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EXHIBIT 10.2
April 25, 1996
U.S. Can Corporation
900 Commerce Drive
Oak Brook, IL 60521
Attention: Mr. Timothy W. Stonich
Executive Vice President
and Chief Financial Officer
Ladies and Gentlemen:
The purpose of this letter is to confirm the engagement of Salomon Brothers
Inc ("Salomon") by U.S. Can Corporation (the "Company") on an exclusive basis to
render financial advisory and investment banking services to the Company in
connection with the possible acquisition (by merger, tender offer or otherwise)
by the Company (or a subsidiary of the Company) of Crown, Cork and Seal Company,
Inc.'s selected European Aerosol Can Businesses (the "Subject Company") or the
possible purchase by the Company (or a subsidiary of the Company) of all or a
significant portion of the assets, or of the equity securities, of the Subject
Company, in a transaction with Aggregate Consideration (as defined in Section 2
herein) greater than $20 million (an "Acquisition Transaction").
Section 1. Services to be Rendered. Salomon will perform such of the
following financial advisory and investment banking services as the Company may
reasonably request:
(a) Salomon will familiarize itself to the extent it deems appropriate
and feasible with the business, operations, properties, financial condition
and prospects of the Company and the Subject Company, it being understood
that Salomon shall, in the course of such familiarization, rely entirely
upon publicly available information and such other information as may be
supplied by the Company or the Subject Company, without independent
investigation;
(b) Salomon will advise and assist the Company in considering the
desirability of effecting an Acquisition Transaction, and, if the Company
believes such a transaction to be desirable, in developing a general
strategy for accomplishing an Acquisition Transaction, including advice
with respect to the structuring of the terms, conditions and financing of
any proposed Acquisition Transaction;
(c) Salomon will advise and assist management of the Company in making
presentations to the Board of Directors of the Company concerning a general
acquisition strategy, the Subject Company and any proposed Acquisition
Transaction;
(d) Salomon will advise and assist the Company in the course of its
negotiation of an Acquisition Transaction and, if requested by the Company,
will participate directly in such negotiations;
(e) If so requested by the Company, Salomon will render, in accordance
with its customary practice, an opinion (the "Opinion") as to the fairness,
from a financial point of view, to the Company of the consideration to be
paid by the Company in an Acquisition Transaction, with the understanding
that in rendering the Opinion Salomon will rely, without independent
investigation, on information furnished to it by the Company (which
information the Company hereby warrants shall be complete and accurate in
all material respects, and not misleading in any material respect), the
Subject Company or other relevant parties or publicly available and that
the Opinion may be in such form as Salomon shall determine and Salomon may
qualify the Opinion in such manner as Salomon believes appropriate. The
Opinion shall not address the Company's underlying business decision to
effect an Acquisition Transaction. Notwithstanding anything to the contrary
elsewhere herein, the Company may reproduce the Opinion in full in any
disclosure document or proxy statement relating to such Acquisition
Transaction (the "Statement") that the Company must file under the
Securities Exchange Act of 1934 and distribute to its shareholders. In such
event, the Company may also include references to the Opinion and to
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Salomon and its relationship with the Company (in each case in such form as
Salomon shall approve) in the Statement;
(f) Salomon will advise and assist the Company in connection with any
interest rate, currency rate or other hedge program(s) of the Company
relating to an Acquisition Transaction, including, if the Company so
requests, assisting in the structuring of such program(s), the
identification of acceptable counterparties (which may include Salomon or
one of its affiliates) in connection therewith and the management of any
related auctions;
(g) Salomon will render such other financial advisory and investment
banking services as may from time to time be agreed upon by Salomon and the
Company.
Section 2. Fees. The Company shall pay to Salomon for its services
hereunder the following cash fees:
(a) $50,000, payable promptly following the Company being invited to
perform due diligence with respect to the Subject Company; plus
(b) $25,000, payable upon submission by the Company of a proposal
regarding an Acquisition Transaction; plus
(c) an additional fee equal to a percentage of the Aggregate
Consideration, determined according to the table on Appendix A reduced by
5%, (less the amounts payable under the immediately preceding clauses (a)
and (b)) such additional fee to be contingent upon the consummation of an
Acquisition Transaction and payable at the closing thereof.
For purposes hereof, the term Aggregate Consideration shall mean the
total amount of cash and the fair market value (on the date of payment) of
all other property paid or payable directly or indirectly by the Company in
connection with an Acquisition Transaction or a transaction related thereto
(including, without limitation, amounts paid by the Company, pursuant to
covenants not to compete, employment contracts, employee benefit plans or
other similar arrangements). Aggregate Consideration shall also include the
value of any long-term liabilities of the Subject Company (including the
principal amount of any indebtedness for borrowed money and any
intercorporate debt) (x) repaid or retired in connection with or
anticipation of an Acquisition Transaction or (y) existing on the Subject
Company's balance sheet at the time of an Acquisition Transaction (if such
Acquisition Transaction takes the form of a merger or a sale of stock) or
assumed by the Company in connection with an Acquisition Transaction (if
such Acquisition Transaction takes the form of a sale of assets). If an
Acquisition Transaction takes the form of a sale of assets, the term
Aggregate Consideration shall also include (i) the value of any current
assets not sold, minus (ii) the value of any current liabilities not
assumed by the Company.
Section 3. Related Financial Transactions and Fees.
(a) If, prior to an Acquisition Transaction or within one year
following its consummation, the Company or any of its affiliates determines
to sell (or cause the Subject Company or any of its affiliates to sell), in
a public offering or a private placement, any debt securities (other than
senior bank debt) and/or equity securities (such debt or equity securities
being the "Securities") in connection with the financing of such
Acquisition Transaction or refinancing of such Acquisition Transaction debt
(including any issuance of Securities required to be made pursuant to a
bridge loan agreement) or the refinancing of the Subject Company's existing
debt, the Company, the Subject Company or its affiliate shall retain
Salomon as lead underwriter (in the case of a public offering) or as lead
placement agent (in the case of a private placement) of the Securities. Any
such sale of Securities shall be pursuant to an underwriting agreement or
placement agent agreement, as the case may be, containing customary
representations, warranties, covenants, conditions and indemnities and
providing for customary underwriting discounts or placement fees, the exact
amounts to be mutually agreed upon.
(b) If, prior to an Acquisition Transaction or within one year
following its consummation, the Company determines to sell (or cause the
Subject Company to sell) any subsidiary or division or other significant
portion of the assets of the Subject Company, the Company shall afford
Salomon a reasonable opportunity to compete with other parties on an equal
basis to act as its exclusive financial advisor in
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connection with such proposed sale. Any such engagement shall be pursuant
to an engagement letter containing customary provisions and terms and
providing for customary fees, the exact amounts to be mutually agreed upon.
(c) In connection with the hedge programs described in Section 1
hereof, the Company agrees to afford Salomon a reasonable opportunity to
compete with other parties on an equal basis in offering to the Company any
interest rate, currency or other hedge products and not to enter into any
exclusive or preferential agreements with such other parties with respect
to such hedge products unless and until Salomon has been afforded such an
opportunity. Any hedge products to be provided by Salomon to the Company
shall be pursuant to separate written agreement(s) containing customary
provisions and providing for customary fees, the exact amounts to be
mutually agreed upon.
Section 4. Expenses. In addition to any fees that may be payable to Salomon
hereunder and regardless of whether any Acquisition Transaction is proposed or
consummated, the Company hereby agrees, from time to time upon request, to
reimburse Salomon for all reasonable fees and disbursements of Salomon's counsel
(which counsel's fees shall not exceed $25,000 without the prior approval of the
Company) and all of Salomon's reasonable travel and other out-of-pocket expenses
incurred in connection with any actual or proposed Acquisition Transaction or
otherwise arising out of Salomon's engagement hereunder.
Section 5. Indemnity. Salomon and the Company have entered into a separate
letter agreement, dated the date hereof, providing for the indemnification of
Salomon by the Company in connection with Salomon's engagement hereunder.
Section 6. Termination of Engagement. Salomon's engagement hereunder may be
terminated by either the Company or Salomon at any time, with or without cause,
upon written advice to that effect to the other party; provided, however, that
Salomon will be entitled to its full fee under Section 2 hereof and to render
the services provided for in Sections 4(a), 4(b) and 4(c) hereof in the event
that at any time prior to the expiration of one year after such termination an
Acquisition Transaction is consummated; and provided, further, that the
provisions of this Section 6 and of Sections 4 and 7 hereof shall survive such
termination.
Section 7. Miscellaneous.
(a) THIS LETTER AGREEMENT AND THE RELATED INDEMNIFICATION AGREEMENT
REFERRED TO ABOVE SHALL BE DEEMED MADE IN NEW YORK. SUCH AGREEMENTS SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO SUCH
STATE'S RULES CONCERNING CONFLICTS OF LAWS. ANY RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY CLAIM OR PROCEEDING RELATED TO OR ARISING OUT OF THIS
ENGAGEMENT, OR ANY TRANSACTION OR CONDUCT IN CONNECTION HEREWITH, IS
WAIVED.
(b) The Company expressly acknowledges that all opinions and advice
(written or oral) given by Salomon to the Company in connection with
Salomon's engagement are intended solely for the benefit and use of the
Company (including its management, directors and attorneys) in considering
the transaction to which they relate and the Company agrees that no such
opinion or advice shall be used for any other purpose or reproduced,
disseminated, quoted or referred to at any time, in any manner or for any
purpose, nor shall any public references to Salomon be made by the Company
(or such persons), without the prior written consent of Salomon, which
consent shall not be unreasonably withheld.
(c) The Company expressly acknowledges that Salomon has been retained
solely as an advisor to the Company, and not as an advisor to or agent of
any other person, and that the Company's engagement of Salomon is not
intended to confer rights upon any persons not a party hereto (including
shareholders,
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employees or creditors of the Company) as against Salomon, Salomon's
affiliates or their respective directors, officers, agents and employees.
* * *
Please confirm that the foregoing is in accordance with your understandings
and agreements with Salomon Brothers Inc by signing and returning to Salomon
Brothers Inc the duplicate of this letter enclosed herewith.
Very truly yours,
SALOMON BROTHERS INC
By /s/ CHARLES BOBRINSKOY
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Managing Director
ACCEPTED AND AGREED AS OF
THE DATE FIRST ABOVE WRITTEN:
U.S. CAN CORPORATION
By /s/ TIMOTHY W. STONICH
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Title: Executive Vice President,
Chief Financial Officer and
Secretary
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April 25, 1996
Salomon Brothers Inc
8700 Sears Tower
Chicago, IL 60606
In connection with your engagement to advise and assist us with the matters
detailed in our engagement letter describing investment banking services to be
provided by Salomon Brothers Inc, we indemnify and hold harmless you and your
affiliates, the respective directors, officers, agents and employees of you and
your affiliates and each other person, if any, controlling you or any of your
affiliates, to the full extent lawful, from and against any losses, claims,
damages or liabilities (or actions, including shareholder actions, in respect
thereof) related to or arising out of such engagement or your role in connection
therewith, and will reimburse you and any other party entitled to be indemnified
hereunder for all expenses (including reasonable counsel fees) as they are
incurred by you or any such other indemnified party in connection with
investigating, preparing or defending any such action or claim, whether or not
in connection with pending or threatened litigation in which you are a party. We
will not, however, be responsible for any claims, liabilities, losses, damages
or expenses which are finally judicially determined to have resulted primarily
from your bad faith of from your negligence. We also agree that neither you, nor
any of your affiliates, nor any officer, director, employee or agent of you or
any of your affiliates, nor any person controlling you or any of your
affiliates, shall have any liability to us for or in connection with such
engagement except for any such liability for losses, claims, damages,
liabilities or expenses incurred by us that result primarily from your bad faith
or negligence. The foregoing agreement shall be in addition to any rights that
you or any indemnified party may have at common law or otherwise, including, but
not limited to, any right to contribution. We hereby consent to personal
jurisdiction and service and venue in any court in which any claim which is
subject to this agreement is brought against you or any other indemnified party.
It is understood that, in connection with your engagement, you may also be
engaged to act for us in one or more additional capacities, and that the terms
of this engagement or any such additional engagement may be embodied in one or
more separate written agreements. This indemnification shall apply to said
engagement, any such additional engagement and any modification of said
engagement or such additional engagement, and shall remain in full force and
effect following the completion or termination of your engagement(s).
Very truly yours,
United States Can Company
By: /s/ TIMOTHY W. STONICH
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Agreed:
SALOMON BROTHERS INC.
By: /s/ CHARLES BOBRINSKOY
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