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