EXHIBIT 10.3
EQUIPMENT SALES, SERVICES AND LICENSE AGREEMENT
between
GRAHAM ENGINEERING CORPORATION
and
GRAHAM PACKAGING HOLDINGS COMPANY
EQUIPMENT SALES, SERVICES AND LICENSE AGREEMENT
THIS EQUIPMENT SALES, SERVICES AND LICENSE AGREEMENT is dated
this 2nd day of February, 1998 (this "Agreement") between Graham Engineering
Corporation, a Pennsylvania corporation ("GEC"), and Graham Packaging Holdings
Company, a Pennsylvania limited partnership (formerly known as Graham Packaging
Company, "GPC"). GPC and GEC are sometimes referred to herein individually as a
"Party" and collectively as the "Parties."
WHEREAS, GEC manufactures blow molding equipment for the
production of plastic products and related in-mold labeling equipment,
extruders, conveyors, trimmers, tooling and other equipment and possesses
certain secret and substantial information and technology that is useful in the
manufacture and operation of blow molding equipment;
WHEREAS, GPC is an international rigid plastic container
manufacturing company that is active in the food and beverage, household and
automotive businesses and possesses certain secret and substantial information,
technology and know-how pertaining to the design and manufacture of plastic
containers; and
WHEREAS, GPC and GEC desire to enter into this Agreement to
provide for (i) the sale by GEC of GEC Wheel Systems (as hereinafter defined)
to GPC and its Affiliates; (ii) the provision of certain consulting services by
GEC and GPC, to each other; and (iii) certain other matters, all as hereinafter
provided.
NOW, THEREFORE, in consideration of the premises and mutual
promises herein made, and in consideration of the covenants and agreements
herein contained, and intending to be legally bound hereby, the Parties agree
as follows:
ARTICLE I. Definitions
1. Certain Definitions. The following terms, when used
in this Agreement, have the following meanings:
"Affiliate" of any person or entity means any other person or
entity that directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such person or
entity. A person shall be deemed to be controlled by another person if such
other person possesses, directly or indirectly, power to direct or cause the
direction of the management and policies of such person whether by ownership of
equity or other securities by contract or otherwise provided that any person or
entity of which any other person or entity owns beneficially or of record,
either directly or through one or more intermediaries, more than twenty-five
percent (25%) of the ownership interests, shall be conclusively presumed to be
an
"Affiliate"; provided that Techne Technipack Engineering Italia SPA shall not
be an Affiliate of Engineering or any of its Affiliates.
"Dairy" means a plant for which a central activity is to
produce and/or package milk, cream, evaporated milk, flavored milks or milk
shakes.
"Dairy Containers" means extrusion blow molded containers for
liquid food products to be filled in Dairies. For the purposes of
clarification, such containers may include bottles for juices, nectars, still
drinks, and water, if filled at a Dairy.
"High Output Extrusion Blow Molding Equipment" means
extrusion blow molding machinery with greater than twelve cavities, including
GEC Wheel Systems. High Output Extrusion Blow Molding Equipment shall also
include rebuilds, retrofits and other similar enhancements of such machinery.
"GEC Wheel Systems" means the GEC "Super 12" line or larger
lines of rotary extrusion blow molding machinery for producing plastic
containers and related components, which operate with more than twelve
stations, and related auxiliary equipment developed or produced by GEC, all as
constituted on the date hereof, as the same may be modified hereafter from time
to time for efficiency improvements, except to the extent such modifications
are, or become, subject to non-use or non- disclosure agreements with third
parties, it being understood that it is GEC's intent, though not its
obligation, to seek to preserve for itself to the extent practicable in its
discretion, the right to include in GEC Wheel Systems for sale to GPC,
efficiency improvements thereto.
"Off-Site Dairy Focused Facility" means a Facility, which is
not a Dairy, but where the substantial portion of the operations are dedicated
to the production of extrusion blow molded milk bottles that are to be filled
in a Dairy.
"Proprietary Technology" means proprietary technical
information and technology that GEC now possesses or hereafter acquires during
the term of this Agreement which is embodied in GEC Wheel Systems and other
equipment proprietary to GEC sold by GEC to GPC and its Affiliates heretofore
or from time to time under this Agreement and other proprietary technical
information and technology identified by GEC to GPC as proprietary that GEC
provides from time to time or already has provided to GPC or any of its
Affiliates.
"Recapitalization Agreement" means the Agreement and Plan of
Recapitalization, Redemption and Purchase dated December 18, 1997 among GPC,
GEC, Graham Packaging Corporation, Graham Family Growth Partnership, Graham
Capital Corporation, Graham Recycling Corporation, Donald C. Graham, BCP/Graham
Holdings LLC and BMP/Graham Holdings Corporation.
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"Territory" means the countries and territories located in
North America and South America and the countries comprising the European
Economic Community as of the date of this Agreement ("EEC"), and any other
country in or to which GPC or its Affiliates, as of or after the date hereof,
has produced or shipped in the then most recent calendar year extrusion blow
molded plastic bottles representing sales in excess of $1,000,000 at
then-prevailing market prices.
ARTICLE II. Equipment Purchases and Sales
2.1. Equipment Purchases by GPC.
(a) During the term of this Agreement and subject to
the requirements set forth in Section 2.1(b) below, and notwithstanding
anything to the contrary in Paragraph 5(a) of the Terms and Conditions of Sales
attached hereto, GPC and its Affiliates shall have the exclusive right to
purchase, lease or otherwise acquire GEC Wheel Systems in the Territory from
GEC (other than GEC Wheel Systems acquired directly as a result of the
acquisition of a controlling interest (through merger or otherwise) in GEC or
the acquisition of substantially all of the assets or extrusion blow molding
assets of GEC (provided that in any such case, GEC shall ensure that the
successor or purchaser assumes GEC's obligations under this Agreement)), except
for the purposes of manufacturing (i) Dairy Containers or (ii) containers for
yogurt drinks or lactic acid drinks, for which GPC and its Affiliates shall
have a nonexclusive right to purchase such equipment, subject to Section 5.2(b)
hereto. Subject to the foregoing, GEC shall not sell GEC Wheel Systems outside
of the Territory to a purchaser (other than a purchaser to which a sale could
be made in the Territory pursuant to the next paragraph) if, at the time of
such sale (i) such sale would be inconsistent with GPC's exclusive rights if it
were made in the Territory and (ii) GEC knows that such purchaser intends to
relocate the GEC Wheel System to the Territory. GPC shall have the nonexclusive
right to purchase GEC Wheel Systems outside the Territory. Except as provided
in this Section 2.1, nothing in this Agreement shall limit GPC's right to sell
products produced by the GEC Wheel Systems in any geographical area.
Notwithstanding anything in this Section 2.1 to the contrary,
GEC shall not be prohibited from selling any GEC Wheel Systems to GEC customers
that (i) have purchased equipment from GEC or its Affiliates prior to the date
hereof or (ii) after the date hereof purchase equipment from GEC or its
Affiliates outside the Territory on the date of such purchase; provided that
the GEC Wheel Systems permitted to be sold to a customer pursuant to this
sentence shall be no larger in size than (A) with respect to clause (i) above,
the largest GEC Wheel System heretofore sold to such GEC customer (or any
affiliate thereof), or (B) with respect to clause (ii) above, the largest GEC
Wheel System sold to such customer (or any affiliate thereof) prior to the date
on which the geographical area in which the customer is located
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becomes part of the Territory. Other than as indicated in this Section 2.1,
nothing in this Agreement shall be construed as imposing any obligation or
restriction whatsoever on sales of equipment by GEC and its Affiliates.
(b) While GPC and its Affiliates shall be free to
purchase extrusion blow molding equipment, including High Output Extrusion Blow
Molding Equipment, from any supplier, in order to maintain the exclusivity
rights set forth in Section 2.1(a) above, GPC and its Affiliates must purchase
from or through GEC all of GPC's and its Affiliates' collective requirements
for High Output Extrusion Blow Molding Equipment; provided that equivalent
equipment is able to be supplied by GEC and that it is on an overall basis
competitive with commercially available substitutes taking into account
relevant factors such as price, performance, quality and delivery. The
foregoing shall not preclude GPC from rebuilding and retrofitting High Output
Extrusion Blow Molding Equipment owned by GPC or its Affiliates as of the date
of this agreement or purchased by GPC or its Affiliates after the date hereof
from GEC. If GPC or its Affiliates purchase High Output Extrusion Blow Molding
Equipment from any supplier other than GEC (other than High Output Extrusion
Blow Molding Equipment acquired directly as the result of the purchase of a
business) notwithstanding that GEC has met the conditions of the immediately
preceding proviso, then GEC shall have the right to terminate the exclusivity
rights set forth in Section 2.1(a) above.
2.2. Terms of Purchase.
(a) The purchase price to be offered by GEC to GPC
and its Affiliates for GEC Wheel Systems shall be set forth in a written price
quote from GEC. The price (excluding delivery and importation duties and other
taxes) for such GEC Wheel Systems will be determined on the basis of a
percentage mark-up of material, labor and overhead costs that is as favorable
to GPC as the percentage mark-up historically offered by GEC to GPC and its
Affiliates for comparable equipment and as favorable as the price at which GEC
is then offering comparable equipment except for the initial five GEC Wheel
Systems sold after the date of this Agreement in each country outside the
Territory (collectively, the "Pricing Methodology"). For purposes of verifying
the Pricing Methodology, GPC shall be entitled to have an audit conducted (at
its expense) of relevant portions of GEC's records pertaining to the pricing to
customers with respect to GEC Wheel Systems by an independent internationally
recognized accounting firm (no more frequently than annually). Such firm shall
be authorized to report to GPC whether or not GEC has complied with the Pricing
Methodology, and shall agree in writing not to disclose to GPC any other
information relating to GEC. In the event GEC has not complied with the Pricing
Methodology to GPC's detriment, GPC shall be entitled to a price rebate as
appropriate.
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(b) GPC shall pay 30% of the purchase price for
equipment ordered from GEC at the time of the order, 60% of the purchase price
prior to delivery of such equipment, and 10% of the purchase price upon
completion of the acceptance of such equipment. Except as otherwise provided in
this Agreement, all other material terms and conditions of sale with respect to
such equipment purchased from GEC are detailed in Schedule A to this Agreement,
as the same may be amended from time to time by GEC.
ARTICLE III. Consulting Services
3.1. GEC Consulting Services. GEC, at GPC's request on
reasonable notice, shall provide such consulting services, including technical
support and know-how, to or on behalf of GPC and its Affiliates as are provided
by GEC as of the date hereof to or on behalf of GPC and its Affiliates ("GEC
Consulting Services"). After December 31, 1998, GEC may terminate GPC's and its
Affiliates' rights to receive GEC Consulting Services by providing written
notice of such termination to GPC, provided that the termination of GEC
Consulting Services shall not become effective until the first anniversary of
GPC's receipt of such notice of termination.
3.2. GPC Consulting Services. GPC, at GEC's request on
reasonable notice, shall provide such consulting services, including technical
support and know-how, to or on behalf of GEC as are provided by GPC and its
Affiliates as of the date hereof to or on behalf of GEC and its Affiliates or
as have been provided to Tetra Pak International S.A. prior to the date hereof
(collectively, the "GPC Consulting Services"). After December 31, 1998, GPC may
terminate GEC's rights to receive GPC Consulting Services by providing written
notice of such termination to GEC, provided that the termination of GPC
Consulting Services shall not become effective until the first anniversary of
GEC's receipt of such notice of termination.
3.3. Provision of Personnel. Each Party shall make available
to the other Party the appropriate personnel required to perform the services
described in Sections 3.1 and 3.2. The overall time requirement of each Party
to the other shall not be materially in excess of past time requirements.
3.4. Reimbursement of Costs. Each Party shall promptly
reimburse the other Party for all reasonable out-of-pocket costs and expenses
for food, travel and lodging of the other Party in connection with the
activities of all personnel of such other Party or its Affiliates under this
Agreement, upon presentation of receipts and other supporting documentation
therefor.
3.5. Fees.
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(a) In consideration for the services to be provided
by a Party under this Article III, the receiving Party shall pay to the
providing Party such hourly rates for such services that are consistent with
the rates currently charged for such services by the providing Party to the
receiving Party, such hourly rates currently ranging from $60 per hour to $200
per hour. Such fees shall be paid in accordance with Section 3.5(b) below. In
addition, upon each anniversary of the date of this Agreement, such hourly
rates for services shall be increased by an amount equal to the product of such
agreed upon rates multiplied by a fraction, the numerator of which shall be the
CPI (as hereinafter defined) for the calendar month immediately preceding such
anniversary date, and the denominator of which shall be the CPI for the same
month of the immediately preceding year. For purposes of this Section 3.5, the
term "CPI" shall mean the Consumer Price Index - All Urban Consumers - All
Items, as published by the Bureau of Labor Statistics of the United States
Department of Labor, or of any revised or successor index hereafter published
by the Bureau of Labor Statistics or other agency of the United States
Government succeeding to its functions.
(b) The fees described in Section 3.5(a) shall be
paid monthly within twenty (20) days of a Party's receipt of a written report
produced by the other Party detailing the amount due for the applicable month,
computed in accordance with Section 3.5(a) hereto. Such written report shall be
delivered within twenty (20) days following the end of the applicable month.
(c) Each Party shall have the right, during normal
business hours and upon reasonable notice to the other Party, to inspect and
permit its accountants to inspect those portions of the books and records of
such Party that are relevant to the computation of fees payable pursuant to
this Section 3.5, provided that without good cause such inspections shall not
be conducted more than once in any calendar year.
ARTICLE IV. Proprietary Technology
4.1. Grant of License by GEC. GEC hereby grants to GPC a
nontransferable (except to entities that are or become and remain Affiliates of
GPC or as permitted under Section 7.3), non-exclusive, perpetual, royalty-free
right and license to use the Proprietary Technology or have it used in the
operation of the equipment sold by GEC to GPC or its Affiliates under this
Agreement.
4.2. Certain Restrictions With Respect to the License.
Nothing contained in this Agreement shall be construed as granting GPC or its
Affiliates any right or license to manufacture or otherwise produce, cause to
be manufactured or otherwise produced, or to sell or cause to be sold,
equipment embodying Proprietary
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Technology or any other technology proprietary to GEC or its Affiliates, except
that repairs, maintenance, rebuilds and retrofits to equipment supplied by GEC
shall be permitted.
4.3. Grant of License by GPC. GPC and its Affiliates shall
own and have the right to utilize in the Territory any improvements to the GEC
Wheel Systems or any other equipment proprietary to GEC or its Affiliates and
to any of the technology embodied therein that may be discovered or developed
by GPC or any of its Affiliates (an "Improvement"), subject to Section 5.2(a)
hereto. Such right of utilization shall be (i) exclusive in the case of
Improvements developed solely by GPC or its Affiliates and (ii) nonexclusive in
the case of Improvements jointly developed by GPC or its Affiliates, on the one
hand, and GEC or its Affiliates, on the other ("Joint Improvements"). A
non-exclusive, perpetual, worldwide, royalty-free right and license, with the
right to grant sublicenses, for all applications with respect to Joint
Improvements shall vest automatically in GEC without the payment of any
additional consideration by GEC. GPC shall fully disclose promptly to GEC any
Joint Improvement and take all such action as may be necessary to secure to GEC
its rights under this Section 4.3, including securing assignments from any
employees or agents of GPC and its Affiliates. Notwithstanding anything to the
contrary contained in this Section 4.3, GPC shall own and have the exclusive
rights (subject to Section 5.2(a) hereto) with respect to any Improvement which
GPC and GEC agree in writing in advance is to be developed for and funded by
GPC.
4.4. Future Development of Proprietary Technology. The
Parties acknowledge their intent to work together in the future to develop new
lines of rotary blow molding equipment proprietary to GPC to the extent that
such developments are agreed to by the Parties and funded by GPC.
ARTICLE V. Confidentiality; Certain Restrictions
5.1. Confidentiality.
(a) During the term of this Agreement and
thereafter, GPC shall (and shall cause its Affiliates to) employ all reasonable
efforts (including as a minimum all efforts used by GPC to protect its own
technology) to protect the confidentiality of, and shall utilize only on its
behalf or that of any Affiliate for the purpose of manufacturing and selling
extrusion blow molded rigid plastic bottles, information relating to the
design, manufacture, sale or service of equipment proprietary to GEC and its
Affiliates or information proprietary to GEC or its Affiliates or as to which
GEC or any of its Affiliates has a duty of confidentiality to any third party
heretofore provided by GEC or its Affiliates or hereafter provided by GEC or
its Affiliates under this Agreement or any information derived therefrom,
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including without limitation the Proprietary Technology. GEC shall (and shall
cause its Affiliates to) employ all reasonable efforts (including as a minimum
all efforts used by GEC to protect its own technology) to protect the
confidentiality of, and shall utilize only on its behalf or that of any
Affiliate not inconsistent with this Agreement, information proprietary to GPC
or its Affiliates or as to which GPC or any of its Affiliates has a duty of
confidentiality to any third party heretofore provided by GPC or its Affiliates
or hereafter provided by GPC or its Affiliates under this Agreement or any
information derived therefrom. All information as described in the preceding
two sentences is hereafter referred to as the "Information." Each of GPC and
GEC hereby agrees to take all reasonable steps, including but not limited to at
least those steps which such Party takes to protect its own proprietary or
confidential property, to prevent any such unauthorized disclosure by any
partner, officer, employee, agent or other representative of it or its
Affiliates without the prior written consent of the other Party, which consent
may be granted or withheld in the sole party. The foregoing provision shall not
apply to any Information, other than Information disclosed under previously
executed agreements between the Parties or their Affiliates, of a disclosing
Party as to which the receiving Party or its Affiliates or any of its partners,
officers, employees, agents or other representatives can demonstrate that such
Information:
(i) is or became public knowledge through
no action of the receiving Party or its Affiliates, or such
partner, officer, employee, agent or other representative; or
(ii) has been properly provided to the
receiving Party or its Affiliates, or such partner, officer,
employee, agent or other representatives without restriction
by an independent third party; or
(iii) was properly in the possession of the
receiving Party or its Affiliates, or such partner, officer,
employee, agent or other representatives at the time of
receipt of such Information under this Agreement; or
(iv) has been developed independently by
the receiving Party or its Affiliates or such partner,
officer, employee, agent or other representative in the
course of work by employees of the receiving Party or such
partners, officers, employees, agents or other
representatives without use of such Information.
(b) Subject to Sections 4.2 and 4.3 above, jointly developed
Information may be used by either of the Parties as agreed to by the Parties
prior to any such use; provided that the non-disclosure restrictions set forth
in Section 5.1(a) shall apply to such jointly developed Information.
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(c) Each Party shall notify all of its partners, officers,
employees agents and representatives to whom any Information is to be disclosed
of the terms of this Article V, and take reasonable measures to preclude their
use or divulgence of confidential information except as permitted under this
Agreement.
(d) Anything in this Agreement to the contrary
notwithstanding, neither Party shall be required to divulge to the other Party
information that is subject to third party confidentiality agreements.
5.2. Certain Restrictions With Respect to Information. In
order to protect against the unauthorized use of the Information (including the
Proprietary Technology) of GEC and its Affiliates, within the limits of
applicable law:
(a) During the term of this Agreement and
thereafter, GPC shall not (and shall cause its Affiliates not to) use any
Information (including the Proprietary Technology) or any Improvement to (i)
design, manufacture, sell or service equipment, or (ii) assist any other party
in the design, manufacture, sale or service of equipment, in each case without
the prior written consent of GEC, which consent may be withheld in GEC's sole
discretion.
(b) During the term of this Agreement and
thereafter, GPC shall not (and shall cause its Affiliates not to) use or
install or sell for installation any GEC Wheel System purchased pursuant to
this Agreement on-site at a Dairy or at an Off-Site Dairy Focused Facility for
the purposes of manufacturing Dairy Containers without the prior written
consent of GEC, which consent may be withheld in GEC's sole discretion;
provided that this restriction shall not preclude GPC or its Affiliates from
using or installing or selling for installation any GEC Wheel System purchased
pursuant to this Agreement on-site at a Dairy or at an Off-Site Dairy Focused
Facility for the purposes of manufacturing (i) Dairy Containers for juice or
juice drink products, which containers are formed in customized shapes with
molds that are unique to the specific juice/juice drink company involved, and
(ii) containers for lactic acid drinks, yogurt drinks, or any non-liquid food
products, such as yogurt.
(c) During the term of this Agreement and
thereafter, if GPC or any of its Affiliates desires to transfer to any third
party any equipment developed or produced by GEC using technology proprietary
to GEC (other than in connection with the acquisition of GPC or a controlling
interest therein (through merger or otherwise) or the acquisition of
substantially all of the assets of GPC), GPC shall (or shall cause its
Affiliate to) first offer in writing to transfer such equipment to GEC at a
price and on terms no less favorable to GEC than the price and terms contained
in the bona fide written arm's length offer of such third party. GEC shall have
15 days in which to accept the offer of GPC or its Affiliate. No counteroffer
or negotiations on the part of GEC shall be deemed a rejection of such offer.
If GEC accepts such
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offer, a closing with respect to such purchase shall take place on a date
specified by GEC within 15 days of its acceptance. If GEC rejects such offer or
fails to accept the same within the first aforementioned 15-day period (each, a
"Rejection"), GPC or its Affiliate shall be entitled to transfer the equipment
to the aforementioned third party within 30 days after GEC's Rejection of the
offer of GPC or its Affiliate at the price and on the terms offered to GEC. If
such transfer to such third party is not made with such 30-day period, GEC's
right of first refusal shall automatically be reinstated with respect to any
subsequent transfer of such equipment.
(d) While the restrictions contained in this Section
5.2 are considered by the Parties to be reasonable in all the circumstances, it
is recognized that restrictions of the nature in question may be unenforceable,
and accordingly it is hereby agreed and declared that if any of such
restrictions shall be adjudged to be void as going beyond what is reasonable in
all the circumstances for the protection of the interests of the Parties and
their Affiliates, but would be valid if part of the wording thereof were
deleted or the periods thereof reduced or the range of activities or area dealt
with thereby reduced in scope, the said restriction shall apply with such
modifications as may be necessary to make it valid and effective.
ARTICLE VI. Term and Termination
6.1. Term. This Agreement shall become effective on the date
hereof and, unless terminated at an earlier date as provided herein, shall
continue until December 31, 2007 or until such later date to which the term of
this Agreement may be extended by mutual agreement of the Parties (the
"Expiration Date").
6.2. Termination.
(a) This Agreement may be terminated at any time
prior to the Expiration Date by mutual consent of the Parties.
(b) In the event either Party hereto breaches this
Agreement in any material respect and fails to remedy such breach within 60
days after written notice thereof by the other Party, then said other Party may
terminate this Agreement on written notice to the breaching Party.
(c) Notwithstanding anything in this Agreement to
the contrary, the continuing obligations of either Party to make payments
accrued as of the date of termination and the obligations under Articles IV and
V hereof shall survive the termination of this Agreement, subject to the
applicable time limitations set forth therein.
ARTICLE VII. Miscellaneous
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7.1. Notices. Any notice or other communication required or
permitted hereunder to be given to a Party to this Agreement shall be in
writing and shall be deemed to be delivered on the date received by such Party.
All notices and documents mailed to a Party shall be duly given when delivered
personally or transmitted by telecopier, receipt acknowledged, or in the case
of documented overnight delivery service or registered or certified mail,
return receipt requested, postage prepaid, on the date shown on the receipt
thereof. All notices and other communications shall be given to the party at
its respective address set out opposite its name below, or at such other
address as it shall have theretofore specified by written notice similarly
delivered:
If to GEC, to:
Graham Engineering Corporation
c/o The Graham Companies
1420 Sixth Avenue
York, Pennsylvania 17405
Attn: William H. Kerlin, Jr.
If to GPC, to:
BCP/Graham Holdings LLC
c/o Blackstone Capital Partners III Merchant Banking Fund LP
345 Park Avenue
New York, NY 10154
Attention: Howard A. Lipson
Facsimile: (212) 754-8703
7.2. Governing Law; Consent to Jurisdiction. The validity,
performance, construction, and effect of this Agreement shall be governed by
the laws of the Commonwealth of Pennsylvania, without regard to the principles
thereof of conflicts of law, for the determination of any controversy
whatsoever arising under or in connection with this Agreement. The parties
hereby irrevocably consent to the jurisdiction of the federal court in the
Eastern District of Pennsylvania and any state court in which venue would
otherwise be proper in the Eastern District of Pennsylvania. Such courts shall
have non-exclusive jurisdiction over any such applications or actions and the
parties hereby waive any objections or defenses to the exercise of personal
jurisdiction by or venue of such courts. Each of the parties agrees that any
notice, process or notice of motion or other application to any of said courts
may be served inside or outside of the United States by personal service, or in
any other manner as may be permitted under the rules of any said court or
pursuant to any international agreement to which the United States is a party.
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7.3. Binding Effect; Assignment. This Agreement shall inure
to the benefit of and be binding upon the successors or permitted assigns of
the Parties. This Agreement shall not be assignable by either Party outside of
its Affiliate group without the prior written consent of the other, except that
each Party shall be entitled to assign all or any of its rights and delegate
all or any of its duties hereunder to any person or entity to which such Party
transfers all or substantially all of its assets, provided that such an
assignment by GPC shall not be to a direct competitor of GEC (or an Affiliate
of such a competitor) unless GEC consents to the assignment.
7.4. Indemnification. (a) GPC shall indemnify and defend and
hold GEC and its Affiliates harmless from and against any and all claims,
losses, damages, actions, amounts paid in settlement and expenses (including
attorney's fees) resulting in whole or in part from claims by third parties
against GEC or any of its Affiliates (i) based on personal injury or property
damage or other injury alleged to have been caused by products manufactured by
GPC or its Affiliates or by the manufacture of such products, or (ii) arising
from any patent, trade secret or trademark infringement claim involving the
alleged infringement of any patent, trade secret or trademark in connection
with any act or omission of GPC or its Affiliates other than the use of GEC
Wheel Systems supplied by GEC that are utilized in accordance with the terms of
this Agreement.
(b) GEC shall indemnify and defend and hold GPC and
its Affiliates harmless from and against any and all claims, losses, damages,
actions, amounts paid in settlement and expenses (including attorney's fees)
resulting in whole or in part from claims by third parties against GPC or any
of its Affiliates arising from any patent, trade secret or trademark
infringement claim involving the alleged infringement of any patent, trade
secret or trademark in connection with the manufacture and sale of GEC Wheel
Systems by GEC pursuant to this Agreement.
(c) The Parties shall cooperate in the defense and/or
settlement of any claim brought against a Party or its Affiliates which would
be covered by the indemnity provided for in this Section 7.4.
7.5. Equitable Remedies. The Parties expressly acknowledge
that damages alone will be an inadequate remedy for any breach or violation of
any of the provisions of Article V hereof, and that either Party, in addition
to all other remedies, shall be entitled as a matter of right to equitable
relief, including injunctions and specific performance, in any court of
competent jurisdiction.
7.6. Unauthorized Use of Information. The Parties shall
promptly, but in all events within five calendar days, notify one another in
writing of any circumstances surrounding any unauthorized possession, use or
knowledge of information relating to the Information after the applicable party
has knowledge
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thereof, shall cooperate with one another in preventing the recurrence of such
unauthorized possession, use or knowledge, and shall cooperate with one another
in any litigation against third parties brought by either Party to protect its
proprietary rights.
7.7. Change in Control. In the event GEC proposes, by merger,
sale of securities or other means to transfer to a competitor of GPC or its
Affiliates (a "Competitor") a controlling interest in GEC's business or
substantially all of its assets or that portion of its assets comprising rotary
extrusion blow molding equipment (a "Transfer"), then GEC shall, at GPC's
option, (1) enter into a licensing and technical assistance agreement with GPC
on terms mutually agreeable to the Parties securing to GPC the right to
manufacture GEC Wheel Systems consistent with its rights under this Agreement,
or (2) grant to GPC on reasonable terms a right of first refusal to meet the
terms and conditions offered by or to be offered to such Competitor with
respect to the Transfer.
7.8. Cooperation. It is the intent of GEC, prior to any
Change in Control, to cooperate with GPC in identifying potential acquisition
and expansion opportunities for GPC.
7.9. Replacement Parts. GEC shall sell to GPC upon GPC's
order and on terms and conditions, including price, as favorable to GPC as
those generally offered by GEC to its other customers, replacement parts for
GEC Wheel Systems during the term of this Agreement and, except in the case of
a termination of this Agreement by GEC pursuant to Section 6.2(b) hereof, for
five years following termination of this Agreement, provided that GEC is then
still stocking and selling such replacement parts.
7.10. Entire Agreement. This Agreement constitutes the entire
understanding between the Parties with respect to the subject matter hereof,
supersedes all prior oral or written understandings of the Parties with respect
hereto, and may be amended only by a document in writing executed by both
Parties. This Agreement specifically supersedes the Master Purchase and License
Agreement between the Parties dated April 3, 1989, as amended, which agreement
is hereby terminated.
7.11. Waiver. Failure by either Party to insist on
compliance with this Agreement by the other Party to this Agreement shall not
be deemed a waiver of any
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term or condition of this Agreement, and such Party may thereafter insist upon
compliance with all terms and conditions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
GRAHAM ENGINEERING CORPORATION
By:/s/ William H. Kerlin
----------------------
Title: Chairman
GRAHAM PACKAGING HOLDINGS
COMPANY
By: Graham Packaging Corporation,
its General Partner
By:/s/ William H. Kerlin
----------------------
Title:Chief Executive Officer
------------------------
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Terms and Conditions of Sales
1. Proposal. In order to accept the attached proposal ("Proposal") from
Graham Engineering Corporation ("GEC), upon the terms and conditions set forth
therein, Buyer must execute and deliver to GEC the Proposal by the validity date
stated in the Proposal.
2. Freight Charges. The prices stated in this Proposal are given F.O.B.
GEC's place of manufacture in York, Pennsylvania and do not include any special
handling charges or special painting which shall be at the Buyer's expense.
Extra expenses incurred incident to shipment abroad shall be considered special
handling expenses and shall be paid by the Buyer.
3. Terms. All payments shall be made in United States dollars and shall
be made in accordance with these Terms and Conditions and the
Proposal. Notwithstanding the foregoing if shipment is delayed at
Buyer's request or due to conditions beyond the control of either GEC
or the Buyer, the final payment as stated in the Proposal shall become
due upon notification by GEC that the equipment is ready for shipment.
In such event GEC may, at its option and at Buyer's risk, store the
equipment in a warehouse or within GEC's premises. Upon submission of
the appropriate invoices, Buyer shall pay all handling, transportation
and storage costs incurred in connection with such storage.
4. Taxes. Prices set forth in the Proposal are exclusive of taxes. The
amount of any present or any future occupation, sales, use, value
added, service, excise or other similar tax which GEC shall be liable
for, either on its own behalf or on behalf of the Buyer, with respect
to any orders for machinery or services, shall be in addition to the
billing prices and shall be paid by the Buyer.
5. Cancellation. In the event the Buyer requests that work stop on or
upon the cancellation of all or any part of an accepted order, Buyer
shall pay liquidated damages to GEC as follows:
(a) If the ordered equipment is manufactured and
ready for shipment at the time GEC receives from Buyer notice
to stop work on or cancel the order, then such equipment
shall be paid for at the full purchase price; provided
however, that if GEC sells any portion of the canceled order
to another buyer, the proceeds from such sale will reduce the
amount owed by the amount of such sale.
(b) If the equipment is work in process at the time
GEC receives from Buyer notice to stop work on or cancel the
order, then liquidated damages shall be paid on the basis of
GEC's reasonable determination of fall accumulated costs for
all services, supplies,
engineering work, work in process (including all direct and
indirect costs), and all commitments made by GEC in
preparation for, and in manufacturing the equipment up to the
time of receipt of such notice plus any profit that would
have otherwise been realized had the Buyer not notified GEC
to stop work on or cancel the orders. Any components which
can be applied to other unfulfilled orders in process shall
be so applied and will reduce the liquidated damages by an
amount equivalent to GEC's reasonable determination of
accumulated costs of such components.
In the event that Buyer request that work stop on or upon the
cancellation of the order, the Buyer shall promptly instruct
GEC as to the disposition of the equipment. GEC shall, if
requested, hold the equipment for Buyer's account. All costs
of storage, insurance, handling and boxing shall be paid by
the Buyer.
6. Delivery. Delivery dates are given as estimates only and should be
considered as the dates when it is estimated that the equipment will
be ready for shipment. GEC shall not be liable for any loss of profits
or other damages due to delays in manufacture or delivery, regardless
of the reason that such delays occur.
7. Risk of Loss. Risk of loss shall pass to the Buyer as soon as the
equipment is placed with a carrier for shipment to Buyer or placed in
GEC's storage facilities. The Buyer shall pay all costs of insurance
from the time that risk of loss passes to the Buyer. GEC shall
cooperate fully with the Buyer with respect to the Buyer obtaining
insurance protection for the equipment.
8. Applicable Law. The agreement between GEC and Buyer shall be governed
by the Uniform Commercial Code as effective in Pennsylvania and other
applicable laws of the Commonwealth of Pennsylvania, without regard to
the principles thereof of conflicts of law. The agreement shall not be
governed by the United Nations Convention on the International Sale of
Goods.
9. Equipment Warranties. GEC warrants equipment, to the extent that it is
of its manufacture, to be free from defects in material and
workmanship for one (1) year after the date of shipment from GEC's
factory or 4,000 hours of operation, whichever occurs first, when used
by the Buyer under normal production conditions and operated by a
qualified operator. Warranty of equipment manufactured by others is
limited to the warranty as issued by the equipment supplier; GEC
hereby agrees to transfer any such warranty to the Buyer. The sole
obligation of GEC under this warranty is, at its option, to repair
without charge the defective part F.O.B. GEC's place of manufacture in
York, Pennsylvania or to furnish without charge F.O.B. GEC's place of
manufacture in York, Pennsylvania a replacement part. Any part claimed
to be
defective under this warranty must be returned by the Buyer,
transportation prepaid to GEC, to establish a claim.
Furthermore, this warranty is conditioned upon GEC receiving prompt
notice of such defect. GEC shall have no obligation to install or pay
for the installation of the replacement part. For repairs which must
be carried out at the customers facility, GEC's standard service call
rates for both labor and expenses will apply. Repair by any party
other than GEC shall void the warranty. This express warranty is in
lieu of any and all implied warranties referenced in Paragraph 10.
10. Disclaimer. ANY DESCRIPTION OF THE GOODS CONTAINED IN THE
PROPOSAL OR IN ANY OTHER DOCUMENT IS FOR THE SOLE
PURPOSE OF IDENTIFYING THEM, IS NOT PART OF THE BASIS OF
THE BARGAIN, AND DOES NOT CONSTITUTE A WARRANTY THAT
THE GOODS SHALL CONFORM TO THAT DESCRIPTION.
FURTHERMORE, THE USE OF ANY SAMPLE OR MODEL IN
CONNECTION WITH THIS CONTRACT IS FOR ILLUSTRATIVE
PURPOSES ONLY, IS NOT PART OF THE BASIS OF THE BARGAIN
AND IS NOT TO BE CONSTRUED AS A WARRANTY THAT THE
GOODS WILL CONFORM TO THE SAMPLES OR MODELS. NO
AFFIRMATION OR FACT OR PROMISE MADE BY GEC WHETHER OR
NOT IN THESE TERMS AND CONDITIONS OR THE PROPOSAL OR
ELSEWHERE, SHALL CONSTITUTE A WARRANTY THAT THE GOODS
WILL CONFORM TO THE AFFIRMATION OR PROMISE.
THIS SALE IS MADE ON THE EXPRESS UNDERSTANDING THAT THERE IS NO
IMPLIED WARRANTY THAT THE GOODS SHALL BE MERCHANTABLE OR FIT FOR ANY
PARTICULAR PURPOSE.
ANYTHING IN THESE TERMS AND CONDITIONS OR IN THE PROPOSAL TO THE
CONTRARY NOTWITHSTANDING, UNDER NO CIRCUMSTANCES SHALL GEC BE LIABLE
TO BUYER FOR ANY CONSEQUENTIAL, INDIRECT OR SPECIAL DAMAGES, RELATED
TO, IN CONNECTION WITH OR ARISING AS A RESULT OF THE PROPOSAL OR GEC'S
MANUFACTURING, SALE OR DELIVERY OF THE EQUIPMENT OR THE USE, STORAGE
OR OPERATION THEREOF OR ANY PERFORMANCE OR FAILURE OF PERFORMANCE OF
GEC OR THE EQUIPMENT, INCLUDING ANY BREACH OF ANY WARRANTY OR OTHER
OBLIGATION OF GEC HEREUNDER.
11. Patents. Buyer agrees that it will notify GEC in writing by certified
mail within one (1) week after receiving any information or notice of
any claim whether made formally or informally that equipment
manufactured by and
purchased from GEC infringes patents held by anyone else. If GEC is so
notified and suit is brought against Buyer in the United States
claiming that such equipment or any part thereof as supplied by GEC
constitutes in and of itself an infringement of any patent of the
United States, GEC will pay the cost of defending any such patent suit
provided Buyer promptly turns over the defense thereof to GEC and
fully cooperates with GEC in such defense. GEC at its own option and
expense shall have the right to settle such suit or demand. GEC shall
be entitled to satisfy its obligations hereunder either by procuring
for Buyer the right to continue using the apparatus, or part thereof
furnished by GEC; by replacing same with non-infringing apparatus; by
modifying same so that it becomes non-infringing apparatus; or by
removal of the alleged infringing apparatus and refunding the purchase
price less any amounts claimed on Buyer's Federal Income Tax returns
as depreciation on the apparatus. GEC assumes no legal obligation or
liability in connection with patent infringement suits against Buyer
claiming that the product produced by the equipment, rather than the
equipment itself, or any part thereof, infringes anothers patents;
Buyer will indemnify GEC for all cost of defending such a patent
infringement suit and any damages.
12. Installation & Start-up Assistance. Installation and start-up
assistance can be provided by GEC at current contract rates. Buyer
will assume the responsibility for injuries and accidents to GEC
personnel, when on his (its) premises and will provide safe and
suitable working conditions for such personnel.
13. Drawings. GEC shall not be required to furnish detailed manufacturing
drawings of the equipment. However, GEC will supply Buyer with those
documents and reference drawings which GEC determines are necessary
for proper maintenance.
Any drawings, specifications, and general technical information such
as, but not limited to, foundation drawings, lay-out drawings,
dimensional drawings, etc., given by GEC are believed by GEC to be
adequate under normal operating conditions but should be adapted by
Buyer to meet local or unusual conditions. GEC reserves the right to
change, amend or modify such drawings as well as its equipment without
prior notice and without incurring any obligation on equipment
previously delivered; to modify equipment to include subsequent
improvements.
14. Security Deposit. GEC retains a security interest in all equipment
ordered by Buyer pursuant to the Proposal to secure the payment of all
sums due until the full purchase price thereof is paid by Buyer. Buyer
shall execute any and all instruments necessary to perfect such
security interest and shall pay any and all fees, taxes or assessments
incurred by GEC in filing such instruments.
15. Condition Precedent. In the event Buyer accepts the Proposal,
performance under the resulting agreement of sale shall be subject to,
and conditioned upon, GEC's review of and satisfaction with, in GEC's
sole discretion, Buyer's financial condition. Buyer shall cooperate
fully with GEC in proving Buyer's financial information.