyer gives credit to similarly situated employees of Buyer for
comparable service performed by such employees for Buyer.
Except as provided in Section 5.6(a)(4), Seller shall be solely
responsible for, and shall retain all liabilities and obligations for, all
Absent Nonrepresented Hourly Employees unless and until such employees
become Transferred Employees. Seller shall be solely responsible for, and
shall retain all liabilities and obligations with respect to, severance,
termination pay and related liabilities for all Seller Nonrepresented
Hourly Employees who terminate or are terminated by Seller prior to
74
the date such employees become Transferred Employees, and shall reimburse
Buyer for any and all liabilities and obligations incurred by Buyer that are
retained by Seller or for which Seller is obligated to reimburse Buyer
pursuant to this paragraph.
(c) Salaried Employees Including Headquarter Employees,
Commencing Employment as of the Closing Date. Effective at Closing, Buyer
may offer employment to (i) any salaried employees associated with the
Business who are employed at Seller's Can Division headquarters, and (ii)
any salaried employees listed on Section 5.5(c)(2) of the Disclosure
Schedule hereto located at operating locations but who are not directly
associated with plant responsibilities (e.g., regional sales or services
employees) (collectively, the "Headquarter Employees"), in either case,
whom Buyer, in its sole discretion, chooses to employ.
Effective at Closing, Buyer shall also offer employment to all
salaried employees located at operating locations and directly associated
with plant responsibilities of the Business (collectively, the "Plant
Salaried Employees") other than those employees ("Absent Salaried
Employees") on short- and long-term disability, leaves of absence,
including, without limitation, under FMLA or military leaves, layoff or
workers' compensation. The definition of Absent Salaried Employees shall
not include any Headquarter Employees.
In addition, Buyer shall offer employment to all Absent
Salaried Employees who are available to commence active employment on or
prior to the 180th day following the Closing Date or such later date to the
extent that Buyer is so required pursuant to applicable law.
Those salaried employees of Seller described in this Section
5.5(c), including Headquarter Employees ("Seller Salaried Employees") who
commence active employment with Buyer within the time prescribed by this
Section 5.5(c) or Section 5.6 shall, as of the date such employees commence
active employment with Buyer, be herein referred to as "Transferred
Salaried Employees."
Buyer shall offer to Transferred Salaried Employees who
commence active employment with Buyer as of the Closing Date the same
salary levels in effect with Seller immediately prior to the Closing Date,
and benefits consistent with benefits provided to similarly situated
employees of Buyer as of the Closing Date. Buyer shall offer to Transferred
Salaried Employees who commence active employment with Buyer after the
Closing Date salary levels consistent with salary levels in
75
effect for
similarly situated employees of Buyer and benefits consistent with benefits
provided to similarly situated employees of Buyer, in either case, as of
the date such employees commence active employment with Buyer.
Notwithstanding the foregoing, (i) Buyer shall have no obligation to
guarantee to continue the salary levels or benefits provided to such
Transferred Salaried Employees pursuant to this paragraph, (ii) Buyer shall
have no obligation to provide Transferred Salaried Employees who are not
participants as of the Closing Date in an incentive plan maintained by
Seller with incentive compensation or bonuses, or to include such employees
as participants in any incentive compensation or bonus plans, and (iii)
with respect to Transferred Salaried Employees who were participants in
Seller's Performance Incentive Plan for 1997 during the 1997 calendar year,
Buyer shall permit such employees to participate in the annual cash
incentive compensation plan, if any, maintained by Buyer from and after the
Closing Date at such levels as shall be determined by Buyer in its sole
discretion, from time to time, pursuant to the terms of Buyer's plans.
Prior to the date hereof, Seller shall have provided Buyer with a true and
complete list of the Transferred Salaried Employees described in clause
(iii) above.
Buyer shall recognize Transferred Salaried Employees service
with Seller to the same extent and for the same purposes (other than for
purposes of benefit accrual under defined benefit plans) that Seller is
required to recognize such service pursuant to the terms of Seller's plans,
in accordance with the provisions governing crediting of service from time
to time under Buyer's employee benefit plans (whether or not funded and
whether or not subject to ERISA) and personnel policies; provided, however,
that Buyer shall be required to credit service with Seller under Buyer's
employee benefit plans only if, and to the extent that, Buyer gives credit
to similarly situated employees of Buyer for comparable service performed
by such employees for Buyer.
Except as provided in Section 5.6(a)(4), Seller shall be solely
responsible for, and shall retain all liabilities and obligations for, all
Absent Salaried Employees unless and until such employees become
Transferred Employees. Seller shall be solely responsible for, and shall
retain all liabilities and obligations with respect to, severance,
termination pay and related liabilities for all Seller Salaried Employees
who terminate or are terminated by Seller prior to the date such employees
become Transferred Employees, and shall reimburse Buyer for any and all
liabilities and obligations incurred by Buyer that are retained by Seller
or for which Seller is obligated to reimburse Buyer pursuant to this
paragraph.
76
(d) Employee Defined Benefit Pension Benefits.
(i) Transferred Nonrepresented Hourly Employees.
Buyer shall provide Transferred Nonrepresented Hourly Employees with
pension benefits substantially comparable in the aggregate to those
benefits provided to them immediately prior to the Closing Date by
Seller pursuant to the terms of Seller's pension plans that are
intended to qualify under section 401(a) of the Code; provided,
however, that Buyer shall have no obligation to provide any
gainsharing plan, any plan based in whole or in part on either
Seller's or Buyer's profits, earnings, returns or revenues, any plan
pursuant to which benefits or plan assets are distributed or invested
in employer securities or other form of investment in which it would
be impracticable or infeasible for Buyer to distribute or invest, as
the case may be, or any plan the assets of which Buyer determines
should be invested, in whole or in part, in investments different
from the plan investments immediately prior to the Closing Date
(including participant directed investments).
Effective on, or as soon as practicable following, the
Closing Date, Seller shall timely amend Seller's tax-qualified
pension plans that cover Transferred Nonrepresented Hourly Employees
to provide that all Nonrepresented Hourly Employees participating in
such plans shall be 100% vested in their benefits accrued under such
plans as of the Closing Date.
(ii) Transferred Salaried Employees. With respect to
Transferred Salaried Employees, effective as of the Closing Date or,
if later, the date such employees become Transferred Salaried
Employees, Buyer shall provide or cause to be provided coverage under
a tax-qualified defined benefit plan maintained by Buyer, which is
intended to provide benefits consistent with the benefits provided to
similarly situated employees of Buyer, and that provides benefits for
periods of service of such employees occurring on or after the
Closing Date, or if later, the date such employees become Transferred
Salaried Employees. Buyer shall recognize, for purposes of vesting
and eligibility for participation, ancillary benefits or early
retirement or disability subsidies, but not for purposes of benefit
accrual or final average compensation, under such plan, all service
credited to such Trans-
77
ferred Salaried Employees for such purposes
under the tax-qualified defined benefit plans maintained by Seller
for such employees immediately prior to the Closing Date, or if later
the date such employees become Transferred Employees. Buyer shall
have no liability or obligation whatsoever with respect to the
defined benefit plans retained by Seller pursuant to this Section
5.5.
Effective on, or as soon as practicable following, the Closing
Date, Seller shall timely amend Seller's tax-qualified pension plans that
cover Transferred Salaried Employees to provide that all Transferred
Salaried Employees participating in such plans shall be 100% vested in
their benefits accrued under such plans as of the Closing Date.
(e) Defined Contribution Plans. Effective on, or as soon
as practicable following, the Closing Date, Buyer shall adopt a
tax-qualified defined contribution plan or plans, or amend an existing
defined contribution plan or plans, as necessary or appropriate, to permit
Transferred Employees to direct that distributions from Seller's defined
contribution plans that satisfy the requirements of an "eligible rollover
distribution" within the meaning of section 402(c)(4) of the Code be rolled
over into Buyer's plan or plans. Notwithstanding the foregoing, the parties
agree that Buyer shall have no obligation to accept (directly or
indirectly) participant loans as rollovers into Buyer's plans, and in no
event shall Buyer's failure to accept participant loans be deemed to be a
breach of, or failure by Buyer to satisfy its obligations under, Section
5.4. Buyer and Seller shall cooperate as necessary to effectuate the
foregoing. In addition, Seller shall use reasonable efforts to take all
actions necessary or appropriate to enable Buyer, at Buyer's election, to
accept direct rollovers of participant loans from Seller's defined
contribution plans.
(f) Welfare Benefits.
(i) Post-Retirement Medical and Life Insurance
Benefit Liability For All Employees. Seller shall retain all
liabilities and obligations for all post-retirement medical and life
insurance liabilities payable under the terms of Seller's
post-retirement plans for employees ("Post-Retirement Eligible
Employees") receiving or eligible to receive post-retirement medical
and life insurance benefits as of the Closing Date, including those
who are eligible for post-retirement medical and life insurance
benefits upon termination of
78
employment or commencement of pension
benefits as of the Closing Date, or if later, the date such employees
become Transferred Employees.
Post-Retirement Eligible Employees shall be primarily
covered by Buyer's active medical plans and shall be covered
secondarily, using a "carve-out" method of claims payment, by
Seller's post-retirement medical plans while actively employed by
Buyer. Once such employees terminate employment with Buyer, such
employees shall be covered primarily by the post-retirement medical
plans maintained by Seller as of the Closing Date, and shall be
covered secondarily, using a "carve-out" method of claims payment, by
the post-retirement medical plans, if any, maintained by Buyer as of
the date of retirement for similarly situated employees. For purposes
of the foregoing sentence, a "carve-out" method of claims payment
shall mean that for the same covered health care expense, the
benefits payable by the secondary claims payor are reduced by the
benefits payable by the primary claims payor.
With respect to Transferred Employees who are not
PostRetirement Eligible Employees, when such employees terminate
employment with Buyer, Buyer shall provide such employees
post-retirement medical and life insurance benefits in accordance
with the terms of Buyer's plan or plans, if any (including
requirements for eligibility and participation), then in effect for
such employees.
With respect to those employees who have not satisfied
the age and service requirements for "Rule of 90" post-retirement
benefits as of the Closing Date pursuant to the terms of Seller's
post-retirement welfare plans, and consequently are required to
contribute toward their coverage, Seller shall not be required to
give such employees credit for service with Buyer for purposes of
reducing such employees' required contributions for such coverage.
Each of Seller and Buyer retains the right to change at
any time, and from time to time, any and all of its employee benefit
plans, including those plans providing medical and other welfare
benefits to its retired employees, including those who may become
Transferred Employees, provided that no change may be made that would
single out the Transferred
79
Employees for special adverse treatment or
that would adversely affect Transferred Employees differently than
other similarly situated employees of Seller or Buyer.
Notwithstanding the foregoing, if in accordance with the foregoing
sentence, Seller changes the kind and/or level of the benefits
covered by its retiree medical benefit plans from those in effect as
of the Closing Date, Seller shall reimburse Buyer for any additional
out-of-pocket costs incurred by Buyer as a result of such change. In
like manner, if Buyer changes the kind and/or level of the medical
benefits covered by the plans it maintains for its active employees
from those in effect as of the Closing Date, Buyer shall reimburse
Seller for any additional out-of-pocket costs incurred by Seller
under its retiree medical plans as a result of such change.
(ii) Active Welfare Benefits. Effective as of the
Closing Date (or such later date as a Seller Employee becomes a
Transferred Employee), Buyer shall provide, or cause to be provided,
without any waiting period, where applicable, medical, life
insurance, accident, sickness and other group insurance benefits and
short-term and long-term disability benefits ("Welfare Benefits") to
all Transferred Employees and, to the extent applicable, their
respective eligible dependents, in plans maintained by, or for the
benefit of, Buyer ("Buyer's Welfare Plans"). Benefits under Buyer's
Welfare Plans, (A) shall be, with respect to Transferred
Nonrepresented Hourly Employees who commence active employment with
Buyer on the Closing Date, substantially comparable to those benefits
provided to such employees by Seller immediately prior to the Closing
Date, and with respect to Transferred Nonrepresented Hourly Employees
who commence active employment with Buyer after the Closing Date,
substantially comparable to those benefits provided to similarly
situated employees of Buyer as of the date such employee commences
active employment with Buyer, and (B) with respect to Transferred
Salaried Employees, shall be consistent with benefits provided to
similarly situated employees of Buyer. With respect to Transferred
Represented Employees, Buyer's Welfare Plans shall conform to the
terms of the applicable collective bargaining agreements.
Buyer shall be responsible for medical expenses covered under
the terms of the applicable Buyer's Welfare Plans incurred by a Transferred
Employee and/or his or her covered dependents who are enrolled in such
plans on and after the
80
later of (A) the Closing Date or (B) the date such
employee becomes a Transferred Employee. Seller shall be responsible for
medical expenses covered under the terms of Seller's welfare plans (the
"Seller's Welfare Plans") incurred prior to the Closing Date or the date
the employee becomes a Transferred Employee, if later, by a Transferred
Employee or a covered dependent. If a Transferred Employee or a covered
dependent of a Transferred Employee is hospitalized immediately prior to
the Closing Date, Seller's Welfare Plans shall pay the covered medical
expenses of such person until he or she is discharged from the hospital, to
the extent coverage is provided under the terms of Seller's Welfare Plans.
Buyer shall be responsible for claims for Welfare Benefits
other than medical claims covered under Buyer's Welfare Plans that are
incurred by a Transferred Employee and/or his or her covered dependents who
are enrolled in such plans on and after the later of (A) the Closing Date
or (B) the date such employee becomes a Transferred Employee.
For purposes of this Section 5.5(f), a claim will be deemed
"incurred" on the date that the event that gives rise to the claim occurs
(for purposes of life insurance, severance and sickness, accident and
disability programs), or on the date that treatment or services are
provided (for purposes of healthcare programs).
Seller shall be responsible for, and shall reimburse Buyer for
claims for Welfare Benefits other than medical claims, in each case with
respect to Seller Employees and their covered dependents, whether covered
under Seller's Welfare Plans, Buyer's Welfare Plans, or otherwise, that are
incurred prior to the later of the Closing Date and the date the affected
Seller Employee becomes a Transferred Employee.
(g) Workers' Compensation Claims. Seller shall be
responsible for and shall pay any and all workers' compensation and other
similar statutory claims asserted by or with respect to Seller Employees in
respect of any injury or other compensable event or occupational illness or
disease that occurred or is attributable to any event, state of facts or
condition that existed or occurred in whole before the later of the Closing
Date and the date the applicable Seller Employee becomes a Transferred
Employee. Buyer shall be responsible for and shall pay any and all workers'
compensation and other similar statutory claims asserted by or with respect
to any Transferred Employees in respect of any injury or any other
compensable event or occupational illness or disease that occurred or is
attributable to any
81
event, state of facts or condition that existed or
occurred in whole after the later of the Closing Date and the date the
applicable Transferred Employee becomes a Transferred Employee.
If the liabilities for any claims for injuries or other
compensable events or occupational illnesses or diseases of any Transferred
Employee who was employed by Seller before the Closing Date and was
actively employed by Buyer on or after the Closing Date is attributable in
part to causes occurring before the Closing Date and in part to causes
occurring on or subsequent to the Closing Date and is the basis of a
workers' compensation or other similar statutory claim, the liability for
any such claims shall be shared by Seller and Buyer in the proportion of
the period of employment of such Transferred Employee with Seller and the
period of active employment with Buyer, if any. In the event that one party
hereto is required by an applicable state workers' compensation law to pay
workers' compensation otherwise allocated to the other party pursuant to
this Section 5.5(g), the party obligated to pay such amount pursuant to
this Section shall reimburse the paying party.
(h) Alternate Arrangements; Parties' Cooperation.
Notwithstanding anything in Section 5.4, 5.5 or 5.6 to the contrary, to the
extent that Buyer, in its sole discretion, deems it necessary or
appropriate in order to implement Section 5.4, 5.5 or 5.6, or otherwise to
fulfill its obligations hereunder during a transition period from and
following the Closing Date, Buyer may cause the benefits and coverage
described in Section 5.4, 5.5 or 5.6, to be provided under separate
arrangements that are not maintained by Buyer, including leased or
contracted plans or arrangements.
Buyer and Seller shall cooperate and shall use reasonable
efforts (i) to enable Buyer to satisfy its obligations under Sections 5.4,
5.5 and 5.6, (ii) to facilitate Buyer's relationships with the applicable
unions, and (iii) to facilitate the administration of Buyer's and Seller's
employee benefit plans.
(i) Reimbursement. The parties to this Agreement agree
that the provisions of Sections 5.4, 5.5 and 5.6 set forth the intent of
the parties with regard to the allocation of liabilities, responsibilities
and costs relating to employees of the Business and the payment of benefits
to such employees before, on, and after the Closing Date. If one party
makes a payment that under the terms of Section 5.4, 5.5 or 5.6 should have
been made by or on behalf of the other party, whether by mistake or in
accordance with a ruling, regulation, or order of an Authority, or as a
82
payment where a reimbursement is expressly contemplated pursuant to Section
5.4, 5.5 or 5.6, then the party that is obligated under the provisions of
Section 5.4, 5.5 or 5.6, to make such payment or reimbursement, as the case
may be, shall reimburse the party that actually made the payment or who is
entitled to the reimbursement (or for whose benefit the payment was made).
Anything in this Agreement to the contrary notwithstanding, the
reimbursement obligations under Section 5.4, 5.5 or 5.6 shall remain in
force and effect so long as either party is making payments to which these
provisions apply; provided however, that a specific request for a
reimbursement must be made no later than two years following the date that
the related reimbursement obligation arose.
All reimbursements under this Section 5.5(i) shall be paid to
the party to be reimbursed once each month for the first two years
following the Closing Date and once each calendar quarter thereafter, in
either case, within thirty (30) days after receipt of a bill from the party
to be reimbursed (which bill shall not be submitted more frequently than
monthly, or quarterly, as the case may be) describing each element of
reimbursement claimed and shall be subject to reasonable timely audit and
verification by the other party, and their accountants, actuaries and/or
consultants.
(j) COBRA. With respect to each (i) current and former
employee of Seller who does not become a Transferred Employee, (i) each
Transferred Employee for any period prior to the date any such employee
becomes a Transferred Employee, and (iii) each other individual who is a
"qualified beneficiary" with respect to such current or former employee, in
connection with a "group health plan" maintained by Seller or an Affiliate
(as such terms are defined in Code section 4980B), Seller shall be
responsible for providing "group health plan" continuation coverage with
regard to any event that occurs before the employee becomes a Transferred
Employee. Seller shall indemnify and hold Buyer and its Affiliates harmless
from and against any and all Losses with respect to such individual arising
in connection with group health plan continuation required under Code
section 4980B or Part 6 of Subtitle B of ERISA.
83
Section 5.6 Special Employment and Transition Rules for
Salaried Employees.
(a) Employment of Salaried Employees.
(i) No later than 14 days before the Closing Date,
Buyer shall provide Seller with a list identifying those Headquarter
Employees whom Buyer desires to remain employed by Seller on and
after the Closing Date, but who shall on and after the Closing Date
perform services for Buyer, at the direction of Buyer (the "Seconded
Employees"). It is not intended that Seconded Employees will perform
services covered by the transition agreements described in Section
1.7(d). Once identified, except with respect to the "Extended
Seconded Employees," as defined below, a Seconded Employee shall
remain employed by Seller in this capacity for 180 days from the
Closing Date (the "Selection Period") or for such shorter period as
Buyer may determine if it so notifies Seller at least 14 days in
advance with regard to a particular Seconded Employee. Prior to the
expiration of the Selection Period, Buyer may extend the Selection
Period for up to an additional 60 days with respect to no more than
35 Seconded Employees (the "Extended Seconded Employees"), who shall
be selected by Buyer in its sole discretion. Buyer shall provide
Seller at least 14 days before the end of the original Selection
Period with a list identifying the Extended Seconded Employees. For
purposes of the Extended Seconded Employees, if any, the Selection
Period shall mean the period commencing on the Closing Date and
terminating 240 days following the Closing Date, or for such shorter
period as Buyer may determine if it so notifies Seller at least 14
days in advance with regard to a particular Extended Seconded
Employee. Buyer shall reimburse Seller monthly in arrears in
accordance with Section 5.6(a)(1) of the Disclosure Schedule for the
costs incurred by Seller with respect to the salary and benefits
provided by Seller to the Seconded Employees during the Selection
Period.
(ii) At any time during the Selection Period, Buyer
in its sole discretion may offer employment to any or all of the
Seconded Employees. A Seconded Employee who becomes employed by Buyer
by the end of the Selection Period shall be treated as a
84
Transferred Salaried Employee for purposes of this Agreement as of
the date such employee commences active employment with Buyer.
(iii) A Seconded Employee who has not been employed by
Buyer by the end of the Selection Period (or by the end of such
shorter period as Buyer may determine if it so notifies Seller at
least 14 days in advance with regard to a particular Seconded
Employee) shall be either retained or terminated by Seller in
Seller's sole discretion, but in either case Buyer shall have no
further reimbursement or other obligation with regard to such
Seconded Employee after the end of the Selection Period (or after
such shorter period as Buyer may determine with regard to a
particular Seconded Employee). Buyer shall give Seller at least 14
days advance notice with regard to any Seconded Employee to whom
Buyer does not intend to offer employment by the end of the Selection
Period.
(iv) Buyer shall indemnify Seller against, and shall
hold it harmless from, any and all Losses incurred or suffered as a
result of any claim by (A) a Seconded Employee (during the period
such employee was seconded to Buyer, but in no event after the
Selection Period), (B) an Absent Nonrepresented Hourly Employee or an
Absent Salaried Employee (in each case, during the period from the
Closing Date to the 180th day thereafter), in each case, that arises
out of or in any way relates to the acts or omissions of Buyer,
including, without limitation, claims arising under federal, state or
local statute(s) (including, without limitation, Title VII of the
Civil Rights Act, as amended, the Age Discrimination in Employment
Act, as amended, the Equal Pay Act, as amended, the Americans with
Disabilities Act, as amended, and all other statutes regarding the
terms and conditions of employment), regulation(s) or ordinance(s),
under the common law or equity (including any claims for wrongful
discharge or otherwise).
(v) Seller shall indemnify Buyer against, and shall
hold it harmless from, any and all Losses incurred or suffered as a
result of any claim by a Seconded Employee, an Absent Nonrepresented
Hourly Employee or an Absent Salaried Employee that arises out of or
in any way relates to the acts or omissions of
85
Seller, including,
without limitation, claims arising under federal, state or local
statute(s) (including, without limitation, Title VII of the Civil
Rights Act, as amended, the Age Discrimination in Employment Act, as
amended, the Equal Pay Act, as amended, the Americans with
Disabilities Act, as amended, and all other statutes regarding the
terms and conditions of employment), regulation(s) or ordinance(s),
under the common law or equity (including any claims for wrongful
discharge or otherwise).
(b) Severance Obligation.
(i) Notwithstanding anything in this Agreement to
the contrary except for Buyer's reimbursement obligations as set
forth in Section 5.6(a)(i) and (iv), Seller shall retain all
liabilities and obligations, including but not limited to severance
obligations, pertaining to Headquarter Employees and Plant Salaried
Employees who do not become Transferred Salaried Employees pursuant
to this Agreement, including, without limitation, Seconded Employees
who terminate employment on or prior to the end of the Selection
Period without becoming Transferred Salaried Employees. Seller shall
reimburse Buyer for any and all liabilities and obligations incurred
by Buyer that are retained by Seller pursuant to this paragraph.
(ii) If a Seller Nonrepresented Hourly Employee
becomes a Transferred Nonrepresented Hourly Employee, or a Salaried
Employee becomes a Transferred Salaried Employee, and in either case,
Buyer terminates such employee's employment other than for cause,
then Buyer shall be obligated to pay such employee severance
benefits, if any, determined pursuant to the terms of Buyer's
severance plan or policy, if any, in effect at such time, based on
combined service with Buyer plus service credited with Seller, to the
extent and for the same purposes that such service was required to
have been taken into account for purposes of Seller's severance plan
in effect as of the Closing Date, or if later, the date the
individual becomes a Transferred Employee.
(c) Nonsolicitation Agreement. Except for the four
individuals listed on Section 5.6(c) of the Disclosure Schedule of this
Agreement, Seller shall
86
refrain, and shall use its best efforts to cause
its Affiliates to refrain, from (i) interfering with Buyer's efforts to
hire any of the employees employed by Seller in the Business, including its
Headquarter Employees and (ii) without obtaining prior written consent from
Buyer, offering employment to any Transferred Employees from the date of
this Agreement until the end of 24 months following the Closing Date,
unless such employee has been terminated from Buyer for at least six
continuous months. Notwithstanding the foregoing, Seller may offer
employment (i) to any Plant Salaried Employee who does not become a
Transferred Salaried Employee as of the Closing Date, or such later date as
an Absent Salaried Employee is available to commence employment with Buyer,
if applicable; (ii) to any Headquarter Employee who does not become a
Seconded Employee or a Transferred Salaried Employee as of the Closing
Date; and (iii) to any Seconded Employee who does not become a Transferred
Employee by the end of the Selection Period. Seller agrees that (x) if it
retains a Seconded Employee to whom Buyer has offered employment and such
employee has rejected Buyer's offer, then Seller shall reimburse Buyer for
any and all amounts paid by Buyer to Seller to cover the costs of benefits
for such Seconded Employee during the Selection Period (but not for the
direct cost of compensation or FICA or FUTA (as defined in Section 5.6(d)
hereof)), and (y) if Seller hires any Transferred Employee prior to the
earlier of 24 months following the Closing Date and six months following
such employee's termination of employment from Buyer, Seller shall
reimburse Buyer for all relocation, severance and related costs and
expenses paid by or on behalf of Buyer for such Transferred Employee.
(d) Employment Taxes. Seller, Buyer and Ball shall (i)
treat Buyer and Ball each as a "successor employer" and Seller as a
"predecessor," within the meaning of section 3121(a)(1) of the Code and for
purposes of Taxes imposed under the United States Federal Unemployment Tax
Act ("FUTA") or the United States Federal Insurance Contributions Act
("FICA") and (ii) cooperate with each other to avoid, to the extent
possible, the filing of more than one Internal Revenue Service Form W-2
with respect to each Transferred Employee for the calendar year within
which the Closing Date occurs. At the request of Buyer with respect to any
particular applicable Tax Law relating to employment, unemployment
insurance, social security, disability, workers' compensation, payroll,
healthcare or other similar Tax other than Taxes imposed under FICA and
FUTA, Seller, Buyer and Ball shall (i) treat Buyer and Ball each as a
successor employer and Seller as predecessor employer, within the meaning
of the relevant provisions of such Tax Law, with respect to Transferred
Employees who are employed by Buyer, to the extent permitted by applicable
state and local laws and (ii) cooperate with each other to avoid, to
87
the extent possible, the filing of more than one individual information
reporting form pursuant to each such Tax Law with respect to each such
Transferred Employee for the calendar year within which the Closing Date
occurs.
(e) Reimbursement. All reimbursements described in this
Section 5.6, including Section 5.6(a)(1) of the Disclosure Schedule, shall
be made in accordance with the reimbursement procedures set forth in
Section 5.5(i) hereof.
(f) Indemnification Procedures. Any claim for
indemnification made under Sections 5.4, 5.5 or 5.6 hereunder shall be made
according to, and shall be governed by, the procedures contained in Section
6.4(c)- (h) of this Agreement.
Section 5.7 Tax Matters.
(a) Consolidated Subsidiaries. Seller represents and
warrants that each of LAR, RCAL and RIND is a fully consolidated subsidiary
of Seller for federal income Tax purposes at Closing. Each of LAR, RCAL and
RIND will be included in the consolidated Tax Return of Seller for federal
income Tax purposes for the taxable period of each of LAR, RCAL and RIND
that includes the date of Closing.
(b) Section 338 Elections and Forms. With respect to the
acquisition of the stock of LAR, RCAL and RIND hereunder, Seller, Ball and
Buyer shall jointly make all available Section 338(h)(10) Elections, and
with respect to the acquisition of the stock of RIB hereunder, Buyer or
Ball shall make a Section 338(g) Election, in each case in accordance with
applicable Tax Laws on a timely basis and as set forth herein. Seller, Ball
and Buyer will supply in advance to one another copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof) to be sent or made by Ball, Buyer or Seller or their
respective representatives to or with the IRS relating to any Section 338
Elections. Buyer, Ball and Seller agree to report the transfers under this
Agreement consistent with any Section 338 Elections and the allocations
provided by Section 5.7(d), and shall take no position contrary thereto
unless required to do so by applicable Tax Laws pursuant to a
"determination" (as described in section 1313 of the Code).
(c) Preparation of Forms. Buyer shall be responsible for
the preparation and filing of all Section 338 Forms in accordance with
applicable Tax
88
Laws and the terms of this Agreement; provided that Seller
shall be responsible for filing any form related to a Section 338 Election
that must be filed with a Tax Return of Seller or one of its Affiliates.
Buyer shall deliver such forms and related documents to Seller at least 20
days prior to the date such Section 338 Forms are required to be filed
under applicable Tax Laws. Seller shall provide all information reasonably
requested by Buyer and shall execute and deliver to Buyer such documents or
forms as are reasonably requested by Buyer and are required by any Tax Laws
to properly complete the Section 338 Forms, no more than 10 days after the
date such documents or forms are requested by Buyer. Seller shall be
responsible for the preparation and filing of the Tax Returns of LAR, RCAL
and RIND for all taxable years ending on or before the Closing Date
(including, without limitation, any consolidated, combined or unitary group
return of which LAR, RCAL or RIND is a member which includes the gain or
loss on the deemed sale of assets of LAR, RCAL and RIND under section 338
of the Code or similar state or local statute).
(d) Allocation. Seller and Buyer will allocate the
"Aggregate Deemed Sales Price" arising from the Section 338(g) Elections
and the "Modified Aggregate Deemed Sale Price" arising from the Section
338(h)(10) Elections, as computed under applicable Treasury Regulations (or
similar state law provisions) with respect to the acquisition of shares of
stock of RIB, LAR, RCAL and RIND among the assets of RIB, LAR, RCAL and
RIND, respectively, for tax purposes in accordance with the provisions of
Section 1.9.
(e) Taxable Periods Ending On or Before the Closing Date.
Except as set forth in Section 1.6, Seller shall be liable for, shall pay
and shall indemnify and hold Buyer, Ball, RIB, LAR, RCAL and RIND harmless
against, all Taxes of Seller, RIB, LAR, RCAL, RIND and their Affiliates for
any taxable year or taxable period ending on or before the Closing Date due
or payable with respect to the Business or the operations, assets or
business of Seller, LAR, RCAL, RIND and their Affiliates on or before the
Closing Date, including any Taxes resulting from the making of the Section
338 Elections and any liability for Taxes pursuant to Treasury Regulations
ss.ss. 1.1502-6, 1.338-5(b)(3) or 1.338(h)(10)-1(e)(5) (or any similar
provision of Law). All liabilities and obligations between RIB, LAR, RCAL
or RIND on the one hand, and Seller or its Affiliates on the other hand,
under any tax allocation agreement or arrangement in effect prior to
Closing (other than this Agreement or as set forth herein) shall cease to
apply to RIB, LAR, RCAL and RIND as of the Closing.
89
(f) Taxable Periods Commencing After the Closing Date.
Buyer shall be liable for, shall pay and shall indemnify and hold Seller
and its Affiliates harmless against, any and all Taxes of RIB, LAR, RCAL
and RIND for any taxable year or taxable period commencing after the
Closing Date other than Taxes resulting from Section 338 Elections.
(g) Taxable Periods Commencing On or Before the Closing
Date and Ending After the Closing Date. Except as set forth in Section 1.6,
any Taxes for a taxable period beginning on or before the Closing Date and
ending after the Closing Date (the "Closing Period") with respect to RIB,
LAR, RCAL or RIND shall be apportioned between Seller and Buyer as if the
Closing Period had ended at the Closing but with Seller bearing the effect
of all Section 338 Elections. For purposes of Section 5.7(e), (f) and (g),
the portion of the Closing Period deemed to end on the Closing Date shall
be deemed to be a taxable period (the "Pre-Closing Period"). All real
property Taxes, personal property Taxes, intangible Taxes and similar ad
valorem obligations levied with respect to the Business Assets or assets
held by RIB, LAR, RCAL or RIND for the Closing Period shall be apportioned
between Seller and Buyer as of the Closing Date based on the number of days
of such taxable period included in the Pre-Closing Period and the number of
days of such taxable period after the Closing Date. Upon receipt of any
bill for Taxes relating to the Closing Period, Seller, Buyer or their
respective Affiliates, as the case may be, shall present to the other a
statement setting forth amounts of any reimbursement due under this Section
5.7(g) together with such supporting evidence as is reasonably necessary to
calculate the apportioned amount. The apportioned amount shall be paid by
the party owing the reimbursement to the other party as soon as possible
but no later than 30 days after delivery of such statement.
(h) Refunds or Credits. Except as otherwise set forth in
this Agreement, any refunds or credits of Taxes, to the extent that such
refunds or credits are attributable to taxable periods ending on or before
the Closing Date shall be for the account of Seller, and, to the extent
that such refunds or credits are attributable to taxable periods beginning
after the Closing Date, such refunds or credits shall be for the account of
Buyer. To the extent that such refunds or credits are attributable to Taxes
for the Closing Period that are described in Section 5.7(g), such refunds
and credits shall be for the account of the party who bears responsibility
for such Taxes pursuant to Section 5.7(g). Buyer shall, or shall cause RIB,
LAR, RCAL or RIND to, forward to Seller or to reimburse Seller for any such
refunds or credits due Seller pursuant to this Section 5.7(h) within 15
days after receipt thereof by any of Buyer,
90
Ball, RIB, LAR, RCAL or RIND
that are for the account of Seller hereunder, and Seller shall forward to
Buyer or reimburse Buyer for any refunds or credits that are for the
account of Buyer within 15 days after receipt thereof by Seller or its
Affiliates that are for the account of Buyer hereunder; provided, however,
that the refunding party shall be entitled to deduct from the amount to be
refunded a proportionate share of reasonable costs and expenses incurred by
such refunding party in obtaining such refund and provided further that the
amount of costs and expenses deducted by the refunding party from the
amount to be paid to the other party shall not exceed such other party's
share of such refund.
(i) Certificates. Seller shall, on the Closing Date,
provide Buyer with any clearance certificates or similar documents which
may be required by any foreign or domestic Taxing Authority to relieve
Buyer of any obligation to withhold any portion of the Purchase Price or to
hold Buyer harmless for any sales or use or other Tax liability, including,
without limitation, an affidavit described in section 1445(b)(2) of the
Code.
(j) Mutual Cooperation. Seller and Buyer shall each (i)
provide the other with such assistance as may reasonably be requested by
either of them in connection with the preparation of any Tax Return, audit
or other examination by any Taxing Authority relating to liability for
Taxes, (ii) retain and provide the other, at the other's expense, with any
records or other information which may be relevant to such Tax Return,
audit or examination, proceeding or determination and (iii) provide the
other, at the other's expense, with any requested information relating to
final determination of any such audit or examination, proceeding or
determination that affects any amount required to be shown on any Tax
Return of the other for any period. Without limiting the foregoing, Buyer
and Ball on the one hand, and Seller on the other hand, shall cooperate in
taking all reasonable actions to obtain and provide each other with
information necessary to allow either party to determine and claim United
States foreign Tax credits with respect to foreign income Taxes paid by
LAR, RIB and Latasa (including the Latasa Subsidiaries) attributable to any
Closing Period. Specifically and without limitation, the parties shall
provide to each other, as applicable, official receipts (or other evidence
acceptable to the United States Internal Revenue Service) showing the
amount of foreign income Tax paid by each of LAR, RIB and Latasa (in-
91
cluding the Latasa Subsidiaries) with respect to its applicable Closing
Period, copies of the foreign income Tax Returns filed by each of LAR, RIB and
Latasa (including the Latasa Subsidiaries) for its applicable Closing
Period and schedules prorating the taxable income of LAR, RIB and Latasa
(including the Latasa Subsidiaries) for its applicable Closing Period
between the Pre-Closing Period and the portion of such Closing Period after
the Closing Date.
(k) Contests. Whenever any Taxing Authority asserts a
claim, makes an assessment, or otherwise disputes the amount of Taxes owed
by RIB, LAR, RCAL or RIND for which Seller is or may be liable under this
Agreement, Buyer shall promptly inform Seller, and Seller shall have the
right to control any resulting proceedings and to determine whether and
when to settle any such claim, assessment or dispute to the extent such
proceedings or determinations would affect the amount of Taxes for which
Seller is liable under this Agreement; provided, however, that Seller shall
not enter into any such settlement without the consent of Buyer (which
consent shall not be unreasonably withheld) if such settlement could
reasonably be expected to affect the amount of Taxes for which Buyer or
Ball is liable under this Agreement. Whenever any Taxing Authority asserts
a claim, makes an assessment or otherwise disputes the amount of Taxes for
which Buyer or Ball is liable under this Agreement, Seller shall promptly
inform Buyer, and Buyer shall have the right to control any resulting
proceedings and to determine whether and when to settle any such claim,
assessment or dispute to the extent such proceedings would affect the
amount of Taxes for which Buyer or Ball is liable under this Agreement;
provided, however, that Buyer shall not enter into any such settlement
without the consent of Seller (which consent shall not be unreasonably
withheld) if such settlement could reasonably be expected to affect the
amount of Taxes for which Seller is liable under this Agreement.
(l) Resolution of Disagreements between Seller and Buyer.
If Seller, on the one hand, and Buyer or Ball, on the other hand, disagree
as to the amount of Taxes for which each is liable under this Agreement or
are unable to agree on any matter relating to the Section 338 Elections,
Seller and Buyer shall promptly consult each other in an effort to resolve
such dispute. If any such point of disagreement cannot be resolved within
15 days of the date of consultation (which period may be extended by mutual
agreement of Buyer and Seller), Seller and Buyer shall within 10 days after
such 15-day period jointly engage the Neutral Auditor to act as an
arbitrator to resolve all points of disagreement concerning tax accounting
matters with respect to this Agreement. All fees and expenses relating to
the work performed by the Neutral Auditor in accordance with this Section
5.7(l) shall be borne equally by Seller and Buyer, unless otherwise ordered
by the Neutral Auditor.
92
(m) Puerto Rico Tax Exemption. Seller will use all
reasonable efforts to assist Ball, Buyer and LAR in obtaining such
approvals and consents as are necessary so that from and after the Closing
Ball, Buyer and LAR will have the full benefit of the partial Puerto Rico
Tax exemptions that are currently enjoyed by LAR with respect to the
operation of the Business in Puerto Rico.
Section 5.8 Non-Competition.
(a) Seller agrees that, to assure Ball and Buyer that
Buyer will retain the value of the Business as a "going concern," for a
period of six years beginning on the Closing Date, Seller shall not,
directly or indirectly, itself or through one or more Affiliates, engage or
have an interest, anywhere in the world, alone or in association with
others, as partner or shareholder or through the investment of capital,
lending of money or property, provision of management or engineering
services, technology or know-how, or otherwise, in the development,
manufacture, distribution, sale or marketing of products or services that
are competitive with the products or services provided by the Business,
consisting of metal beverage cans and ends and PET beverage containers.
Notwithstanding the foregoing, Seller and its Affiliates may, after the
Closing, engage or continue to engage in the following business activities
related to metal beverage can bodies and ends: the development,
manufacture, distribution, sale and marketing of can, end and tab sheet;
the recycling and reclamation of metal beverage can bodies and ends;
Machinery Operations; the design, manufacture and sale of printing
cylinders, printing plates and color separations used by Persons other than
Seller and its Affiliates in the manufacture of metal beverage can bodies
and ends; and ancillary services customarily provided to manufacturers of
metal beverage can bodies and ends by persons engaged in the foregoing
businesses, provided that such services are directly related to such
businesses and do not use any Intellectual Property Rights. In addition,
notwithstanding the foregoing, Seller may:
(i) from and after the Closing Date, own an equity
interest of not greater than 50% in the Russian company or group of
companies which owns the Sayansk aluminum smelter and/or the Samara
rolling mill (such company or group, "Siberian Aluminum"), even
though Siberian Aluminum in turn owns a significant interest in the
Rostar-Dmitrov aluminum can and end manufacturing plant near Moscow;
provided that Seller shall use all reasonable efforts as an equity
holder in Siberian Aluminum, if Siberian Alumi-
93
num includes can, end
and tab sheet operations, to facilitate the supply of can, end and
tab sheet to the can and end plant near Moscow established by PLM
Beverage Can Manufacturing ZAO on mutually acceptable terms;
(ii) from and after the third anniversary of the
Closing Date, own an equity interest of not greater than 50% in any
Person which, in addition to its primary business or businesses, is
engaged in the development, manufacture, distribution, sale or
marketing of metal beverage cans and ends provided that the portion
of such Person's consolidated revenues attributable to activities
related to metal beverage cans and ends does not exceed 20% of its
total consolidated revenues and such Person's manufacturing
activities are conducted solely in Russia, China or India; provided
further that (x) subject to other obligations such Person may have,
Seller shall use all reasonable efforts as an equity holder in such
Person to cause such Person to offer to Ball the opportunity to
invest in such metal beverage can and end business and/or to provide
management and engineering services, technology and know-how to such
business on mutually acceptable terms, and (y) Seller shall, if such
Person's operations include can, end and tab sheet operations, use
all reasonable efforts as an equity holder to facilitate the supply
of can, end and tab sheet on mutually acceptable terms to any can
and/or end manufacturing ventures in Russia, China and India in which
Ball or any of its Affiliates has an equity interest; and
(iii) from and after the Closing Date, continue to own
its current 27.5% equity interest in UAC and continue activities
directly related to the current operations of UAC pursuant to its
current agreements with UAC;
and for greater certainty, Seller and its Affiliates shall not, as a
consequence of clauses (i), (ii) or (iii) hereof, be permitted, in respect
of any Person, to provide management or engineering services, technology or
know-how to any operations engaged in the development, manufacture,
distribution, sale or marketing of metal beverage cans and ends and PET
beverage containers.
94
(b) Seller shall not at any time on or after the Closing
Date, directly or indirectly, through one or more Affiliates, use or
purport to authorize any person to use any name, mark, logo, trade dress or
other identifying words or images which are the same as or confusingly
similar to any of those included in the Intellectual Property Rights,
whether or not such use would be in a business in which Seller is
prohibited from engaging pursuant to Section 5.8(a) provided, that this
Section 5.8(b) shall not apply to any registered trademark which Ball, its
successors or assigns has allowed to expire commencing one year after such
expiration.
(c) The provisions of this Section 5.8 shall not be
deemed to prohibit Seller from acquiring not more than 5% of any class of
securities of any company with a class of securities registered under the
Exchange Act (or any similar foreign statute) or otherwise publicly traded,
provided that Seller does not have control over or does not attempt to
control or influence such company.
(d) If, at the time of enforcement of this Section 5.8, a
court shall hold that the duration, scope or area restrictions stated
herein are unreasonable under the circumstances then existing, the maximum
duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area. Seller acknowledges and
agrees that Ball and Buyer would be damaged irreparably if any of the
provisions of this Section 5.8 are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, Seller and Buyer
each agrees that the other party shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Section 5.8 and
to enforce specifically the terms and provisions of this Section 5.8 in any
action instituted in any court having jurisdiction over the parties and the
matter, in addition to any other remedy to which it may be entitled, at law
or in equity.
Section 5.9 Confidentiality.
(a) Prior to the Closing, each party will hold and will
cause its consultants and advisors to hold in confidence, all documents and
information concerning the other party furnished it by such other party or
its representatives in connection with the transactions contemplated by
this Agreement pursuant to the terms of the Confidentiality Agreement,
dated May 28, 1997 between Seller and Buyer, as amended (the
"Confidentiality Agreement").
95
(b) Prior to and after the Closing, Seller, Ball and
Buyer will hold, and will use their best efforts to cause their respective
officers, directors, employees, accountants, counsel, consultants,
advisors, agents and Affiliates to hold, in confidence, unless compelled to
disclose by judicial or administrative process or by other requirements of
law, all confidential documents and information (x) concerning the
Business, the Business Assets, the Shares and Seller and provided to Ball
or Buyer or (y) concerning Ball or Buyer and provided to Seller, except to
the extent that such information can be shown to have been or to have
become (i) generally available to the public other than as a result of
disclosure by the officers, directors, employees, representatives,
consultants or advisors of Seller, Ball or Buyer, (ii) disclosed to the
other party from a source other than the officers, directors, employees,
representatives, consultants or advisors of Seller, Ball or Buyer from a
source that was permitted to disclose it or (iii) known to the other party
before the date of the disclosure of such information. However, nothing
contained in this Section 5.9(b) shall (i) prevent any party from using or
disclosing information to (A) perform its obligations or enforce its rights
hereunder or (B) to defend or prosecute any claim or (ii) preclude the
disclosure of such information on the condition that it remain confidential
to auditors, attorneys, lenders, financial advisors and other consultants
and advisors in connection with the performance of their duties in
preparation for consummation of the transactions contemplated hereby.
Section 5.10 Materials Received After Closing. Following the
Closing, Buyer may receive and open all mail, telecopies or telexes
addressed to Seller and deal with the contents thereof in its discretion to
the extent that such mail, telecopies or telexes and the contents thereof
relate to the Business, Business Assets or the Shares. Ball and Buyer shall
promptly deliver to Seller all material they receive (including mail,
checks, money, telecopies, telefaxes and the contents thereof) which is
addressed to Seller or its Affiliates to the extent it does not relate to
the Business, the Business Assets or the Shares or to the extent it deals
with Excluded Assets or Excluded Liabilities. Seller shall promptly deliver
to Ball or Buyer, as the case may be, all of the mail, checks, money,
telecopies, telexes and the contents thereof with respect to the Business,
the Business Assets or the Shares received by Seller following the Closing.
Section 5.11 Access to Books and Records.
(a) Each party agrees that from and after the Closing
Date to the seventh anniversary thereof, during normal business hours, it
will permit (at no
96
charge, cost or expense to such party and without
unreasonable disruption of such party's business) the other party and its
auditors, through their authorized representatives, to have reasonable
access to and to examine and take copies of all books and records
(including, without limitation, correspondence, memoranda, books of
account, tax reports and returns and the like) included in the Business
Information or otherwise reasonably relating to the Business or the
Business Assets (including, without limitation, records with respect to
Tax, pension, severance and litigation matters) and reasonably relating to
events occurring prior to the Closing Date and to events occurring
subsequent to the Closing Date which are related to or arise out of events
occurring prior to the Closing Date, in any case, subject to the
confidentiality provisions of Section 5.9.
(b) Each party will direct its employees to render any
assistance which the other party may reasonably request in examining or
using such books and records. Until the seventh anniversary of the Closing
Date, neither party will destroy any files or records which are subject to
this Section 5.11 without giving reasonable notice to the other party, and
within 30 days of receipt of such notice, the other party may cause to be
delivered to it the records intended to be destroyed; provided, however,
that books or records relating to Tax matters may not in any event be
destroyed for seven years after the Closing Date (and, if at the expiration
thereof, any Tax audit or judicial proceeding is in progress or the
applicable statute of limitations has been extended, for such longer period
as such audit or judicial proceeding is in progress or such statutory
period is extended).
(c) Seller shall request that records of the type
described in Section 5.11(a) in possession of its independent accountants
be retained by them for the customary retention period established by the
firm (but not less than the applicable statute of limitations period) and
that such records be made available to Buyer on request.
(d) Seller is currently engaged in a study to establish
Seller's right to research and experimentation tax credits for the years
1990 through 1997. In connection with this study, Seller may require
information pertaining to the Business or the Business Assets, including,
without limitation, interviews with persons employed in the Business prior
to the Closing Date. Ball or Buyer shall permit Seller reasonable access
(solely for purposes of the study) to any such persons and/or information
in the employ or possession of Ball, Buyer or any Affiliate of either, at
Seller's expense but without any charge for any interviewee's time.
97
Section 5.12 Actions by Ball. Ball shall be jointly and
severally liable with Buyer for all obligations of Buyer (or any assignee
or Designee of Ball or Buyer) hereunder or under the Ancillary Agreements.
Ball hereby guarantees Buyer's (or any assignee's or Designee's)
performance of all obligations required of Buyer by this Agreement or the
Ancillary Agreements.
Section 5.13 Delivery of Financial Statements.
(a) Within 30 days after the date hereof, Seller shall
deliver to Buyer the financial statements of Seller's global can operations
referred to in Section 2.7(a), except that such financial statements shall
be audited and shall be delivered with the report thereon of Ernst and
Young LLP, independent certified public accountants (the "Audited Financial
Statements"). Insofar as the Audited Financial Statements pertain to the
U.S. domestic operations of the Business, they shall not differ in any
respect from the Unaudited Financial Statements previously delivered to
Buyer. The amounts included in the balance sheets, results of operations
and cash flows included in the Audited Financial Statements which relate to
Latasa shall not differ in any material respect from those contained in the
Unaudited Financial Statements previously delivered to Buyer.
(b) Within 30 days after the date hereof, Seller shall
deliver to Buyer the financial statements of Latasa referred to in Section
2.28, except that such statements shall be audited and shall be delivered
with the report thereon of Price Waterhouse, independent certified public
accountants (the "Audited Latasa Financial Statements"). The Audited Latasa
Financial Statements shall not differ in any material respect from the
Unaudited Latasa Financial Statements previously delivered to Buyer.
Section 5.14 Litigation Support. With respect to any litigation
being conducted by Seller, Buyer, Ball or their Affiliates, not the subject
of indemnification under Article VI hereof, but relating to the Business,
the Business Assets, the Shares, the Assumed Liabilities or the Excluded
Liabilities, the other party shall cooperate with the litigating party and
its counsel in such action, make available personnel and provide such
testimony and access to books and records as shall be reasonably necessary
in connection with such action, provided that the litigating party shall
reimburse the other party for reasonable out-of-pocket costs and expenses
(including reimbursement for employees' time) for furnishing such
cooperation.
98
Section 5.15 Returns. At Seller's request and expense, Ball and
Buyer shall use reasonable efforts to assist Seller in the processing of
any returns by, and the provision of any replacement products to, customers
of the Business for product sales as to which Seller remains liable.
Section 5.16 Accounts Receivable. If any Accounts Receivable
reflected in the Final Closing Statement remain uncollected six months
after the Closing Date, Seller shall purchase such Accounts Receivable from
Buyer at the amounts reflected in the Final Closing Statement therefor less
(i) amounts previously paid to Ball or Buyer with respect thereto and (ii)
any reserve for uncollectible amounts included in the Final Closing
Statement. Such purchase shall be completed within seven days of receipt by
Seller of a written request from Buyer to such effect. If no such notice
has been received by Seller within nine months after Closing, Seller's
obligations under this paragraph shall expire.
Section 5.17 Inadvertently Retained Information. Ball, Buyer
and Seller acknowledge that the Business and certain other portions of
Seller's operations (including, without limitation, the Machinery
Operations) have been run on an integrated basis. Accordingly, Seller may
have in its possession after Closing documents (whether in paper, mylar,
microfilm or electronically stored form) containing or embodying Business
Information or Intellectual Property Rights, and Buyer or Ball may have in
its possession after Closing documents (whether in paper, mylar, microfilm
or electronically stored form) containing or embodying confidential
business information or intellectual property of Seller which are Excluded
Assets (in either case, "Inadvertently Retained Information"). Each of
Ball, Buyer and their Designees and Seller shall (i) use Inadvertently
Retained Information only to the extent expressly permitted by this
Agreement or the Ancillary Agreements and (ii) as the existence of
Inadvertently Retained Information comes to its attention, use reasonable
efforts to destroy or expunge it or return it to Ball, Buyer and their
Designees or Seller, as the case may be; provided, however, Ball, Buyer,
their Designees and Latasa and its subsidiaries shall not be required to
destroy, expunge or return documents which Seller or its Affiliates make
available to third party purchasers of goods and services from Seller or
its Affiliates or would make available if the Business were a third party
purchaser of goods and services from Seller or its Affiliates.
99
ARTICLE VI
SURVIVAL AND INDEMNIFICATION
Section 6.1 Survival of Representations, Warranties and
Covenants. All representations and warranties of each party contained in
this Agreement shall survive the Closing, regardless of any investigation
made by the other party, for a period ending on the second anniversary of
the Closing Date, except that: (i) the representations and warranties set
forth in Sections 2.4, 2.23, 3.2 and 3.6 shall survive indefinitely and
(ii) the representations and warranties set forth in Section 2.16 shall
survive until the expiration of the applicable statutes of limitation plus
90 days. The covenants and agreements contained herein shall survive the
Closing without limitation as to time unless the covenant or agreement
specifies a term, in which case such covenant or agreement shall survive
for such specified term. The respective expiration dates for the survival
of the representations and warranties and the covenants shall be referred
to herein as the relevant "Expiration Date." All representations with
respect to title to Owned Real Property shall be merged into the respective
special warranty deeds and shall not survive the Closing.
Section 6.2 Indemnification by Ball and Buyer. Ball and Buyer
agree to indemnify, defend and hold Seller, its officers, directors,
employees, agents, Affiliates and representatives harmless, from and
against any and all cost, expense, loss, liability or damage (except
punitive damages attributable to an Indemnified Party's acts or omissions)
and actions and claims in respect thereof (including, without limitation,
amounts paid in settlement and herein referred to as "Losses" suffered or
incurred by reason of (i) the representations and warranties of Ball and
Buyer in Article III hereof or the Article V Representations of Ball and
Buyer being untrue (without giving effect to any qualification contained
therein as to materiality, Material Adverse Effect or knowledge of any
party) as of the date hereof and as of the Closing Date, notice of which is
given to Ball and Buyer on or prior to the relevant Expiration Date, (ii)
any nonfulfillment of any covenant or agreement of Ball and Buyer in this
Agreement, notice of which is given to Buyer on or prior to the relevant
Expiration Date, (iii) subject to Section 6.5 with respect to the Assumed
Liabilities referred to in Section 1.3(a)(v), any failure to pay and
discharge the Assumed Liabilities, (iv) claims arising out of conduct of
the Business by Buyer, Ball or their Designees after the Closing Date to
the extent Seller is not obligated to indemnify Ball or Buyer with respect
thereto pursuant to Section 6.3, and (v) all reasonable costs and expenses,
including, without limitation, legal fees and expenses,
100
incurred in connection with enforcing the indemnification rights of Seller
pursuant to this Section 6.2.
Section 6.3 Indemnification by Seller. Seller agrees to
indemnify, defend and hold Ball and Buyer, their officers, directors,
employees, agents, Affiliates and representatives harmless from and against
all Losses suffered or incurred by reason of (i) the representations and
warranties of Seller in Article II hereof or the Article V Representations
of Seller being untrue (without giving effect to any qualification
contained therein as to materiality, Material Adverse Effect or knowledge
of any party in Sections 2.5, 2.11(b), 2.11(c), 2.13(a) (last sentence),
2.13(c) (first two sentences), 2.13(d) (with respect to defaults by
Seller), 2.14 (with respect to defaults by Seller), 2.16, 2.18, 2.20(b),
2.20(c), 2.21(b), 2.21(g), 2.26(b) and 2.29) as of the date hereof and as
of the Closing Date, notice of which is given to Seller on or prior to the
relevant Expiration Date; (ii) any nonfulfillment of any covenant or
agreement of Seller in this Agreement, notice of which is given to Seller
on or prior to the relevant Expiration Date; (iii) any liability,
obligation or contract of Seller not specifically assumed by Ball or Buyer
hereunder (including, but not limited to, the Excluded Liabilities); (iv)
any Losses arising out of or in connection with Seller's or Buyer's
non-compliance with any so-called bulk transfer laws set forth in Section
4.7; (v) any Tax liability caused by the recapture of any deferred
intercompany gains or excess loss accounts or by any consolidated return
liability arising under Treasury Regulation Section 1.1502-6 or similar
provision of state, local or foreign law; and (vi) all reasonable costs and
expenses, including, without limitation, legal fees and expenses, incurred
in connection with enforcing the indemnification rights of Ball and Buyer
pursuant to this Section 6.3. Notwithstanding anything contained herein to
the contrary, any claims for which indemnification is provided under
Section 6.5 shall not be subject to this Section 6.3, and notwithstanding
anything herein to the contrary, if Seller shall be required to indemnify
both Ball and Buyer with respect to the same matter, the satisfaction of
such indemnity to one of them shall discharge its obligation to the other
to the extent of the amount paid.
Section 6.4 Claims for Indemnification.
(a) Limits on Indemnification. Notwithstanding the
provisions of Sections 6.2 and 6.3, to the extent that (x) Seller incurs a
Loss under Section 6.2(i) or (y) Ball or Buyer incurs a Loss under Section
6.3(i) (other than with respect to a breach of the representation set forth
in Section 2.13(g) for which Ball and Buyer shall be entitled to
indemnification without such limits), the other party shall
101
be required to
indemnify and hold harmless the party incurring the Loss with respect to
such Loss only if the aggregate of all such Losses to that party exceeds
$3.75 million and then only with respect to Losses in excess of that
amount, provided that the foregoing limit does not apply to Seller's breach
of any representation or warranty relating to Taxes. Notwithstanding
anything contained in this Agreement, Seller's indemnification obligations
shall not, in the aggregate, exceed the Purchase Price.
(b) Notwithstanding any provision hereof to the contrary,
(i) Seller's obligations with respect to any breach of the representations
and warranties set forth in the first sentence of Section 2.8 shall be
solely as provided in Section 5.16 (ii) Seller's obligations with respect
to any breach of the representations and warranties set forth in Section
2.9(a) insofar as any such breach relates to obsolete or slow-moving
Inventory shall be solely as provided in Section 1.5(d) and (iii) Seller's
indemnification obligations under Section 1.7(e) shall be limited to
$1,000,000.00 in the aggregate.
(c) General. The parties intend that all indemnification
claims be made as promptly as practicable by the party seeking
indemnification (the "Indemnified Party"). Whenever any claim shall arise
for indemnification, the Indemnified Party shall promptly notify the party
from whom indemnification is sought (the "Indemnifying Party") of the
claim, and the facts constituting the basis for such claim. The failure to
so notify the Indemnifying Party shall not relieve the Indemnifying Party
of any liability that it may have to the Indemnified Party, except to the
extent the Indemnifying Party demonstrates that the defense of such action
is prejudiced thereby.
(d) Claims by Third Parties. With respect to claims made
by third parties, the Indemnifying Party, upon acknowledgment of its
liability for the claim, shall be entitled to assume control of the defense
of such action or claim with counsel reasonably satisfactory to the
Indemnified Party, provided, however, that:
(i) the Indemnified Party shall be entitled to
participate in the defense of such claim and to employ counsel at its
own expense to assist in the handling of such claim;
(ii) no Indemnifying Party shall consent to the entry
of any judgment or enter into any settlement if such judgment or
settlement (A) does not include as an unconditional term thereof the
102
giving by each claimant or plaintiff to each Indemnified Party of a
release from all liability in respect to such claim or (B) if as a
result of such consent or settlement injunctive or other equitable
relief would be imposed against the Indemnified Party or such
judgment or settlement could materially interfere with the business,
operations or assets of the Indemnified Party;
(iii) if the Indemnifying Party does not assume
control of the defense of such claim in accordance with the foregoing
provisions within 10 days after receipt of notice of the claim, the
Indemnified Party shall have the right to defend such claim in such
manner as it may deem appropriate at the cost and expense of the
Indemnifying Party, and the Indemnifying Party will promptly
reimburse the Indemnified Party therefor in accordance with this
Article VI, provided that without the prior written consent of the
Indemnifying Party the Indemnified Party shall not be entitled to
consent to the entry of any judgment or enter into any settlement (A)
if such consent or settlement does not include as an unconditional
term thereof the giving by each claimant or plaintiff to each
Indemnifying Party of a release from all liability in respect of such
claim or (B) if as a result of such consent or settlement injunctive
or other equitable relief would be imposed against the Indemnifying
Party or such judgment or settlement could materially interfere with
the business operations or assets of the Indemnifying Party; and
(iv) the Indemnified Party shall make available to
the Indemnifying Party and its attorneys, accountants and other
representatives all books and records in its possession relating to
such claim and the parties shall otherwise render each other
assistance as may be reasonably requested to ensure the proper and
adequate defense to the claim.
(e) Remedies Cumulative. Subject to Section 10.12, the
remedies provided herein shall be cumulative and shall not preclude
assertion by any party of any rights or the seeking of any other remedies
against any other party.
(f) Disclosure. Except as otherwise provided herein, no
action by an Indemnified Party to determine the extent of indemnified
liability,
103
including, without limitation, voluntary disclosure to
Authorities or potential claimants, shall in any way affect such
Indemnified Party's right to indemnification from the Indemnifying Party.
(g) Subrogation. In connection with any indemnity payment
hereunder, an Indemnifying Party shall not be entitled to require that any
action be brought against any third party before an action is brought
against the Indemnifying Party hereunder by an Indemnified Party but, to
the extent of such payment, the Indemnifying Party shall be subrogated to
any such right of action of the Indemnified Party against any third party
(other than any third party insurer) in respect of the Loss to which such
payment relates; provided, however, that until the Indemnified Party
recovers full payment of such Loss, any claims of the Indemnifying Party
against any such third party are hereby made expressly subordinated and
subject, in right of payment, to the Indemnified Party's rights against
such third party.
(h) No Duplication of Remedies. If a party is entitled to
indemnification under more than one provision of this Agreement for the
same Loss, it shall be entitled to only a single recovery for such Loss,
or, if applicable, such Loss shall only be taken into account once in the
calculation of the $3.75 million threshold amount set forth in Section
6.4(a).
(i) Certain Employee Benefits Representations. Statements
in Sections 5.4, 5.5 and 5.6 hereof which use the word "represent" and
derivations thereof (the "Article V Representations") shall be deemed
"representations" for purposes of Section 6.3(i) hereof (if made by Seller)
and Section 6.2(i) hereof (if made by Ball or Buyer). Notwithstanding the
foregoing, any provision of Sections 5.4, 5.5 and 5.6 that expressly
provides for indemnification or reimbursement of any party shall not be
subject to the limitations contained in Section 6.4(a) hereof.
Section 6.5 Environmental Indemnification.
(a) Without regard to whether any breach of a
representation or warranty is involved, subject to the limits set forth in
Section 6.5(b) and the provisions of Exhibit 6.5, Seller shall indemnify
and hold harmless Ball and Buyer against Losses (as calculated herein)
arising out of any Environmental Condition existing at the Business
Locations, to the extent attributable to any condition existing at or
before the Closing or event occurring at or before the Closing, (i) that,
as of the Closing, constitutes a violation of applicable Environmental Law
or (ii) with respect
104
to which there is liability for Cleanup before or
after the Closing under applicable Environmental Law in effect as of the
Closing, any such Loss being referred to herein as an
"Environmental Loss."
(b) With respect to Environmental Losses relating to
matters that are initially asserted:
(i) on or before the third anniversary of
Closing, Seller shall be responsible for 100% of the Loss;
(ii) on or before the fourth anniversary of
Closing, Seller shall be responsible for 80% of the Loss;
(iii) on or before the fifth anniversary of
Closing, Seller shall be responsible for 60% of the Loss; and
(iv) on or before the date five years and six months
after the Closing, Seller shall be responsible for 40% of the Loss.
Notwithstanding any provision hereof to the contrary, with regard to
matters initially asserted after the date five years and six months after
the Closing, Seller shall have no responsibility pursuant to this Agreement
for any Loss under any Environmental Law other than for any Offsite
Obligations.
(c) All claims for indemnification under either Section
6.3 (i) (with respect to a breach of Section 2.19 relating to matters
located on the Business Locations) or this Section 6.5 with respect to
Environmental Laws shall be subject to the provisions of this Section 6.5
and the provisions of Exhibit 6.5.
105
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATION
The obligation of Seller to consummate the sale of the
Business, the Business Assets and the Shares pursuant to this Agreement
shall be subject to the satisfaction, at or prior to the Closing, of each
of the following conditions, unless waived in writing by
Seller:
Section 7.1 Representations and Warranties True. The
representations and warranties contained in Article III and in all
certificates and other documents delivered by Ball or Buyer to Seller
pursuant to this Agreement shall be true, complete and correct in all
material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of another date) as of
the Closing Date as though such representations and warranties were made on
and as of such date, except for changes expressly contemplated by the terms
of this Agreement.
Section 7.2 Performance. Ball and Buyer shall have performed
and complied in all material respects with all agreements, obligations and
conditions required by this Agreement to be performed or complied with by
Ball and Buyer or both, as the case may be, at or before
the Closing.
Section 7.3 No Injunction, Litigation, etc. On the Closing
Date, there shall be no injunction, writ, preliminary restraining order or
any order of any nature issued by a court of competent jurisdiction
directing that the transactions provided for in this Agreement or any of
them not be consummated as so provided. No order of any Authority shall be
in effect which restrains or prohibits the consummation of the transactions
contemplated by this Agreement, and there shall not have been threatened,
nor shall there be pending, any action or proceeding in any such court or
before any such governmental agency seeking to prohibit or delay, or
challenging the validity of, the transactions contemplated by this
Agreement.
Section 7.4 Stockholder's Agreement. If any Ball Shares are
issued pursuant hereto, Ball shall have executed and delivered the
Stockholder's Agreement.
106
Section 7.5 Legal Opinion. Ball shall have furnished Seller
with a legal opinion from its general counsel substantially in the form set
forth in Exhibit 7.5.
Section 7.6 HSR Act Waiting Periods. All waiting periods
applicable to this Agreement and the transactions contemplated hereby under
the HSR Act shall have expired or been terminated.
Section 7.7 Certificates. Ball and Buyer shall have furnished
Seller with such certificates of their officers to evidence compliance with
the conditions set forth in this Article VII as may be reasonably requested
by Seller, including, without limitation, a certificate as to the
effectiveness of attached resolutions authorizing execution by Ball and
Buyer of this Agreement and the Stockholder's Agreement and the
consummation by Ball and Buyer of the transactions contemplated hereby.
Section 7.8 Consents. Those consents of third parties
identified in Section 7.8 of the Disclosure Schedule shall have been
obtained.
ARTICLE VIII
CONDITIONS TO BUYER'S OBLIGATION
The obligation of Ball and Buyer to consummate the purchase of
the Business, the Business Assets and the Shares pursuant to this Agreement
shall be subject to the satisfaction, at or prior to the Closing, of each
of the following conditions, unless waived in writing by Ball and Buyer:
Section 8.1 Representations and Warranties True. The
representations and warranties contained in Article II hereof, the
Disclosure Schedule and in all certificates and other documents delivered
by Seller to Ball or Buyer pursuant to this Agreement shall be true,
complete and correct in all material respects as of the date of this
Agreement and (except to the extent such representations and warranties
speak as of another date) as of the Closing Date as though such
representations and warranties were made on and as of such date, except for
changes expressly contemplated by the terms of this Agreement.
107
Section 8.2 Performance. Seller shall have performed and
complied in all material respects with all agreements, obligations and
conditions required by this Agreement to be performed or complied with by
Seller at or before the Closing.
Section 8.3 No Injunction, Litigation, etc. On the Closing
Date, there shall be no injunction, writ, preliminary restraining order or
any order of any nature issued by a court of competent jurisdiction
directing that the transactions provided for in this Agreement or any of
them not be consummated as so provided. No order of any Authority shall be
in effect which restrains or prohibits the consummation of the transactions
contemplated by this Agreement, and there shall not have been threatened,
nor shall there be pending, any action or proceeding in any such court or
before any such governmental agency seeking to prohibit or delay, or
challenging the validity of, the transactions contemplated by this
Agreement.
Section 8.4 Governmental Filings and Consents; Third Party
Consents. All governmental filings or consents required to be made or
obtained prior to the Closing Date by Seller in connection with the
execution and delivery of this Agreement and the Ancillary Agreements and
the consummation of the transactions contemplated hereby and thereby shall
have been made or obtained. All authorizations, consents and approvals of
any third party (other than an Authority) required in connection with the
execution and delivery of this Agreement and the Ancillary Agreements and
the transactions contemplated hereby and thereby which are material to the
operation of the Business or the consummation by Seller of the transactions
contemplated hereby (including those expressly set forth in Section 8.4 of
the Disclosure Schedule) shall have been obtained.
Section 8.5 Stockholder's Agreement. If any Ball Shares are
issued pursuant hereto, Seller shall have executed and delivered the
Stockholder's Agreement.
Section 8.6 HSR Act Waiting Periods. All waiting periods
applicable to this Agreement and the transactions contemplated hereby under
the HSR Act shall have expired or been terminated.
Section 8.7 No Material Adverse Change. Since December 31,
1997, no condition, event, change or occurrence, or any series of the
foregoing, shall exist or shall have occurred which, individually or in the
aggregate, has had, or is reasonably likely to have, a Material Adverse
Effect.
108
Section 8.8 Certificates. Seller shall have furnished Buyer
with such certificates of its officers and others to evidence compliance
with the conditions set forth in this Article VIII as may be reasonably
requested by Buyer, including, without limitation, certificates as to the
effectiveness of attached resolutions authorizing execution by Seller of
this Agreement and the Stockholder's Agreement and the consummation by
Seller of the transactions contemplated hereby.
Section 8.9 Financing Conditions. The conditions set forth in
clauses (i), (ii) and (iii) of the fourth paragraph of the Commitment
(commencing at the end of page two thereof and continuing on the top of
page three thereof) Letter and under the heading "Conditions Precedent -
Due Diligence" on the Term Sheet attached thereto (the "Due Diligence
Condition") shall have been satisfied; provided that, only with respect to
the condition set forth in clause (i) of the fourth paragraph of the
Commitment Letter (the "Documentation Condition") and the Due Diligence
Condition, the condition set forth in this Section 8 shall expire and be of
no further effect at the close of business on the 45th day after the date
hereof.
Section 8.10 Actions by Seller. Seller shall
have completed all of the actions described in Annex 8.10.
ARTICLE IX
TERMINATION AND ABANDONMENT
Section 9.1 Methods of Termination. This Agreement and the
transactions contemplated herein may be terminated and abandoned at any
time prior to the Closing:
(a) by mutual written consent of Buyer and Seller;
(b) by either Buyer or Seller if the Closing shall not
have occurred on or before December 31, 1998;
(c) by either Seller or Buyer if any court of competent
jurisdiction in the United States or other Authority shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated hereby, and such order,
decree or ruling or other action
109
shall have become final and nonappealable
after the affected party or parties have made all reasonable efforts to
contest and appeal the issuance of such order, decree, ruling or other
action;
(d) by either Buyer or Seller (provided that the
terminating party is not then in material breach of any representation,
warranty or covenant in this Agreement) if there shall have been a material
breach of any of the representations, warranties or covenants in this
Agreement on the part of the other party, which breach is not cured within
30 days following written notice to the party committing such breach, or
which breach, by its nature, cannot be cured prior to Closing; and
(e) by Buyer on the next business day following the 45th
day after the date hereof if either the Documentation Condition or the Due
Diligence Condition has not been satisfied on or before such 45th day.
Section 9.2 Procedure upon Termination. In the event of
termination and abandonment of this Agreement pursuant to Section 9.1
hereof, written notice thereof shall forthwith be given to the other party,
and the transactions contemplated by this Agreement shall be terminated and
abandoned. If the transactions contemplated by this Agreement are so
terminated and abandoned:
(a) each party, if requested, will redeliver all
documents, work papers and other material of any other party relating to
the transactions contemplated hereby, whether so obtained before or after
the execution hereof, to the party furnishing the same;
(b) all confidential information received by Seller with
respect to Ball or Buyer or their Affiliates shall be treated in accordance
with the Confidentiality Agreement and Section 5.9 hereof;
(c) all confidential information received by Ball or
Buyer with respect to Seller or its Affiliates shall be treated in
accordance with the Confidentiality Agreement and Section 5.9 hereof;
(d) notwithstanding any such termination, Sections 5.9,
9.2, 10.3 and 10.12 shall remain in full force and effect; and
110
(e) no party and none of its respective directors,
officers, Affiliates or agents shall have any liability to the other
parties to this Agreement or the Ancillary Agreements as a result of the
transactions contemplated hereby or thereby, except for the willful breach
of this Agreement or any breach of the provisions of this Agreement that
survive such termination pursuant to Section 9.2(d).
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 Amendment and Modification. This Agreement may be
amended, modified and supplemented only by written agreement of Seller,
Ball and Buyer.
Section 10.2 Waiver of Compliance. Any failure of Seller on the
one hand, or Ball and Buyer on the other, to comply with any obligation,
covenant, agreement or condition herein may be expressly waived in writing
by an authorized representative of Buyer or Seller, respectively, but such
waiver or failure to insist upon compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
Section 10.3 Expenses, etc. Except as otherwise set forth
herein, whether or not the transactions contemplated by this Agreement
shall be consummated, the fees and expenses incurred by a party in
connection with this Agreement shall be borne by such party.
Section 10.4 Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given if delivered by hand or sent by
overnight courier or telecopy (and promptly confirmed by certified mail,
return receipt requested):
111
(a) if to Seller, to:
Reynolds Metals Company
6601 West Broad Street
Richmond, Virginia 23230
Attention: General Counsel
Telecopier: (804) 281-3740
and a copy to:
McGuire, Woods, Battle & Boothe, LLP
One James Center
901 E. Cary Street
Richmond, Virginia 23219-4030
Attention: Marshall H. Earl, Jr., Esq.
Telecopier: (804) 698-2044
or to such other person or address as Seller shall furnish to Ball and
Buyer in writing.
(b) if to Ball or Buyer, to:
Ball Corporation
Ball Metal Beverage Container Corp.
10 Longs Peak Drive
Broomfield, Colorado 80021-2510
Attention: General Counsel
Telecopier: (303) 460-2691
and a copy to:
Skadden, Arps, Slate, Meagher &
Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Attention: Charles W. Mulaney, Jr.
Telecopier: (312) 407-0411
or to such other person or address as Ball or Buyer shall furnish to Seller
in writing.
112
Section 10.5 Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns, but neither
this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by either party without the prior written consent of the
other party, except by operation of law and except that Buyer may assign
its rights under this Agreement, in whole or in part, to Ball or any direct
or indirect wholly-owned subsidiary or subsidiaries of Ball.
Section 10.6 Publicity. Neither Seller nor Ball and Buyer shall
make any announcement or statement concerning this Agreement or the
transactions contemplated hereby to the general public or Seller's
Employees without the prior consent of the other party. This provision
shall not apply, however, to any announcement or written statement required
to be made by law or the regulations of any federal or state governmental
agency, except that the party required to make such announcement shall,
whenever practicable, consult with the other party concerning the timing
and content of such announcement before such announcement is made.
Section 10.7 Governing Law. This Agreement and the legal
relations among the parties shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to its
conflicts of law doctrine.
Section 10.8 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.
Section 10.9 Headings. The headings of the Sections and
Articles of this Agreement are inserted for convenience only and shall not
constitute a part hereof or affect in any way the meaning or interpretation
of this Agreement.
Section 10.10 Entire Agreement. This Agreement, including the
Annexes and Exhibits hereto, the Disclosure Schedule, the Ancillary
Agreements, the other documents and certificates delivered pursuant to this
Agreement and the Confidentiality Agreement set forth the entire agreement
and understanding of the parties in respect of the subject matter hereof
and supersede all prior agreements, representations or warranties, whether
oral or written, by any party unless a contrary intention is indicated by a
specific reference to this clause in any such written agreement.
113
Section 10.11 Third Parties. Except as specifically referred to
herein, nothing herein shall be construed to give to any Person other than
the parties and their successors or assigns, any rights or remedies under
or by reason of this Agreement.
Section 10.12 Dispute Resolution.
(a) Except as otherwise provided in this Agreement or any
Ancillary Agreement, including by way of example Exhibit 6.5, all disputes,
controversies or claims (a "Dispute") arising between Seller on the one
hand, and Buyer, Ball or their Designees, on the other hand, arising out of
or relating to this Agreement and the subject matter hereof, will be
settled as provided herein. The parties may by written agreement modify the
specified time limitations and procedures.
(b) The parties shall promptly attempt to resolve any
Dispute by negotiation. If a Dispute is not resolved by negotiations in the
normal course of business, and a party wishes to pursue the matter further,
it shall give the other party written notice requesting "Higher Level
Executive Negotiations." Specifically, Executives of both parties at levels
one step above the personnel who have previously been involved in the
Dispute shall meet at a mutually acceptable time and place in Chicago,
Illinois (or such other place as the parties mutually agree), within 15
calendar days after giving such notice, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the Dispute.
(c) If a Dispute has not been resolved by Higher Level
Executive Negotiations within 30 calendar days of the claiming party's
giving notice, and the claiming party wishes to pursue the matter further,
it shall give the responding party written notice requesting a "Senior
Executive Abbreviated Mini- Trial," as described in this Section 10.12(c).
The Dispute shall be referred to senior executives of the parties who have
authority to settle the dispute. The senior executives shall meet at a time
and place in Chicago, Illinois (or such other place as the parties mutually
agree), mutually agreed upon within 15 calendar days after such notice
requesting a Senior Executive Abbreviated Mini-Trial. The claiming party
will make a presentation of its position to the senior executives. The
presentation will not exceed one hour in length. The responding party will
then make its presentation, not to exceed one hour in length. The claiming
party may make a rebuttal not to exceed 20 minutes in length. The
responding party may make an answer to the rebuttal not to exceed 20
minutes in length. The presentations of the parties may be made by
114
counsel or other persons designated by the senior executives. When the
presentations have been concluded, the senior executives will discuss the
matter privately. In preparation for the meeting, a senior executive may
make a non-binding request to the other party to provide limited
information believed to be important and significant in achieving a
resolution. The senior executives may also involve a mediator if they
mutually agree. Unless the parties otherwise agree, any such mediator will
be appointed by the Center for Public Resources, New York, New York, a
not-for-profit dispute resolution organization.
(d) If any Dispute is not resolved by the foregoing
dispute resolution processes, the parties shall resolve such Dispute
exclusively by litigation; provided, however, that neither party shall
commence litigation until (i) Higher Level Executive Negotiations and the
Senior Executive Abbreviated Mini-Trial have been conducted in accordance
with this dispute resolution provision, (ii) the time specified for such
(together with any additional time the parties have agreed upon) has
expired or (iii) a party has breached its obligation to participate in the
pre-litigation dispute resolution process. The parties agree to use all
reasonable efforts to expedite any such litigation with respect to a
Dispute.
(e) For all claims that are resolved by litigation, the
prevailing party, to the extent it prevails on its claims, will be entitled
to its attorneys' and experts' fees and disbursements incurred in resolving
the dispute (including those of in-house counsel and experts) and any other
expense directly related to the dispute.
(f) For all claims that are resolved by litigation,
interest on any claim that is determined to be payable will accrue from the
time the claim is originally made at an interest rate per annum equal to
the Prime Rate in effect from time to time.
(g) For all claims that are resolved by litigation, the
parties consent to the exclusive jurisdiction of any state or federal court
located in Delaware and irrevocably agree that all such actions or
proceedings arising out of or related to this Agreement shall be litigated
in such courts. Each party accepts for itself and in connection with its
respective properties, generally and unconditionally, the exclusive
jurisdiction and venue of the aforesaid courts and waives any defense of
forum non conveniens, and irrevocably agrees to be bound by any
nonappealable judgement rendered in connection with this Agreement. THE
PARTIES EXPRESSLY WAIVE THEIR RIGHTS TO A TRIAL BY JURY.
115
(h) Notwithstanding anything to the contrary contained
herein, and in addition to any other remedy available to such party,
Seller, Ball or Buyer may seek provisional or permanent equitable relief to
enforce the provisions of this Agreement and remedy any breach hereof,
including, without limitation, temporary restraining orders and preliminary
or permanent injunctions, in addition to the other remedies set forth
herein.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the day and year first above written.
BALL CORPORATION
By: /s/ R. David Hoover
______________________________
Name: R. David Hoover
Title: Vice Chairman and Chief
Financial Officer
BALL METAL BEVERAGE CONTAINER CORP.
By: /s/ George A. Matsik
___________________________________
Name: George A. Matsik
Title: Chairman and Chief Executive
Officer
REYNOLDS METALS COMPANY
By: /s/ D. Michael Jones
________________________________
Name: D. Michael Jones
Title: Senior Vice President and
General Counsel
A-1
ANNEX A
DEFINED TERMS
"Affiliate(s)" means, with respect to any Person, (i) an entity
of which such Person is a direct or indirect subsidiary, (ii) a direct or
indirect subsidiary of such Person or (iii) a Person that controls, is
controlled by or is under common control with such Person, provided that
Latasa shall not be deemed to be an Affiliate of Seller.
"Cleanup" means all actions required by any Authority or under
any Environmental Law to contain or otherwise ameliorate an Environmental
Condition, including preventing a Release and performing preremedial
studies and investigations and postremedial monitoring and care.
"Code" means the Internal Revenue Code of 1986, as amended.
"Copyrights" means all registered and unregistered copyrights
(including, without limitation, copyrights in software and databases) and
registrations and applications for copyright registration, all rights of
authorship therein, and all rights to sue for past infringement thereof.
"Designee" means a direct or indirect wholly-owned subsidiary
of Ball or Buyer whose specific obligations Ball guarantees in accordance
with Section 5.12.
"Environment" means ambient air, surface water, groundwater,
land surface or land subsurface.
"Environmental Condition" means any condition existing at any
Business Location (or at any nearby property as a result of migration
through the air, soil, groundwater or stormwater run-off from a Business
Location) to the extent (i) resulting from a Release of any Hazardous
Substance into the Environment or (ii) resulting from the violation of or
noncompliance with any Environmental Law.
"Environmental Laws" means all Laws and standards applicable to
Seller or the Business Locations relating to pollution or protection of the
Environment, including, without limitation, Laws relating to Releases or
threatened Releases of Hazardous Substances into the Environment or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, Release, transport or handling of Hazardous Sub-
A-2
stances and all Laws with regard to record keeping, notification, disclosure
and reporting requirements respecting Hazardous Substances.
"Environmental Permits" means licenses, permits, approvals,
applications and authorizations from any Authority, whether federal, state
or local, domestic or foreign, which are required under or issued under
Environmental Laws.
"Hazardous Substances" means pollutants, contaminants,
pesticides, petroleum and petroleum products, polychlorinated biphenyl
("PCBs"), asbestos, any "hazardous substance" as defined in the
Comprehensive Environmental Response, Compensation and Liability Act, 41
U.S.C. ss. 9601, et seq., as amended and reauthorized ("CERCLA"), any
"hazardous waste" as defined in the Resource Conservation and Recovery Act
("RCRA").
"Knowledge of Seller" means the knowledge, both actual
knowledge and knowledge that should be known in the ordinary course of
their duties, of the following persons employed by Seller or its
Affiliates:
William E. Leahey, Jr.* Senior Vice President, Global Cans
D. Michael Jones Senior Vice President and General Counsel
Edmund H. Polonitza Vice President, Planning & Development
F. Robert Newman Vice President, Human Resources
Chuck D. McLane, Jr. Director, Financial Reporting & Analysis
C. S. Weidman Director, Employee Relations
Homer M. Cole Director, Health and Safety
Cathy C. Taylor Director, Environmental Quality
F. R. Ellsworth Director, Real Estate & Administrative
Services
Lucile J. Anutta Senior Employee Benefits Counsel
Donna C. Dabney Secretary and Assistant General Counsel
Edwin A. Harper Senior Division Counsel
Patrick R. Laden Chief Labor Counsel
Robert C. Lyne, Jr. Senior Patent Counsel
James E. McKinnon Chief Environmental Counsel
E. Michael Lewandowski* Director, Finance & Administration
C. Griffin Jones* Director, Manufacturing
Roger H. Donaldson* Director, Technology
Cornell D. Ward* Director, Human Resources
Paul G. Cobbledick* Director, Sales and Marketing
A-3
Paulo R. Rochet* Director, Business Development
Thomas P. Mackell* Director, Materials Management
Managers, Can and End Plants*
*Global Can Business employees
"Machinery Technology" means all technical information and
know-how, confidential or non-confidential, inventions, whether patented or
unpatented, and trade secrets, including, without limitation, all
information and know-how related to increasing manufacturing efficiency and
profitability, patterns, plans, designs, research data, formulae,
manufacturing, sales, service or other processes, operating manuals,
drawings, equipment and parts lists (with related descriptions and
instructions), manuals, data, records, procedures, packaging instructions,
product specifications, analytical methods, sources and specifications for
raw materials, manufacturing and quality control procedures, toxicity and
health and safety information, environmental compliance and regulatory
information, research and development records and reports and other
documents relating to the foregoing including the contents of any invention
disclosures and open invention dockets for which no patent application has
been filed, in each case to the extent the foregoing relates exclusively or
primarily to the Machinery Operations.
"Material Adverse Effect" means an individual or cumulative
adverse change in, or effect on, the business, customers, operations,
properties, condition (financial or otherwise), assets or liabilities of
the Business taken as a whole that is reasonably expected to be materially
adverse to the business, customers, operations, properties, condition
(financial or otherwise), assets or liabilities of the Business taken as a
whole.
"Patents" means all patents, patent applications and related
patent rights, including all reissues, divisionals, continuations and
continuations-in-part, extensions, all improvements thereon and all rights
to sue for past infringement thereof.
"Permits" means licenses, permits, consents, approvals,
applications, product registrations and authorizations from any Authority,
whether federal, state or local, domestic or foreign, other than
Environmental Permits, including, without limitation, licenses, permits or
approvals from, and registrations with, U.S. Equal Employment Opportunity
Commission ("EEOC"), U.S. Occupational Safety and Health Administra-
A-4
tion, U.S. Federal Trade Commission, U.S. Department of Justice, U.S.
Department of Commerce, U.S. Department of Transportation, U.S. Food and Drug
Administration, U.S. Department of Agriculture or Authorities responsible
for the administration of workers' compensation laws.
"Person" means an individual, corporation, partnership,
association, trust, limited liability company or other entity or
organization, including a government or political subdivision or an agency
or instrumentality thereof.
"Release" means any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the Environment of any Hazardous Substances not
including any such action which results in exposure to employees solely
within a work place or omissions from the engine or exhaust of a motor
vehicle, rolling stock or vessel.
"Section 338 Elections" means both a Section 338(g)
Election and a Section 338(h)(10) Election.
"Section 338(g) Election" means an election described in
section 338(g) of the Code or deemed election described in section 338(e)
of the Code. The Term "Section 338(g) Election" shall also include any
substantially similar elections under a state or local statute
corresponding to federal Laws.
"Section 338(h)(10) Election" means an election described in
section 338(h)(10) of the Code. The Term "Section 338(h)(10) Election"
shall also include any substantially similar election under a state or
local statute corresponding to federal Laws.
"Section 338 Forms" shall mean all returns, documents,
statements, and other forms that are required to be submitted to any
federal, state, county, or other local Taxing Authority in connection with
a Section 338(g) Election or a Section 338(h)(10) Election. Section 338
Forms shall include, without limitation, any "statement of section 338
election" and United States Internal Revenue Service Form 8023 (together
with any schedules or attachments thereto) that are required pursuant to
Treas. Reg. ss. 1.338-1 or Treas. Reg. ss. 1.338(h)(10)-1.
"Tax Laws" means the Code and any other Laws relating to Taxes
and any official administrative pronouncements released thereunder.
A-5
"Tax Return(s)" means any return, report, information return or
other document (including any related or supporting information and any
amendment to any of the foregoing) filed or required to be filed with any
Taxing Authority with respect to Taxes.
"Taxing Authority" means any domestic or foreign governmental
authority responsible for the imposition, collection or administration of
any Tax.
"Technology" means all technical information and know-how,
confidential or non-confidential, inventions, whether patented or
unpatented, and trade secrets, including, without limitation, all
information and know-how related to increasing manufacturing efficiency and
profitability, patterns, plans, designs, research data, formulae,
manufacturing, sales, service or other processes, operating manuals,
drawings, equipment and parts lists (with related descriptions and
instructions), manuals, data, records, procedures, packaging instructions,
product specifications, analytical methods, sources and specifications for
raw materials, manufacturing and quality control procedures, toxicity and
health and safety information, environmental compliance and regulatory
information, research and development records and reports and other
documents relating to the foregoing including the contents of any invention
disclosures and open invention dockets for which no patent application has
been filed, in each case to the extent the foregoing relates exclusively or
primarily to the Business.
"Trademarks" means all common law and registered trademarks,
service marks, logos, trade dress and trade names, the goodwill of the
business symbolized thereby, other business, product or service identifiers
and all registrations and applications for registration of the foregoing
and all rights to sue for past infringement or dilution thereof.
<PAGE. A-6
The following terms shall have the definitions contained in the
sections of the Asset Purchase Agreement identified below:
DEFINED TERM SECTION
Absent Nonrepresented Hourly Employees 5.5(b)
Absent Represented Employees 5.4(a)
Absent Salaried Employees 5.5(c)
Accounts Receivable 1.1(h)
Acquisition Proposal 4.5(a)(i)
Act 2.24(i)
Adverse Effect 4.4(b)
Affiliate(s) Annex A
Aggregate Deemed Sales Price 5.7(d)
Agreement Preamble
Agreement Regarding Performance of Technical Services 1.7(c)(viii)
Ancillary Agreements 1.7(d)
Article V Representations 6.4(i)
Assignment and Assumption Agreement 1.7(c)(ii)
Assignment and Assumption of Leases 1.7(b)(ix)
Assumed Benefit Plan(s) 5.4(g)(xii)
Assumed Liabilities 1.3(a)
Audited Balance Sheet 1.5(a)
Audited Financial Statements 5.13(a)
Audited Latasa 1997 Financial Statements 5.13(b)
Authority 2.5
Ball Preamble
Ball SEC Reports 3.5
Ball Shares 1.4
Bill of Sale 1.7(b)(ii)
Business Preamble
Business Assets 1.1
Business Information 1.1(d)
Business Locations 1.1(a)
Buyer Preamble
Buyer's SUB Plan 5.4(c)
Buyer's Welfare Plans 5.5(f)(ii)
Cade 2.6
Cash Price 1.4
A-7
DEFINED TERM SECTION
CERCLA Annex A
Cleanup Annex A
Closing 1.1
Closing Date 1.7(a)
Closing Period 5.7(g)
Closing Statement 1.5(a)
Code Annex A
Collective Bargaining Agreements 2.20(a)
Commitment Letter 3.9
Confidentiality Agreement 5.9(a)
Contracts 2.14(a)
Copyrights Annex A
Cross-License Agreement 1.7(d)(ix)
Data Processing Services Agreement 1.2(t)
Defined Benefit Single Location Plans 5.4(g)(i)
Defined Contribution Single Location Plans 5.4(g)(i)
Designated Value 1.4
Designee Annex A
Differential 1.10(b)
Disclosure Schedule 2.1
Dispute 10.12(a)
Documentation Condition 8.9
Domestic Subsidiary Securities 2.25(a)
Due Diligence Condition 8.9
EEOC Annex A
Employee Benefits Data 5.5(a)
Employee Lists 5.5(a)
employment loss 2.20(j)
Encumbrances 2.11
Environment Annex A
Environmental Condition Annex A
Environmental Laws Annex A
Environmental Loss 6.5(a)
Environmental Permits Annex A
A-8
DEFINED TERM SECTION
Equipment 1.1(b)
ERISA 2.21(a)
ERISA Affiliate 2.21(a)
Exchange Act 3.5
Excluded Assets 1.2
Excluded Liabilities 1.3(b)
Extended Seconded Employees 5.6(a)(i)
Extrusion Land 1.10(a)
Expiration Date 6.1
FICA 5.6(d)
Filed Intellectual Property 1.7(b)
Final Closing Statement 1.5(b)
Financing 3.9
FMLA 5.4(a)
FUTA 5.6(d)
GAAP 1.5(a)
Guaranteed Pension Asset Value 5.4(g)(vi)
Hazardous Substances Annex A
Headquarter Employees 5.5(c)
Higher Level Executive Negotiations 10.12(b)
HSR Act 2.6
Human Resources Services Agreement 1.7(d)(xi)
Inadvertently Retained Information 5.17
Incentive Loan Agreement 1.7(d)(iv)
Indemnified Party 6.4(c)
Indemnifying Party 6.4(c)
Initial Document Production 5.4(g)(ii)
Intellectual Property Rights 1.1(c)
Interim Financial Statements 2.7(b)
Interplant Transfer Provisions 5.4(b)
Inventory 1.1(g)
Inventory Carrying Value 1.5(d)
Knowledge of Seller Annex A
LAR Preamble
A-9
DEFINED TERM SECTION
Latasa Preamble
Latasa Agreements 1.1(f)
Latasa Offering Statement 2.27
Latasa Subsidiaries 2.25(c)
Law(s) 2.5
Leased Premises 1.1(a)
Loss(es) 6.2
Machinery Operations Preamble
Machinery Technology Annex A
Master Trust 5.4(g)(v)
Master Trustee 5.4(g)(v)
Material Adverse Effect Annex A
Modified Aggregate Deemed Sale Price 5.7(d)
Neutral Auditor 1.5(c)
Non-Exclusive Contract(s) 1.1(j)
Non-Exclusive Permit(s) 1.1(e)
Offset 5.4(f)
Offsite Obligations 1.3(b)(v)
Option 1.10(e)
Owned Real Property 1.1(a)
Parcel 1.10(a)
Patents Annex A
Payroll Services Agreement 1.7(d)(vi)
PCBs Annex A
Permanent Shutdown 5.4(h)
Permits Annex A
Permitted Exceptions 4.4(b)
Person Annex A
Plan(s) 2.21(a)
Plant Land 1.10(a)
Plant Salaried Employees 5.5(c)
Post-Retirement Eligible Employees 5.5(f)(i)
Pre-Closing Period 5.7(g)
Prime Rate 1.5(e)
A-10
DEFINED TERM SECTION
Purchase Price 1.4
RCAL Preamble
RCRA Annex A
Real Property Leases 1.1(a)
Release Annex A
Replacement Plan 5.4(f)
Represented Employees 5.4(a)
Resolution Period 1.5(b)
Retained Contracts 1.2(f)
Reynolds Marks 1.2(k)
RIB Preamble
RILA Preamble
RIND Preamble
SEC 3.5
Seconded Employees 5.6(a)(i)
Section 338 Elections Annex A
Section 338(g) Election Annex A
Section 338(h)(10) Election Annex A
Section 338 Forms Annex A
Selection Period 5.6(a)(i)
Seller Preamble
Seller Employee(s) 5.5(a)
Seller Nonrepresented Hourly Employees 5.5(b)
Seller Salaried Employees 5.5(c)
Seller's Plans 5.4(b)
Seller's Welfare Plans 5.5(f)
Senior Executive Abbreviated Mini-Trial 10.12(c)
Shares 1.1
Siberian Aluminum 5.8(a)(i)
Single Location Plans 5.4(g)(i)
Special Retirement Benefit 5.4(f)(ii)
Stockholder's Agreement Preamble
Subdivision 1.10(a)
Supply Program Agreement 1.7(d)(iii)
A-11
DEFINED TERM SECTION
SVE Preamble
SVE Technical Services Agreement 2.29
Tax Laws Annex A
Tax Return(s) Annex A
Taxes 1.3(b)(i)
Taxing Authority Annex A
Technology Annex A
Title Commitments 4.4(b)
Title Company 4.4(b)
Title Costs 4.4(b)
Title IV Plans 2.21(a)
Torrance Lease 1.10(a)
Trademarks Annex A
Trademark License Agreement 1.7(d)(viii)
Transferred Employee(s) 5.5(a)
Transferred Nonrepresented Hourly Employees 5.5(b)
Transferred Represented Employees 5.4(a)
Transferred Salaried Employees 5.5(c)
Transition Services Agreement 1.7(d)(v)
Transitional Trademark License Agreement 1.7(d)(ii)
Transportation Services Agreement 1.7(d)(x)
UAC Preamble
Unaudited Financial Statements 2.7(a)
Unaudited Latasa Financial Statements 2.28
Union Pension Plans 5.4(f)
Valuation Date 5.4(g)(vi)
WARN Act 2.20(j)
Welfare Benefits 5.5(f)(ii)
Working Capital 1.5(a)