EXHIBIT 10.4
EXECUTION COPY
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CONTRIBUTION AGREEMENT
BY AND BETWEEN
SONOCO PRODUCTS COMPANY
AND
AHLSTROM CORPORATION
DATED
APRIL 19, 2004
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TABLE OF CONTENTS
Page
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1. DEFINITIONS.............................................................................................1
2. FORMATION AND CONTRIBUTION..............................................................................2
2.1 Formation of the Joint Venture.................................................................2
2.2 Contribution and Ownership.....................................................................2
3. CLOSING.................................................................................................3
3.1 Date and Place of Closing......................................................................3
3.2 Closing Actions................................................................................3
4. POST CLOSING REVIEW.....................................................................................7
4.1 Understanding of the Parties...................................................................7
4.2 Delivery and Review of Closing Statements......................................................8
4.3 Disputes......................................................................................11
4.4 Schedule of Payments..........................................................................12
4.5 Joint Venture Starting Balance Sheet..........................................................12
4.6 Accounting Issue Dispute Resolution Procedures................................................12
5. UNDERTAKINGS AND COVENANTS.............................................................................13
5.1 Completion of Reorganization; Interim Period Adjustments......................................13
5.2 Access to Records and Properties..............................................................14
5.3 Consents and Approvals; Undertakings to Competition Authorities...............................14
5.4 Operation of Business During the Interim Period...............................................15
5.5 Exclusivity...................................................................................18
5.6 Public Announcements..........................................................................19
5.7 Subsequent Events.............................................................................19
5.8 Further Assurances............................................................................19
5.9 Release of Guarantees.........................................................................20
5.10 Repayment of Intercompany Debt................................................................20
5.11 Karhula Services..............................................................................21
5.12 Use of Ahlstrom Name, Labels, Corporate Names, Etc............................................21
5.13 Paperinkerays Oy..............................................................................22
5.14 UK Pension....................................................................................22
6. REPRESENTATIONS AND WARRANTIES OF SONOCO PRODUCTS......................................................23
6.1 Organization; Power and Authority; Good Standing..............................................24
6.2 Authorization, Execution, Enforceability and No Conflicts.....................................24
6.3 Ownership of Sonoco Holding Companies and Sonoco Operating Companies..........................25
6.4 Bankruptcy....................................................................................26
6.5 Distributions.................................................................................26
6.6 Employee Remuneration.........................................................................26
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6.7 Financial Statements..........................................................................27
6.8 Absence of Undisclosed Liabilities............................................................27
6.9 Absence of Changes............................................................................28
6.10 Outstanding Borrowings; Intercompany Debt.....................................................30
6.11 Related Party Transactions....................................................................30
6.12 Compliance with Laws..........................................................................31
6.13 Taxes.........................................................................................32
6.14 Real Property.................................................................................33
6.15 Environmental and Safety......................................................................34
6.16 Title to Assets...............................................................................35
6.17 Insurance.....................................................................................36
6.18 Intellectual Property.........................................................................36
6.19 Leased Personal Property......................................................................37
6.20 Certain Material Agreements...................................................................38
6.21 Litigation; Disputes..........................................................................40
6.22 Labor Relations...............................................................................41
6.23 Investment Representations....................................................................42
6.24 Subsidies.....................................................................................42
6.25 UK Pension....................................................................................42
6.26 Completeness of Contribution..................................................................42
7. REPRESENTATIONS AND WARRANTIES OF AHLSTROM CORP........................................................43
7.1 Organization; Power and Authority; Good Standing..............................................43
7.2 Authorization, Execution, Enforceability and No Conflicts.....................................43
7.3 Ownership of Ahlstrom Holding Companies and Ahlstrom Operating Companies......................45
7.4 Bankruptcy....................................................................................46
7.5 Distributions.................................................................................46
7.6 Employee Remuneration.........................................................................46
7.7 Financial Statements..........................................................................46
7.8 Absence of Undisclosed Liabilities............................................................47
7.9 Absence of Changes............................................................................47
7.10 Outstanding Borrowings; Intercompany Debt.....................................................49
7.11 Related Party Transactions....................................................................49
7.12 Compliance with Laws..........................................................................50
7.13 Taxes.........................................................................................51
7.14 Real Property.................................................................................52
7.15 Environmental and Safety......................................................................54
7.16 Title to Assets...............................................................................55
7.17 Insurance.....................................................................................55
7.18 Intellectual Property.........................................................................55
7.19 Leased Personal Property......................................................................57
7.20 Certain Material Agreements...................................................................57
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7.21 Litigation; Disputes..........................................................................59
7.22 Labor Relations...............................................................................60
7.23 Investment Representations....................................................................61
7.24 Subsidies.....................................................................................61
7.25 Completeness of Contribution..................................................................61
8. CONDITIONS TO OBLIGATION OF SONOCO PRODUCTS............................................................61
8.1 Representations and Warranties................................................................62
8.2 Performance...................................................................................62
8.3 Legal Proceedings.............................................................................62
8.4 Change in Law.................................................................................62
8.5 Absence of Ahlstrom Material Adverse Effect...................................................63
8.6 Required Consents.............................................................................63
8.7 Required Competition Filings..................................................................63
8.8 Ahlstrom Reorganization.......................................................................63
8.9 China Purchase................................................................................63
8.10 Works Council Consultation....................................................................63
9. CONDITIONS TO OBLIGATION OF AHLSTROM CORP..............................................................64
9.1 Representations and Warranties................................................................64
9.2 Performance...................................................................................64
9.3 Legal Proceedings.............................................................................64
9.4 Change in Law.................................................................................65
9.5 Absence of Sonoco Material Adverse Effect.....................................................65
9.6 Required Consents.............................................................................65
9.7 Required Competition Filings..................................................................65
9.8 Sonoco Reorganization.........................................................................65
9.9 China Purchase................................................................................66
9.10 Works Council Consultation....................................................................66
10. SURVIVAL; INDEMNIFICATION; REMEDIES....................................................................66
10.1 Survival of Representations and Warranties....................................................66
10.2 Agreement of Sonoco Products to Indemnify.....................................................67
10.3 Agreement of Ahlstrom Corp to Indemnify.......................................................68
10.4 Indemnification Procedures....................................................................70
10.5 Remedies Exclusive and Cumulative.............................................................72
11. TERMINATION............................................................................................73
11.1 Termination...................................................................................73
11.2 Effect of Termination.........................................................................73
12. GENERAL PROVISIONS.....................................................................................74
12.1 Additional Actions and Documents..............................................................74
12.2 No Brokers....................................................................................74
12.3 Expenses......................................................................................74
12.4 Assignment....................................................................................75
12.5 Entire Agreement; Amendments..................................................................75
12.6 Waiver........................................................................................76
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12.7 Governing Law; Service of Process.............................................................76
12.8 Arbitration...................................................................................76
12.9 Severability..................................................................................78
12.10 Notices.......................................................................................78
12.11 Interpretation; Headings......................................................................79
12.12 Limitation on Benefits........................................................................80
12.13 Successors and Assigns........................................................................80
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LIST OF EXHIBITS
TO CONTRIBUTION AGREEMENT
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EXHIBIT DESCRIPTION
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Exhibit A Definitions
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Exhibit B Organizational Chart of Sonoco and its Affiliates and Other
Entities Engaged in the Sonoco Business
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Exhibit C Organizational Chart of Ahlstrom and its Affiliates and Other
Entities Engaged in the Ahlstrom Business
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Exhibit D Form of Initial Articles of Association of the Joint Venture
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Exhibit E Business Plan
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Exhibit F Form of Minutes of Initial Joint Venture Shareholder's Meeting
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Exhibit G Form of New Articles of Association of the Joint Venture
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Exhibit H List of New Directors
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Exhibit I Form of Shareholders' Agreement
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Exhibit J Form of Joint Venture/Sonoco IP License Agreement
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Exhibit K Form of SDI IP License Agreement
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Exhibit L Form of Services Agreement
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Exhibit M Form of Joint Venture Supply Agreement
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Exhibit N Form of Representation Agreement
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Exhibit O Form of VP Supply Agreement
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Exhibit P Form of Opinion of Ahlstrom General Counsel
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Exhibit Q Form of Minutes of Board of Directors' Meeting
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Exhibit R Equalization Statement
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Exhibit S Description of Sonoco Reorganization
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Exhibit T Description of Ahlstrom Reorganization
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Exhibit U Ahlstrom Accounting Principles
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LIST OF SCHEDULES
TO CONTRIBUTION AGREEMENT
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SCHEDULE DESCRIPTION
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Schedule 5.3 List of Required Competition Filings
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Schedule 5.10 List of Intercompany Debt and Applicable Rate of Interest
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Schedule 5.14 UK Pension Plan Accounting Principles
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Schedule 6.1 Sonoco Charter Documents
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Schedule 6.2 Sonoco Consents
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Schedule 6.3 Sonoco Group Capitalization and Ownership Structure
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Schedule 6.6 Sonoco Employee Remuneration
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Schedule 6.7 Sonoco Financial Statements
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Schedule 6.8 Sonoco Undisclosed Liabilities
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Schedule 6.9 Sonoco Absence of Changes
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Schedule 6.10 Sonoco Outstanding Borrowings; Intercompany Debt
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Schedule 6.11 Sonoco Related Party Transactions
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Schedule 6.12 Sonoco Compliance with Laws
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Schedule 6.13 Sonoco Tax Consolidation Agreements
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Schedule 6.14 Sonoco Real Property
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Schedule 6.15 Sonoco Environmental and Safety
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Schedule 6.18 Sonoco Intellectual Property
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Schedule 6.19 Sonoco Leased Personal Property
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Schedule 6.20 Sonoco Material Agreement
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Schedule 6.21 Sonoco Litigation; Disputes
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Schedule 6.22 Sonoco Labor Relations
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Schedule 6.24 Sonoco Subsidies
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Schedule 7.1 Ahlstrom Charter Documents
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Schedule 7.2 Ahlstrom Consents
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Schedule 7.3 Ahlstrom Group Capitalization and Ownership Structure
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Schedule 7.6 Ahlstrom Employee Remuneration
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Schedule 7.7 Ahlstrom Financial Statements
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Schedule 7.8 Ahlstrom Undisclosed Liabilities
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Schedule 7.9 Ahlstrom Absence of Changes
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Schedule 7.10 Ahlstrom Outstanding Borrowings; Intercompany Debt
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Schedule 7.11 Ahlstrom Related Party Transactions
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Schedule 7.12 Ahlstrom Compliance with Laws
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Schedule 7.13 Ahlstrom Tax Consolidation Agreements
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Schedule 7.14 Ahlstrom Real Property
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Schedule 7.15 Ahlstrom Environmental and Safety
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Schedule 7.18 Ahlstrom Intellectual Property
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Schedule 7.19 Ahlstrom Leased Personal Property
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Schedule 7.20 Ahlstrom Material Agreements
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Schedule 7.21 Ahlstrom Litigation; Disputes
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Schedule 7.22 Ahlstrom Labor Relations
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Schedule 7.24 Ahlstrom Subsidies
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CONTRIBUTION AGREEMENT
This CONTRIBUTION AGREEMENT (this "CONTRIBUTION AGREEMENT") is entered
into on April 19, 2004 by and between Sonoco Products Company, a company
incorporated under the laws of South Carolina, located at One North Second
Street, Hartsville, South Carolina, 29550, U.S.A. ("SONOCO PRODUCTS"), and
Ahlstrom Corporation, a company incorporated under the laws of Finland, with its
registered office at Etelaesplanadi 14, 00130, Helsinki, Finland ("AHLSTROM
CORP"). Each of Sonoco Products and Ahlstrom Corp is hereinafter referred to
individually as a "Party" and collectively as the "PARTIES."
RECITALS OF THE PARTIES
A. Sonoco Products, through its Affiliates and other entities in which
it has an ownership interest as of the Closing included in the organizational
chart set forth on Exhibit B, is engaged in the paper core/tube and core board
business in Europe (the "SONOCO BUSINESS");
B. Ahlstrom Corp, through its Affiliates and other entities in which it
has an ownership interest as of the Closing included in the organizational chart
set forth on Exhibit C is engaged in the paper core/tube and core board business
in Europe (the "AHLSTROM BUSINESS");
C. The Parties desire to create a joint venture through the combination
of the Sonoco Business and the Ahlstrom Business (the "TRANSACTION") in a
holding company to be organized under the laws of Luxembourg (the "JOINT
VENTURE");
D. This Contribution Agreement is being entered into by the Parties to
set forth the terms and conditions pursuant to which the Sonoco Business and the
Ahlstrom Business will be contributed to the Joint Venture in exchange for Joint
Venture shares; and
E. Upon completion of the transactions contemplated by this
Contribution Agreement, Sonoco Products and Ahlstrom Corp will, directly or
indirectly, own 64.5% and 35.5%, respectively, of the Joint Venture shares.
NOW, THEREFORE, the Parties hereby agree as follows:
1. DEFINITIONS
For all purposes of this Contribution Agreement, capitalized terms used
herein shall have the meanings ascribed to such terms in Exhibit A.
2. FORMATION AND CONTRIBUTION
2.1 FORMATION OF THE JOINT VENTURE
(a) Prior to the Closing, Sonoco Products shall cause the
formation of the Joint Venture as a limited liability company (Societe a
Responsabilite Limitee) pursuant to the laws of Luxembourg under the corporate
name "Sonoco - JV S.a r.l.".
(b) The Joint Venture shall have an initial registered share
capital of EUR12,500, which Sonoco Products shall cause to be paid in full to
the Joint Venture in cash prior to the registration of the Joint Venture with
the Commercial Register of Luxembourg, Grand Duchy of Luxembourg.
(c) The initial articles of association of the Joint Venture
shall be executed in the form attached as Exhibit D.
(d) Sonoco Products undertakes to ensure through the Closing:
(i) that the Joint Venture will not carry out any activity, enter into any
Agreements or assume any Liabilities; and (ii) that none of the shares in the
Joint Venture are Transferred and no Encumbrance is created with respect to such
shares, except, in each of (i) and (ii), as may be required under the laws of
Luxembourg in connection with the Joint Venture's formation or as specifically
contemplated in this Contribution Agreement.
(e) The initial five-year strategic business plan of the Joint
Venture is attached as Exhibit E (the "BUSINESS PLAN").
2.2 CONTRIBUTION AND OWNERSHIP
(a) Sonoco Contribution and Ownership. On the Closing, in
accordance with, and subject to, the provisions of this Contribution Agreement:
(i) Sonoco Products shall cause to be contributed, assigned, transferred and
conveyed to the Joint Venture by way of contribution in kind (Sacheinlage) the
Sonoco Contributed Shares, free and clear of all Encumbrances (other than the
Encumbrances listed on Schedule 6.3) and together with all rights which are on
the Closing Date, or may thereafter become, attached to them (including the
right to receive all undistributed profits, dividends and distributions), and
the Joint Venture shall accept the Sonoco Contributed Shares (the "SONOCO
CONTRIBUTION"); and (ii) the Joint Venture shall issue to Sonoco Luxco Class A
shares of the Joint Venture in a nominal amount of EUR 25 representing, together
with all shares previously owned by Sonoco Luxco, 64.5% of the issued and
outstanding shares, of all classes, of the Joint Venture as of the Closing Date
(the "SONOCO SHARES") and a share reserve account in the maximum amount possible
to be agreed further by the
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Parties prior to the Closing Date that would not reasonably be expected to cause
any additional capital Tax Liability to any Party or any of their Affiliates.
(b) Ahlstrom Contribution and Ownership. On the Closing, in
accordance with, and subject to, the provisions of this Contribution Agreement:
(i) Ahlstrom Corp shall cause to be contributed, assigned, transferred and
conveyed to the Joint Venture by way of contribution in kind (Sacheinlage) the
Ahlstrom Contributed Shares, free and clear of all Encumbrances (other than the
Encumbrances listed on Schedule 7.3) and together with all rights which are on
the Closing Date, or may thereafter become, attached to them (including the
right to receive all undistributed profits, dividends and distributions), and
the Joint Venture shall accept the Ahlstrom Contributed Shares (the "AHLSTROM
CONTRIBUTION"); and (ii) the Joint Venture shall issue to Ahlstrom Holding Class
B shares of the Joint Venture in a nominal amount of EUR 25 representing 35.5%
of the issued and outstanding shares, of all classes, of the Joint Venture as of
the Closing Date (the "AHLSTROM SHARES") and a share reserve account in the
maximum amount possible to be agreed further by the Parties prior to the Closing
Date that would not reasonably be expected to cause any additional capital Tax
Liability to any Party or any of their Affiliates.
3. CLOSING
3.1 DATE AND PLACE OF CLOSING
The Closing of the Transaction (the "CLOSING") shall take
place at the offices of Hogan & Hartson Raue L.L.P., Potsdamer Platz 1, 10785
Berlin, Germany, on the last Business Day of the calendar month in which the
conditions precedent to the Closing set forth in Sections 8 and 9 have been
satisfied or waived by the Party for whose benefit the condition exists (to the
extent such conditions may be waived), with effect as of the last day of such
calendar month or such other date as is mutually agreed upon by the Parties (the
"CLOSING DATE").
3.2 CLOSING ACTIONS
At the Closing, the Parties shall take, or cause their
relevant Affiliates to take, the following actions in the sequence of (a)
through (h) below:
(a) Joint Venture Shareholder's Meeting. The holding by Sonoco
Luxco of a shareholder's meeting of the Joint Venture before a Luxembourg notary
resolving as substantially set forth in the draft minutes attached as Exhibit F,
including that: (i) the stated capital of the Joint Venture shall be increased
by the Sonoco Contribution and the Ahlstrom Contribution; (ii) new shares shall
be created and issued to Sonoco Luxco and Ahlstrom Holding, respectively; (iii)
the initial articles of association of the Joint Venture, attached as Exhibit D,
shall be amended
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by adopting new articles of association substantially in the form of Exhibit G;
(iv) the new directors listed in Exhibit H shall be appointed; and (v) the
accounting rules and procedures with respect to the application of International
Accounting Standards to be used by the Joint Venture shall be adopted.
(b) Share Transfer Agreements and Deeds.
(i) The authorization and execution by the Joint
Venture and Sonoco Luxco of share transfer
agreements, notarial deeds or comparable
documents, as applicable, with respect to
the transfer to the Joint Venture of the
Sonoco Contributed Shares in the form
customary for the jurisdiction of
organization of the Sonoco Group company
represented by such Sonoco Contributed
Shares and reasonably acceptable to Ahlstrom
Corp; and
(ii) The authorization and execution by the Joint
Venture, Ahlstrom Corp and Ahlstrom Holding,
of a notarial deed with respect to the
transfer to the Joint Venture of the
Ahlstrom Contributed Shares in the form
customary in Germany and reasonably
acceptable to Sonoco Products.
(c) Registration of Sonoco Shares and Ahlstrom Shares. The
registration by the Joint Venture of the newly created and issued Sonoco Shares
and Ahlstrom Shares in the name of Sonoco Luxco and Ahlstrom Holding,
respectively in the stock book of the Joint Venture;
(d) Resignation of Initial Joint Venture Directors. The
delivery by Sonoco Products or its Affiliate of the resignation letters of all
directors of the Joint Venture;
(e) Related Documents.
(i) The authorization and execution by Sonoco
Luxco and Sonoco Products, on the one hand,
and Ahlstrom Holding and Ahlstrom Corp, on
the other hand, of the Shareholders'
Agreement substantially in the form of
Exhibit I (the "SHAREHOLDERS' AGREEMENT");
(ii) The authorization and execution by Sonoco
Products, as licensee, and the Joint
Venture, as licensor, of an IP License
Agreement substantially in the form of
Exhibit J (the "JOINT VENTURE/SONOCO IP
LICENSE AGREEMENT");
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(iii) The delivery of an authorized and executed
IP License Agreement by and between Sonoco
Development Inc., as licensor, and Sonoco
Newco Gibraltar, as licensee, substantially
in the form of Exhibit K (the "SDI IP
LICENSE AGREEMENT"), together with documents
in customary form evidencing that the SDI IP
License Agreement has been (1) assigned by
Sonoco Newco Gibraltar to Sonoco Luxco and
(2) contributed by Sonoco Luxco to Sonoco
Newco Swiss;
(iv) The authorization and execution by each of
Sonoco Products or its affiliate and
Ahlstrom Corp and its affiliate, as the case
may be, and the Joint Venture, respectively,
of Services Agreements substantially in the
form of, and for the services described on
the exhibits to such Services Agreements set
forth on, Exhibit L (the "SERVICES
AGREEMENTS");
(v) The authorization and execution by the Joint
Venture or its Affiliate and Ahlstrom Corp
or its Affiliate of a Supply Agreement
substantially in the form of Exhibit M (the
"JOINT VENTURE SUPPLY AGREEMENT");
(vi) The authorization and execution by the Joint
Venture or its Affiliate and Ahlstrom Corp
of a Representation Agreement, pursuant to
which Ahlstrom Corp shall exercise its
rights as a shareholder in Paperinkerays Oy
in the interest and at the direction of the
Joint Venture, substantially in the form of
Exhibit N (the "REPRESENTATION AGREEMENT");
and
(vii) The authorization and execution by each of
the Joint Venture and Ahlstrom Corp of a
Supply Agreement substantially in the form
of Exhibit O (the "VP SUPPLY AGREEMENT").
(f) Charter Documents.
(i) The delivery by Ahlstrom Corp of copies of
the following supporting documents (in form
and substance reasonably satisfactory to
Sonoco Products):
(A) trade register extract or
comparable document in effect on
the Closing Date from an
appropriate Governmental Authority,
dated as of a date
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reasonably close in time to the
Closing Date, of each of the
Ahlstrom Holding Companies and the
Ahlstrom Operating Companies as in
effect on the Closing Date, if the
trade register extract or
comparable document for any such
entity set forth on Schedule 7.1 is
no longer true, correct and
complete as of the Closing Date;
and
(B) (i) a true, correct and complete
copy of each of the articles of
association and by-laws (or
comparable documents) of each of
the Ahlstrom Holding Companies and
the Ahlstrom Operating Companies as
in effect on the Closing Date, if
the articles of association or
by-laws (or comparable documents)
for any such entity set forth on
Schedule 7.1 are no longer true,
correct and complete as of the
Closing Date; and (ii) (1) an
opinion of the general counsel of
Ahlstrom Corp as to the
authorization, execution and
performance of the Contribution
Agreement and the Related Documents
by Ahlstrom Corp in the form of
Exhibit P, and (2) a true, correct
and complete copy of all
resolutions adopted by the board of
managers or board of directors (and
any committees thereof), and the
unitholders or stockholders, of
each of the Ahlstrom Holding
Companies and the Ahlstrom
Operating Companies (as applicable)
authorizing the execution and
performance of this Contribution
Agreement and the Related
Documents.
(ii) The delivery by Sonoco Products of copies of
the following supporting documents (in form
and substance reasonably satisfactory to
Ahlstrom Corp):
(A) trade register extract or
comparable document in effect on
the Closing Date from an
appropriate Governmental Authority,
dated as of a date reasonably close
in time to the Closing Date, of
each of the Sonoco Holding
Companies and the Sonoco Operating
Companies as in effect on the
Closing Date, if the trade register
extract or comparable document for
any such entity set forth on
Schedule 6.1 is no longer true,
correct and complete as of the
Closing Date; and
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(B) (i) a true, correct and complete
copy of each of the articles of
association and by-laws (or
comparable documents) of each of
the Sonoco Holding Companies and
the Sonoco Operating Companies as
in effect on the Closing Date, if
the articles of association or
by-laws (or comparable documents)
for any such entity set forth on
Schedule 6.1 are no longer
accurate; and (ii) a true, correct
and complete copy of all
resolutions adopted by the board of
managers or board of directors (and
any committees thereof), and the
unitholders or stockholders, of
each such entity (as applicable)
authorizing the execution and
performance of this Contribution
Agreement and the Related
Documents.
(g) Board of Directors' Meeting. The holding of a board of
directors' meeting of the Joint Venture resolving substantially as set forth in
the draft minutes attached as Exhibit Q including that: (i) the appointment of
James A. Harrell, III, as chief executive officer shall be approved; (ii) the
Business Plan shall be adopted; and (iii) the annual budget of the Joint Venture
shall be adopted.
4. POST CLOSING REVIEW
4.1 UNDERSTANDING OF THE PARTIES
The Parties agree that:
(a) each of the Sonoco Reorganization and the Sonoco
Contribution as well as the Ahlstrom Reorganization and the Ahlstrom
Contribution shall be carried out with economic effect as of December 31, 2003;
(b) the equalization statement attached as Exhibit R (the
"EQUALIZATION STATEMENT") sets forth:
(i) the pro forma Sonoco Financial Statements
described in Section 6.7(a)(ii) and attached
as Schedule 6.7 and the pro forma Ahlstrom
Financial Statement described in Section
7.7(a)(ii) and attached as Schedule 7.7;
(ii) the aggregate value of the Net Cash/Interest
Bearing Debt of the Sonoco Holding Companies
and Sonoco Operating Companies as of December
31, 2003, calculated on a consolidated basis,
which value is intended to reflect the
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results of the Sonoco Reorganization as if
such reorganization was completed as of
December 31, 2003.
(iii) the aggregate value of the Net Cash/Interest
Bearing Debt of the Ahlstrom Holding
Companies and Ahlstrom Operating Companies as
of December 31, 2003, calculated on a
consolidated basis, which value is intended
to reflect the results of the Ahlstrom
Reorganization as if such reorganization was
completed as of December 31, 2003; and
(iv) the agreed Sonoco Equalization Amount and the
Ahlstrom Equalization Amount calculated in a
manner more fully described in the
Equalization Statement and to be settled in
accordance with Sections 5.1(c) and 5.1.(d),
respectively;
(c) there shall be no transactions of the Sonoco Holding
Companies, Sonoco Operating Companies and the Sonoco Predecessor Companies with
other Sonoco entities occurring during the period from December 31, 2003 until
the Closing Date (the "REFERENCE PERIOD") other than transactions contemplated
by and occurring in connection with the Sonoco Reorganization or necessary for
the settlement of the Equalization Amount, contemplated by the Equalization
Statement or Section 6.5, or transactions occurring in the Ordinary Course of
Business of the Sonoco Business (the "SONOCO PROHIBITED TRANSACTIONS");
(d) there shall be no transactions of the Ahlstrom
Holding Companies and Ahlstrom Operating Companies with other Ahlstrom entities
occurring during the Reference Period, other than transactions contemplated by
and occurring in connection with the Ahlstrom Reorganization or necessary for
the settlement of the Equalization Amount, contemplated by the Equalization
Statement, or transactions occurring in the Ordinary Course of Business of the
Ahlstrom Business (the "AHLSTROM PROHIBITED TRANSACTIONS"); and
(e) all transactions contemplated under this Section 4.1
will be carried out with economic effect as if they had been carried out on
December 31, 2003, applying an interest rate of 3 % per annum as applicable.
4.2 DELIVERY AND REVIEW OF CLOSING STATEMENTS
(a) As soon as practicable after the Closing Date (but in
no case later than 45 days after the Closing Date):
(i) Sonoco Products shall cause to be prepared
and delivered to Ahlstrom Corp:
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(A) a statement identifying all
deviations from the Sonoco
Reorganization as contemplated by
this Agreement and the Equalization
Statement (the "SONOCO
REORGANIZATION DEVIATIONS");
(B) a statement describing the
difference, if any, between the
actual aggregate value of the
consolidated Net Cash/Interest
Bearing Debt of the Sonoco Holding
Companies and Sonoco Operating
Companies as of December 31, 2003,
which value shall reflect the
results of the Sonoco
Reorganization as if such
reorganization was completed as of
December 31, 2003, and the
aggregate value of the consolidated
Net Cash/Interest Bearing Debt of
each of the Sonoco Holding
Companies and Sonoco Operating
Companies as set forth in the
Equalization Statement; and
(C) a statement identifying all Sonoco
Prohibited Transactions occurring
during the Reference Period, if
any;
each of (A), (B) and (C) prepared in
accordance with U.S. GAAP and the principles
upon which the Sonoco Financial Statements
were prepared (collectively, the "SONOCO
CLOSING STATEMENTS"); and identifying
separately the adjustments that have been
carried out to calculate the economic
benefit as of December 31, 2003; and
(ii) Ahlstrom Corp shall cause to be prepared and
delivered to Sonoco Products:
(A) a statement identifying all
deviations from the Ahlstrom
Reorganization as contemplated by
this Agreement and the Equalization
Statement (the "AHLSTROM
REORGANIZATION DEVIATIONS");
(B) a statement describing the
difference, if any, between the
actual aggregate value of the
consolidated Net Cash/Interest
Bearing Debt of the Ahlstrom
Holding Companies and Ahlstrom
Operating Companies as of December
31, 2003,
9
which value shall reflect the
results of the Ahlstrom
Reorganization as if such
reorganization was completed as of
December 31, 2003, and the
aggregate value of the consolidated
Net Cash/Interest Bearing Debt of
each of the Ahlstrom Holding
Companies and the Ahlstrom
Operating Companies as set forth on
the Equalization Statement; and
(C) a statement identifying all
Ahlstrom Prohibited Transactions
occurring during the Reference
Period, if any;
each of (A), (B) and (C) prepared in
accordance with Ahlstrom Accounting
Principles and the principles upon which the
Ahlstrom Financial Statements were prepared
(the "AHLSTROM CLOSING STATEMENTS" and
together with the Sonoco Closing Statement,
the "CLOSING STATEMENTS"), and identifying
separately the adjustments that have been
carried out to calculate the economic
benefit as of December 31, 2003.
(b) Each of Sonoco Products and its auditors and Ahlstrom
Corp and its auditors shall conduct a review of the Ahlstrom Closing Statements
and the Sonoco Closing Statements, respectively, and shall use good faith
efforts to agree in writing upon: (i) the occurrence, and the net financial
statement impact, of each of the Sonoco Reorganization Deviations and the
Ahlstrom Reorganization Deviations, if any, (ii) the difference, if any, in the
aggregate amount of the consolidated Net Cash/Interest Bearing Debt as described
in the Sonoco Closing Statements and the Ahlstrom Closing Statements,
respectively, as against the amount of such item set forth on the Equalization
Statement, (iii) the occurrence, and the net financial statement impact, of each
of the Sonoco Prohibited Transactions and the Ahlstrom Prohibited Transactions,
if any, and (iv) the payments, if any, required to be made by Sonoco Products or
Ahlstrom Corp, as the case may be, to, or Distributions to Sonoco Products or
Ahlstrom Corp, as the case may be, from, the Joint Venture in order to (A)
eliminate such net financial statement impact of each of the Sonoco
Reorganization Deviations and the Ahlstrom Reorganization Deviations, (B)
correct for any such differences in Net Cash/Interest Bearing Debt and (C)
eliminate such net financial statement impact of each of the Sonoco Prohibited
Transactions and the Ahlstrom Prohibited Transactions (such written agreement,
the "SETTLEMENT AGREEMENT"). For the avoidance of doubt, and unless otherwise
agreed by the Parties, (x) if the aggregate amount of the consolidated Net
Cash/Interest Bearing Debt described on the Sonoco Closing Statement or the
Ahlstrom Closing
10
Statement, as the case may be, is greater than the aggregate amount of the
consolidated Net Cash/Interest Bearing Debt described on the Equalization
Statement, then the Joint Venture shall be obligated to make a Distribution to
Sonoco Products or Ahlstrom Corp, as the case may be, in an amount equal to the
amount of such difference and (y) if the aggregate amount of the consolidated
Net Cash/Interest Bearing Debt described on the Sonoco Closing Statement or the
Ahlstrom Closing Statement, as the case may be, is less than the aggregate
amount of the consolidated Net Cash/Interest Bearing Debt described on the
Equalization Statement, then Sonoco Products or Ahlstrom Corp, as the case may
be, shall be obligated to make a payment to the Joint Venture in an amount equal
to the amount of such difference. Any such payments required to be made by
Sonoco Products or Ahlstrom Corp, as the case may be, to the Joint Venture,
shall be made (i) as a contribution to the free reserves of the Joint Venture,
and not against issuance of shares of the Joint Venture, and include an amount
equal to the capital contribution duty or any other taxes to be paid by the
Joint Venture under Luxembourg law on such contribution to the free reserves or
(ii) as a cancellation of Intercompany Debt. For the avoidance of doubt, any
such payment shall not affect the other Partner's respective ownership
percentage in the Joint Venture.
(c) Each of Sonoco Products and Ahlstrom Corp shall
provide the other Party with access, during normal business hours, to its
working papers, documents, financial information and other information as such
other Party may reasonably request in connection with such review and
examination of the Closing Statements.
4.3 DISPUTES
Either Party may object to the other Party's Closing Statement
within ten Business Days of its receipt of such Closing Statement (the
"EXAMINATION PERIOD") by providing to the other Party a written notice (an
"OBJECTION NOTICE") describing in reasonable detail such Party's objections to
any item or valuation of such Closing Statement. Either Party's failure to
deliver an Objection Notice to the other Party by the end of the Examination
Period shall constitute such Party's binding acceptance of such Closing
Statement and all matters identified therein. If the parties are unable to
resolve the objection described in an Objection Notice within 20 Business Days
after an Objection Notice is delivered to a Party, then the matter shall be
resolved pursuant to the accounting issue dispute resolution procedures set
forth in Section 4.6.
4.4 SCHEDULE OF PAYMENTS
Any payments required to be made pursuant to this Section 4
shall be made as follows: (i) if no Party shall have delivered an Objection
Notice to the other Party in accordance with the provisions of Section 4.3, then
the payments, if any,
11
required to be made pursuant to the Settlement Agreement shall be made no later
than five Business Days after the execution of the Settlement Agreement; and
(ii) if a Party shall have delivered an Objection Notice to the other Party in
accordance with the provisions of Section 4.3, then payments of any amounts set
forth in the Accountant's Determination shall be made within five Business Days
of the delivery of the Accountant's Determination as provided in Section 4.6.
4.5 JOINT VENTURE STARTING BALANCE SHEET
Within 90 days after the Closing Date, the Joint Venture
auditors shall prepare and deliver to each Party and the Joint Venture a
statement representing the unaudited consolidated balance sheet (the "JOINT
VENTURE STARTING BALANCE SHEET") of the Joint Venture and the Sonoco Holding
Companies and the Sonoco Operating Companies and the Ahlstrom Holding Companies
and the Ahlstrom Operating Companies as of the Closing Date, which statement
shall be prepared in accordance with International Accounting Standards, which
will exclude footnotes and disclosures otherwise required, but including
supplementary information as needed by the Parties, as applied according to the
accounting rules and principles approved at the Second Joint Venture
Shareholders' Meeting described in Section 3.2(a). The Joint Venture Starting
Balance Sheet shall be the initial financial statement of the Joint Venture. The
Joint Venture auditors shall also prepare and deliver to each Party and the
Joint Venture financial statements prepared in accordance with U.S. GAAP which
will exclude footnotes and disclosures otherwise required, but including
supplementary information as needed by the Parties, together with a
reconciliation between the International Accounting Standards and U.S. GAAP
financial statements.
4.6 ACCOUNTING ISSUE DISPUTE RESOLUTION PROCEDURES
At such time as a matter becomes subject to resolution
pursuant to the accounting issue dispute resolution procedures set forth in this
Section 4.6, the Parties shall select an independent accounting firm of
recognized international standing which shall resolve the issue as to which
there is a dispute as promptly as possible. The accounting firm selected shall
not at the time of selection be performing services for either Party or their
Affiliates. A decision by the independent accounting firm as to the resolution
of such issue, and the determination of the amount of any payments to be made as
a result thereof, shall be (absent an agreement of the Parties regarding an
error that is manifest) conclusive and binding upon the Parties for purposes of
this Agreement (the "ACCOUNTANT'S DETERMINATION"). The Accountant's
Determination shall: (i) be in writing; (ii) be made in accordance with
principles upon which the relevant financial statement of the Parties or the
Joint Venture were made; (iii) be made after having given each Party the
opportunity to state its case in writing; (iv) set forth the basis upon which it
is made; and (v) be incontestable by either Party and each of their
12
respective Affiliates and successors and not subject to collateral attack for
any such reason. All fees and costs payable to the independent accounting firm
referred to in this Section shall be borne by the Parties equally.
5. UNDERTAKINGS AND COVENANTS
5.1 COMPLETION OF REORGANIZATION; INTERIM PERIOD ADJUSTMENTS
(a) Prior to the Closing, Sonoco Products shall duly and
validly complete, or cause to be duly and validly completed, all transactions,
filings, registrations and other steps or actions contemplated by the
reorganization of the Sonoco Business as described in Exhibit S (the "SONOCO
REORGANIZATION"). Notwithstanding anything to the contrary in Exhibit S, and
without prejudice to Section 10.2(d), Sonoco Products shall cause the Sonoco
Reorganization to be carried out in a manner that neither any Sonoco Holding
Company nor any Sonoco Operating Company owns or has any Liability for any
Sonoco Excluded Asset or Liability.
(b) Prior to the Closing, Ahlstrom Corp shall duly and validly
complete, or cause to be duly and validly completed, all transactions, filings,
registrations and other steps or actions contemplated by the reorganization of
the Ahlstrom Business as described in Exhibit T (the "AHLSTROM REORGANIZATION").
Notwithstanding anything to the contrary in Exhibit T, and without prejudice to
Section 10.3(d), Ahlstrom Corp shall cause the Ahlstrom Reorganization to be
carried out in a manner that neither any Ahlstrom Holding Company nor any
Ahlstrom Operating Company owns or has any Liability for any Ahlstrom Excluded
Asset or Liability.
(c) Prior to Closing, Sonoco Products shall cause to be
Distributed, from the Sonoco Business cash in the amount of EUR 4,400,000, plus
interest thereon at the rate of 3% per annum from December 31, 2003 to and
including the date of distribution (such amount, including interest, the "SONOCO
EQUALIZATION AMOUNT"). Alternatively, in connection with the Distribution of the
Sonoco Equalization Amount, Sonoco may, at its election, cause the Sonoco
Business to issue Indebtedness to a third Person in an amount equal to the
Sonoco Equalization Amount, the proceeds of which shall be Distributed from the
Sonoco Business.
(d) Prior to Closing, Ahlstrom Corp shall (i) contribute, or
cause to be contributed, to the Ahlstrom Business cash in the amount of EUR
4,400,000, plus interest thereon at the rate of 3% per annum from December 31,
2003 to and including the date of contribution (such amount, including interest,
the "AHLSTROM EQUALIZATION Amount"). Alternatively, in lieu of the contribution
of the Ahlstrom Equalization Amount, Ahlstrom may, at its election, cancel, or
caused to be
13
cancelled, Outstanding Borrowings of the Ahlstrom Business in an amount equal to
the Ahlstrom Equalization Amount.
5.2 ACCESS TO RECORDS AND PROPERTIES
(a) Subject to the applicable confidentiality requirements and
Laws, from and after the date hereof until the earlier of the Closing or the
termination of this Agreement in accordance with its terms (the "INTERIM
Period"), Sonoco Products shall provide, or cause to be provided, to Ahlstrom
Corp and its Affiliates, and each of their respective authorized
representatives, including, without limitation, accountants, consultants and
attorneys (collectively, "REPRESENTATIVES"), the information they might
reasonably request concerning the Interim Period business and financial results
or reasonably related to its integration planning of the Sonoco Business and the
Ahlstrom Business, together with monthly financial results of the Sonoco
Business.
(b) Subject to applicable confidentiality requirements and
Laws, during the Interim Period, Ahlstrom Corp shall provide, or cause to be
provided, to Sonoco Products and its Affiliates, and each of their respective
Representatives, the information they might reasonably request related to the
monthly Interim Period business and financial results or reasonably continue its
integration planning of the Sonoco Business and the Ahlstrom Business, together
with monthly financial results of the Ahlstrom Business.
(c) Each Party agrees: that the information provided pursuant
to this Section 5.2 shall not affect or otherwise diminish or obviate in any
respect any of the representations and warranties or the indemnification rights
of the other Party contained in this Contribution Agreement.
5.3 CONSENTS AND APPROVALS; UNDERTAKINGS TO COMPETITION
AUTHORITIES
(a) Each Party shall take all commercially reasonable measures
during the Interim Period to secure, or cause to be secured, such consents,
authorizations and approvals of any Governmental Authority, and of any other
Person, as may be necessary or advisable in order for such Party to carry out
the transactions contemplated by this Contribution Agreement and to perform all
of its other obligations hereunder, including, without limitation, in connection
with the Sonoco Reorganization and the Ahlstrom Reorganization, and obtaining
the Required Consents; and
(b) Each of Sonoco Products and Ahlstrom Corp shall, and shall
cause the other Controlled members of the Sonoco Group and the Ahlstrom Group,
respectively, during the Interim Period to cooperate in the filing of all forms,
notifications, reports and information, and conduct of Proceedings, if any,
required
14
or reasonably deemed advisable pursuant to Laws or Orders of any Governmental
Authority in connection with the transactions contemplated by this Contribution
Agreement, including, without limitation, the competition filings listed on
Schedule 5.3 (the "REQUIRED COMPETITION FILINGS").
(c) In the event that a competent Governmental Authority in
charge of a Required Competition Filing raises objections to the Transaction,
the Parties undertake to use good faith best efforts to agree on appropriate
measures to overcome these objections, it being understood: (i) that any such
measure to be agreed shall not affect this Contribution Agreement (including the
valuation of the Sonoco Business and the Ahlstrom Business); (ii) that the
economic burden or benefit associated with such measures shall be assumed by or
credited to the Joint Venture; and (iii) that the Parties shall not be obligated
to agree on any measure that would (A) have a material adverse effect on Sonoco
Products or Ahlstrom Corp as the case may be, or any of their respective
Affiliates or Assets not contributed to the Joint Venture or its subsidiaries as
part of the Transaction or (B) amount to a Sonoco Material Adverse Effect or an
Ahlstrom Material Adverse Effect.
5.4 OPERATION OF BUSINESS DURING THE INTERIM PERIOD
Except as expressly contemplated by this Contribution
Agreement (including, without limitation, as contemplated by the Sonoco
Reorganization or the Ahlstrom Reorganization, respectively), during the Interim
Period, each of Sonoco Products and Ahlstrom Corp shall cause each Sonoco
Holding Company and Controlled Sonoco Operating Company and each Ahlstrom
Holding Company and Controlled Ahlstrom Operating Company, respectively, to:
(a) (i) preserve the Sonoco Business and the Ahlstrom Business
as reflected on the Sonoco Financial Statements and the Ahlstrom Financial
Statements, respectively, and the organizations and relationships with
consultants, employees and third parties, consistent with the Ordinary Course of
Business; and (ii) maintain the Assets of the Sonoco Business and the Ahlstrom
Business, respectively, in customary repair and condition;
(b) conduct the Sonoco Business and the Ahlstrom Business,
respectively, only in the Ordinary Course of Business, and, in addition, not to:
(i) enter into any material transaction or
Agreement, or cause any event or condition,
which, individually or in the aggregate,
could reasonably be expected to have a
Sonoco Material Adverse Effect or an
Ahlstrom Material Adverse Effect, as the
case may be;
(ii) commit any act or omit to do any act, or
engage in any activity or transaction or
incur any Liability (by conduct
15
or otherwise) or cause any damage,
destruction or Loss, whether or not covered
by insurance, which, individually or in the
aggregate, could reasonably be expected to
have a Sonoco Material Adverse Effect or an
Ahlstrom Material Adverse Effect, as the
case may be;
(iii) issue any shares or ownership interests, or
any options, warrants or other rights to
subscribe for or purchase any of its shares
or ownership interests, or any securities
convertible into or exchangeable for its
shares or ownership interests;
(iv) declare, pay or set aside any Distribution
(whether outstanding or issuable upon the
conversion, exchange or exercise of
outstanding shares or ownership interests),
or directly or indirectly redeem, purchase
or otherwise acquire any of its shares or
ownership interests;
(v) effect a split, reclassification or other
change in or of any of its shares or
ownership interests;
(vi) amend its Charter Documents;
(vii) grant any increase in, or prepayment of, the
compensation payable, or to become payable,
to its directors, officers, managing
directors, managers, employees or agents, or
enter into any bonus, insurance, pension or
other benefit plan, payment or arrangement
for or with any of such directors, officers,
managing directors, managers, employees or
agents, other than normal salary increases
in the Ordinary Course of Business;
(viii) make any lay-offs with respect to a
significant part of the workforce;
(ix) incur any Indebtedness, including
Intercompany Debt (other than Indebtedness
incurred in the Ordinary Course of Business
on reasonable arms length terms), or
directly or indirectly provide a Guarantee,
or agree to provide a Guarantee, of
Indebtedness of any other Person;
(x) cancel, or make any material change to, any
Indebtedness owing to it from any Person or
any Claims which it may possess, or waive or
release any material rights (other than in
the Ordinary Course of Business);
16
(xi) place, or allow to be placed, an Encumbrance
(other than a Permitted Encumbrance) on any
of its Assets;
(xii) make any change in any method of accounting
or accounting practice or policy except as
required by U.S. GAAP, in the case of the
Sonoco Group, and Ahlstrom Accounting
Principles, in the case of the Ahlstrom
Group, including, without limitation, any
change in its policies with respect to the
payment of accounts payable or other current
Liabilities or the collection of accounts
receivable, including, without limitation,
any acceleration or deferral of the payment
or collection thereof, as applicable;
(xiii) Transfer any Intellectual Property (other
than in the Ordinary Course of Business);
(xiv) Transfer any material portion of its Assets,
or scrap any material portion of its Assets
as obsolete, in each case except in the
Ordinary Course of Business and for fair
value;
(xv) materially change the general manner in
which it markets and sells its products or
services;
(xvi) make any commitments for capital
expenditures in excess of EUR1,000,000 per
occurrence or EUR5,000,000 in the aggregate;
(xvii) violate any material Law or material Order;
(xviii) make any loan or advance to any of its
members, stockholders or other equity
holders, or, officers, directors, managing
directors, managers or to any other Person;
or
(xix) commit any act or omit to do any act which
could reasonably be expected to result in
the untruth, inaccuracy or breach of any
representation or warranty contained in
Sections 6 or 7;
(c) keep proper books of record and account in which true and
complete entries will be made of all transactions in accordance with applicable
accounting methods Applied on a Consistent Basis; and
(d) subject to the requirements of applicable Law, provide the
other Party on a regular and ongoing basis an update with respect to the Sonoco
Business
17
and the Ahlstrom Business, as the case may be, including, without limitation,
any significant or extraordinary developments relating to the Sonoco Business or
the Ahlstrom Business, as the case may be.
5.5 EXCLUSIVITY
(a) During the Interim Period, except as may be required by
applicable securities Laws, or the rules or requirements of any relevant stock
exchange or other Governmental Authority, without the prior written consent of
the other Party, no Party shall, nor shall it through any officer, director,
managing director, manager, employee, Representative, agent or direct or
indirect stockholder or subsidiary, directly or indirectly, take, or permit the
taking of, any action to: (i) encourage, initiate or solicit the submission of
any proposal that constitutes an Alternative Transaction; (ii) enter into any
Agreement with respect to or accept any Alternative Transaction; (iii)
encourage, initiate or solicit (including by way of furnishing information) the
making of any proposal that constitutes, or may reasonably be expected to lead
to, an Alternative Transaction; (iv) furnish to any Person other than the other
Party any information relating to the Sonoco Business or the Ahlstrom Business,
as the case may be; (v) Transfer any stock or other equity interests in any
member of the Sonoco Group or the Ahlstrom Group, as the case may be (except as
contemplated by this Contribution Agreement); or (vi) enter into negotiations
with respect to any of the foregoing.
(b) In addition to the obligations of the Parties set forth in
paragraph (a) of this Section 5.5, each Party shall immediately advise the other
Party orally and in writing of any request for information or of any proposal or
any inquiry regarding any Alternative Transaction, the material terms and
conditions of such request, proposal or inquiry and the identity of the Person
making such request, proposal or inquiry. Each Party will keep the other Party
fully informed of the status and details (including amendments or proposed
amendments) of any such request, proposal or inquiry.
5.6 PUBLIC ANNOUNCEMENTS
Upon execution of this Contribution Agreement, the Parties
shall issue an agreed press release announcing the transactions contemplated by
this Contribution Agreement and the Related Documents. Neither Party shall issue
or approve, or cause or permit to be issued or approved, any additional news
release or other public announcement concerning the transactions contemplated by
this Contribution Agreement or any Related Document without the prior written
approval of the other Party; provided, however, that no prior approval shall be
needed for releases or announcements required to comply with applicable
securities Laws, or the rules or requirements of any relevant stock exchange or
other Governmental Authority, it being understood that in such situations the
Parties
18
will consult in good faith in advance with one another regarding such releases
or announcements.
5.7 SUBSEQUENT EVENTS
During the Interim Period, each Party shall notify the other
Party promptly in writing of the occurrence of any event, or the failure of any
event to occur, prior to the Closing that results in a breach of any of the
covenants or representations and warranties made by or on behalf of such Party
in this Contribution Agreement or any Related Document, or any other document
furnished in connection herewith or therewith, but such notification shall not
excuse breaches of representations, warranties, covenants, guarantees or
agreements disclosed in such notification. In addition, each Party shall
immediately notify the other Party in writing in the event it reasonably
believes that any condition set forth in Sections 8 or 9 cannot be satisfied on
or prior to the Closing. Without limiting the generality of the foregoing, each
Party shall notify the other Party promptly in writing of any change occurring,
or known to likely occur, prior to the Closing which has had, or could
reasonably be expected to have, a Sonoco Material Adverse Effect or an Ahlstrom
Material Adverse Effect, as the case may be, including, without limitation,
information (including without limitation copies of all Agreements relating
thereto) concerning all Claims instituted, threatened or asserted against or
affecting the Sonoco Business or the Ahlstrom Business, as the case may be,
before or by any Governmental Authority or before any other relevant Person.
5.8 FURTHER ASSURANCES
During the Interim Period:
(a) Subject to the terms and conditions of this Contribution
Agreement, each Party shall take or do, and shall use commercially reasonable
efforts to cause to be taken or done in respect of any acts or obligations
involving third Persons, all actions and things required under all applicable
Laws in order to consummate the transactions contemplated hereby and by the
Related Documents.
(b) Each Party shall satisfy, and shall use commercially
reasonable efforts to cause to be satisfied in respect of any conditions
involving third Persons, each of the closing conditions set forth in Sections 8
and 9 to the extent such satisfaction is within its power, provided, however,
that Section 5.3 comprehensively regulates the Parties' obligations in
connection with the Required Competition Filings.
19
5.9 RELEASE OF GUARANTEES
As soon as practicable following the Closing Date (and in any
event within 90 days after the Closing Date): (i) Sonoco Products and Ahlstrom
Corp shall procure the release of each Sonoco Holding Company and Controlled
Sonoco Operating Company or Ahlstrom Holding Company and Controlled Ahlstrom
Operating Company, respectively, from any Guarantees or indemnities undertaken
by them in respect of obligations of Sonoco Group companies or Ahlstrom Group
companies (other than Affiliates of the Joint Venture), and, pending such
release, shall indemnify the Ahlstrom Indemnified Persons or the Sonoco
Indemnified Persons, as the case may be, against any Loss whatsoever arising out
of such Guarantees; and (ii) the Joint Venture shall procure the release of each
of Sonoco Products and Ahlstrom Corp from any Guarantees or indemnities
undertaken by them in respect of Affiliates of the Joint Venture, and, pending
such release, shall indemnify Sonoco Products and Ahlstrom Corp, as the case may
be, against any Loss whatsoever arising out of such Guarantees.
5.10 REPAYMENT OF INTERCOMPANY DEBT
As soon as practicable following the Closing Date (and in any
event within 90 days after the Closing Date), each of Sonoco Products and
Ahlstrom Corp shall cause the Joint Venture or its Subsidiaries to repay and
release in full all Intercompany Debt of each Sonoco Holding Company and
Controlled Sonoco Operating Company or Ahlstrom Holding Company and Ahlstrom
Operating Company, respectively, plus interest at the rate of interest set forth
for each such Intercompany Debt in Schedule 5.10 from December 31, 2003 to and
including the date of repayment, or indemnities undertaken by them in respect of
such Intercompany Debt, by refinancing such Intercompany Debt with Indebtedness
issued by the Joint Venture or any of its subsidiaries to Third Persons;
provided, however, that if the amount of such Indebtedness that the Joint
Venture is able to issue to such Third Persons is less than the amount of such
Intercompany Debt outstanding as of the date of refinancing, plus such amount of
interest, then such Intercompany Debt, plus such amount of interest, of each
Sonoco Holding Company and Sonoco Operating Company or Ahlstrom Holding Company
or Ahlstrom Operating Company, respectively, shall be repaid pro rata in
accordance with Sonoco Luxco's and Ahlstrom Holding's respective ownership
interest in the Joint Venture as of such date of refinancing.
5.11 KARHULA SERVICES
(a) On or prior to the Closing, Ahlstrom Corp: (i) shall use
its best efforts to cause the Karhula Commitment Agreement to be terminated and
Ahlstrom Cores Oy to have no further Liability under such Agreement; and (ii)
shall, and shall cause all of its Affiliates that are also shareholders in
Karhula
20
Services (other than Ahlstrom Cores Oy) to, enter into an Agreement,
satisfactory to Sonoco Products, whereby (A) Ahlstrom Cores Oy commits to pay to
Karhula Services the portion of any land restoration or landscaping actually
incurred by Karhula Services upon closure of the landfill operated by Karhula
Services equal to 25% of such costs, up to a maximum payment of EUR344,000 (the
"JOINT VENTURE COMMITMENT AMOUNT") and (B) Ahlstrom Corp and such Affiliates
agree to assume any Liability or obligation of Ahlstrom Cores Oy for (1) land
restoration or landscaping required upon the closure of the landfill operated by
Karhula Services in excess of the Joint Venture Commitment Amount, (2) any
remediation obligation resulting from Ahlstrom Cores Oy's ownership in Karhula
Services, delivery of waste to such landfill or otherwise, or (3) any obligation
of Karhula Services to construct an environmental lining, install a sewage
system or upgrade the wastewater management system at the landfill.
(b) The Parties recognize that the continued use by the Joint
Venture or its Affiliates of the landfill after the Closing Date will be subject
to such terms as shall be agreed between the Joint Venture or its Affiliates and
Karhula Services.
5.12 USE OF AHLSTROM NAME, LABELS, CORPORATE NAMES, ETC.
From and after the Closing Date, in connection with the sale
or other disposition of products of, or otherwise in the conduct of, the
Business of the Joint Venture, Ahlstrom agrees that the Joint Venture shall have
the right (without any fee or other charge) to: (i) sell or otherwise dispose of
any products bearing as of the Closing Date Ahlstrom's name, marks or other
Intellectual Property; (ii) use any carton, labels, forms, brochures, invoices
or other printed material bearing as of the Closing Date Ahlstrom's name, marks
or other Intellectual Property; and (iii) continue to use the corporate names of
the Ahlstrom Holding Companies and the Ahlstrom Operating Companies, in each of
(i), (ii) and (iii), for so long as such products or other materials described
in (i) and (ii) remain in the inventory of the Joint Venture but in any event
not later than six months after the Closing Date; provided that the Joint
Venture shall use its commercially reasonable efforts to cause the corporate
name of the Ahlstrom Holding Companies and the Ahlstrom Operating Companies to
be changed to exclude the name "Ahlstrom" as soon as practicable after the
Closing Date. Ahlstrom shall have and retain sole ownership of the name
"Ahlstrom" and the Ahlstrom corporate logo.
5.13 PAPERINKERAYS OY
After the Closing, Ahlstrom Corp shall: (i) use best efforts
to promptly (but in no case later than one year after the Closing) obtain all
consents, approvals and waivers of the shareholders of Paperinkerays Oy required
under the Articles of Association of Paperinkerays Oy for the sale of the shares
of Paperinkerays Oy
21
owned by Ahlstrom Corp to the Joint Venture or its designee; and (ii) upon
receipt of all required consents, approvals and waivers described in (i) above,
(A) sell such shares in Paperinkerays Oy to the Joint Venture or its designee
for EUR2,100,000, plus interest on such EUR2,100,000 at the rate of 3% per annum
from the Closing Date until the date of such sale, and (B) in connection with
such sale, provide to the Joint Venture or its designee representations,
warranties and indemnities with respect to Paperinkerays Oy substantially
similar to those that Ahlstrom Corp has provided in respect of each Ahlstrom
Holding Company and Ahlstrom Operating Company in this Contribution Agreement.
5.14 UK PENSION
(a) As part of the Sonoco Reorganization, Sonoco Products
shall cause the Sonoco UK Predecessor to: (i) Transfer to Sonoco Newco UK
certain employees of the Sonoco UK Predecessor who are active exclusively in the
Sonoco Business as of the date of the Transfer and do not elect to contest such
Transfer under applicable Law (the "UK Transfer Employees"); (ii) procure that
Sonoco Newco UK becomes a participating employer in the current pension plan of
the Sonoco UK Predecessor of which the UK Transfer Employees are members (the
"UK PENSION PLAN") in relation to UK Transfer Employees so far as possible
within applicable Law and as permitted by the UK Pension Plan; and (iii) procure
that the terms on which Sonoco Newco UK participates in the UK Pension Plan are
such that, so far as possible within applicable Law, Sonoco Newco UK's maximum
Pension Contributions for a period will be equal to the Pension Service Cost for
that period.
(b) Sonoco Products unconditionally and irrevocably agrees, as
a continuing obligation, that if at any time Sonoco Newco UK, the Joint Venture
or any of its Affiliates becomes liable to pay Pension Contributions in excess
of the Pension Service Cost, Sonoco Products will meet that Liability and Sonoco
Products will immediately indemnify Sonoco UK and the Joint Venture against any
such Liability.
(c) For the purposes of (a) and (b) above, (i) "PENSION
CONTRIBUTIONS" includes all contributions or payments made or due to the UK
Pension Plan under the provisions governing the UK Pension Plan or by applicable
Law, including any payments becoming due as a result of Sonoco Newco UK ceasing
to participate in the UK Pension Plan or the UK Pension Plan being terminated or
wound up, and any other liabilities arising in relation to the UK Pension Plan
including any liability to indemnify the trustees or administrators of the UK
Pension Plan and any Losses, Taxes, levies, penalties, demands and expenses; and
(ii) "PENSION SERVICE COST" for any period means the value of benefits accrued
under the UK Pension Plan during that period by UK employees active exclusively
in the Sonoco Business calculated in accordance with the principles set forth in
Schedule 5.14 which were used in the calculation of the 2003 Pension Service
Cost.
22
6. REPRESENTATIONS AND WARRANTIES OF SONOCO PRODUCTS
No representation and warranty contained in this Section 6 shall be
construed as a seller's guarantee (Garantie fur die Beschaffenheit der Sache)
within the meaning of Sections 443 and 444 of the German Civil Code.
Notwithstanding anything to the contrary contained in this Contribution
Agreement, or the Schedules hereto, the information and disclosures contained in
each Schedule to a particular representation, warranty, guaranty or covenant
shall not be deemed to be disclosed and incorporated by reference in any other
section of any other Schedule and shall not be deemed to qualify or limit any
other representation, warranty, guarantee or covenant of Sonoco Products
contained in this Contribution Agreement unless such information or disclosure
is clearly incorporated by reference into such other section of such other
Schedule or the applicability of such information to such other Schedule is
reasonably obvious. Each schedule referenced in this Section 6 may be amended by
Sonoco Products within two weeks from the date hereof by notice to Ahlstrom
Corp, subject to approval of such amendment by Ahlstrom Corp, such approval not
to be unreasonably withheld or delayed. For the avoidance of doubt, all
representations and warranties (i) in respect of Sonoco Newco UK, Sonoco Newco
Swiss, Sonoco Newco Germany and Sonoco Greece (in respect of the Sonoco Business
Transferred from the Sonoco Greece Predecessor as part of the Sonoco
Reorganization only) shall be deemed delivered by Sonoco Products as of the
Closing Date only and, to the extent any such representation or warranty is made
as of a particular date other than the Closing Date, such representation and
warranty shall be deemed not made by Sonoco Products in respect of Sonoco Newco
UK and Sonoco Newco Swiss and (ii) in respect of the Sonoco Predecessor
Companies shall be deemed delivered by Sonoco Products as of the date hereof
only. Subject to the foregoing, Sonoco Products hereby represents and warrants
to Ahlstrom Corp by way of an independent guarantee (within the meaning of
section 311, paragraph 1, of the German Civil Code) and, for the avoidance of
doubt, subject to the limitations contained herein, including, in particular in
Section 10, that the statements made in this Section 6 are true and correct.
6.1 ORGANIZATION; POWER AND AUTHORITY; GOOD STANDING
Each of the Sonoco Holding Companies and the Sonoco Operating
Companies is duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its formation, incorporation or organization, as
applicable, and has all requisite power and authority to own, lease and operate
its Assets and to carry on its applicable portion of the Sonoco Business as
presently conducted. Schedule 6.1 contains true, correct and complete copies of
the Charter Documents of each of the Sonoco Holding Companies and the Sonoco
Operating Companies (other than Schweighouse and Sodarec), as amended and in
effect on the date hereof and on the Closing Date.
23
6.2 AUTHORIZATION, EXECUTION, ENFORCEABILITY AND NO CONFLICTS
(a) Each of Sonoco Products, Sonoco Luxco and any other Sonoco
Group Person has all requisite power and authority (corporate or otherwise) to
execute this Contribution Agreement and each Related Document (collectively, the
"TRANSACTION DOCUMENTS") to which it is a party and any and all instruments
necessary or appropriate in order to effectuate fully the terms and conditions
of each such document and to perform and consummate the transactions
contemplated hereby and thereby. Each Transaction Document to which Sonoco
Products, Sonoco Luxco or any other Sonoco Group Person is a party, and the
performance of its respective obligations hereunder and thereunder, has been
duly and validly authorized by all requisite action on the part of Sonoco
Products, Sonoco Luxco or such other Sonoco Group Person, as applicable, and
each such Transaction Document to which Sonoco Products, Sonoco Luxco or such
other Sonoco Group Person is a party has been, or upon its execution on the
Closing Date will be, duly and validly executed by Sonoco Products, Sonoco Luxco
or such other Sonoco Group Person, and constitutes, or upon its execution on the
Closing Date will constitute, a valid and legally binding obligation of Sonoco
Products, Sonoco Luxco or such other Sonoco Group Person, as applicable,
enforceable against Sonoco Products or Sonoco Luxco or such other Sonoco Group
Person, as applicable, in accordance with its terms and conditions, except as
enforceability thereof may be limited by any applicable bankruptcy,
reorganization, insolvency or other Laws affecting creditors' rights generally
or by general principles of equity.
(b) The execution and performance by each of Sonoco Products,
Sonoco Luxco and any other Sonoco Group Person of each Transaction Document to
which it is a party, and the consummation of the transactions contemplated
hereby and thereby, will not: (i) violate any Law applicable to Sonoco Products,
Sonoco Luxco or such other Sonoco Group Person, or any of the Assets of the
Sonoco Group; or (ii) conflict with, or result in any breach of, any of the
terms, conditions or provisions of, or constitute (with due notice or lapse of
time, or both) a default or give rise to any right of termination, cancellation
or acceleration, or result in the creation of any Encumbrance (other than a
Permitted Encumbrance) upon: (x) any of the Assets of the Sonoco Group; or (y)
under any provision of: (1) the Transaction Documents, (2) the Charter Documents
of Sonoco Products, Sonoco Luxco or such other Sonoco Group Person, as
applicable, (3) any Permit required or issued in connection with the operation
of the Sonoco Business or (4) any other Agreement to which it is a party or by
which the Assets of the Sonoco Group is or may be bound, except for such
violations, conflicts or breaches of or with respect to (x), (y) (1), (3) and
(4) above that, individually or in the aggregate, have not had, and are not
reasonably expected to have, a Sonoco Material Adverse Effect. Except for the
Required Competition Filings and as set forth on Schedule 6.2, neither Sonoco
Products nor any relevant Person of the Sonoco Group has been or is required to
give any notice to, obtain the consent of or make any filing with, any
Governmental
24
Authority or any other Person, or obtain any material Permit, in each case for
the valid execution and performance by Sonoco Products, Sonoco Luxco or such
other Sonoco Group Person of the Transaction Documents to which it is a party.
6.3 OWNERSHIP OF SONOCO HOLDING COMPANIES AND SONOCO OPERATING
COMPANIES
(a) Schedule 6.3 lists: (i) the authorized, issued and
outstanding shares of capital stock or equity interests of each of the Sonoco
Holding Companies and the Sonoco Operating Companies; (ii) the record and
beneficial holders of the authorized, issued and outstanding shares of capital
stock or equity interests of each of the Sonoco Holding Companies and the Sonoco
Operating Companies; and (iii) the number of shares or units, and percentage of
shares or units, of capital stock or equity interests of each such holder. Other
than as set forth on Schedule 6.3, Sonoco Products has no Affiliates, and no
equity investment or other interest in any Person, engaged in any aspect of the
core/tube and core board business in the Territory.
(b) Except as set forth on Schedule 6.3, Sonoco Products is,
or will be immediately prior to the Closing, the lawful direct or indirect
record and beneficial owner of all the shares of capital stock of, or other
ownership interests in, each of the Sonoco Holding Companies and the Sonoco
Operating Companies, and has good and marketable title to such shares of capital
stock or ownership interests, free and clear of all Encumbrances (other than
Permitted Encumbrances). Except as set forth on Schedule 6.3, there are no: (i)
outstanding subscriptions, preemptive rights, warrants, calls or options to
acquire, or instruments convertible into or exchangeable for, or Agreements or
understandings with respect to the sale or issuance of, shares of capital stock
or ownership interest of any of the Sonoco Holding Companies or the Sonoco
Operating Companies; (ii) Encumbrances (other than Permitted Encumbrances),
rights of first refusal, rights of first offer, proxies, voting trusts, or
voting Agreements with respect to the sale, issuance or voting of any shares of
capital stock or ownership interest of any of the Sonoco Holding Companies or
the Sonoco Operating Companies (whether outstanding or issuable upon the
conversion, exchange or exercise of outstanding securities); or (iii)
obligations to redeem, repurchase or otherwise acquire shares of capital stock
or ownership interest of any of the Sonoco Holding Companies or the Sonoco
Operating Companies, in each of (i), (ii) or (iii) above, pursuant to any Law
(other than any limitations or restrictions on Transferability under any
applicable securities Laws), any Charter Document of any of the Sonoco Holding
Companies or the Sonoco Operating Companies or any Agreement to which Sonoco
Luxco, any of the Sonoco Holding Companies or the Sonoco Operating Companies is
a party or may be bound.
(c) All shares of capital stock of, or other ownership
interests in, the Sonoco Holding Companies and the Sonoco Operating Companies
that are indirectly
25
held by Sonoco Products have been, or upon their issuance on or prior to the
Closing Date will be, duly authorized, validly issued, outstanding and fully
paid in (and such capital payments have not been paid back).
(d) None of the Sonoco Holding Companies or the Sonoco
Operating Companies is a party to a company agreement (Unternehmensvertrag
within the meaning of the German Stock Corporation Act), except for those
agreements disclosed in Schedule 6.3 which will be validly terminated with
effect prior to or as of the Closing Date.
6.4 BANKRUPTCY
No Sonoco Holding Company or Sonoco Operating Company is
involved in any Proceeding by or against it as a debtor before any Governmental
Authority under any insolvency, restructuring or debtors' relief act, or for the
appointment of a trustee, receiver, liquidator, assignee, sequestrator or other
similar official, or under any similar Law, for any part of its Assets.
6.5 DISTRIBUTIONS
Except as contemplated by the Sonoco Reorganization and the
EUR2,440,628 Distribution made on March 3, 2004 from Sonoco Holding Italia
S.r.l. to Sonoco Luxco, no Distribution has been made since December 31, 2003 by
or to any of the Sonoco Holding Companies or the Sonoco Operating Companies.
6.6 EMPLOYEE REMUNERATION
Schedule 6.6 lists the aggregate annual remuneration,
including, without limitation, bonuses and fringe benefits, paid or payable, as
applicable, by each of the Sonoco Holding Companies, the Sonoco Operating
Companies (other than Schweighouse and Sodarec) and the Sonoco Predecessor
Companies, to its respective employees, managers or directors, for the most
recently completed fiscal year and, based on Sonoco Products' good faith
estimate, for the current fiscal year.
6.7 FINANCIAL STATEMENTS
(a) Schedule 6.7 contains true, correct and complete copies of
the following (the "SONOCO FINANCIAL STATEMENTS"):
(i) The unaudited consolidated balance sheet and
profit and loss account of the Sonoco
Holding Companies and the Sonoco Operating
Companies as of December 31, 2003 and for
the 12-month period then ended; and
26
(ii) The pro forma unaudited consolidated balance
sheet and profit and loss account of the
Sonoco Holding Companies and the Sonoco
Operating Companies as of December 31, 2003
and for the 12-month period then ended,
which balance sheet and profit and loss
account shall reflect the results of the
Sonoco Reorganization as if the Sonoco
Reorganization was completed as of December
31, 2003.
(b) The Sonoco Financial Statements, together with the notes
thereto: (i) have been prepared in accordance with U.S. GAAP, Applied on a
Consistent Basis; (ii) have been prepared in accordance with the books and
records of each of the Sonoco Holding Companies and the Sonoco Operating
Companies, which books and records have been properly maintained; (iii) present
fairly the financial condition and results of operations of the Sonoco Holding
Companies and Sonoco Operating Companies on a consolidated basis, as of the date
thereof and for the period covered thereby; provided, however, that the Sonoco
Financial Statements do not contain all footnotes required under U.S. GAAP.
Since December 31, 2003, there has been no change in any accounting principle,
procedure or practice followed by the Sonoco Holding Companies and the Sonoco
Operating Companies or in the method of applying such principle, procedure or
practice.
6.8 ABSENCE OF UNDISCLOSED LIABILITIES
No Sonoco Holding Company or Sonoco Operating Company has any
Liabilities, except: (i) Liabilities as set forth in the Sonoco Financial
Statements; (ii) Liabilities that need not be shown on the balance sheet under
U.S. GAAP and that arose in the Ordinary Course of Business; (iii) Liabilities
arising in the Ordinary Course of Business since December 31, 2003; (iv)
Liabilities set forth on Schedule 6.8; or (v) Liabilities which are not, and are
not reasonably expected to become, material to the Sonoco Business.
6.9 ABSENCE OF CHANGES
Except as set forth on Schedule 6.9 or as provided or
contemplated by the Transaction Documents (including, without limitation, as
contemplated by the Sonoco Reorganization), since December 31, 2003, each of the
Sonoco Holding Companies, the Sonoco Operating Companies, the Sonoco Predecessor
Companies and the Sonoco Business has been operated in the Ordinary Course of
Business and there has not been:
(a) any event or condition, or any material transaction or
Agreement which, individually or in the aggregate, has had, or is reasonably
expected to have, a Sonoco Material Adverse Effect;
27
(b) any act, omission of any act, activity or transaction, or
incurrence of Liability (by conduct or otherwise), or any damage, destruction or
Loss, whether or not covered by insurance, which, individually or in the
aggregate, has had, or is reasonably expected to have, a Sonoco Material Adverse
Effect;
(c) any issuance of any shares or ownership interests, or any
options, warrants or other rights to subscribe for or purchase any of its shares
or ownership interests, or any securities convertible into or exchangeable for
its shares or ownership interests by any Sonoco Holding Company, Sonoco
Operating Company or Sonoco Predecessor Company;
(d) split, reclassification or other change in or of any of
the shares or ownership interests of any Sonoco Holding Company, Sonoco
Operating Company or Sonoco Predecessor Company;
(e) amendment of the Charter Documents of any Sonoco Holding
Company, Sonoco Operating Company or Sonoco Predecessor Company;
(f) any increase in, or prepayment of, the compensation
payable, or to become payable, by any Sonoco Holding Company, Sonoco Operating
Company or Sonoco Predecessor Company to any of its directors, officers,
managing directors, managers, employees or agents, or enter into any bonus,
insurance, pension or other benefit plan, payment or arrangement for or with any
of such directors, officers, managing directors, managers, employees or agents,
other than normal salary increases in the Ordinary Course of Business;
(g) any lay-offs with respect to a significant part of the
workforce of any Sonoco Holding Company, Sonoco Operating Company or Sonoco
Predecessor Company;
(h) any incurrence of any Indebtedness, including Intercompany
Debt (other than Indebtedness incurred in the Ordinary Course of Business on
reasonable arms length terms), or direct or indirect provision of a Guarantee,
or any agreement to provide a Guarantee, or Indebtedness of any other Person;
(i) any cancellation of, or material change to, Indebtedness
owing to any Sonoco Holding Company, Sonoco Operating Company or Sonoco
Predecessor Company from any Person or any Claims which any Sonoco Holding
Company, Sonoco Operating Company or Sonoco Predecessor Company may possess, or
any waiver or release of any material rights (other than in the Ordinary Course
of Business);
(j) any placement, or allowance to place, an Encumbrance
(other than a Permitted Encumbrance) on any Assets of any Sonoco Holding
Company, Sonoco Operating Company or Sonoco Predecessor Company;
28
(k) any change in any method of accounting or accounting
practice or policy of any Sonoco Holding Company, Sonoco Operating Company or
Sonoco Predecessor Company, except as required by U.S. GAAP, including, without
limitation, any change in its policies with respect to the payment of accounts
payable or other current Liabilities or the collection of accounts receivable,
including, without limitation, any acceleration or deferral of the payment or
collection thereof, as applicable;
(l) any Transfer of Intellectual Property (other than in the
Ordinary Course of Business) from or to any Sonoco Holding Company, Sonoco
Operating Company or Sonoco Predecessor Company;
(m) any Transfer of a material portion of the Assets of any
Sonoco Holding Company, Sonoco Operating Company or the Sonoco UK Predecessor,
or scrapping of a material portion of the Assets of any Sonoco Holding Company,
Sonoco Operating Company or Sonoco Predecessor Company as obsolete;
(n) any material change in the general manner in which any
Sonoco Holding Company, Sonoco Operating Company or Sonoco Predecessor Company
markets its products or services;
(o) any commitments for capital expenditures of any Sonoco
Holding Company, Sonoco Operating Company or Sonoco Predecessor Company in
excess of EUR1,000,000 per occurrence or EUR5,000,000 in the aggregate;
(p) any violation of any material Law or material Order; or
(q) any loan or advance to any members, stockholders or equity
holders, or officers, directors, managing directors, managers or to any other
Person of any Sonoco Holding Company, Sonoco Operating Company or Sonoco
Predecessor Company.
6.10 OUTSTANDING BORROWINGS; INTERCOMPANY DEBT
Schedule 6.10 lists: (i) the amount of principal, interest and
other obligations of all Outstanding Borrowings and Intercompany Debt of each
Sonoco Holding Company, Sonoco Operating Company and Sonoco Predecessor Company
as of December 31, 2003; (ii) the Encumbrances that relate to such Outstanding
Borrowings and Intercompany Debt; (iii) the name of each lender or party
thereof; and (iv) the amount of any unfunded commitments available in connection
with such Outstanding Borrowings and Intercompany Debt.
29
6.11 RELATED PARTY TRANSACTIONS
Except as set forth on Schedule 6.11, and except for: (i)
compensation and payment of reimbursable expenses incurred in the Ordinary
Course of Business to regular employees of any Sonoco Holding Company, Sonoco
Operating Company or Sonoco Predecessor Company; (ii) any individual amount not
exceeding EUR100,000 per year; or (iii) sales of products in the Ordinary Course
of Business on arms-length terms, no current or former Affiliate of any Sonoco
Holding Company, Sonoco Operating Company or Sonoco Predecessor Company, is now,
or has been since December 31, 2003: (x) a party to any transaction or Agreement
with any Sonoco Holding Company, Sonoco Operating Company or Sonoco Predecessor
Company; (y) Indebted to any Sonoco Holding Company, Sonoco Operating Company or
Sonoco Predecessor Company; or (z) the direct or indirect owner of an interest
in any Person which is a competitor, supplier or customer of any Sonoco Holding
Company, Sonoco Operating Company or Sonoco Predecessor Company (other than
non-affiliated holdings in publicly held companies), nor, to the Actual
Knowledge of Sonoco Products, does any such Person receive income from any
source other than any Sonoco Holding Company, Sonoco Operating Company or Sonoco
Predecessor Company which should properly accrue to any Sonoco Holding Company,
Sonoco Operating Company or Sonoco Predecessor Company. Except as set forth on
Schedule 6.11, no current or former Affiliate of any Sonoco Holding Company,
Sonoco Operating Company or Sonoco Predecessor Company provides a Guarantee or
is otherwise responsible for any Liability (including Indebtedness) of any
Sonoco Holding Company, Sonoco Operating Company or Sonoco Predecessor Company.
6.12 COMPLIANCE WITH LAWS
(a) Except as disclosed on Schedule 6.12, each of the Sonoco
Holding Companies, Sonoco Operating Companies and the Sonoco Predecessor
Companies have: (i) complied in all material respects with, is in compliance in
all material respects with and has operated the Sonoco Business and maintained
its Assets in compliance in all material respects with, all Laws applicable to
it and its applicable portion of the Sonoco Business as currently conducted; and
(ii) all Permits used or necessary in the conduct of its applicable portion of
the Sonoco Business, except for such Permits the absence of which, individually
or in the aggregate, has not had, and is not reasonably expected to have, a
Sonoco Material Adverse Effect. Such Permits described in clause (ii) are valid
and in good standing and are in full force and effect, no violations with
respect to any thereof have occurred or are or have been recorded and no
Proceeding is pending or, to the Best Knowledge of Sonoco Products, threatened
to revoke or limit any thereof.
(b) Schedule 6.12 contains a true, correct and complete list
of: (i) all such Permits described in paragraph (a) of this Section 6.12 (other
than Permits for
30
Schweighouse and Sodarec); and (ii) all material Orders under which each of the
Sonoco Holding Companies, the Sonoco Operating Companies (other than Orders for
Schweighouse and Sodarec) and the Sonoco Predecessor Companies are operating or
bound. To the Actual Knowledge of Sonoco Products, there is no proposed change
in any applicable Law which would require any Sonoco Holding Company, Sonoco
Operating Company or Sonoco Predecessor Company to obtain any Permits not set
forth on Schedule 6.12 in order to conduct its applicable portion of the Sonoco
Business as presently conducted. Except as disclosed in Schedule 6.12, none of
such Permits or Orders shall be adversely affected as a result of Sonoco
Products', any Sonoco Holding Company's or Sonoco Operating Company's execution
of, or the performance of its obligations under, any Transaction Document to
which it is a party, or the consummation of the transactions contemplated hereby
and thereby. No Sonoco Holding Company, Sonoco Operating Company or Sonoco
Predecessor Company has received any opinion or memorandum or legal advice from
legal counsel to the effect that it is exposed, from a legal standpoint, to any
Liability or disadvantage, individually or in the aggregate, which has had, or
is reasonably expected to have, a Sonoco Material Adverse Effect. To the Actual
Knowledge of Sonoco Products, no Sonoco Holding Company, Sonoco Operating
Company or Sonoco Predecessor Company is aware of any proposed Law which would
prohibit or restrict it from, or otherwise materially adversely affect it in,
conducting its applicable portion of the Sonoco Business in any jurisdiction in
which it is now conducting the Sonoco Business.
6.13 TAXES
(a) Each of the Sonoco Holding Companies and the Sonoco
Operating Companies has (or, in the case of Tax Returns becoming due after the
date hereof and on or before the Closing Date, will have prior to the Closing
Date) duly filed all Tax Returns, notices and other reports or filings required
to be filed by any of the Sonoco Holding Companies or the Sonoco Operating
Companies (collectively, "SONOCO TAX RETURNS") on or before the Closing Date
(including, without limitation, in connection with or as a result of the Sonoco
Reorganization) with respect to all applicable Taxes. All such Tax Returns are
(or, in the case of returns becoming due after the date hereof, including,
without limitation, in connection with or as a result of the Sonoco
Reorganization, will be) true and complete in all material respects.
(b) All Taxes which are required to be paid by each of the
Sonoco Holding Companies and the Sonoco Operating Companies before the Closing
Date have been or will be paid in full prior to the Closing Date and an
appropriate provision has been provided in respect of all Taxes that are not due
prior to the Closing Date and that relate to the time period through December
31, 2003 in the Sonoco Financial Statements.
31
(c) There is no investigation or Claim pending or, to the Best
Knowledge of Sonoco Products, threatened in respect of any material Taxes for
which any of the Sonoco Holding Companies and the Sonoco Operating Companies is,
or is reasonably expected to become, liable. No Sonoco Holding Company or Sonoco
Operating Company has consented to any waivers or extensions of any statute of
limitations with respect to any taxable year of the Sonoco Group.
(d) No Sonoco Holding Company or Sonoco Operating Company is a
party to an Agreement or arrangement relating to the sharing, allocation or
payment of, indemnity or security for, Taxes, except for the Tax consolidation
Agreements (e.g., Organschaft) set forth on Schedule 6.13, which will be
terminated prior to the Closing Date.
(e) The execution and performance of this Contribution
Agreement and the Related Documents will not result in: (i) the imposition of
any Tax on or with respect to any Sonoco Holding Company or Sonoco Operating
Company, or their respective Assets; or (ii) the Loss by any Sonoco Holding
Company or Sonoco Operating Company of any Tax relief or Tax benefit other than
the loss of trade Tax loss carryforwards and Tax loss carryforwards or other Tax
attributes for which adequate provision has been made on the Sonoco Financial
Statements.
(f) No Sonoco Holding Company and no Sonoco Operating Company
has carried out any dealings with Affiliates on a non-arms length basis that
could be assessed by the relevant Governmental Authorities to constitute hidden
distributions of profits (verdeckte Gewinnausschuettung).
6.14 REAL PROPERTY
(a) Schedule 6.14 lists all the Real Property used in the
Sonoco Business (the "SONOCO REAL PROPERTY") and specifies the owner of each
parcel thereof and sets forth a legal description for all such Real Property.
The Sonoco Real Property is suitable and adequate in all material respects for
the uses for which it is currently devoted. None of the Sonoco Holding
Companies, the Sonoco Operating Companies or the Sonoco Predecessor Companies
own, lease, sublease, license or use any Real Property in the operation of the
Sonoco Business, other than the Sonoco Real Property.
(b) Each of the Sonoco Holding Companies, the Sonoco Operating
Companies and the Sonoco Predecessor Companies, as applicable, is the sole owner
of good, valid and marketable fee simple or comparable title to the Sonoco Real
Property listed in Schedule 6.14 as owned Sonoco Real Property and has valid and
binding rights under leases to the Sonoco Real Property listed in Schedule 6.14
as leased Sonoco Real Property, in each case free and clear of all Encumbrances
(other
32
than Permitted Encumbrances). Schedule 6.14 contains an accurate and complete
list of all mortgages and similar Encumbrances on the Sonoco Real Property.
(c) All buildings, structures, fixtures and other improvements
on the Sonoco Real Property are: (i) in good repair, normal wear and tear
excepted, and free of material defects (latent or patent); and (ii) are suitable
and adequate in all material respects for the uses to which they are currently
devoted. All such buildings, structures, fixtures and improvements on the Sonoco
Real Property conform in all material respects to all material Laws. The
buildings, structures, fixtures and improvements on each parcel of Sonoco Real
Property lie entirely within the boundaries of such parcel of the Sonoco Real
Property as specified in the legal description set forth in Schedule 6.14, and
do not encroach in any material respects on any adjoining premises and no
structures of any kind encroach in any material respects on such Sonoco Real
Property.
(d) Except as set forth on Schedule 6.14: (i) none of the
Sonoco Real Property is subject to any material Agreement or other material
restriction of any nature whatsoever (recorded or unrecorded) preventing or
limiting in any material respects any Sonoco Holding Company's, Sonoco Operating
Company's or Sonoco Predecessor Company's right to convey or otherwise dispose
of its interest in same; and (ii) none of the Sonoco Real Property is subject to
any material Agreement or other material restriction of any nature whatsoever
(recorded or unrecorded) preventing or limiting in any material respects any
Sonoco Holding Company's, Sonoco Operating Companies' or the Sonoco Predecessor
Company's right to use it.
(e) No material portion of the Sonoco Real Property or any
building, structure, fixture or improvement thereon is the subject of, or
affected by, any condemnation or eminent domain Proceeding currently instituted
or pending, and to Sonoco Products' Actual Knowledge, none of the foregoing will
be the subject of, or affected by, any such future Proceeding.
(f) The Sonoco Real Property has reasonably direct and
unobstructed access to material public roads and to reasonably adequate material
electric, gas, water, sewer and telephone lines, all of which are reasonably
adequate for the uses to which such Sonoco Real Property is currently devoted.
(g) Except as disclosed on Schedule 6.14, there are no Persons
in possession, or who have a right of possession of any portion of the Sonoco
Real Property other than the Sonoco Holding Companies, the Sonoco Operating
Companies or the Sonoco Predecessor Companies, whether as lessees, tenants at
will or otherwise.
(h) Schedule 6.14 contains a complete and accurate copy of all
Real Property Leases relating to the Sonoco Real Property. Each Real Property
Lease
33
entered into (whether as lessor or lessee) by each of the Sonoco Holding
Companies, the Sonoco Operating Companies or the Sonoco Predecessor Companies
is: (i) valid, binding and enforceable in all material respects against the
Sonoco Holding Companies, the Sonoco Operating Companies and the Sonoco
Predecessor Companies, as applicable; and (ii) to Sonoco Products' Actual
Knowledge, is valid, binding and enforceable in all material respects against
the other parties thereto in accordance with its terms, and is in full force and
effect in all material respects.
(i) None of the Sonoco Holding Companies, the Sonoco Operating
Companies or the Sonoco Predecessor Companies are in material default under, or
in material breach of, or are otherwise materially delinquent in performance
under any Real Property Lease entered into (whether as lessor or lessee) by the
Sonoco Holding Companies, the Sonoco Operating Companies or the Sonoco
Predecessor Companies, and, to Sonoco Products' Actual Knowledge, no event has
occurred which, with due notice or lapse of time, or both, would constitute such
a default.
6.15 ENVIRONMENTAL AND SAFETY
(a) Each of the Sonoco Holding Companies, the Sonoco Operating
Companies and the Sonoco Predecessor Companies has complied in all material
respects with, and each such company and all of the Sonoco Real Property is in
compliance in all material respects with, all material Environmental and Safety
Requirements; and there are no Proceedings pending or, to the Best Knowledge of
Sonoco Products, threatened against any Sonoco Holding Company, Sonoco Operating
Company or Sonoco Predecessor Company alleging any failure to so comply or
involving any Environmental and Safety Requirement issue with respect to its
past operations or any Real Property of any Sonoco Holding Company, Sonoco
Operating Company or Sonoco Predecessor Company.
(b) No Sonoco Holding Company, Sonoco Operating Company or
Sonoco Predecessor Company has any material Liability arising under any
Environmental and Safety Requirements.
(c) Except as set forth on Schedule 6.15, no Sonoco Holding
Company, Sonoco Operating Company or Sonoco Predecessor Company has received any
written notice or report with respect to it or its Real Property regarding any:
(i) actual or alleged violation of Environmental and Safety Requirements; or
(ii) actual or potential Liability arising under Environmental and Safety
Requirements, including any investigatory, remedial or corrective obligation, in
each of (i) and (ii), during the last three calendar years.
(d) No Sonoco Holding Company, Sonoco Operating Company or
Sonoco Predecessor Company has assumed or undertaken any material Liability of
any other Person under any Environmental and Safety Requirements.
34
(e) No Sonoco Holding Company, Sonoco Operating Company or
Sonoco Predecessor Company has treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled or released any substance, or
owned or operated any Real Property, in a manner that has given rise to material
Liabilities of any Sonoco Holding Company, Sonoco Operating Company or Sonoco
Predecessor Company pursuant to any Environmental and Safety Requirement,
including any material Liability for response costs, corrective action costs,
personal injury, property damage, natural resources damage or attorney fees, or
any investigative, corrective or remedial obligations.
(f) Schedule 6.15 sets forth all environmental matters for
which a financial reserve has been made on the Sonoco Financial Statements and
the amount of such reserve.
6.16 TITLE TO ASSETS
Except for the leased Assets listed in Schedule 6.19 and
subject to Section 6.14, each of the Sonoco Holding Companies and the Sonoco
Operating Companies has, or upon consummation of the Sonoco Reorganization will
have at the Closing Date, good, valid and marketable title to all Assets used in
its applicable portion of the Sonoco Business, free and clear of all
Encumbrances (other than Permitted Encumbrances). All personal property of the
Sonoco Holding Companies and Sonoco Operating Companies is in normal operating
condition and repair, normal wear and tear excepted, and is suitable and
adequate for the uses for which it is used. All inventory of the Sonoco Holding
Companies and Sonoco Operating Companies consists of items which are good and
merchantable and of a quality and quantity presently usable and saleable in the
Ordinary Course of Business, subject to any reserves properly reflected on the
Sonoco Financial Statements under U.S. GAAP.
6.17 INSURANCE
All policies of Assets, fire, hazard, casualty, liability,
life, and other forms of insurance of any kind owned or held by, or for the
benefit of, the Sonoco Holding Companies and the Sonoco Operating Companies: (i)
are in full force and effect and, to the Best Knowledge of Sonoco Products, no
grounds for termination of such policies exist; (ii) are sufficient for
compliance by each of the Sonoco Holding Companies and the Sonoco Operating
Companies with all requirements of applicable Law and of all Agreements which
require any of the Sonoco Holding Companies or the Sonoco Operating Companies to
acquire and/or maintain insurance; (iii) are valid and enforceable against the
insurer in all material respects; and (iv) insure against risks of the kind
customarily insured against and in amounts customarily carried by companies
similarly situated and by companies engaged in similar businesses and owning
similar properties, and provide adequate
35
insurance coverage for the Sonoco Business and Assets of the Sonoco Holding
Companies and the Sonoco Operating Companies. All premium and other payments
required to be paid by, or on behalf of, each of the Sonoco Holding Companies
and the Sonoco Operating Companies pursuant to such policies have been fully and
timely made.
6.18 INTELLECTUAL PROPERTY
(a) Schedule 6.18 contains a list: (i) of all Intellectual
Property owned by each of the Sonoco Holding Companies, the Sonoco Operating
Companies and the Sonoco Predecessor Companies in respect of which a
registration has been granted, and in respect of which a registration has been
applied for, in each case specifying, as applicable (A) the nature of such
Intellectual Property, (B) the owner of such Intellectual Property, (C) the
jurisdictions in which such Intellectual Property has been registered, or in
which an application for registration has been filed, and the registration or
application numbers and (D) any licenses that have been granted with respect to
such Intellectual Property; and (ii) of all licenses pursuant to which each of
the Sonoco Holding Companies and the Sonoco Operating Companies has been granted
the right to use Intellectual Property owned by another Person, in each case
specifying (A) the licensor, (B) the duration of the license and (C) the
royalties payable. The Intellectual Property listed on Schedule 6.18 is all
Intellectual Property necessary to conduct the Sonoco Business as currently
conducted.
(b) Each of the Sonoco Holding Companies, the Sonoco Operating
Companies and the Sonoco Predecessor Companies: (i) owns, or has a valid license
to use, all Intellectual Property used by it in the Ordinary Course of Business
in the Sonoco Business, except where the failure to own, or have a valid license
to use, such Intellectual Property, individually or in the aggregate, has not
had, and is not reasonably expected to have, a Sonoco Material Adverse Effect;
and (ii) each of the Sonoco Holding Companies, the Sonoco Operating Companies
and the Sonoco Predecessor Companies has made, or has had made on its behalf,
all payments as and when required to validly maintain all registrations of, its
ownership of, or its license to use, such Intellectual Property in full force
and effect, with any Governmental Authority or other Person, as the case may be.
To the Best Knowledge of Sonoco Products, there exist no grounds for termination
of the Sonoco Holding Companies', the Sonoco Operating Companies' or the Sonoco
Predecessor Companies ownership rights in, or licenses to use, the Intellectual
Property referred to in the preceding sentence, in particular, there are no
pending challenges of any Intellectual Property owned by any Sonoco Holding
Company, Sonoco Operating Company or Sonoco Predecessor Company, and to Sonoco
Products' Best Knowledge, no such challenges are threatened.
36
(c) No Sonoco Holding Company, Sonoco Operating Company or the
Sonoco Predecessor Company has granted an exclusive license with respect to any
Intellectual Property used in the Sonoco Business to any third Person (other
than another Sonoco Holding Company, Sonoco Operating Company or Sonoco
Predecessor Company).
(d) No Sonoco Holding Company, Sonoco Operating Company or
Sonoco Predecessor Company has any Actual Knowledge of, nor has it received any
notice to the effect, that any product that any Sonoco Holding Company, Sonoco
Operating Company or Sonoco Predecessor Company sells or that any service any
Sonoco Holding Company, Sonoco Operating Company or Sonoco Predecessor Company
renders, or that the manufacture, distribution, marketing, sale or use of any
such product or service, may or is Claimed to infringe any Intellectual Property
right of another.
6.19 LEASED PERSONAL PROPERTY
Schedule 6.19 lists every lease, sublease and Agreement
involving aggregate annual lease payments exceeding EUR30,000 per lease, per
year (net of ancillary costs) under which any of the Sonoco Holding Companies,
the Sonoco Operating Companies or the Sonoco Predecessor Companies is lessee or
lessor of any material Asset, or holds, manages or operates any material Asset
owned by any third party, or under which any material Asset owned by any of the
Sonoco Holding Companies, the Sonoco Operating Companies or the Sonoco
Predecessor Companies is held, operated or managed by a third party. Each of the
Sonoco Holding Companies and the Sonoco Operating Companies or the Sonoco UK
Predecessor is the owner and holder of all rights under leases used by it in the
Sonoco Business. Each such lease, sublease and other Agreement is in full force
and effect and constitutes a legal, valid and binding obligation of, and is
legally enforceable against, the respective Parties and grants the leasehold
interest it purports to grant free and clear of all Encumbrances (other than
Permitted Encumbrances). Each of the Sonoco Holding Companies, the Sonoco
Operating Companies and the Sonoco Predecessor Companies has in all material
respects performed all obligations thereunder required to be performed by any of
them to date. No Party is in default in any material respect under any of the
foregoing, and there has not occurred any event which (whether with or without
notice, lapse of time or the happening or occurrence of any other event) would
constitute such a material default.
6.20 CERTAIN MATERIAL AGREEMENTS
(a) Subject to Section 6.14, except for the Agreements set
forth on Schedule 6.20 ("SONOCO MATERIAL AGREEMENTS"), no Sonoco Holding
Company, Sonoco Operating Company or Sonoco Predecessor Company is a party to
any written or oral:
37
(i) Agreement for the employment or retention
of, whether on a full-time, part-time,
consulting or other basis, or understanding
with, any of the directors, top five
officers, managing directors, general
managers or country managers of the Sonoco
Business, any Sonoco Holding Company, Sonoco
Operating Company or Sonoco Predecessor
Company;
(ii) Agreement relating to Indebtedness or to the
mortgaging, pledging or otherwise placing an
Encumbrance (other than a Permitted
Encumbrance) on any Asset of the Sonoco
Business, or any Sonoco Holding Company,
Sonoco Operating Company or Sonoco
Predecessor Company, with a fair market
value in excess of EUR50,000;
(iii) Agreement preventing or otherwise
restricting the right of any Sonoco Holding
Company, Sonoco Operating Company or Sonoco
Predecessor Company to make or receive
Distributions;
(iv) Agreement involving the sale of the accounts
receivable of any Sonoco Holding Company,
Sonoco Operating Company or Sonoco
Predecessor Company to any other Person;
(v) Agreement with respect to the investing of
funds, including, without limitation, any
hedging Agreement;
(vi) Agreement under which any Sonoco Holding
Company, Sonoco Operating Company or Sonoco
Predecessor Company is the lessor of, or
permits any third Person to hold or operate,
any real or personal property owned or
controlled by any Sonoco Holding Company,
Sonoco Operating Company or Sonoco
Predecessor Company in excess of EUR30,000;
(vii) assignment, license, indemnification or
other Agreement with respect to any form of
intangible property with Third Parties,
including, without limitation, any
Intellectual Property;
(viii) Agreement or group of related Agreements
with the same Person for the sale of Assets
or services which generated in excess of
EUR100,000 in revenues in the most recent
12-month period or is reasonably expected to
generate in
38
excess of EUR100,000 in revenues in any
12-month period ending after the date
hereof;
(ix) non-competition agreement which limits any
Sonoco Holding Company, Sonoco Operating
Company or Sonoco Predecessor Company from
freely engaging in any business anywhere in
the world;
(x) Agreement relating to the purchase,
distribution, marketing, advertising or sale
of any Sonoco Holding Company's, Sonoco
Operating Company's or Sonoco Predecessor
Company's or any other Person's products or
services (other than Agreements entered into
in the Ordinary Course of Business); or
(xi) other than Agreements described and
disclosed in subsections (i) through (x)
above, Agreement pursuant to which any
Sonoco Holding Company, Sonoco Operating
Company or Sonoco Predecessor Company has
Liabilities or is required to make or give,
or entitled to receive, aggregate payments
or other value in excess of EUR100,000.
(b) All Sonoco Material Agreements are, or following the
Sonoco Reorganization will be, an Asset of a Sonoco Holding Company, a Sonoco
Operating Company or a Sonoco Predecessor Company, and no other Sonoco Group
company is, or will be following the Sonoco Reorganization, a party to any such
Sonoco Material Agreement.
(c) Except as specifically disclosed in Schedule 6.20, each of
the Sonoco Holding Companies, the Sonoco Operating Companies and the Sonoco
Predecessor Companies has performed in all material respects all obligations
required to be performed by it, and is not in default under or in breach of, nor
in receipt of any Claim of default or breach under, any Sonoco Material
Agreement to which it is a party or by which any of its Assets may be bound,
and, to the Actual Knowledge of Sonoco Products, no event has occurred which
with the passage of time or the giving of notice or both would result in such a
material default or breach under any such Sonoco Material Agreement. To the
Actual Knowledge of Sonoco Products, no other party to any Sonoco Material
Agreement to which any of the Sonoco Holding Companies, the Sonoco Operating
Companies or the Sonoco Predecessor Companies is a party, or by which any of
their Assets may be bound, is in material default under or in breach of any
Sonoco Material Agreements, and no event has occurred which with the passage of
time or giving of notice or both would result in a material default or breach by
such other party under any Sonoco
39
Material Agreement. There has been made available to Ahlstrom Corp in the Sonoco
Data Room: (i) a true and complete copy of each written Sonoco Material
Agreement, together with all amendments, waivers or other changes thereto; and
(ii) a true and complete description of the material terms of all oral Sonoco
Material Agreements.
6.21 LITIGATION; DISPUTES
Except as (x) set forth on Schedule 6.21 and (y) for matters
which have not resulted, and could not reasonably be expected to result, in a
fine or other award of damages in excess of EUR100,000, there are no: (i)
Proceedings pending (for which proper service has been made) against or
involving any of the Sonoco Holding Companies, the Sonoco Operating Companies or
the Sonoco Predecessor Companies, whether at law or in equity, whether civil or
criminal in nature or by or before any Governmental Authority; (ii) customer
Claims of any nature against any of the Sonoco Holding Companies, the Sonoco
Operating Companies or the Sonoco Predecessor Companies; or (iii) Orders of any
Governmental Authority with respect to or involving any of the Sonoco Holding
Companies, the Sonoco Operating Companies or the Sonoco Predecessor Companies,
nor, in the case of (i), (ii) or (iii), to the Best Knowledge of Sonoco
Products, does there exist any basis for any such Proceeding, Claim or Order, or
has any such Proceeding, Claim or Order been threatened.
6.22 LABOR RELATIONS
(a) Except as set forth on Schedule 6.22, there are no
strikes, work stoppages, or other disputes pending or, to the Best Knowledge of
Sonoco Products, threatened, or reasonably anticipated between any of the Sonoco
Holding Companies, the Sonoco Operating Companies or the Sonoco Predecessor
Companies and: (i) any current or former employees of any of the Sonoco Holding
Companies, the Sonoco Operating Companies or the Sonoco Predecessor Companies
involving amounts, individually or in the aggregate, exceeding EUR100,000; (ii)
any union, employee representatives or other collective bargaining unit
representing employees of the Sonoco Holding Companies, the Sonoco Operating
Companies or the Sonoco Predecessor Companies; or (iii) any social security
Governmental Authority.
(b) No Sonoco Holding Company or Sonoco Operating Company has,
or is obligated with respect to, any stock option, stock bonus, phantom stock
plan, scheme or similar arrangement. Except for the UK Pension Obligation, any
unfunded pension Liability arrangements for present or former employees,
directors, officers, managing directors, managers or workers of each of the
Sonoco Holding Companies, the Sonoco Operating Companies or the Sonoco
Predecessor Companies is covered by adequate reserves in the Sonoco Financial
Statements, and
40
any other pension Liability is fully funded and complies with all statutory and
regulatory funding obligations in respect of all categories of member.
(c) No Sonoco Holding Company, Sonoco Operating Company or the
Sonoco Predecessor Company has any consulting arrangements with their respective
directors.
(d) Each of the Sonoco Holding Companies, the Sonoco Operating
Companies and the Sonoco Predecessor Companies has complied, and is in
compliance with, in all material respects, all Laws relating to employment,
workers, the workplace, the termination of employment or income tax, wage
withholding tax or social security matters, including, without limitation,
provisions relating to wages, hours, collective bargaining, employee
representation, consultation, safety and health, work authorization, equal
employment opportunity, discrimination, immigration, withholding, unemployment
compensation, worker's compensation, employee privacy and right to know and
social security contributions.
(e) Except as set forth on Schedule 6.22 and without limiting
the generality of the foregoing, no Sonoco Holding Company, Sonoco Operating
Company or Sonoco Predecessor Company is a party to any existing Agreement with
an employee, officer, director, managing director, manager or agent which in
case of termination could result in compensation payments in an amount exceeding
EUR50,000.
(f) The consummation of the transactions contemplated in this
Contribution Agreement (including the Sonoco Reorganization) will not cause any
Sonoco Holding Company or Sonoco Operating Company to incur or suffer any
Liability relating to, or obligation to pay, severance, termination, social
security or other payments (including interest, penalties and charges relating
thereto) to any Person.
(g) Except as set forth in Schedule 6.22, or as imposed by
applicable Law, no Sonoco Holding Company, Sonoco Operating Company or Sonoco
Predecessor Company is a party to an Agreement or arrangement with any union,
works counsel, other employee representation body or employee representatives,
limiting its right to consummate the restructurings contemplated by the Business
Plan, including the closure of any plants or other facilities, relocation or
termination of employees.
6.23 INVESTMENT REPRESENTATIONS
Sonoco Luxco is acquiring the Sonoco Shares hereunder, for its
own account, for investment and not with a view to the distribution thereof in
violation of applicable securities Laws.
41
6.24 SUBSIDIES
Schedule 6.24 contains a complete and correct list of all
subsidies in an amount of EUR100,000 or more granted or awarded to any of the
Sonoco Holding Companies, the Sonoco Operating Companies or the Sonoco
Predecessor Companies or any of their predecessors during the last five calendar
years in respect of the relevant portion of the Sonoco Business. Neither the
Transaction (including the Sonoco Reorganization) nor the measures contemplated
under the Business Plan will result in an obligation to repay (or lose the
award) of any such subsidies.
6.25 UK PENSION
The Pension Service Cost for the UK Pension Plan reflected in
the Sonoco Financial Statements was calculated based on the assumptions
described on Schedule 5.14.
6.26 COMPLETENESS OF CONTRIBUTION
Following the Sonoco Reorganization, all Assets, Agreements
and employees used in the conduct of the Sonoco Business as it is presently
conducted will have been Transferred to the Sonoco Holding Companies and the
Sonoco Operating Companies.
7. REPRESENTATIONS AND WARRANTIES OF AHLSTROM CORP
No representation and warranty contained in this Section 7 shall be
construed as a seller's guarantee (Garantie fur die Beschaffenheit der Sache)
within the meaning of Sections 443 and 444 of the German Civil Code.
Notwithstanding anything to the contrary contained in this Contribution
Agreement, or the Schedules hereto, the information and disclosures contained in
each Schedule to a particular representation, warranty, guaranty or covenant
shall not be deemed to be disclosed and incorporated by reference in any other
section of any other Schedule and shall not be deemed to qualify or limit any
other representation, warranty, guarantee or covenant of Ahlstrom Corp contained
in this Contribution Agreement unless such information or disclosure is clearly
incorporated by reference into such other section of such other Schedule or the
applicability of such information to such other Schedule is reasonably obvious.
Each schedule referenced in this Section 7 may be amended by Ahlstrom Corp
within two weeks from the date hereof by notice to Sonoco Products, subject to
approval of such amendment by Sonoco Products, such approval not to be
unreasonably withheld or delayed. Subject to the foregoing, Ahlstrom Corp hereby
represents and warrants to Sonoco Products by way of an independent guarantee
(within the meaning of section 311, paragraph 1, of the German Civil Code) and,
for the avoidance of doubt, subject to the limitations contained herein,
including, in particular in Section 10, that the statements made in this Section
7 are true and correct.
42
7.1 ORGANIZATION; POWER AND AUTHORITY; GOOD STANDING
Each of the Ahlstrom Holding Companies and the Ahlstrom
Operating Companies is duly organized, validly existing and in good standing
under the Laws of the jurisdiction of its formation, incorporation or
organization, as applicable, and has all requisite power and authority to own,
lease and operate its Assets and to carry on its applicable portion of the
Ahlstrom Business as presently conducted. Schedule 7.1 contains true, correct
and complete copies of the Charter Documents of each of the Ahlstrom Holding
Companies and the Ahlstrom Operating Companies (other than Karhula Services and
AT-Spiral), as amended and in effect on the date hereof and on the Closing Date.
7.2 AUTHORIZATION, EXECUTION, ENFORCEABILITY AND NO CONFLICTS
(a) Each of Ahlstrom Corp, Ahlstrom Holding and any other
Ahlstrom Group Person has all requisite power and authority (corporate or
otherwise) to execute the Transaction Documents to which it is a party and any
and all instruments necessary or appropriate in order to effectuate fully the
terms and conditions of each such document and to perform and consummate the
transactions contemplated hereby and thereby. Each Transaction Document to which
Ahlstrom Corp, Ahlstrom Holding or any other Ahlstrom Group Person is a party,
and the performance of its respective obligations hereunder and thereunder, has
been duly and validly authorized by all requisite action on the part of Ahlstrom
Corp, Ahlstrom Holding or such other Ahlstrom Group Person, as applicable, and
each such Transaction Document to which Ahlstrom Corp, Ahlstrom Holding or such
other Ahlstrom Group Person is a party has been, or upon its execution on the
Closing Date will be, duly and validly executed by Ahlstrom Corp, Ahlstrom
Holding or such other Ahlstrom Group Person, and constitutes, or upon its
execution on the Closing Date will constitute, a valid and legally binding
obligation of Ahlstrom Corp, Ahlstrom Holding or such other Ahlstrom Group
Person, as applicable, enforceable against Ahlstrom Corp, Ahlstrom Holding or
such other Ahlstrom Group Person, as applicable, in accordance with its terms
and conditions, except as enforceability thereof may be limited by any
applicable bankruptcy, reorganization, insolvency or other Laws affecting
creditors' rights generally or by general principles of equity.
(b) The execution and performance by each of Ahlstrom Corp,
Ahlstrom Holding and any other Ahlstrom Group Person of each Transaction
Document to which it is a party, and the consummation of the transactions
contemplated hereby and thereby, will not: (i) violate any Law applicable to
Ahlstrom Corp, Ahlstrom Holding or such other Ahlstrom Group Person, or any of
the Assets of the Ahlstrom Group; or (ii) conflict with, or result in any breach
of, any of the terms, conditions or provisions of, or constitute (with due
notice or lapse of time, or both) a default or give rise to any right of
termination, cancellation or
43
acceleration, or result in the creation of any Encumbrance (other than a
Permitted Encumbrance) upon: (x) any of the Assets of the Ahlstrom Group; or (y)
under any provision of: (1) the Transaction Documents, (2) the Charter Documents
of Ahlstrom Corp, Ahlstrom Holdings or such other Ahlstrom Group Person, as
applicable, (3) any Permit required or issued in connection with the operation
of the Ahlstrom Business or (4) any other Agreement to which it is a party or by
which the Assets of the Ahlstrom Group is or may be bound, except for such
violations, conflicts or breaches of or with respect to (x), (y) (1), (3) and
(4) above that, individually or in the aggregate, have not had, and are not
reasonably expected to have, an Ahlstrom Material Adverse Effect. Except for the
Required Competition Filings and as set forth on Schedule 7.2, neither Ahlstrom
Corp nor any relevant Person of the Ahlstrom Group has been or is required to
give any notice to, obtain the consent of or make any filing with, any
Governmental Authority or any other Person, or obtain any material Permit, in
each case for the valid execution and performance by Ahlstrom Corp, Ahlstrom
Holdings or any other Ahlstrom Group Person of the Transaction Documents to
which it is a party.
7.3 OWNERSHIP OF AHLSTROM HOLDING COMPANIES AND AHLSTROM OPERATING
COMPANIES
(a) Schedule 7.3 lists: (i) the authorized, issued and
outstanding shares of capital stock or equity interests of each of the Ahlstrom
Holding Companies and the Ahlstrom Operating Companies; (ii) the record and
beneficial holders of the authorized, issued and outstanding shares of capital
stock or equity interests of each of the Ahlstrom Holding Companies and the
Ahlstrom Operating Companies; and (iii) the number of shares or units, and
percentage of shares or units, of capital stock or equity interests of each such
holder. Other than as set forth on Schedule 7.3, Ahlstrom Corp has no
Affiliates, and no equity investment or other interest in any Person, engaged in
any aspect of the core/tube and core board business in the Territory.
(b) Except as set forth on Schedule 7.3, Ahlstrom Corp is, or
will be immediately prior to the Closing, the lawful direct or indirect record
and beneficial owner of all the shares of capital stock of, or other ownership
interests in, each of the Ahlstrom Holding Companies and the Ahlstrom Operating
Companies, and has good and marketable title to such shares of capital stock or
ownership interests, free and clear of all Encumbrances (other than Permitted
Encumbrances). Except as set forth on Schedule 7.3, there are no: (i)
outstanding subscriptions, preemptive rights, warrants, calls or options to
acquire, or instruments convertible into or exchangeable for, or Agreements or
understandings with respect to the sale or issuance of, shares of capital stock
or ownership interest of any of the Ahlstrom Holding Companies or the Ahlstrom
Operating Companies; (ii) Encumbrances (other than Permitted Encumbrances),
rights of first refusal, rights of first offer, proxies, voting trusts, or
voting Agreements with respect to the sale, issuance or
44
voting of any shares of capital stock or ownership interest of any of the
Ahlstrom Holding Companies or the Ahlstrom Operating Companies (whether
outstanding or issuable upon the conversion, exchange or exercise of outstanding
securities); or (iii) obligations to redeem, repurchase or otherwise acquire
shares of capital stock or ownership interest of any of the Ahlstrom Holding
Companies or the Ahlstrom Operating Companies, in each of (i), (ii) or (iii)
above, pursuant to any Law (other than any limitations or restrictions on
Transferability under any applicable securities Laws), any Charter Document of
any of the Ahlstrom Holding Companies or the Ahlstrom Operating Companies or any
Agreement to which any of the Ahlstrom Holding Companies or the Ahlstrom
Operating Companies is a party or may be bound.
(c) All shares of capital stock of, or other ownership
interests in, the Ahlstrom Holding Companies and the Ahlstrom Operating
Companies that are indirectly held by Ahlstrom Corp have been, or upon their
issuance on or prior to the Closing Date will be, duly authorized, validly
issued, outstanding and fully paid in (and such capital payments have not been
paid back).
(d) None of the Ahlstrom Holding Companies or the Ahlstrom
Operating Companies is a party to a company agreement (Unternehmensvertrag
within the meaning of the German Stock Corporation Act), except for those
agreements disclosed in Schedule 7.3 which will be validly terminated with
effect prior to or as of the Closing Date.
7.4 BANKRUPTCY
No Ahlstrom Holding Company or Ahlstrom Operating Company is
involved in any Proceeding by or against it as a debtor before any Governmental
Authority under any insolvency, restructuring or debtors' relief act, or for the
appointment of a trustee, receiver, liquidator, assignee, sequestrator or other
similar official, or under any similar Law, for any part of its Assets.
7.5 DISTRIBUTIONS
Except as contemplated by the Ahlstrom Reorganization, no
Distribution has been made since December 31, 2003 by or to any of the Ahlstrom
Holding Companies or the Ahlstrom Operating Companies.
7.6 EMPLOYEE REMUNERATION
Schedule 7.6 lists the aggregate annual remuneration,
including, without limitation, bonuses and fringe benefits of each employee,
manager and director of each of the Ahlstrom Holding Companies and the Ahlstrom
Operating Companies (other than Karhula Services and AT-Spiral) due and accrued
for the
45
first quarter of the current fiscal year and paid in the most recently completed
fiscal year.
7.7 FINANCIAL STATEMENTS
(a) Schedule 7.7 contains true, correct and complete copies of
the following (the "AHLSTROM FINANCIAL STATEMENTS"):
(i) The unaudited consolidated balance sheet and
profit and loss account of the Ahlstrom
Holding Companies and the Ahlstrom Operating
Companies as of December 31, 2003 and for
the 12-month period then ended; and
(ii) The pro forma unaudited consolidated balance
sheet and profit and loss account of the
Ahlstrom Holding Companies and the Ahlstrom
Operating Companies as of December 31, 2003
and for the 12-month period then ended,
which balance sheet and profit and loss
account shall reflect the results of the
consummation of the transactions
contemplated by the China Purchase Agreement
as if such transactions were completed as of
December 31, 2003.
(b) The Ahlstrom Financial Statements, together with the notes
thereto: (i) have been prepared in accordance with Ahlstrom Accounting
Principles, Applied on a Consistent Basis; (ii) have been prepared in accordance
with the books and records of each of the Ahlstrom Holding Companies and the
Ahlstrom Operating Companies, which books and records have been properly
maintained; and (iii) present fairly the financial condition and results of
operations of the Ahlstrom Holding Companies and Ahlstrom Operating Companies on
a consolidated basis, as of the date thereof and for the period covered thereby;
provided, however, that the Ahlstrom Financial Statements do not contain all
footnotes required under Ahlstrom Accounting Principles. Since December 31,
2003, there has been no change in any accounting principle, procedure or
practice followed by the Ahlstrom Holding Companies and the Ahlstrom Operating
Companies or in the method of applying such principle, procedure or practice.
7.8 ABSENCE OF UNDISCLOSED LIABILITIES
No Ahlstrom Holding Company or Ahlstrom Operating Company has
any Liabilities, except: (i) Liabilities as set forth in the Ahlstrom Financial
Statements; (ii) Liabilities that need not be shown on the balance sheet under
Ahlstrom Accounting Principles and that arose in the Ordinary Course of
Business; (iii) Liabilities arising in the Ordinary Course of Business since
December 31, 2003;
46
(iv) Liabilities set forth on Schedule 7.8; or (v) Liabilities which are not,
and are not reasonably expected to become, material to the Ahlstrom Business.
7.9 ABSENCE OF CHANGES
Except as set forth on Schedule 7.9 or as provided or
contemplated by the Transaction Documents (including, without limitation, as
contemplated by the Ahlstrom Reorganization), since December 31, 2003, each of
the Ahlstrom Holding Companies, the Ahlstrom Operating Companies and the
Ahlstrom Business has been operated in the Ordinary Course of Business and there
has not been:
(a) any event or condition, or any material transaction or
Agreement, which, individually or in the aggregate, has had, or is reasonably
expected to have, an Ahlstrom Material Adverse Effect;
(b) any act, omission of any act, activity or transaction, or
incurrence of Liability (by conduct or otherwise), or any damage, destruction or
Loss, whether or not covered by insurance, which, individually or in the
aggregate, has had, or is reasonably expected to have, an Ahlstrom Material
Adverse Effect;
(c) any issuance of any shares or ownership interests or any
options, warrants or other rights to subscribe for or purchase any of its shares
or ownership interests or any securities convertible into or exchangeable for
its shares or ownership interests by any Ahlstrom Holding Company or Ahlstrom
Operating Company;
(d) split, reclassification or other change in or of any of
the shares or ownership interests of any Ahlstrom Holding Company or Ahlstrom
Operating Company;
(e) amendment of the Charter Documents of any Ahlstrom Holding
Company or Ahlstrom Operating Company;
(f) any increase in, or prepayment of, the compensation
payable, or to become payable, by any Ahlstrom Holding Company or Ahlstrom
Operating Company to any of its directors, officers, managing directors,
managers, employees or agents, or enter into any bonus, insurance, pension or
other benefit plan, payment or arrangement for or with any of such directors,
officers, managing directors, managers, employees or agents, other than normal
salary increases in the Ordinary Course of Business;
(g) any lay-offs with respect to a significant part of the
workforce of any Ahlstrom Holding Company or Ahlstrom Operating Company;
47
(h) any incurrence of any Indebtedness, including Intercompany
Debt (other than Indebtedness incurred in the Ordinary Course of Business on
reasonable arms length terms), or direct or indirect provision of a Guarantee,
or any agreement to provide a Guarantee, or Indebtedness of any other Person;
(i) any cancellation of, or material change to, Indebtedness
owing to any Ahlstrom Holding Company or Ahlstrom Operating Company from any
Person or any Claims which any Ahlstrom Holding Company or Ahlstrom Operating
Company may possess, or any waiver or release of any material rights (other than
in the Ordinary Course of Business);
(j) any placement, or allowance to place, an Encumbrance
(other than a Permitted Encumbrance) on any Assets of any Ahlstrom Holding
Company or Ahlstrom Operating Company;
(k) any change in any method of accounting or accounting
practice or policy of any Ahlstrom Holding Company or Ahlstrom Operating
Company, except as required by Ahlstrom Accounting Principles, including,
without limitation, any change in its policies with respect to the payment of
accounts payable or other current Liabilities or the collection of accounts
receivable, including, without limitation, any acceleration or deferral of the
payment or collection thereof, as applicable;
(l) any Transfer of Intellectual Property (other than in the
Ordinary Course of Business) from or to any Ahlstrom Holding Company or Ahlstrom
Operating Company;
(m) any Transfer of a material portion of the Assets of any
Ahlstrom Holding Company or Ahlstrom Operating Company, or scrapping of a
material portion of the Assets of any Ahlstrom Holding Company or Ahlstrom
Operating Company as obsolete;
(n) any material change in the general manner in which any
Ahlstrom Holding Company or Ahlstrom Operating Company markets its products or
services;
(o) any commitments for capital expenditures of any Ahlstrom
Holding Company or Ahlstrom Operating Company in excess of EUR1,000,000 per
occurrence or EUR5,000,000 in the aggregate;
(p) any violation of any material Law or material Order; or
(q) any loan or advance to any members, stockholders or equity
holders, or officers, directors, managing directors, managers or to any other
Person of any Ahlstrom Holding Company or Ahlstrom Operating Company.
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7.10 OUTSTANDING BORROWINGS; INTERCOMPANY DEBT
Schedule 7.10 lists: (i) the amount of principal, interest and
other obligations of all Outstanding Borrowings and Intercompany Debt of each
Ahlstrom Holding Company and each Ahlstrom Operating Company as of December 31,
2003; (ii) the Encumbrances that relate to such Outstanding Borrowings and
Intercompany Debt; (iii) the name of each lender or party thereof; and (iv) the
amount of any unfunded commitments available in connection with such Outstanding
Borrowings and Intercompany Debt.
7.11 RELATED PARTY TRANSACTIONS
Except as set forth on Schedule 7.11, and except for: (i)
compensation and payment of reimbursable expenses incurred in the Ordinary
Course of Business to regular employees of any Ahlstrom Holding Company or
Ahlstrom Operating Company; (ii) any individual amount not exceeding EUR100,000
per year; or (iii) sales of products in the Ordinary Course of Business on
arms-length terms, no current or former Affiliate of any Ahlstrom Holding
Company or Ahlstrom Operating Company, is now, or has been since December 31,
2003: (x) a party to any transaction or Agreement with any Ahlstrom Holding
Company or Ahlstrom Operating Company; (y) Indebted to any Ahlstrom Holding
Company or Ahlstrom Operating Company; or (z) the direct or indirect owner of an
interest in any Person which is a competitor, supplier or customer of any
Ahlstrom Holding Company or Ahlstrom Operating Company (other than
non-affiliated holdings in publicly held companies), nor, to the Actual
Knowledge of Ahlstrom Corp, does any such Person receive income from any source
other than any Ahlstrom Holding Company or Ahlstrom Operating Company which
should properly accrue to any Ahlstrom Holding Company or Ahlstrom Operating
Company. Except as set forth on Schedule 7.11, no current or former Affiliate of
any Ahlstrom Holding Company or Ahlstrom Operating Company provides a Guarantee
or is otherwise responsible for any Liability (including Indebtedness) of any
Ahlstrom Holding Company or Ahlstrom Operating Company.
7.12 COMPLIANCE WITH LAWS
(a) Except as disclosed on Schedule 7.12, each of the Ahlstrom
Holding Companies and Ahlstrom Operating Companies has: (i) complied in all
material respects with, is in compliance in all material respects with and has
operated the Ahlstrom Business and maintained its Assets in compliance in all
material respects with, all Laws applicable to it and its applicable portion of
the Ahlstrom Business as currently conducted; and (ii) all Permits used or
necessary in the conduct of its applicable portion of the Ahlstrom Business,
except for such Permits the absence of which, individually or in the aggregate,
has not had, and is not reasonably expected to have, an Ahlstrom Material
Adverse Effect. Such
49
Permits described in clause (ii) are valid and in good standing and are in full
force and effect, no violations with respect to any thereof have occurred or are
or have been recorded and no Proceeding is pending or, to the Best Knowledge of
Ahlstrom Corp, threatened to revoke or limit any thereof.
(b) Schedule 7.12 contains a true, correct and complete list
of: (i) all such Permits described in paragraph (a) of this Section 7.12 (other
than Permits for Karhula Services and AT-Spiral); and (ii) all material Orders
under which each of the Ahlstrom Holding Companies and the Ahlstrom Operating
Companies (other than Orders for Karhula Services and AT-Spiral) are operating
or bound. To the Actual Knowledge of Ahlstrom Corp, there is no proposed change
in any applicable Law which would require any Ahlstrom Holding Company or
Ahlstrom Operating Company to obtain any Permits not set forth on Schedule 7.12
in order to conduct its applicable portion of the Ahlstrom Business as presently
conducted. Except as disclosed in Schedule 7.12, none of such Permits or Orders
shall be adversely affected as a result of Ahlstrom Corp's, any Ahlstrom Holding
Company's or Ahlstrom Operating Company's execution of, or the performance of
its obligations under, any Transaction Document to which it is a party, or the
consummation of the transactions contemplated hereby and thereby. No Ahlstrom
Holding Company or Ahlstrom Operating Company has received any opinion or
memorandum or legal advice from legal counsel to the effect that it is exposed,
from a legal standpoint, to any Liability or disadvantage, individually or in
the aggregate, which has had, or is reasonably expected to have, an Ahlstrom
Material Adverse Effect. To the Actual Knowledge of Ahlstrom Corp, no Ahlstrom
Holding Company or Ahlstrom Operating Company is aware of any proposed Law which
would prohibit or restrict it from, or otherwise materially adversely affect it
in, conducting its applicable portion of the Ahlstrom Business in any
jurisdiction in which it is now conducting the Ahlstrom Business.
7.13 TAXES
(a) Each of the Ahlstrom Holding Companies and the Ahlstrom
Operating Companies has (or, in the case of Tax Returns becoming due after the
date hereof and on or before the Closing Date, will have prior to the Closing
Date) duly filed all Tax Returns, notices and other reports or filings required
to be filed by any of the Ahlstrom Holding Companies or the Ahlstrom Operating
Companies (collectively, "AHLSTROM TAX RETURNS") on or before the Closing Date
(including, without limitation, in connection with or as a result of the
Ahlstrom Reorganization) with respect to all applicable Taxes. All such Tax
Returns are (or, in the case of returns becoming due after the date hereof,
including, without limitation, in connection with or as a result of the Ahlstrom
Reorganization, will be) true and complete in all material respects.
50
(b) All Taxes which are required to be paid by each of the
Ahlstrom Holding Companies and the Ahlstrom Operating Companies before the
Closing Date have been or will be paid in full prior to the Closing Date and an
appropriate provision has been provided in respect of all Taxes that are not due
prior to the Closing Date and that relate to the time period through December
31, 2003 in the Ahlstrom Financial Statements.
(c) There is no investigation or Claim pending or, to the Best
Knowledge of Ahlstrom Corp, threatened in respect of any material Taxes for
which any of the Ahlstrom Holding Companies and the Ahlstrom Operating Companies
is, or is reasonably expected to become, liable. No Ahlstrom Holding Company or
Ahlstrom Operating Company has consented to any waivers or extensions of any
statute of limitations with respect to any taxable year of the Ahlstrom Group.
(d) No Ahlstrom Holding Company or Ahlstrom Operating Company
is a party to an Agreement or arrangement relating to the sharing, allocation or
payment of, indemnity or security for, Taxes, except for the Tax consolidation
Agreements (e.g., Organschaft) set forth on Schedule 7.13, which will be
terminated prior to the Closing Date.
(e) The execution and performance of this Contribution
Agreement and the Related Documents will not result in: (i) the imposition of
any Tax on or with respect to any Ahlstrom Holding Company or Ahlstrom Operating
Company, or their respective Assets; or (ii) the Loss by any Ahlstrom Holding
Company or Ahlstrom Operating Company of any Tax relief or Tax benefit other
than the loss of trade Tax loss carryforwards and Tax loss carryforwards or
other Tax attributes for which adequate provision has been made on the Ahlstrom
Financial Statements.
(f) No Ahlstrom Holding Company and no Ahlstrom Operating
Company has carried out any dealings with Affiliates on a non-arms length basis
that could be assessed by the relevant Governmental Authorities to constitute
hidden distributions of profits (verdeckte Gewinnausschuettung).
7.14 REAL PROPERTY
(a) Schedule 7.14 lists all the Real Property used in the
Ahlstrom Business (the "AHLSTROM REAL PROPERTY") and specifies the owner of each
parcel thereof and sets forth a legal description for all such Real Property.
The Ahlstrom Real Property is suitable and adequate in all material respects for
the uses for which it is currently devoted. None of the Ahlstrom Holding
Companies and the Ahlstrom Operating Companies own, lease, sublease, license or
use any Real Property in the operation of the Ahlstrom Business other than the
Ahlstrom Real Property.
51
(b) Each of the Ahlstrom Holding Companies and the Ahlstrom
Operating Companies, as applicable, is the sole owner of good, valid and
marketable fee simple or comparable title to the Ahlstrom Real Property listed
in Schedule 7.14 as owned Ahlstrom Real Property and has valid and binding
rights under leases to the Ahlstrom Real Property listed in Schedule 7.14 as
leased Ahlstrom Real Property, in each case free and clear of all Encumbrances
(other than Permitted Encumbrances). Schedule 7.14 contains an accurate and
complete list of all mortgages and similar Encumbrances on the Ahlstrom Real
Property.
(c) All buildings, structures, fixtures and other improvements
on the Ahlstrom Real Property are: (i) in good repair, normal wear and tear
excepted, and free of material defects (latent or patent); and (ii) are suitable
and adequate in all material respects for the uses to which they are currently
devoted. All such buildings, structures, fixtures and improvements on the
Ahlstrom Real Property conform in all material respects to all material Laws.
The buildings, structures, fixtures and improvements on each parcel of Ahlstrom
Real Property lie entirely within the boundaries of such parcel of the Ahlstrom
Real Property as specified in the legal description set forth in Schedule 7.14,
and do not encroach in any material respects on any adjoining premises and no
structures of any kind encroach in any material respects on such Ahlstrom Real
Property.
(d) Except as set forth on Schedule 7.14: (i) none of the
Ahlstrom Real Property is subject to any material Agreement or other material
restriction of any nature whatsoever (recorded or unrecorded) preventing or
limiting in any material respects any Ahlstrom Holding Company's or Ahlstrom
Operating Company's right to convey or otherwise dispose of its interest in
same; and (ii) none of the Ahlstrom Real Property is subject to any material
Agreement or other material restriction of any nature whatsoever (recorded or
unrecorded) preventing or limiting in any material respects any Ahlstrom Holding
Company's or Ahlstrom Operating Companies' right to use it.
(e) No material portion of the Ahlstrom Real Property or any
building, structure, fixture or improvement thereon is the subject of, or
affected by, any condemnation or eminent domain Proceeding currently instituted
or pending, and to Ahlstrom Corp's Actual Knowledge, none of the foregoing will
be the subject of, or affected by, any such future Proceeding.
(f) The Ahlstrom Real Property has reasonably direct and
unobstructed access to material public roads and to reasonably adequate material
electric, gas, water, sewer and telephone lines, all of which are reasonably
adequate for the uses to which such Ahlstrom Real Property is currently devoted.
(g) Except as disclosed on Schedule 7.14, there are no Persons
in possession, or who have a right of possession of any portion of the Ahlstrom
Real
52
Property other than the Ahlstrom Holding Companies or the Ahlstrom Operating
Companies, whether as lessees, tenants at will or otherwise.
(h) Schedule 7.14 contains a complete and accurate copy of all
Real Property Leases relating to the Ahlstrom Real Property. Each Real Property
Lease entered into (whether as lessor or lessee) by each of the Ahlstrom Holding
Companies or the Ahlstrom Operating Companies is: (i) valid, binding and
enforceable in all material respects against the Ahlstrom Holding Companies and
the Ahlstrom Operating Companies, as applicable; and (ii) to Ahlstrom Corp's
Actual Knowledge, is valid, binding and enforceable in all material respects
against the other parties thereto in accordance with its terms, and is in full
force and effect in all material respects.
(i) None of the Ahlstrom Holding Companies or the Ahlstrom
Operating Companies are in material default under, or in material breach of, or
are otherwise materially delinquent in performance under any Real Property Lease
entered into (whether as lessor or lessee) by the Ahlstrom Holding Companies or
the Ahlstrom Operating Companies, and, to Ahlstrom Corp's Actual Knowledge, no
event has occurred which, with due notice or lapse of time, or both, would
constitute such a default.
7.15 ENVIRONMENTAL AND SAFETY
(a) Each of the Ahlstrom Holding Companies and the Ahlstrom
Operating Companies has complied in all material respects with, and each such
company and all of the Ahlstrom Real Property is in compliance in all material
respects with, all material Environmental and Safety Requirements; and there are
no Proceedings pending or, to the Best Knowledge of Ahlstrom Corp, threatened
against any Ahlstrom Holding Company or Ahlstrom Operating Company alleging any
failure to so comply or involving any Environmental and Safety Requirement issue
with respect to Ahlstrom its past operations or any Real Property of any
Ahlstrom Holding Company or Ahlstrom Operating Company.
(b) No Ahlstrom Holding Company or Ahlstrom Operating Company
has any material Liability arising under any Environmental and Safety
Requirements.
(c) Except as set forth on Schedule 7.15, no Ahlstrom Holding
Company or Ahlstrom Operating Company has received any written notice or report
with respect to it or its Real Property regarding any: (i) actual or alleged
violation of Environmental and Safety Requirements; or (ii) actual or potential
Liability arising under Environmental and Safety Requirements, including any
investigatory, remedial or corrective obligation, in each of (i) and (ii),
during the last three calendar years.
53
(d) No Ahlstrom Holding Company or Ahlstrom Operating Company
has assumed or undertaken any material Liability of any other Person under any
Environmental and Safety Requirements.
(e) No Ahlstrom Holding Company or Ahlstrom Operating Company
has treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled or released any substance, or owned or operated any Real
Property in a manner that has given rise to material Liabilities of any Ahlstrom
Holding Company or Ahlstrom Operating Company pursuant to any Environmental and
Safety Requirement, including any material Liability for response costs,
corrective action costs, personal injury, property damage, natural resources
damage or attorney fees, or any investigative, corrective or remedial
obligations.
(f) Schedule 7.15 sets forth all environmental matters for
which a financial reserve has been made on the Ahlstrom Financial Statements and
the amount of such reserve.
7.16 TITLE TO ASSETS
Except for the leased Assets listed in Schedule 7.19 and
subject to Section 7.14, each of the Ahlstrom Holding Companies and the Ahlstrom
Operating Companies has, or upon consummation of the Ahlstrom Reorganization
will have at the Closing Date, good, valid and marketable title to all Assets
used in its applicable portion of the Ahlstrom Business, free and clear of all
Encumbrances (other than Permitted Encumbrances). All personal property of the
Ahlstrom Holding Companies and Ahlstrom Operating Companies is in normal
operating condition and repair, normal wear and tear excepted, and is suitable
and adequate for the uses for which it is used. All inventory of the Ahlstrom
Holding Companies and Ahlstrom Operating Companies consists of items which are
good and merchantable and of a quality and quantity presently usable and
saleable in the Ordinary Course of Business, subject to any reserves properly
reflected on the Ahlstrom Financial Statements under Ahlstrom Accounting
Principles.
7.17 INSURANCE
All policies of Assets, fire, hazard, casualty, liability,
life, and other forms of insurance of any kind owned or held by, or for the
benefit of, the Ahlstrom Holding Companies and the Ahlstrom Operating Companies:
(i) are in full force and effect and, to the Best Knowledge of Ahlstrom Corp, no
grounds for termination of such policies exist; (ii) are sufficient for
compliance by each of the Ahlstrom Holding Companies and the Ahlstrom Operating
Companies with all requirements of applicable Law and of all Agreements which
require any of the Ahlstrom Holding Companies or the Ahlstrom Operating
Companies to acquire and/or maintain insurance; (iii) are valid and enforceable
against the insurer in all material
54
respects; and (iv) insure against risks of the kind customarily insured against
and in amounts customarily carried by companies similarly situated and by
companies engaged in similar businesses and owning similar properties, and
provide adequate insurance coverage for the Ahlstrom Business and Assets of the
Ahlstrom Holding Companies and the Ahlstrom Operating Companies. All premium and
other payments required to be paid by, or on behalf of, each of the Ahlstrom
Holding Companies and the Ahlstrom Operating Companies pursuant to such policies
have been fully and timely made.
7.18 INTELLECTUAL PROPERTY
(a) Schedule 7.18 contains a list: (i) of all Intellectual
Property owned by each of the Ahlstrom Holding Companies and the Ahlstrom
Operating Companies in respect of which a registration has been granted, and in
respect of which a registration has been applied for, in each case specifying,
as applicable (A) the nature of such Intellectual Property, (B) the owner of
such Intellectual Property, (C) the jurisdictions in which such Intellectual
Property has been registered, or in which an application for registration has
been filed, and the registration or application numbers and (D) any licenses
that have been granted with respect to such Intellectual Property; and (ii) of
all licenses pursuant to which each of the Ahlstrom Holding Companies and the
Ahlstrom Operating Companies has been granted the right to use Intellectual
Property owned by another Person, in each case specifying (A) the licensor, (B)
the duration of the license and (C) the royalties payable. The Intellectual
Property listed on Schedule 7.18 is all Intellectual Property necessary to
conduct the Ahlstrom Business as currently conducted.
(b) Each of the Ahlstrom Holding Companies and the Ahlstrom
Operating Companies: (i) owns, or has a valid license to use, all Intellectual
Property used by it in the Ordinary Course of Business in the Ahlstrom Business,
except where the failure to own, or have a valid license to use, such
Intellectual Property, individually or in the aggregate, has not had, and is not
reasonably expected to have, an Ahlstrom Material Adverse Effect; and (ii) has
made, or has had made on its behalf, all payments as and when required to
validly maintain all registrations of, its ownership of, or its license to use,
such Intellectual Property in full force and effect with any Governmental
Authority or other Person, as the case may be. To the Best Knowledge of Ahlstrom
Corp, there exist no grounds for termination of the Ahlstrom Holding Companies'
or the Ahlstrom Operating Companies' ownership rights in, or licenses to use,
the Intellectual Property referred to in the preceding sentence, in particular,
there are no pending challenges of any Intellectual Property owned by an
Ahlstrom Holding Company or an Ahlstrom Operating Company, and to Ahlstrom
Corp's Best Knowledge, no such challenges are threatened.
55
(c) Other than the restrictions contained in the License
Agreement, dated February 16, 2000, between Ahlstrom Alcore Oy, on the one hand,
and Selectube and Abzac Inc., on the other hand, no Ahlstrom Holding Company or
Ahlstrom Operating Company has granted an exclusive license with respect to any
Intellectual Property used in the Ahlstrom Business to any third Person (other
than another Ahlstrom Holding Company or Ahlstrom Operating Company).
(d) No Ahlstrom Holding Company or Ahlstrom Operating Company
has any Actual Knowledge of, nor has it received any notice to the effect, that
any product that any Ahlstrom Holding Company or Ahlstrom Operating Company
sells or that any service any Ahlstrom Holding Company or Ahlstrom Operating
Company renders, or that the manufacture, distribution, marketing, sale or use
of any such product or service, may or is Claimed to infringe any Intellectual
Property right of another.
7.19 LEASED PERSONAL PROPERTY
Schedule 7.19 lists every lease, sublease and Agreement
involving aggregate annual lease payments exceeding EUR30,000 per lease, per
year (net of ancillary costs) under which any of the Ahlstrom Holding Companies
and the Ahlstrom Operating Companies is lessee or lessor of any material Asset,
or holds, manages or operates any material Asset owned by any third party, or
under which any material Asset owned by any of the Ahlstrom Holding Companies
and Ahlstrom Operating Companies is held, operated or managed by a third party.
Each of the Ahlstrom Holding Companies and the Ahlstrom Operating Companies is
the owner and holder of all rights under leases used by it in the Ahlstrom
Business. Each such lease, sublease and other Agreement is in full force and
effect and constitutes a legal, valid and binding obligation of, and is legally
enforceable against, the respective Parties and grants the leasehold interest it
purports to grant free and clear of all Encumbrances (other than Permitted
Encumbrances). Each of the Ahlstrom Holding Companies and Ahlstrom Operating
Companies has in all material respects performed all obligations thereunder
required to be performed by any of them to date. No Party is in default in any
material respect under any of the foregoing, and there has not occurred any
event which (whether with or without notice, lapse of time or the happening or
occurrence of any other event) would constitute such a material default.
7.20 CERTAIN MATERIAL AGREEMENTS
(a) Subject to Section 7.14, except for the Agreements set
forth on Schedule 7.20 ("AHLSTROM MATERIAL AGREEMENTS"), no Ahlstrom Holding
Company or Ahlstrom Operating Company is a party to any written or oral:
56
(i) Agreement for the employment or retention
of, whether on a full-time, part-time,
consulting or other basis, or understanding
with, any of the directors, top five
officers, managing directors, general
managers or country managers of the Ahlstrom
Business, any Ahlstrom Holding Company or
Ahlstrom Operating Company;
(ii) Agreement relating to Indebtedness or to the
mortgaging, pledging or otherwise placing an
Encumbrance (other than a Permitted
Encumbrance) on any Asset of the Ahlstrom
Business, or any Ahlstrom Holding Company or
Ahlstrom Operating Company, with a fair
market value in excess of EUR50,000;
(iii) Agreement preventing or otherwise
restricting the right of any Ahlstrom
Holding Company or Ahlstrom Operating
Company to make or receive Distributions;
(iv) Agreement involving the sale of the accounts
receivable of any Ahlstrom Holding Company
or Ahlstrom Operating Company to any other
Person;
(v) Agreement with respect to the investing of
funds, including, without limitation, any
hedging Agreement;
(vi) Agreement under which any Ahlstrom Holding
Company or Ahlstrom Operating Company is the
lessor of, or permits any third Person to
hold or operate, any real or personal
property owned or controlled by any Ahlstrom
Holding Company or Ahlstrom Operating
Company in excess of EUR30,000;
(vii) assignment, license, indemnification or
other Agreement with respect to any form of
intangible property with Third Parties,
including, without limitation, any
Intellectual Property;
(viii) Agreement or group of related Agreements
with the same Person for the sale of Assets
or services which generated in excess of
EUR100,000 in revenues in the most recent
12-month period or is reasonably expected to
generate in excess of EUR100,000 in revenues
in any 12-month period ending after the date
hereof;
57
(ix) non-competition agreement which limits any
Ahlstrom Holding Company or Ahlstrom
Operating Company from freely engaging in
any business anywhere in the world;
(x) Agreement relating to the purchase,
distribution, marketing, advertising or sale
of any Ahlstrom Holding Company's or
Ahlstrom Operating Company's or any other
Person's products or services (other than
Agreements entered into in the Ordinary
Course of Business); or
(xi) other than Agreements described and
disclosed in subsections (i) through (x)
above, Agreement pursuant to which any
Ahlstrom Holding Company or Ahlstrom
Operating Company has Liabilities or is
required to make or give, or entitled to
receive, aggregate payments or other value
in excess of EUR100,000.
(b) All Ahlstrom Material Agreements are, or following the
Ahlstrom Reorganization will be, an Asset of an Ahlstrom Holding Company or an
Ahlstrom Operating Company, and no other Ahlstrom Group company is, or will be
following the Ahlstrom Reorganization, a party to any such Ahlstrom Material
Agreement.
(c) Except as specifically disclosed in Schedule 7.20, each of
the Ahlstrom Holding Companies and Ahlstrom Operating Companies has performed in
all material respects all obligations required to be performed by it, and is not
in default under or in breach of, nor in receipt of any Claim of default or
breach under, any Ahlstrom Material Agreement to which it is a party or by which
any of its Assets may be bound, and, to the Actual Knowledge of Ahlstrom Corp,
no event has occurred which with the passage of time or the giving of notice or
both would result in such a material default or breach under any such Ahlstrom
Material Agreement. To the Actual Knowledge of Ahlstrom Corp, no other party to
any Ahlstrom Material Agreement to which any of the Ahlstrom Holding Companies
or the Ahlstrom Operating Companies is a party, or by which any of their Assets
may be bound, is in material default under or in breach of any Ahlstrom Material
Agreements, and no event has occurred which with the passage of time or giving
of notice or both would result in a material default or breach by such other
party under any Ahlstrom Material Agreement. There has been made available to
Ahlstrom Corp in the Ahlstrom Data Room: (i) a true and complete copy of each
written Ahlstrom Material Agreement, together with all amendments, waivers or
other changes thereto; and (ii) a true and complete description of the material
terms of all oral Ahlstrom Material Agreements.
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7.21 LITIGATION; DISPUTES
Except as (x) set forth on Schedule 7.21 and (y) for matters
which have not resulted, and could not reasonably be expected to result, in a
fine or other award of damages in excess of EUR100,000, there are no: (i)
Proceedings pending (for which proper service has been made) against or
involving any of the Ahlstrom Holding Companies or the Ahlstrom Operating
Companies, whether at law or in equity, whether civil or criminal in nature or
by or before any Governmental Authority; (ii) customer Claims of any nature
against any of the Ahlstrom Holding Companies or the Ahlstrom Operating
Companies; or (iii) Orders of any Governmental Authority with respect to or
involving any of the Ahlstrom Holding Companies and Ahlstrom Operating
Companies, nor, in the case of (i), (ii) or (iii), to the Best Knowledge of
Ahlstrom Corp, does there exist any basis for any such Proceeding, Claim or
Order, or has any such Proceeding, Claim or Order been threatened.
7.22 LABOR RELATIONS
(a) Except as set forth on Schedule 7.22, there are no
strikes, work stoppages, or other disputes pending or, to the Best Knowledge of
Ahlstrom Corp, threatened, or reasonably anticipated between any of the Ahlstrom
Holding Companies or the Ahlstrom Operating Companies and: (i) any current or
former employees of any of the Ahlstrom Holding Companies or the Ahlstrom
Operating Companies involving amounts, individually or in the aggregate,
exceeding EUR100,000; (ii) any union, employee representatives or other
collective bargaining unit representing employees of the Ahlstrom Holding
Companies or the Ahlstrom Operating Companies; or (iii) any social security
Governmental Authority.
(b) No Ahlstrom Holding Company or Ahlstrom Operating Company
has, or is obligated with respect to, any stock option, stock bonus, phantom
stock plan, scheme or similar arrangement. Any unfunded pension Liability
arrangements for present or former employees, directors, officers, managing
directors, managers or workers of each of the Ahlstrom Holding Companies and the
Ahlstrom Operating Companies is covered by adequate reserves in the Ahlstrom
Financial Statements, and any other pension Liability is fully funded and
complies with all statutory and regulatory funding obligations in respect of all
categories of member.
(c) No Ahlstrom Holding Company or Ahlstrom Operating Company
has any consulting arrangements with their respective directors.
(d) Each of the Ahlstrom Holding Companies and the Ahlstrom
Operating Companies has complied, and is in compliance with, in all material
respects, all Laws relating to employment, workers, the workplace, the
termination
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of employment or income tax, wage withholding tax or social security matters,
including, without limitation, provisions relating to wages, hours, collective
bargaining, employee representation, consultation, safety and health, work
authorization, equal employment opportunity, discrimination, immigration,
withholding, unemployment compensation, worker's compensation, employee privacy
and right to know and social security contributions.
(e) Except as set forth in Schedule 7.22 and without limiting
the generality of the foregoing, no Ahlstrom Holding Company or Ahlstrom
Operating Company is a party to any existing Agreement with an employee,
officer, director, managing director, manager or agent which in case of
termination could result in compensation payments in an amount exceeding
EUR50,000.
(f) The consummation of the transactions contemplated in this
Contribution Agreement (including the Ahlstrom Reorganization) will not cause
any Ahlstrom Holding Company or Ahlstrom Operating Company to incur or suffer
any Liability relating to, or obligation to pay, severance, termination, social
security or other payments (including interest, penalties and charges relating
thereto) to any Person.
(g) Except as set forth in Schedule 7.22, or as imposed by
applicable Law, no Ahlstrom Holding Company or Ahlstrom Operating Company is a
party to an Agreement or arrangement with any union, works council, other
employee representation body or employee representatives, limiting its right to
consummate the restructurings contemplated by the Business Plan, including the
closure of any plants or other facilities, relocation or termination of
employees.
7.23 INVESTMENT REPRESENTATIONS
Ahlstrom Holding is acquiring the Ahlstrom Shares hereunder,
for its own account, for investment and not with a view to the distribution
thereof in violation of applicable securities Laws.
7.24 SUBSIDIES
Schedule 7.24 contains a complete and correct list of all
subsidies in an amount of EUR100,000 or more granted or awarded to any of the
Ahlstrom Holding Companies or Ahlstrom Operating Companies or any of their
predecessors during the last five calendar years in respect of the relevant
portion of the Ahlstrom Business. Neither the Transaction (including the
Ahlstrom Reorganization) nor the measures contemplated under the Business Plan
will result in an obligation to repay (or lose the award) of any such subsidies.
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7.25 COMPLETENESS OF CONTRIBUTION
Following the Ahlstrom Reorganization, all Assets, Agreements
and employees used in the conduct of the Ahlstrom Business as it is presently
conducted will have been Transferred to the Ahlstrom Holding Companies and the
Ahlstrom Operating Companies.
8. CONDITIONS TO OBLIGATION OF SONOCO PRODUCTS
The obligation of Sonoco Products to proceed with the Closing, and to
consummate the transactions contemplated hereby and by each Related Document, is
subject to the fulfillment or waiver by Sonoco Products (to the extent such
condition can be waived), at or prior to the Closing, of each of the following
conditions precedent:
8.1 REPRESENTATIONS AND WARRANTIES
The representations and warranties given by Ahlstrom Corp and
any other Ahlstrom Group Person party to a Transaction Document, to Sonoco
Products or any other Sonoco Group Person in this Contribution Agreement and in
each Related Document, as the case may be, shall be true and correct in all
respects on the date hereof and at and as of the Closing Date (except for any
changes expressly contemplated or permitted hereby), as if made at and as of
such date (except for those representations and warranties which address matters
only as of a particular date, which representations and warranties shall be true
and correct as of such date); provided, however, that the condition precedent
provided in this Section 8.1 shall be deemed to be met unless the failure of the
representations and warranties given by Ahlstrom Corp and any other Ahlstrom
Group Person party to a Transaction Document to be so true and correct results
in, has resulted in, or could reasonably be expected to result in, individually
or in the aggregate, a diminution in value of, Indebtedness of, or a Claim or
Loss applicable to, the Ahlstrom Business in excess of EUR8,500,000.
8.2 PERFORMANCE
Each of Ahlstrom Corp and its Affiliates shall have performed
and complied in all material respects with all of its obligations, agreements
and covenants required by this Contribution Agreement to be performed or
complied with by Ahlstrom Corp and its Affiliates on or prior to the Closing
Date, including, without limitation, its obligations, agreements and covenants
set forth in Section 3.2, which shall have been performed in all respects.
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8.3 LEGAL PROCEEDINGS
There shall not be: (i) any Order of any nature issued by a
Governmental Authority with competent jurisdiction directing that the
transactions provided for herein or any aspect of them not be consummated as
herein provided; or (ii) any Proceeding pending wherein an unfavorable Order
would prevent the performance of this Contribution Agreement or any of the
Related Documents, or the consummation of any aspect of the transactions or
events contemplated hereby or thereby, declare unlawful any aspect of the
transactions or events contemplated by this Contribution Agreement or any of the
Related Documents or cause any aspect of the transactions contemplated by this
Contribution Agreement or any of the Related Documents to be rescinded.
8.4 CHANGE IN LAW
As of the Closing Date, there shall not have been any change
in any Law that would prevent the consummation of the transactions contemplated
by this Contribution Agreement or any of the Related Documents.
8.5 ABSENCE OF AHLSTROM MATERIAL ADVERSE EFFECT
During the Interim Period, there shall not have occurred any
Ahlstrom Material Adverse Effect, or any other material adverse change in the
Assets, rights, Liabilities, financial condition or affairs of the Ahlstrom
Business (other than (i) changes or conditions affecting the paper core/tube and
core board industry generally, (ii) changes in macro-economic, regulatory or
political conditions generally or (iii) changes resulting from a decision of a
customer of the Ahlstrom Business not to continue to conduct business with any
Ahlstrom Holding Company or Ahlstrom Operating Company), that, individually or
in the aggregate, have resulted, or are reasonably expected to result, in a
diminution in value of, Indebtedness of, or a Claim or Loss applicable to, the
Ahlstrom Business in excess of EUR8,500,000.
8.6 REQUIRED CONSENTS
All of the Required Consents shall have been obtained and be
in full force and effect on the Closing Date.
8.7 REQUIRED COMPETITION FILINGS
All of the Required Competition Filings shall have been made
or given and approved, authorized, cleared or exempted by the applicable
Governmental Authorities.
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8.8 AHLSTROM REORGANIZATION
The Ahlstrom Reorganization shall have been completed pursuant
to Section 5.1(b).
8.9 CHINA PURCHASE
The transaction contemplated by the China Purchase Agreement
shall have been simultaneously consummated with the transactions contemplated
hereby.
8.10 WORKS COUNCIL CONSULTATION
The contribution of the paper plant located at Aalten, The
Netherlands to the Joint Venture (the "AALTEN CONTRIBUTION") by way of
contribution by Sonoco Luxco to the Joint Venture of the shares it owns in
Sonoco Netherlands BV, shall not be consummated until Sonoco Netherlands BV
shall have complied with its obligations under Article 24 of the Works Council
Act of The Netherlands (the "WOR ACT"), and the works council of Sonoco
Netherlands BV shall have been informed about the Joint Venture and the
consequences thereof.
9. CONDITIONS TO OBLIGATION OF AHLSTROM CORP
The obligation of Ahlstrom Corp to proceed with the Closing, and to
consummate the transactions contemplated hereby and by each Related Document, is
subject to the fulfillment or waiver by Ahlstrom Corp (to the extent such
condition can be waived), at or prior to the Closing, of each of the following
conditions precedent:
9.1 REPRESENTATIONS AND WARRANTIES
The representations and warranties given by Sonoco Products,
and any other Sonoco Group Person party to a Transaction Document, to Ahlstrom
Corp or any other Ahlstrom Group Person in this Contribution Agreement and in
each Related Document, as the case may be, shall be true and correct in all
respects on the date hereof and at and as of the Closing Date (except for any
changes expressly contemplated or permitted hereby), as if made at and as of
such date (except for those representations and warranties which address matters
only as of a particular date, which representations and warranties shall be true
and correct as of such date); provided, however, that the condition precedent
provided in this Section 9.1 shall be deemed to be met unless the failure of the
representations and warranties given by Sonoco Products and any other Sonoco
Group Person party to a Transaction Document to be so true and correct results
in, has resulted in, or could reasonably be expected to result in, individually
or in the aggregate, a diminution in
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value of, Indebtedness of, or a Claim or Loss applicable to, the Sonoco Business
in excess of EUR8,500,000.
9.2 PERFORMANCE
Each of Sonoco Products and its Affiliates shall have
performed and complied in all material respects with all of its obligations,
agreements and covenants required by this Contribution Agreement to be performed
or complied with by Sonoco Products and its Affiliates on or prior to the
Closing Date, including, without limitation, its obligations, agreements and
covenants set forth in Section 3.2, which shall have been performed in all
respects.
9.3 LEGAL PROCEEDINGS
There shall not be: (i) any Order of any nature issued by a
Governmental Authority with competent jurisdiction directing that the
transactions provided for herein or any aspect of them not be consummated as
herein provided; or (ii) any Proceeding pending wherein an unfavorable Order
would prevent the performance of this Contribution Agreement or any of the
Related Documents or the consummation of any aspect of the transactions or
events contemplated hereby or thereby, declare unlawful any aspect of the
transactions or events contemplated by this Contribution Agreement or any of the
Related Documents or cause any aspect of the transactions contemplated by this
Contribution Agreement or any of the Related Documents to be rescinded.
9.4 CHANGE IN LAW
As of the Closing Date, there shall not have been any change
in any Law that would prevent the consummation of the transactions contemplated
by this Contribution Agreement or any of the Related Documents.
9.5 ABSENCE OF SONOCO MATERIAL ADVERSE EFFECT
During the Interim Period, there shall not have occurred any
Sonoco Material Adverse Effect, or any other material adverse change in the
Assets, rights, Liabilities, financial condition or affairs of the Sonoco
Business (other than (i) changes or conditions affecting the paper core/tube and
core board industry generally, (ii) changes in macro-economic, regulatory or
political conditions generally or (iii) changes resulting from a decision of any
customer of the Sonoco Business not to continue to conduct business with any
Sonoco Holding Company or Sonoco Operating Company), that, individually or in
the aggregate, have resulted, or are reasonably expected to result, in a
diminution in value of, Indebtedness of, or a Claim or Loss applicable to, the
Sonoco Business in excess of EUR8,500,000.
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9.6 REQUIRED CONSENTS
All of the Required Consents shall have been obtained and be
in full force and effect on the Closing Date.
9.7 REQUIRED COMPETITION FILINGS
All of the Required Competition Filings shall have been made
or given and approved, authorized, cleared or exempted by the applicable
Governmental Authorities.
9.8 SONOCO REORGANIZATION
The Sonoco Reorganization shall have been completed pursuant
to Section 5.1(a).
9.9 CHINA PURCHASE
The transaction contemplated by the China Purchase Agreement
shall have been simultaneously consummated with the transactions contemplated
hereby.
9.10 WORKS COUNCIL CONSULTATION
The Aalten Contribution shall not be consummated until Sonoco
Netherlands BV shall have complied with its obligations under the WOR Act, and
the works council of Sonoco Netherlands BV shall have been informed about the
Joint Venture and the consequences thereof.
10. SURVIVAL; INDEMNIFICATION; REMEDIES
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
(a) Claims for breach of the representations and warranties
contained in this Contribution Agreement and Section 5 of the SDI IP License
Agreement shall survive the Closing until (verjaehren) 24 months after the
Closing Date; provided, however, that: (i) Claims for breach of the
representations and warranties contained in Sections 6.1, 6.2, 6.3, 7.1, 7.2 and
7.3 of this Contribution Agreement shall survive the Closing until ten years
after the Closing Date; (ii) Claims for breach of the representations and
warranties contained in Sections 6.15 and 7.15 of this Contribution Agreement
shall survive the Closing until seven years after the Closing Date; and (iii)
Claims for breach of the representations and warranties contained in Sections
6.13 and 7.13 of this Contribution Agreement shall survive the Closing until the
ninetieth day after the expiration of the respective assessment period
applicable to the matters covered thereby. The covenants and
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other agreements of the Parties contained in this Contribution Agreement shall
survive the Closing Date until they are otherwise terminated by their terms. The
period from the Closing until the date upon which any representation, warranty,
covenant or agreement contained herein shall terminate is referred to as the
"SURVIVAL PERIOD."
(b) No Sonoco Indemnified Person or Ahlstrom Indemnified
Person shall be entitled to make any Claim with respect to such representations,
warranties, covenants or agreements after the expiration of the applicable
Survival Period, if any, except that each Claim initiated by a Sonoco
Indemnified Person or Ahlstrom Indemnified Person, as the case may be, prior to
the expiration of the applicable Survival Period shall survive until it is
settled or resolved. In addition: (i) no Sonoco Indemnified Person shall be
entitled to make any Claim with respect to representations, warranties,
covenants or agreements of Ahlstrom Corp or any other Ahlstrom Group Person at
any time after Sonoco Products ceases, directly or indirectly, to be a
shareholder of the Joint Venture; and (ii) no Ahlstrom Indemnified Person shall
be entitled to make any Claim with respect to representations, warranties,
covenants or agreements of Sonoco Products or any Sonoco Group Person at any
time after Ahlstrom Corp ceases, directly or indirectly, to be a shareholder of
the Joint Venture.
(c) The Representations and warranties contained in this
Contribution Agreement and Section 5 of the SDI IP License Agreement shall
survive the execution of the Transaction Documents and the consummation of the
transactions contemplated hereby and all indemnification rights hereunder shall
survive the execution of the Transaction Documents and the consummation of the
transactions contemplated hereby and thereby until the applicable Survival
Period.
10.2 AGREEMENT OF SONOCO PRODUCTS TO INDEMNIFY
Sonoco Products shall indemnify, defend and hold harmless the
Ahlstrom Indemnified Persons from and against all Losses in connection with,
related to or arising out of:
(a) the untruth, inaccuracy or breach of any representation or
warranty given or made by Sonoco Products or any Sonoco Group Person pursuant to
this Contribution Agreement or in Section 5 of the SDI IP License Agreement;
(b) any nonfulfillment or breach of any covenant or agreement
on the part of Sonoco Products or any Sonoco Group Person contained in this
Contribution Agreement;
(c) any Claim by any third party (including Governmental
Authorities) against or affecting the Joint Venture or any Sonoco Holding
Company or Sonoco Operating Company which, if successful, would give rise to or
relate to a
66
breach of: (i) any of the representations or warranties on the part of Sonoco
Products or any Sonoco Group Person referred to in paragraph (a) above at the
time made; or (ii) covenants or agreements of Sonoco Products or any Sonoco
Group Person referred to in paragraph (b) above;
(d) any Claim by any third party (including Governmental
Authorities) or any incurrence of any Loss by any Ahlstrom Indemnified Person
for, or that arose from or in connection with, or is directly or indirectly
related to, any Sonoco Excluded Asset or Liability;
(e) any Losses sustained or suffered by any Ahlstrom
Indemnified Person, including Claims sustained or suffered by any Ahlstrom
Indemnified Person, (whether by, against or relating to Sonoco Products or any
other Person, including without limitation a Governmental Authority) and
arising, directly or indirectly, from the Sonoco Reorganization including,
without limitation, any Tax or employment restructuring indemnities arising in
connection with or triggered, directly or indirectly, by the Sonoco
Reorganization and to be borne by the Joint Venture or any of its Affiliates;
(f) without prejudice to Section 6.3(d), the obligation of a
Sonoco Holding Company or a Sonoco Operating Company to reimburse Losses of a
Sonoco Group company or to Transfer its profits to a Sonoco Group company under
a company agreement (Unternehmensvertrag within the meaning of the German Stock
Corporation Act), except if such Sonoco Group company is a Sonoco Holding
Company or a Sonoco Operating Company, or if (and to the extent that) such
obligation is reflected in the Sonoco Financial Statements;
(g) without prejudice to Section 6.13, all Taxes paid and to
be paid by the Sonoco Holding Companies or the Sonoco Operating Companies since
December 31, 2003 (including under Tax consolidation arrangements (e.g.,
Organschaft) with other Sonoco Group companies) that relate to the time period
through December 31, 2003, except if and to the extent that such Taxes were
provided for in the Sonoco Financial Statements;
(h) any Liability arising out of, or related to, Sonoco SAS's
ownership interest in, or sale of, shares of Papeteries du Rhin SA; or
(i) any Liability arising as a result of the Joint Venture's
or its Affiliates' failure to fulfill its obligations under the Demolli Put or
the Demolli Call (each as defined in the Shareholders' Agreement) due to the
failure to obtain required approval from, or a prohibition by, a Governmental
Authority responsible for enforcing applicable competition laws;
provided, however, that: (i) Sonoco Products shall
not be Liable under Sections 10.2(a) or 10.2(c)(i) until the aggregate amount of
Losses with
67
respect to the matters referred to in Sections 10.2(a) and 10.2(c)(i) exceeds
EUR750,000, and then to the extent of Losses incurred in excess of such amount
only, provided, that items of Loss that are individually in an amount less than
EUR37,500 shall not be applied against such EUR750,000 amount; (ii) Sonoco
Products' maximum Liability under Sections 10.2(a) and 10.2(c)(i) shall not
exceed EUR25,000,000 in the aggregate; and (iii) Sonoco Products shall not be
Liable for any matter disclosed in the Schedules to this Contribution Agreement.
10.3 AGREEMENT OF AHLSTROM CORP TO INDEMNIFY
Ahlstrom Corp shall indemnify, defend and hold harmless the
Sonoco Indemnified Persons from and against all Losses in connection with,
related to or arising out of:
(a) the untruth, inaccuracy or breach of any representation or
warranty given or made by Ahlstrom Corp or any Ahlstrom Group Company pursuant
to this Contribution Agreement;
(b) any nonfulfillment or breach of any covenant or agreement
on the part of Ahlstrom Corp or any Ahlstrom Group Company contained in this
Contribution Agreement;
(c) any Claim by any third party (including Governmental
Authorities) against or affecting the Joint Venture or any Ahlstrom Holding
Company or Ahlstrom Operating Company which, if successful, would give rise to
or relate to a breach of: (i) any of the representations or warranties on the
part of Ahlstrom Corp or any Ahlstrom Group Company referred to in paragraph (a)
above at the time made; or (ii) covenants or agreements of Ahlstrom Corp or any
Ahlstrom Group Company referred to in paragraph (b) above;
(d) any Claim by any third party (including Governmental
Authorities) or any incurrence of any Loss by any Sonoco Indemnified Person for,
or that arose from or in connection with, or is directly or indirectly related
to, any Ahlstrom Excluded Asset or Liability;
(e) any Losses sustained or suffered by any Sonoco Indemnified
Person, including Claims sustained or suffered by any Sonoco Indemnified Person,
(whether by, against or relating to Ahlstrom Corp or any other Person, including
without limitation a Governmental Authority) and arising, directly or
indirectly, from the Ahlstrom Reorganization including, without limitation, any
Tax or employment restructuring indemnities arising in connection with or
triggered, directly or indirectly, by the Ahlstrom Reorganization and to be
borne by the Joint Venture or any of its Affiliates;
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(f) without prejudice to Section 7.3(d), the obligation of an
Ahlstrom Holding Company or an Ahlstrom Operating Company to reimburse Losses of
an Ahlstrom Group company or to Transfer its profits to an Ahlstrom Group
company under a company agreement (Unternehmensvertrag within the meaning of the
German Stock Corporation Act), except if such Ahlstrom Group company is an
Ahlstrom Holding Company or an Ahlstrom Operating Company, or if (and to the
extent) that such obligation is reflected in the Ahlstrom Financial Statements;
(g) without prejudice to Section 7.13, all Taxes paid and to
be paid by the Ahlstrom Holding Companies or the Ahlstrom Operating Companies
since December 31, 2003 (including under Tax consolidation arrangements (e.g.,
Organschaft) with other Ahlstrom Group companies) that relate to the time period
through December 31, 2003, except if and to the extent that such Taxes were
provided for in the Ahlstrom Financial Statements; or
(h) any Liability arising under the Concluding Memorandum,
dated April 25, 2002, between Advance Agro Holding Co., Ltd. and Ahlstrom Cores
Oy; or
(i) any Liability arising under Environmental and Safety
Requirements with respect to the landfill operated by Karhula Services,
including, without limitation, any Liability related to (A) land restoration or
landscaping required upon the closure of such landfill in excess of the Joint
Venture Commitment, (B) the Karhula Commitment Agreement, (C) any remediation
obligation resulting from Ahlstrom Cores Oy's ownership in Karhula Services,
delivery of waste to such landfill or otherwise, or (D) any obligation of
Karhula Services to construct an environmental lining, install a sewage system
or upgrade the wastewater management system at the landfill; provided, however,
that any such Liability related to the use of the landfill by the Joint Venture
or its Affiliates after the Closing Date shall be the responsibility of the
Joint Venture.
provided, however, that: (i) Ahlstrom Corp shall not
be Liable under Sections 10.3(a) or 10.3(c)(i) until the aggregate amount of
Losses with respect to the matters referred to in Sections 10.3(a) and
10.3(c)(i) exceeds EUR750,000, and then to the extent of Losses incurred in
excess of such amount only, provided, that items of Loss that are individually
in an amount less than EUR37,500 shall not be applied against such EUR750,000
amount; (ii) Ahlstrom Corp's maximum Liability under Sections 10.3(a) and
10.3(c)(i) shall not exceed EUR25,000,000 in the aggregate; and (iii) Ahlstrom
Corp shall not be Liable for any matter disclosed in the Schedules to this
Contribution Agreement.
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10.4 INDEMNIFICATION PROCEDURES
The Liabilities of each of Sonoco Products and Ahlstrom Corp
with respect to its indemnities pursuant to this Section 10 resulting from any
Claim or Loss shall be subject to the following terms and conditions:
(a) Sonoco Products or Ahlstrom Corp, as the case may be,
shall give prompt written notice to the indemnifying Party as soon as it has
knowledge of any Claim or Loss which is asserted against, resulting to, imposed
upon or incurred by an Ahlstrom Indemnified Person or a Sonoco Indemnified
Person, as the case may be, and which may give rise to Liability of the
indemnifying Party pursuant to this Section 10, stating (to the extent known or
reasonably anticipated) the nature and basis of such Claim or Loss and the
amount thereof. Any delay in notification to the indemnifying Party of such
Claim or Loss shall not relieve the indemnifying Party of its obligations
hereunder, except to the extent such delay shall have adversely prejudiced the
ability of the indemnifying Party to defend the Claim.
(b) The indemnifying Party shall have the right, but not the
obligation, to control the defense and engage counsel or representatives of its
own choosing with respect to any such Claim or Loss, such representation
(including the compromise or settlement of any Claim or Loss) to be undertaken
on behalf of and for the account and risk of the indemnifying Party. In the
event the indemnifying Party elects not to undertake such defense by its own
representatives, the indemnifying Party shall give prompt written notice of such
election to the indemnified Person, and the indemnified Person will undertake
the defense thereof by counsel or other representatives designated by it whom
the indemnifying Party determines in writing to be satisfactory for such
purposes. The consent of the indemnifying Party to the indemnified Person's
choice of counsel or other representative shall not be unreasonably withheld and
shall be deemed granted if not objected to within ten days of notice thereof.
(c) In the event that any Claim or Loss shall arise out of a
transaction or cover any period or periods wherein Sonoco Products and Ahlstrom
Corp, on the one hand, and the Joint Venture, on the other hand, shall each be
liable hereunder for part of the Liability arising therefrom, then the Parties
shall, each choosing its own counsel and bearing its own expense, defend such
Claim or Loss, and no settlement or compromise of such Claim or Loss may be made
without the joint consent or approval of Sonoco Products and Ahlstrom Corp
(which consent shall not be unreasonably withheld).
(d) To the extent an indemnification payment pursuant to this
Section 10 shall be reduced by withholding Tax or causes a Tax to be payable by
the indemnified person with respect to such payment without such indemnified
Person having received and utilized a corresponding Tax reduction or benefit
with respect
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to the Claim or Loss for which the indemnification payment was made, the
indemnifying Party shall increase the gross amount of such payment by a
sufficient amount so that the net balance held by the indemnified Person, after
imposition of such withholding Tax or Tax payable with respect to such payment,
equals the amount of the indemnity payment to which the indemnified Person is
entitled pursuant to this Section 10.4.
(e) An indemnifying Party shall not be held liable for
indemnification to the extent the Loss for which indemnification is sought may
be attributed to any grossly negligent voluntary action or omission on the part
of the indemnified Party after the date hereof.
(f) An indemnifying Party shall not be held liable in respect
of any breach of representation or warranty which would not have occurred but
for: (i) any Tax Law promulgated after the date of this Agreement; or (ii) any
Environment and Safety Requirements promulgated after the date of this
Agreement.
(g) Any indemnification due by an indemnifying Party in
connection with any Loss shall be reduced by the amount of any insurance
proceeds actually received by the indemnified Person.
(h) An indemnifying Party shall not be held liable for
indemnification to the extent the indemnified Person (i) did not, after
acquiring Actual Knowledge of the facts or circumstances giving rise or likely
to give rise to a Loss, use reasonable efforts to mitigate the corresponding
Loss or (ii) intentionally uncovered facts or circumstances in order to make a
Claim for a breach of the representation and warranties contained in Section
6.15 or 7.15, as applicable, except if such facts and circumstances were
uncovered by any such indemnified Person in satisfaction of its obligations
under applicable Law.
(i) In the event that the facts or circumstances giving rise
to a Claim is curable, in whole or in part, the Sonoco Indemnified Person or
Ahlstrom Indemnified Person, as the case may be, shall give the indemnifying
Party 30 days to cure such facts or circumstances.
(j) Any indemnification payments required by this Section 10
shall be made by wire transfer of immediately available funds to the account
designated by the indemnified Person within 15 days of determination. For the
avoidance of doubt, any indemnification payments owing by an indemnifying Party
in respect of Losses suffered by the Joint Venture or its Affiliates shall be
payable exclusively by such indemnifying Party to the Joint Venture or its
Affiliate concerned.
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10.5 REMEDIES EXCLUSIVE AND CUMULATIVE
The rights and remedies provided in this Contribution
Agreement shall, to the extent permitted by Law, be the exclusive remedies of
the Parties with respect to the subject matter of this Contribution Agreement.
Except as expressly stated in this Contribution Agreement, including in
particular in this Section 10, all other and further liability of the Parties
with respect to the Contribution of the Sonoco Business or the Ahlstrom
Business, as the case may be, regardless of the kind of liability and the legal
basis on which claims may be raised (including warranty claims for factual or
legal deficiencies (Gewaehrleistung), fault at the conclusion of an agreement
(culpa in contrahendo), violation of implied obligations (positive
Vertragsverletzung), rescission for error (Anfechtung wegen Irrtum), or
frustration (Wegfall der Geschaeftsgrundlage, etc.) are explicitly excluded,
unless a Party or their respective representatives violated intentionally their
statutory or contractual obligations to the other Party. Also excluded is the
right of the Parties to any remedies not specially provided for herein,
including the right to withdraw from this Contribution Agreement (Ruecktritt).
The rights and remedies provided herein shall be cumulative with one another and
the assertion by any Party of certain of such rights or remedies shall not
preclude the assertion by that Party of any of the other rights or remedies
hereunder against a Party or its successors or permitted assigns, as provided
herein.
11. TERMINATION
11.1 TERMINATION
This Contribution Agreement may be terminated at any time
before the Closing Date only under any one or more of the following
circumstances:
(a) by the mutual written consent of Sonoco Products and
Ahlstrom Corp;
(b) by Sonoco Products, by written notice of termination
delivered to Ahlstrom Corp, if any of the conditions set forth in Section 8 have
not been satisfied or waived by Sonoco Products (to the extent they may be
waived) by September 30, 2004, and such failure to satisfy such conditions is
not the result solely of the necessity of obtaining approvals or satisfying
requirements of any Governmental Authority;
(c) by Ahlstrom Corp, by written notice of termination
delivered to Sonoco Products, if any of the conditions set forth in Section 9
have not been satisfied or waived by Ahlstrom Corp (to the extent they may be
waived) by September 30, 2004, and such failure to satisfy such conditions is
not the result solely of the necessity of obtaining approvals or satisfying
requirements of any Governmental Authority; or
72
(d) by either Party, by written notice of termination
delivered to the other Party, if any of the conditions set forth in Section 8
(if Sonoco Products is the Party seeking to terminate this Contribution
Agreement) or Section 9 (if Ahlstrom Corp is the Party seeking to terminate this
Contribution Agreement) are not satisfied or waived by the Party for whose
benefit such conditions exist by December 31, 2004.
11.2 EFFECT OF TERMINATION
In the event this Contribution Agreement is terminated as
provided in this Section 11, this Contribution Agreement shall forthwith become
wholly void and of no effect, and the Parties shall be released from all future
obligations hereunder; provided, however, that nothing in this Section 11 shall
relieve any Party of Liability for any breach occurring prior to termination,
and provided further that the provisions of Section 10 (with respect to any
Claim for indemnification relating to the period before such termination only),
this Section 11, Sections 12.2, 12.3, 12.7 and 12.8 shall not be extinguished
but shall survive such termination. The Parties shall have any and all remedies
to enforce such obligations provided at Law.
12. GENERAL PROVISIONS
12.1 ADDITIONAL ACTIONS AND DOCUMENTS
Each Party hereby agrees to take, or cause to be taken, all
such further commercially reasonable actions to issue and receive such legal
declarations, or cause to be issued or received such legal declarations, to
execute and file, or cause to be executed and filed, such further documents and
to obtain such consents, as may be necessary or as may be reasonably requested,
in order to fully effect the purposes, terms and conditions of this Contribution
Agreement.
12.2 NO BROKERS
Each Party represents and warrants to the other Party that
such Party has not engaged any broker, finder or agent in connection with the
transactions contemplated by this Contribution Agreement or any Related Document
which will give rise to any obligation of any other Party or its Affiliates
under applicable Law to pay any brokerage fees, finders' fees or commissions,
and has not incurred (and will not incur) any unpaid liability to any broker,
finder or agent for any brokerage fees, finders' fees or commissions, with
respect to the transactions contemplated by this Contribution Agreement. Each
Party agrees to indemnify, defend and hold harmless the other Party from and
against any and all Claims or Losses asserted against such Party or its
Affiliates for any such fees or commissions by any persons purporting to act or
to have acted for or on behalf of the indemnifying Party. For the avoidance of
doubt, all fees, expenses or other amounts payable to Per Karlsson
73
& Co AB for services rendered in connection with the transactions contemplated
hereby shall be paid by Ahlstrom Corp.
12.3 EXPENSES
Each Party shall pay its own expenses incident to this
Contribution Agreement and each Related Document, and the transactions
contemplated hereunder and thereunder (including, without limitation, in
connection with the Sonoco Reorganization or the Ahlstrom Reorganization),
including all legal and accounting fees and disbursements. Notwithstanding the
foregoing: (i) the filing fees required in connection with the Required
Competition Filings as contemplated by this Contribution Agreement, and legal
fees and expenses incurred in connection with the assessment, preparation and
filing of such Required Competition Filings, shall be borne one-half by Sonoco
Products and one-half by Ahlstrom Corp; and (ii) all fees incurred in connection
with the notarization of the Transaction Documents as required under German Law
shall be borne one-half by Sonoco Products and one-half by Ahlstrom Corp;
provided, however, that Sonoco Products shall pay no more than EUR20,000 (net)
in connection with such notarization, and Ahlstrom Corp shall pay any remaining
amount.
12.4 ASSIGNMENT
(a) Neither Sonoco Products nor Ahlstrom Corp may assign its
rights and obligations under this Contribution Agreement, in whole or in part,
whether by operation of Law or otherwise, without the prior written consent of
the other Party, and any such assignment contrary to the terms hereof shall be
null and void and of no force and effect.
(b) No Party may unreasonably withhold its consent to an
assignment by a Party of rights and obligations under this Contribution
Agreement, provided that: (i) the proposed assignee is a wholly-owned downstream
Affiliate of the assignor; (ii) the assignee agrees in writing to assume the
obligations of assignor under this Contribution Agreement and the Related
Documents; (iii) the assignor unconditionally guarantees (by way of an
independent guarantee (selbststaendiges Schuldversprechen)) that the assignee
will duly perform the assumed obligations under this Contribution Agreement or
the Related Documents; and (iv) the assignee agrees to Transfer back to the
assignor such rights and obligations in the event that such assignee ceases to
be a wholly-owned downstream Affiliate of the assignor.
12.5 ENTIRE AGREEMENT; AMENDMENTS
(a) This Contribution Agreement, including the Exhibits and
Schedules, and the Related Documents constitute the entire agreement of the
Parties with respect to the transactions contemplated hereby, and it supersedes
all prior oral or written agreements, commitments or understandings with respect
to
74
the matters provided for herein. Notwithstanding the foregoing, the
Confidentiality Agreement, dated June 6, 2003, between Sonoco Products and
Ahlstrom Corp shall remain in full force and effect pursuant to its terms.
(b) The terms and provisions of this Contribution Agreement
(including this Section 12.5(b)) may not be amended, modified, or waived,
temporarily or permanently, except pursuant to a written instrument executed by
both Parties.
12.6 WAIVER
No delay or failure on the part of any Party in exercising any
right, power or privilege under this Contribution Agreement or any Related
Document shall impair any such right, power or privilege or be construed as a
waiver of any default or any acquiescence therein. No single or partial exercise
of any such right, power or privilege shall preclude the further exercise of
such right, power or privilege, or the exercise of any other right, power or
privilege. No waiver shall be valid against any Party unless made in writing and
signed by the Party against whom enforcement of such waiver is sought and then
only to the extent expressly specified therein.
12.7 GOVERNING LAW; SERVICE OF PROCESS
(a) This Contribution Agreement shall be governed by and
construed in accordance with the domestic laws of the Federal Republic of
Germany without giving effect to any choice of law or conflict of law provision
or rule (whether of the laws of the Federal Republic of Germany or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the jurisdiction of the Federal Republic of Germany.
(b) Sonoco Products appoints Sonoco CPD GmbH,
Nikolaus-Otto-Stra(beta)e, 56727 Mayen, Germany and Ahlstrom Corp appoints
Ahlstrom Holding, Romereschstrasse 33, 49070, Osnabruck, Germany, as its agent
for service of process (Zustellungsbevollmaechtigter) for all legal proceedings
arising out of or in connection with this Contribution Agreement. This
appointment shall only terminate upon the appointment of another agent for
service of process domiciled in Germany and the appointment has been notified to
and approved in writing by Sonoco or Ahlstrom, as the case may be (which
approval shall not be unreasonably withheld). Sonoco Products and Ahlstrom Corp
shall promptly after the date hereof and upon appointment of any new agent for
service of process, as the case may be, issue to the agent a written power of
attorney (Vollmachtsurkunde) and shall irrevocably instruct the agent to submit
such deed in connection with any service of process under this Contribution
Agreement.
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12.8 ARBITRATION
All controversies, Claims, disputes and matters in question
arising out of, or relating to, this Contribution Agreement or any Related
Document, including any questions regarding the existence, validity or
termination of this Contribution Agreement ("DISPUTES") shall be finally
resolved through submission to final and binding arbitration as follows:
(a) Any Party may exercise the right to arbitrate any Disputes
against the other by sending written notice to arbitrate to the other Party of
any action that gives rise to such Disputes, which notice shall include the
amount in controversy. The written notice shall identify and describe the nature
of any and all Disputes asserted and the facts upon which such Disputes are
based;
(b) The place of the arbitration shall be Frankfurt am Main,
Germany, and the proceedings shall be conducted in the English language;
(c) The arbitration will be conducted pursuant to the
International Chamber of Commerce ("ICC") arbitration rules and procedures and
by three arbitrators chosen in accordance with the procedure used by the ICC.
All of the arbitrators shall be qualified to be a judge in Germany under the
German Law of the Judiciary ("Deutsches Richtergesetz") and shall not be an
Affiliate of any party to the Dispute and shall not have any potential for bias
or conflict of interest with respect to any party to the Dispute, directly or
indirectly, by virtue of any direct or indirect financial interest, family
relationship, close friendship or otherwise (the "ARBITRATORS");
(d) Each Party shall bear equally the costs of arbitration,
filing fees and the fees of the Arbitrators. Each Party shall bear its own
attorneys' fees, witness fees and other costs. The Parties shall mutually agree
with the Arbitrators on the date, time and place of the arbitration. In the
event that the Parties are unable to mutually agree to the date, time, and place
within the Frankfurt am Main, Germany, for the arbitration to be conducted, the
Arbitrators shall determine the date, time, and place of the arbitration in
Frankfurt am Main, Germany;
(e) Notwithstanding the above, the Arbitrators shall have the
power, but not the obligation, to order that the Party it deems to be the losing
Party pay to the prevailing Party all or a portion of the prevailing Party's
fees and expenses in the arbitration, including the Arbitrators' fees,
attorneys' fees, fees for expert testimony and for other expenses of presenting
its case;
(f) The Arbitrators shall have exclusive authority to resolve
any Disputes between the Parties. The Arbitrators shall have the power to award
damages against any Party and to make an award granting such further relief as
they deem just, proper, and equitable. The Arbitrators shall follow the laws of
the
76
Federal Republic of Germany. The Arbitrators shall render a written arbitration
decision that reveals the essential findings and conclusions upon which the
award is based; and
(g) Any award issued by the Arbitrators pursuant to this
Section 12.8 shall be made in the English language, denominated in Euros and
delivered within 120 days of the date on which such arbitration proceeding
commenced and shall be final and binding and enforceable in any court of
competent jurisdiction. Judgment on the award rendered by the Arbitrators may be
entered in any court having jurisdiction thereof.
12.9 SEVERABILITY
If any part of any provision of this Contribution Agreement or
any Related Document, or other document delivered pursuant herewith or
therewith, shall be invalid or unenforceable in any respect, such part shall be
ineffective to the extent of such invalidity or unenforceability only, without
in any way affecting the validity and enforceability of the remaining parts of
such provision or the remaining provisions of this Contribution Agreement. The
Parties shall negotiate with a view to agreeing a replacement provision that is
valid, and the nature and economic considerations of which come as close as
possible to the voided provision. Failing agreement of the Parties on such
replacement provision after good faith negotiations, any Party may, by notice to
the other Party, refer the determination of such replacement provision to
arbitration pursuant to Section 12.8. For the avoidance of doubt, this Section
12.9 shall not be construed to amend automatically this Contribution Agreement,
or to require any Party to agree to changes in this Contribution Agreement,
which are, in either case, imposed by Governmental Authorities as a condition to
any review, approval or other action by such Governmental Authorities.
12.10 NOTICES
All notices, requests, demands, claims, consents and other
communications which are required or otherwise delivered hereunder shall be in
writing in the English language and shall be deemed to have been duly given if:
(i) personally delivered; (ii) sent by internationally recognized overnight
courier; (iii) mailed by registered or certified mail with postage prepaid,
return receipt requested; or (iv) transmitted by facsimile or telecopy (with a
copy of such transmission concurrently transmitted by registered or certified
mail with postage prepaid, return receipt requested), to the Parties at the
following addresses (or at such other address for a Party as shall be specified
by like notice):
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(i) If to Sonoco Products, to:
Harris E. DeLoach, Jr.
President and Chief Executive Officer
Sonoco Products Company
1 North Second Street
Hartsville, SC 29550 USA
Facsimile: +1-843-383-7008
with a copy (which shall not constitute notice) to:
Claud v.S. Eley
Hogan & Hartson L.L.P.
875 Third Avenue
New York, NY 10022 USA
Facsimile: +1-212-918-3100
(ii) If to Ahlstrom Corp, to:
General Counsel
Ahlstrom Corporation, PB 329
Etelaesplanadi 14
00101 Helsinki, Finland
Facsimile: + 358-10-888-4789
with a copy (which shall not constitute notice) to:
Stephan Barthelmess
Cleary, Gottlieb, Steen & Hamilton
Main Tower
Neue Mainzer Strasse 52
60311 Frankfurt an Main, Germany
Facsimile: + 49-69-97103-199
or to such other address as the Party to whom such notice or other communication
is to be given may have furnished to each other Party in writing in accordance
herewith. Any such notice or communication shall be deemed to have been
received: (i) when delivered, if personally delivered; (ii) when sent, if sent
by facsimile or telecopy; (iii) on the next Business Day after dispatch, if sent
by nationally recognized, overnight courier guaranteeing next Business Day
delivery; and (iv) on the tenth Business Day following the date on which the
piece of mail containing such communication is posted, if sent by mail;
provided, that where, in the case of personal delivery, facsimile or telecopy
transmission, delivery or transmission occurs after 6:00 p.m. (local time at the
place of receipt) on a Business
78
Day or on a day which is not a Business Day, receipt shall be deemed to occur at
9:00 a.m. (local time at the place of receipt) on the next following Business
Day.
12.11 INTERPRETATION; HEADINGS
(a) To the extent that the interpretation of any English
language provision of this Contribution Agreement conflicts or is otherwise
inconsistent with the German language equivalent of such provision contained in
this Contribution Agreement, if any, the German language equivalent of such
provision contained in this Contribution Agreement shall govern such
interpretation and the Arbitrators shall be bound thereby.
(b) Section headings contained in this Contribution Agreement
are inserted for convenience of reference only, shall not be deemed to be a part
of this Contribution Agreement for any purpose, and shall not in any way define
or affect the meaning, construction or scope of any of the provisions hereof.
12.12 LIMITATION ON BENEFITS
The covenants, undertakings and agreements set forth in this
Contribution Agreement shall be solely for the benefit of, and shall be
enforceable only by, the Parties and their respective successors and permitted
assigns, except that the agreements set forth in Section 10 also shall be for
the benefit of, and enforceable by, the Ahlstrom Indemnified Persons, the Sonoco
Indemnified Persons and their respective successors or permitted assigns as
third party beneficiaries (unechter Vertrag zugunsten Dritter).
12.13 SUCCESSORS AND ASSIGNS
Subject to any provisions hereof restricting assignment, this
Contribution Agreement shall be binding upon and shall inure to the benefit of
the Parties and their respective successors and assigns
(Gesamtrechtsnachfolger).
79
EXHIBIT A
TO CONTRIBUTION AGREEMENT
DEFINITIONS
"AALTEN CONTRIBUTION" has the meaning set forth in Section 8.10.
"ACCOUNTANT'S DETERMINATION" has the meaning set forth in Section 4.6.
"ACTUAL KNOWLEDGE" means, with respect to any Person, actual knowledge
of such Person, including, without limitation, in the case of incorporated
Persons, the actual knowledge of the officers, directors, managing directors and
general managers, as the case may be, of such Person; provided, that: (i) the
"Actual Knowledge" of Sonoco Products shall include the Actual Knowledge of any
Sonoco Holding Company and Sonoco Operating Company; and (ii) the "Actual
Knowledge" of Ahlstrom Corp shall include the Actual Knowledge of any Ahlstrom
Holding Company and Ahlstrom Operating Company.
"AFFILIATE" means, with respect to any specified Person, any other
Person who, directly or indirectly, through one or more intermediaries,
Controls, is Controlled by, or is under common Control with such specified
Person; provided, however, that, from and after the Closing, the Joint Venture
and its subsidiaries shall not be deemed an Affiliate of either Sonoco Products
and its Affiliates (other than the Joint Venture and its subsidiaries) or
Ahlstrom Corp and its Affiliates (other than the Joint Venture and its
subsidiaries), and vice versa.
"AGREEMENT" means any concurrence of understanding and intention
between two or more persons (or entities) with respect to their relative rights
and/or obligations or with respect to a thing done or to be done (whether oral
or in recorded form and whether or not conditional, executory, express, implied,
in writing or meeting the requirements of contract), including without
limitation contracts, leases, promissory notes, easements, rights of way,
covenants and commitments, including those related to the settlement of disputes
or Claims.
"AHLSTROM ACCOUNTING PRINCIPLES" means accounting standards Applied on
a Consistent Basis by Ahlstrom Corp and attached as Exhibit U.
"AHLSTROM BUSINESS" has the meaning set forth in the Recitals.
"AHLSTROM CLOSING STATEMENTS" has the meaning set forth in Section
4.2(ii)(C).
"AHLSTROM CONSENTS" means the consents listed in Schedule 7.2.
Exhibit A - Page 1
"AHLSTROM CONTRIBUTED SHARES" means all of the shares or ownership
interests, as applicable, in Ahlstrom Cores Oy and Ahlstrom Cores GmbH.
"AHLSTROM CONTRIBUTION" has the meaning set forth in Section 2.2(b).
"AHLSTROM CORP" has the meaning set forth in the Introduction.
"AHLSTROM DATA ROOM" means, collectively, the due diligence rooms
containing the information regarding the Ahlstrom Business assembled for
purposes of the due diligence carried out by Sonoco Products and its
Representatives at KPMG LLP's offices and Ahlstrom Corp's offices in Helsinki,
Finland.
"AHLSTROM EQUALIZATION AMOUNT" has the meaning set forth in Section
5.1(d).
"AHLSTROM EXCLUDED ASSET OR LIABILITY" means any Asset or Liability of
Ahlstrom Corp or the Ahlstrom Group, whether presently existing or arising
hereafter, which is not part of the Ahlstrom Business, including, without
limitation, any Liability (environmental or otherwise) of any Ahlstrom Group
company related to the Pont Audemer facility in France and any Liability of any
Ahlstrom Holding Company or Ahlstrom Operating Company in respect of any
employees who are not primarily working for the Ahlstrom Business.
"AHLSTROM FINANCIAL STATEMENTS" has the meaning set forth in Section
7.7(a).
"AHLSTROM GROUP" means, collectively, Ahlstrom Corp with respect to the
Ahlstrom Business, including, prior to the Closing, the Ahlstrom Holding
Companies and the Ahlstrom Operating Companies.
"AHLSTROM HOLDING" means Ahlstrom Holding GmbH, a company organized
under the laws of Germany and a wholly-owned subsidiary of Ahlstrom Corp.
"AHLSTROM HOLDING COMPANIES" means, collectively: (i) Ahlstrom Cores
Oy, a company organized under the laws of Finland; and (ii) Ahlstrom Cores
Holding AB, a company organized under the laws of Sweden.
"AHLSTROM INDEMNIFIED PERSON" means the Joint Venture, Ahlstrom Corp,
the Ahlstrom Holding Companies, the Ahlstrom Operating Companies, and their
respective Affiliates, partners, officers, directors, managing directors,
managers, employees, agents and representatives, in each case other than any
member of the Sonoco Group.
Exhibit A - Page 2
"AHLSTROM MATERIAL ADVERSE EFFECT" means any circumstance, event,
change in, or effect on any of the Ahlstrom Holding Companies or the Ahlstrom
Operating Companies that has a material adverse effect or change on or to the
Ahlstrom Business, Assets, Liabilities, relationship with material customers or
suppliers, condition (financial or otherwise), prospects, operations, earnings,
cash flows or results of operations of the Ahlstrom Holding Companies or the
Ahlstrom Operating Companies, taken as a whole, whether such material adverse
effect or change occurs before or after the Ahlstrom Contribution.
"AHLSTROM MATERIAL AGREEMENTS" has the meaning set forth in Section
7.20(a).
"AHLSTROM OPERATING COMPANIES" means, collectively: (i) Ahlstrom Cores
SAS, a company organized under the laws of France; (ii) Ahlstrom Cores Ou, a
company organized under the laws of Estonia; (iii) Ahlstrom Cores B.V., a
company organized under the laws of The Netherlands; (iv) Ahlstrom Cores
Sp. z o.o., a company organized under the laws of Poland; (v) Ahlstrom Cores AS,
a company organized under the laws of Norway; (vi) Ahlstrom Cores AB, a company
organized under the laws of Sweden; (vii) ZAO Ahlstrom Cores, a company
organized under the laws of Russia; (viii) AT-Spiral; (ix) Ahlstrom Cores GmbH,
a company organized under the laws of Germany; and (x) Karhula Services.
"AHLSTROM PROHIBITED TRANSACTIONS" has the meaning set forth in Section
4.1(d).
"AHLSTROM REAL PROPERTY" has the meaning set forth in Section 7.14(a).
"AHLSTROM REORGANIZATION" has the meaning set forth in Section 5.1(b).
"AHLSTROM REORGANIZATION DEVIATIONS" has the meaning set forth in
Section 4.2(a)(ii)(A).
"AHLSTROM SHARES" has the meaning set forth in Section 2.2(b).
"AHLSTROM SUPPLY AGREEMENT" has the meaning set forth in Section
3.2(f)(vii).
"AHLSTROM TAX RETURNS" has the meaning set forth in Section 7.13(a).
"ALTERNATIVE TRANSACTION" means: (i) any direct or indirect acquisition
or purchase of any shares of equity interests or debt securities of any of the
Sonoco Holding Companies or the Sonoco Operating Companies or any of the
Ahlstrom Holding Companies or the Ahlstrom Operating Companies, as the case may
be, or any interests therein; (ii) any direct or indirect acquisition or
purchase of all or a material portion of the Assets of any of the Sonoco Holding
Companies or the
Exhibit A - Page 3
Sonoco Operating Companies, or any of the Ahlstrom Holding Companies or the
Ahlstrom Operating Companies, as the case may be; (iii) the merger,
consolidation or business combination of any of the Sonoco Holding Companies or
the Sonoco Operating Companies, or any of the Ahlstrom Holding Companies or the
Ahlstrom Operating Companies, as the case may be; (iv) the refinancing of any of
the Sonoco Holding Companies or the Sonoco Operating Companies, or any of the
Ahlstrom Holding Companies or the Ahlstrom Operating Companies, as the case may
be; or (v) the liquidation, dissolution, reorganization or similar transaction
involving any of the Sonoco Holding Companies or the Sonoco Operating Companies,
or any of the Ahlstrom Holding Companies or the Ahlstrom Operating Companies, as
the case may be, in each of clauses (i) through (v) above, other than the
transactions contemplated by this Contribution Agreement.
"APPLIED ON A CONSISTENT BASIS" means, with respect to any Person,
prepared using the same accounting principles, policies, standards, practices
and estimates used by such Person in prior periods and as used in the
preparation of such Person's most recent audited financial statements.
"ARBITRATORS" has the meaning set forth in Section 12.8(c).
"ASSETS" means, with respect to any Person, all businesses, properties,
fixed assets, machinery, equipment, furniture, fixtures, licenses, permits,
franchises, goodwill and rights of such Person, individually and as a going
concern, of every nature, kind and description, tangible and intangible, owned
or leased, wheresoever located and whether or not carried or reflected on the
books or records of such Person, used or held for use, in connection with the
operation of such Person's business, as the case may be; provided, that: (i) the
"Assets" of the Sonoco Group means the "Assets" of the Sonoco Group upon
consummation of the Sonoco Reorganization; and (ii) the "Assets" of the Ahlstrom
Group means the "Assets" of the Ahlstrom Group upon consummation of the Ahlstrom
Reorganization.
"AT-SPIRAL" means AT-Spiral Oy, a company organized under the laws of
Finland.
"BEST KNOWLEDGE" means, with respect to any Person: (i) actual
knowledge of such Person and its Affiliates (including, without limitation, in
the case of incorporated Persons, the actual knowledge of the officers,
directors, managing directors and managers, as the case may be, of such Person
and its Affiliates); and (ii) that knowledge which could have been acquired by
such Person after making such due inquiry and exercising such due diligence as a
prudent business person would have made or exercised in the management of his or
her business affairs in light of all the circumstances applicable thereto,
including due inquiry of those key employees and professionals of such Person
and its Affiliates who could reasonably be expected to have actual knowledge of
the matters in question.
Exhibit A - Page 4
"BUSINESS DAY" means any day that is not a Saturday, Sunday or legal
holiday or other day on which banks are required to be closed in Brussels,
Belgium, Helsinki, Finland or New York, New York.
"BUSINESS PLAN" has the meaning set forth in Section 2.1(e).
"CASH AND CASH EQUIVALENTS" means, with respect to any Person, cash or
cash equivalents, of such Person, whether credited to an account at a financial
institution, or in hand, of such Person, including marketable short-term
securities, other short-term investments, notes receivable, non-trade
intercompany receivables and accrued interest income.
"CHARTER DOCUMENT" means, with respect to any Person, the articles of
association, by-laws, partnership agreement and/or other applicable constitutive
or organizational documents of such Person.
"CHINA PURCHASE AGREEMENT" means the Stock Purchase Agreement, dated
the date hereof, between Sonoco Products and Ahlstrom Corp.
"CLAIM" means any claim, demand, Order or Proceeding.
"CLOSING" has the meaning set forth in Section 3.1.
"CLOSING DATE" has the meaning set forth in Section 3.1.
"CLOSING STATEMENTS" has the meaning set forth in Section 4.2(a)(i)(C).
"CONTRIBUTION AGREEMENT" has the meaning set forth in the Introduction,
including all Schedules and Exhibits hereto.
"CONTROL" (together with the correlative meanings, "CONTROLLED BY" or
"UNDER COMMON CONTROL WITH") means the possession, direct or indirect, of the
power to direct, or cause the direction of, the management and policies of a
Person whether through the ownership of shares or ownership interests, voting
rights, by contract or otherwise.
"DISPUTES" has the meaning set forth in Section 12.8.
"DISTRIBUTIONS" means, with respect to any Person: (i) the payment of
any dividend on or in respect of shares or ownership interests or membership
interests of such Person; (ii) the purchase, redemption, or other retirement of
any shares or ownership interests or membership interests of such Person,
directly by such Person or indirectly through a Subsidiary of such Person or
otherwise; (iii) the direct or indirect return of capital by such Person to its
stockholders or members as
Exhibit A - Page 5
such; or (iv) any other distribution on or in respect of any shares or ownership
interests or membership interests of such Person.
"ENCUMBRANCE" means and includes any security interest, mortgage, Lien,
pledge, Claim, charge, escrow, encumbrance, cloud, option, security agreement or
other similar agreement, arrangement, Agreement, understanding or obligation,
whether written or oral and whether or not relating in any way to credit or the
borrowing of money.
"ENVIRONMENTAL AND SAFETY REQUIREMENTS" means all Laws, Orders,
contractual obligations and all common law concerning public health and safety,
worker health and safety, and pollution or protection of the environment,
including all those relating to the presence, use, production, generation,
handling, transportation, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control or cleanup
of any hazardous materials, substances or wastes, chemical substances or
mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum
products or byproducts, asbestos, polychlorinated biphenyls, noise or radiation.
"EQUALIZATION STATEMENT" has the meaning set forth in Section 4.1(b).
"EXAMINATION PERIOD" has the meaning set forth in Section 4.3.
"EXHIBIT" means an Exhibit to this Contribution Agreement.
"GAAP" means generally accepted accounting principles, Applied on a
Consistent Basis.
"GERMAN CIVIL CODE" means Buergerliches Gesetzbuch.
"GERMAN LAW OF THE JUDICIARY" means Deutsches Richtergesetz.
"GERMAN STOCK CORPORATION ACT" means Aktiengesetz.
"GOVERNMENTAL AUTHORITY" means any federal, state, local or regional
government, regulatory authority, administrative agency, instrumentality,
department, commission, board, bureau, agency, arbitrator, court or tribunal,
whether domestic, foreign or supranational and whether legislative, executive or
judicial, including, without limitation, any competition Law authority or
commission.
"GUARANTEE" means any obligation, contingent or otherwise, of any
Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation of any other Person in any manner, whether
directly or indirectly, including any obligation of such Person, direct or
indirect: (i) to purchase or pay (or
Exhibit A - Page 6
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment of such Indebtedness or other obligation; (ii)
to purchase property, securities or services for the purpose of assuring the
owner of such Indebtedness or other obligation of the payment thereof; (iii) to
purchase or otherwise pay for merchandise, materials, supplies, services or
other property under an Agreement or other arrangement which provides that
payment for such merchandise, materials, supplies, services or other property
shall be made regardless of whether delivery of such merchandise, materials,
supplies, services or other property is ever made or tendered; or (iv) to
maintain the working capital, equity capital or other financial statement
condition of any primary obligor, provided, however, that the term Guarantee
shall not include endorsement of instruments for deposit and collection in the
Ordinary Course of Business.
"ICC" has the meaning set forth in Section 12.8(c).
"INDEBTEDNESS" means, with respect to any Person, without duplication:
(i) all obligations of such Person for borrowed money or with respect to
deposits or advances of any kind; (ii) all obligations of such Person evidenced
by (or which customarily would be evidenced by) bonds, debentures, notes or
similar instruments; (iii) all reimbursement obligations of such Person with
respect to letters of credit and similar instruments; (iv) all obligations of
such Person under conditional sale or other title retention agreements relating
to property or assets purchased by such Person; (v) all obligations of such
Person incurred, issued or assumed as the deferred purchase price of property
other than accounts payable incurred and paid on terms customary in the business
of such Person (it being understood that the "deferred purchase price" in
connection with any purchase of property or assets shall include only that
portion of the purchase price which shall be deferred beyond the date on which
the purchase is actually consummated); (vi) all obligations secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed; (vii)
all obligations of such Person under forward sales, futures, options and other
similar hedging arrangements (including interest rate hedging or protection
agreements); (viii) all obligations of such Person to purchase or otherwise pay
for merchandise, materials, supplies, services or other property under an
arrangement which provides that payment for such merchandise, materials,
supplies, services or other property shall be made regardless of whether
delivery of such merchandise, materials, supplies, services or other property is
ever made or tendered; (ix) all guarantees by such Person of obligations of
others; and (x) all capitalized lease obligations of such Person.
"INTELLECTUAL PROPERTY" means all patents, trademarks, service marks,
trade names, domain names, logos, trade dress, copyrights, know-how, trade
Exhibit A - Page 7
secrets, inventions, methods, processes, practices, computer software, web
sites, industrial and other designs and drawings, other works of authorship, and
all general intangibles of a like nature, whether or not protectable by
copyright, patent, trademark or other applicable law, and all registrations,
applications, disclosures and filings with respect to the foregoing, and all
reissuances, continuations-in-part, revisions, extensions, reexaminations and
renewals thereof, together with their foreign counterparts, as applicable.
"INTERCOMPANY DEBT" means: (i) with respect to the Sonoco Products or
any of its Affiliates, all Indebtedness between a Sonoco Holding Company or
Sonoco Operating Company, on the one hand, and Sonoco Products and its other
Affiliates not transferred to the Joint Venture, on the other hand, which
Indebtedness is outstanding on such date of determination; and (ii) with respect
to the Ahlstrom Corp and any of its Affiliates, all Indebtedness between a
Ahlstrom Holding Company or Ahlstrom Operating Company, on the one hand, and
Ahlstrom Corp and its other Affiliates not transferred to the Joint Venture, on
the other hand, which Indebtedness is outstanding on such date of determination.
"INTEREST BEARING DEBT" means, with respect to any Person, any interest
bearing Indebtedness owed to financial institutions, Liabilities under capital
leases and non-trade Intercompany Debt, plus, where applicable, any accrued and
unpaid interest thereon.
"INTERIM PERIOD" has the meaning set forth in Section 5.2(a).
"INTRODUCTION" means the Introduction to this Contribution Agreement.
"IP LICENSE AGREEMENTS" means, collectively, the Joint Venture/Sonoco
IP License Agreement and the SDI IP License Agreement.
"JOINT VENTURE" has the meaning set forth in the Recitals.
"JOINT VENTURE COMMITMENT AMOUNT" has the meaning set forth in Section
5.11.
"JOINT VENTURE/SONOCO IP LICENSE AGREEMENT" has the meaning set forth
in Section 3.2(e)(ii).
"JOINT VENTURE STARTING BALANCE SHEET" has the meaning set forth in
Section 4.5.
"JOINT VENTURE SUPPLY AGREEMENT" has the meaning set forth in Section
3.2(e)(v).
Exhibit A - Page 8
"KARHULA COMMITMENT AGREEMENT" means the Commitment, dated December 31,
1999, by and between Ahlstrom Cores Oy and Karhula Services.
"KARHULA SERVICES" means Ahlstrom Karhulan Palvelot Oy, a company
organized under the laws of Finland.
"LAW" means all statutes, laws, ordinances, regulations, rules,
resolutions, orders, determinations, writs, injunctions, awards (including
without limitation awards of any arbitrator), judgments and decrees applicable
to the specified persons or entities and to the businesses and assets thereof
(including without limitation Laws relating to securities registration and
regulation; the sale, leasing, ownership or management of real property;
employment practices, terms and conditions, and wages and hours; building
standards, land use and zoning; safety, health and fire prevention; and
environmental protection).
"LIABILITY" means any liability or obligation, whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated and whether due or to become due, regardless of when
asserted.
"LIEN" means, with respect to any Asset, any mortgage, lien, pledge,
charge, security interest or Encumbrance of any kind, or any Agreement to give
the foregoing in respect of such Asset.
"LOSS" means any loss, Liability, action, cause of action, cost,
damage, deficiency, Tax, penalty, fine or expense, whether or not arising out of
any Claims by or on behalf of any Party to this Contribution Agreement or any
Third Party, including interest, penalties, reasonable attorneys' fees and
expenses and all amounts paid in investigation, defense or settlement of any of
the foregoing which any such Party or the Joint Venture or its subsidiaries may
suffer, sustain or become subject to, as a result of, in connection with, or
relating to or by virtue of any indemnifiable event or condition, reduced by the
amount of any Tax benefit to such Party resulting from such Loss, in each case
on an after Tax basis; provided, however, any Claim relating to a Loss suffered
by Demolli Industria Cartaria S.p.A., or by any Party, the Joint Venture or its
subsidiaries as a result of its direct or indirect interest in Demolli Industria
Cartaria S.p.A., shall include 100% of such Loss if such Loss is suffered by any
Party, the Joint Venture or its subsidiaries after the acquisition by the Joint
Venture or its Affiliates of the remaining 75% of Demolli Industria Cartaria
S.p.A. that an Affiliate of Sonoco Products does not own on the date hereof.
"NET CASH/INTEREST BEARING DEBT" means, with respect to any Person, all
Cash and Cash Equivalents of such Person less Interest Bearing Debt calculated
in accordance with accounting principles used in the Ordinary Course of Business
of such Person. If Cash and Cash Equivalents exceed Interest Bearing Debt, the
Exhibit A - Page 9
amount of Net Cash/Interest Bearing Debt shall be positive; if Interest Bearing
Debt exceeds Cash and Cash Equivalents, the amount of Net Cash/Interest Bearing
Debt shall be negative.
"OBJECTION NOTICE" has the meaning set forth in Section 4.3.
"ORDER" or "ORDERS" means any judgments, writs, decrees, injunctions,
orders, compliance agreements or settlement agreements of or with any
Governmental Authority.
"ORDINARY COURSE OF BUSINESS" means, with respect to any Person,
ordinary course of business consistent with past practices of such Person and
prudent customary business operations.
"OUTSTANDING BORROWINGS" means: (i) with respect to the Sonoco Group,
all Indebtedness of each Sonoco Holding Company, Sonoco Operating Company and
Sonoco Products or any of its other Affiliates on behalf of the Sonoco Business
for money borrowed, or any Guarantee provided, by any Sonoco Holding Company,
Sonoco Operating Company and Sonoco Products or any of its other Affiliates on
behalf of the Sonoco Business, other than Intercompany Debt of the Sonoco Group,
which Indebtedness is outstanding on such date of determination; and (ii) with
respect to the Ahlstrom Group, all Indebtedness of each Ahlstrom Holding
Company, Ahlstrom Operating Company and Ahlstrom Corp or any of its other
Affiliates on behalf of the Ahlstrom Business for money borrowed, or any
Guarantee provided, by any Ahlstrom Holding Company, Ahlstrom Operating Company
and Ahlstrom Corp or any of its other Affiliates on behalf of the Ahlstrom
Business, other than Intercompany Debt of the Ahlstrom Group, which Indebtedness
is outstanding on such date of determination.
"PARTY" and "PARTIES" has the meanings set forth in the Introduction.
"PENSION CONTRIBUTIONS" has the meaning set forth in Section 5.14.
"PENSION SERVICE COST" has the meaning set forth in Section 5.14.
"PERMITTED ENCUMBRANCES" means: (i) Encumbrances for Taxes not yet due
and payable or being contested in good faith by appropriate proceedings and for
which there are adequate reserves on the books of the applicable Person; (ii)
workers or unemployment compensation Liens arising in the Ordinary Course of
Business; (iii) mechanic's, materialman's, supplier's, vendor's or similar Liens
arising in the Ordinary Course of Business securing amounts that are not
delinquent or past due; (iv) Encumbrances relating to purchase money security
interests arising in the Ordinary Course of Business; (v) Liens not created by a
Person that affect the underlying fee interest of any Real Property leased by
such Person but which do not materially interfere with the ordinary conduct of
the
Exhibit A - Page 10
business of such Person and will not materially interfere with the quiet
enjoyment of such leased Real Property during the term of the applicable lease;
(vi) zoning ordinances and other governmental land use restrictions; (vii)
easements, reservations and restrictions of legal record affecting Real Property
which would not, individually or in the aggregate, materially affect the value
of such Real Property or materially interfere with the present use of such Real
Property; and (viii) any state of facts that an accurate survey would show,
provided such facts do not individually or in the aggregate, materially affect
the value of such Real Property or materially interfere with the present use of
such Real Property.
"PERMITS" means all permits, licenses, authorizations, registrations,
franchises, approvals, consents, certificates, variances and similar rights
obtained, or required to be obtained, from Governmental Authorities.
"PERSON" means, and shall be construed broadly and shall include, an
individual, a partnership, a corporation, a company, an association, a joint
stock company, a limited liability company, a limited liability partnership, a
trust, a joint venture, an unincorporated organization and a Governmental Entity
or similar entities.
"PROCEEDING" means any action, suit, proceeding, complaint, charge,
hearing, inquiry, audit or investigation before or by any Governmental
Authority.
"REAL PROPERTY" means, with respect to any Person, the real property
owned, leased, subleased, licensed, operated, used, held for use or otherwise
occupied by such Person in its business and all buildings, structures,
improvements and fixtures thereon, together with all rights of way, easements,
privileges and appurtenances pertaining thereto, including any right, title and
interest in and to any street adjoining any portion of such real property.
"REAL PROPERTY LEASE" means any lease, sublease, license or other form
of occupancy agreement entered into by a Person (whether as lessor or lessee)
with respect to Real Property.
"RECITALS" means the Recitals to this Contribution Agreement.
"REFERENCE PERIOD" has the meaning set forth in Section 4.1(c).
"RELATED DOCUMENTS" means, collectively, the Shareholders' Agreement,
the Services Agreements, the Joint Venture/Sonoco IP License Agreement, the SDI
IP License Agreement, the Representation Agreement, the China Purchase
Agreement, the Joint Venture Supply Agreement and the VP Supply Agreement.
"REPRESENTATION AGREEMENT" has the meaning set forth in Section
3.2(e)(vi).
Exhibit A - Page 11
"REPRESENTATIVES" has the meaning set forth in Section 5.2(a).
"REQUIRED COMPETITION FILINGS" has the meaning set forth in Section
5.3(b).
"REQUIRED CONSENTS" means, collectively, the Sonoco Consents and the
Ahlstrom Consents; provided, however, that for purposes of the conditions
precedent in Sections 8.6 and 9.6, (i) any Ahlstrom Consent the satisfaction of
which is solely within the control of Ahlstrom Corp shall not be a condition
precedent for Ahlstrom Corp and (ii) any Sonoco Consent the satisfaction of
which is solely within the control of Sonoco Products shall not be a condition
precedent for Sonoco Products.
"SCHEDULE" means a Schedule to this Contribution Agreement.
"SCHWEIGHOUSE" means SEM Construction Schweighouse S.a r.l., a company
organized under the laws of France.
"SDI IP LICENSE AGREEMENT" has the meaning set forth in Section
3.2(e)(iii).
"SECTION" means a Section (or a subsection) of this Contribution
Agreement.
"SERVICES AGREEMENT" has the meaning set forth in Section 3.2(e)(iv).
"SETTLEMENT AGREEMENT" has the meaning set forth in Section 4.2(b).
"SHAREHOLDERS' AGREEMENT" has the meaning set forth in Section
3.2(e)(i).
"SODAREC" means Sodarec S.a r.l., a company organized under the laws of
France.
"SONOCO BUSINESS" has the meaning set forth in the Recitals.
"SONOCO CLOSING STATEMENTS" has the meaning set forth in Section
4.2(a)(i)(C).
"SONOCO CONSENTS" means the consents listed on Schedule 6.2.
"SONOCO CONTRIBUTED SHARES" means all of the shares or ownership
interests, as applicable, in the Sonoco Holding Companies, Sonoco Greece, Sonoco
Netherlands B.V. and Sonoco Poland S.p. z o.o.
"SONOCO CONTRIBUTION" has the meaning set forth in Section 2.2(a).
Exhibit A - Page 12
"SONOCO DATA ROOM" means the due diligence room containing the
information regarding the Sonoco Business assembled for purposes of the due
diligence carried out by Ahlstrom Corp and its Representatives at the offices of
Sonoco Europe S.A. in Brussels, Belgium.
"SONOCO EQUALIZATION AMOUNT" has the meaning set forth in Section
5.1(c).
"SONOCO EXCLUDED ASSET OR LIABILITY" means any Asset or Liability of
Sonoco Products or the Sonoco Group, whether presently existing or arising
hereafter, which is not part of the Sonoco Business, including, without
limitation, the UK Pension Obligation and any Liability of any Sonoco Holding
Company or Sonoco Operating Company in respect of any employees who are not
primarily working for the Sonoco Business
"SONOCO EXTRAORDINARY TRANSACTIONS" has the meaning set forth in
Section 4.1(a).
"SONOCO FINANCIAL STATEMENTS" has the meaning set forth in Section
6.7(a).
"SONOCO GREECE" means Hellenic Paper Mill of Central Macedonia-Sonoco
S.A., a company organized under the Laws of Greece.
"SONOCO GREECE PREDECESSOR" means Sonoco IPD Greece SA, a company
organized under the laws of Greece.
"SONOCO GROUP" means, collectively, Sonoco Products with respect to the
Sonoco Business, Sonoco International, Sonoco Luxco, including prior to the
Closing, the Sonoco Holding Companies and the Sonoco Operating Companies.
"SONOCO HOLDING COMPANIES" means, collectively: (i) Sonoco Deutschland
Holdings GmbH, a company organized under the laws of Germany; (ii) Sonoco SAS, a
company organized under the laws of France; (iii) Sonoco Newco Swiss; (iv)
Sonoco Iberia S.L., a company organized under the laws of Spain; (v) Sonoco
Netherlands Holdings I B.V., a company organized under the laws of The
Netherlands; and (vi) Sonoco Holding Italia S.r.l., a company organized under
the laws of Italy.
"SONOCO INDEMNIFIED PERSON" means the Joint Venture, Sonoco Products,
the Sonoco Holding Companies, the Sonoco Operating Companies, and their
respective Affiliates, partners, officers, directors, managing directors,
managers, employees, agents and representatives, in each case other than any
member of the Ahlstrom Group.
"SONOCO INTERNATIONAL" means Sonoco International, Inc., a company
organized under the laws of the State of Delaware.
Exhibit A - Page 13
"SONOCO LUXCO" means Sonoco Luxembourg S.a r.l., a company organized
under the laws of Luxembourg and an indirect, wholly-owned subsidiary of Sonoco
Products.
"SONOCO MATERIAL ADVERSE EFFECT" means any circumstance, event, change
in, or effect on any of the Sonoco Holding Companies or the Sonoco Operating
Companies that has a material adverse effect or change on or to the Sonoco
Business, Assets, Liabilities, relationship with material customers or
suppliers, condition (financial or otherwise), prospects, operations, earnings,
cash flows or results of operations of the Sonoco Holding Companies or the
Sonoco Operating Companies taken as a whole, whether such material adverse
effect or change occurs before or after the Sonoco Contribution.
"SONOCO MATERIAL AGREEMENTS" has the meaning set forth in Section
6.20(a).
"SONOCO NEWCO GERMANY" means a company to be organized under the laws
of Germany as part of the Sonoco Reorganization, as described in more detail in
Exhibit S.
"SONOCO NEWCO GIBRALTAR" means a company organized under the laws of
Gibraltar which is part of the Sonoco Reorganization, as described in more
detail in Exhibit S.
"SONOCO NEWCO UK" means a company to be organized under the laws of
England and Wales as part of the Sonoco Reorganization, as described in more
detail in Exhibit S.
"SONOCO NEWCO SWISS" means a company to be organized under the laws of
Switzerland as part of the Sonoco Reorganization, as described in more detail in
Exhibit S.
"SONOCO OPERATING COMPANIES" means, collectively: (i) Sonoco IPD France
S.A., a company organized under the laws of France; (ii) Sonoco Eurocore, S.A.,
a company organized under the laws of Belgium; (iii) Sonoco Paper France S.A., a
company organized under the laws of France; (iv) Tubetex, NV, a company
organized under the laws of Belgium; (v) Sonoco IPD GmbH, a company organized
under the laws of Germany; (vi) Sonoco Caprex Karton- und Papierverarbeitungs
AG, a company organized under the laws of Switzerland; (vii) Sonoco Deutschland
GmbH, a company organized under the laws of Germany; (viii) Sonoco OPV Hulsen
GmbH, a company organized under the laws of Germany; (ix) Demolli Industria
Cartaria S.p.A., a company organized under the laws of Italy; (x) Sonoco Poland
S.p. z o.o., a company organized under the laws of Poland; (xi) Sonoco Barcelona
S.A., a company organized under the laws of Spain; (xii) Sonoco Pina S.A., a
company
Exhibit A - Page 14
organized under the laws of Spain; (xiii) Sonoco Ambalaj Sanayi ve Ticaret AS, a
company organized under the laws of Turkey; (xiv) Sonoco Norge AS, a company
organized under the laws of Norway; (xv) Sonoco Newco UK; (xvi) Sonoco Europe
S.A., a company organized under the laws of Belgium; (xvii) Sonoco Greece;
(xviii) Sonoco Netherlands B.V., a company organized under the laws of The
Netherlands; (xix) Schweighouse; (xx) Sodarec; and (xxi) Sonoco Newco Germany.
"SONOCO PREDECESSOR COMPANIES" means the Sonoco UK Predecessor and the
Sonoco Greece Predecessor.
"SONOCO PRODUCTS" has the meaning set forth in the Introduction.
"SONOCO PROHIBITED TRANSACTIONS" has the meaning set forth in Section
4.1(c).
"SONOCO REAL PROPERTY" has the meaning set forth in Section 6.14(a).
"SONOCO REORGANIZATION" has the meaning set forth in Section 5.1(a).
"SONOCO REORGANIZATION DEVIATIONS" has the meaning set forth in Section
4.2(a)(i)(A).
"SONOCO SHARES" has the meaning set forth in Section 2.2(a).
"SONOCO TAX RETURNS" has the meaning set forth in Section 6.13(a).
"SONOCO UK PREDECESSOR" means Sonoco Ltd., the predecessor of Sonoco
Newco UK, in respect of its operation of its allocable portion of the Sonoco
Business, prior to the Transfer of such allocable portion of the Sonoco Services
to Sonoco Newco UK.
"SURVIVAL PERIOD" has the meaning set forth in Section 10.1(a).
"TAXES" means all national, local and foreign taxes (including without
limitation income, withholding on dividends, interest and royalties, profit,
franchise, sales, use, real property, personal property, value added (VAT), ad
valorem, excise, employment, wage taxes, and withholding taxes or advance
payments regarding taxes as well as social security contributions, stamp or
capital taxes and taxes on net wealth) and installments of estimated taxes,
assessments, deficiencies, levies, imports, duties, license fees, registration
fees, withholdings, or other similar charges of every kind, character or
description imposed by any governmental or quasi-governmental authorities, and
any interest, penalties or additions to tax imposed thereon or in connection
therewith.
Exhibit A - Page 15
"TAX RETURN" means any return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TERRITORY" means, collectively, the countries of continental Africa,
Europe (including Russia) and the Middle East (for purposes of this Contribution
Agreement the following countries shall be deemed to be the Middle East:
Afganistan, Bahrain, Cyprus, Iran, Iraq, Israel, Jordan, Kuwait, Kyrgyzstan,
Lebanon, Oman, Pakistan, Qatar, Saudi Arabia, Syria, Tajikistan, Turkey,
Turkmenistan, United Arab Emirates, Uzbekistan and Yemen).
"TRANSACTION" has the meaning set forth in the Recitals.
"TRANSACTION DOCUMENTS" has the meaning set forth in Section 6.2(a).
"TRANSFER" means, as to any security or assets, to sell, or in any
other way transfer, assign, gift, contribute, pledge, grant a security interest
in, distribute, encumber or otherwise dispose of (including, without limitation,
the foreclosure or other acquisition by any lender with respect to any security
or asset pledged to such lender by the holder of such security or asset), such
security or asset, either voluntarily or involuntarily and with or without
consideration.
"UK PENSION OBLIGATION" means any Pension obligation of any member of
the Sonoco Group incorporated or active in the UK with respect to employees who
are not, at the time of the Sonoco Reorganization, active exclusively in the
Sonoco Business and either are not Transferred, or object to being Transferred,
to the Joint Venture in connection with the transactions contemplated hereby.
"UK PENSION PLAN" has the meaning set forth in Section 5.14(a).
"UK TRANSFERRED EMPLOYEES" has the meaning set forth in Section 5.14.
"VP SUPPLY AGREEMENT" has the meaning set forth in Section 3.2(e)(vii).
"WOR ACT" has the meaning set forth in Section 8.10.
* * * *
Exhibit A - Page 16
EXHIBIT H
TO CONTRIBUTION AGREEMENT
LIST OF NEW DIRECTORS
Sonoco Appointees
- -----------------
Harris DeLoach
Charles Hupfer
Jim Bowen
Isabelle Flamme
Ahlstrom Appointees
- -------------------
Juha Rantanen
Svante Adde
Alex Schmitt
Exhibit H - Page 1
EXHIBIT T
TO CONTRIBUTION AGREEMENT
DESCRIPTION OF AHLSTROM REORGANIZATION
1. The contribution by Ahlstrom Corp of its direct and indirect interests
in the Ahlstrom Holding Companies and the Ahlstrom Operating Companies
to Ahlstrom Holding.
2. With affect as of the Closing Date, Ahlstrom Corp shall, and shall
cause its Affiliates to, terminate all management services agreements
and division management services agreements between any of the Ahlstrom
Holding Companies or the Ahlstrom Operating Companies, on the one hand,
and Ahlstrom Corp or any of its other Affiliates, on the other hand,
referred to in Schedule 7.11. Any amounts paid under such agreements
for the period from January 1, 2004 through the Closing Date shall be
promptly reimbursed to the payor from the respective payee after the
Closing Date including interest thereon from the date the payment was
made until the date the reimbursement is made at a rate of 3% per
annum.
As soon as practicable after the Closing Date (but in no event later
than 45 days after the Closing Date), Ahlstrom Corp will prepare and
deliver to Sonoco Products a reasonably detailed report on such
payments and reimbursements.
Exhibit T - Page 1