Exhibit 2.1
STOCK PURCHASE AGREEMENT
AMONG
GRAHAM PACKAGING COMPANY, L.P.,
OI PLASTIC PRODUCTS FTS, INC.
AND
OWENS-ILLINOIS, INC.
DATED AS OF JULY 28, 2004
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TABLE OF CONTENTS
Page
ARTICLE I
THE PURCHASE; CERTAIN RELATED MATTERS
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1.1 The
Purchase.........................................................................1
1.2 Purchase
Price.......................................................................1
1.3 Purchase
Price
Adjustments...........................................................2
1.4 Closing
5
1.5 Closing
Deliveries....................................................................
1.6 Foreign
Subsidiaries.................................................................6
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF O-I AND SELLER
2.1 Due
Organization.....................................................................7
2.2
Authorization and Validity of this Agreement and the Additional
Agreements...........8
2.3
Subsidiaries.........................................................................8
2.4 No
Conflict..........................................................................8
2.5
Capitalization; Ownership of
Stock...................................................9
2.6 Financial
Statements................................................................10
2.7 Absence of
Material Adverse
Change..................................................12
2.8 Absence of
Undisclosed Liabilities; No
Indebtedness.................................15
2.9 Real
Property
Ownership.............................................................15
2.10 Leased Real
Property................................................................16
2.11 Real
Property.......................................................................17
2.12 Condition of
Properties.............................................................17
2.13 Tax
Matters.........................................................................18
2.14 Legal
Proceedings...................................................................21
2.15 Government
Licenses, Permits and Related Approvals; Environmental
Matters...........21
2.16 Employee Benefit
Plans..............................................................23
2.17 Intellectual
Property...............................................................26
2.18
Insurance...........................................................................31
2.19 Material
Contracts..................................................................32
2.20 Transactions
with
Affiliates........................................................35
2.21 Brokers,
Finders,
etc...............................................................36
2.22
Employment-Related
Matters..........................................................36
2.23
Inventory...........................................................................37
2.24 Accounts
Receivable.................................................................38
2.25 Sufficiency of
Assets...............................................................38
2.26 Product
Liability;
Recalls..........................................................39
2.27 Customers and
Suppliers.............................................................39
2.28 Accounts
Payable....................................................................40
2.29 Books and
Records...................................................................40
2.30 Rebates
40
2.31 Propriety of
Past
Payments..........................................................41
2.32 Bank
Accounts.......................................................................41
2.33 No Other
Representations and
Warranties.............................................41
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF O-I
3.1 Due
Organization....................................................................41
3.2
Authorization and Validity of this Agreement and the Additional
Agreements..........41
3.3 No
Conflict.........................................................................42
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Due
Organization....................................................................43
4.2
Authorization and Validity of this Agreement and the Additional
Agreements..........43
4.3 No
Conflict.........................................................................43
4.4 Brokers,
Finders,
etc...............................................................44
4.5 Available
Funds.....................................................................44
4.6 Purchase
for
Investment.............................................................44
4.7 Legal
Proceedings...................................................................45
ARTICLE V
COVENANTS
5.1 Access;
Information and Records;
Confidentiality....................................45
5.2 Conduct of
the Businesses of the Company Prior to the Closing
Date..................46
5.3 Antitrust
Laws......................................................................51
5.4
Non-Solicitation....................................................................52
5.5 Additional
Agreements...............................................................53
5.6
Termination of Affiliate
Relations..................................................54
5.7 Further
Actions.....................................................................54
5.8
Insurance...........................................................................57
5.9 Access to
Records and
Personnel.....................................................57
5.10 Use of
Owens-Illinois
Name..........................................................58
5.11
Guarantees..........................................................................59
5.12 No Debt
59
5.13 Transfer of
Assets..................................................................60
5.14
Non-Competition.....................................................................60
5.15
Confidentiality.....................................................................63
5.16 No Third Party
Discussions..........................................................63
5.17 Remittance of
Accounts
Receivable...................................................64
5.18 Notice of
Developments..............................................................64
5.19
Financing-Related
Cooperation.......................................................65
5.20 New Jersey
Industrial Site Recovery
Act.............................................65
5.21 Delivery of
Financial
Information...................................................66
5.22 Confidentiality
Undertakings........................................................69
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions
Precedent to Obligations of
Parties......................................69
6.2 Conditions
Precedent to Obligations of
Buyer........................................70
6.3 Conditions
Precedent to the Obligations of
Seller...................................71
ARTICLE VII
TAXES
7.1
Termination of Tax Sharing
Agreements...............................................72
7.2 Seller's
Returns and
Taxes..........................................................72
7.3 Buyer's
Returns and
Taxes...........................................................73
7.4 Tax
Cooperation.....................................................................74
7.5 Tax
Indemnification.................................................................75
7.6 Contests;
Refunds...................................................................76
7.7 Transfer
Taxes......................................................................77
7.8 Conflicts;
Survival.................................................................77
ARTICLE VIII
LABOR MATTERS, EMPLOYEE RELATIONS AND BENEFITS
8.1 Parent
Plans, Company
Plans.........................................................77
8.2 Collective
Bargaining
Agreements....................................................78
8.3
Post-Closing
Benefits...............................................................78
8.4 Service
Credit........................................................................
8.5 Pension
and Retiree
Medical.........................................................79
8.6 Certain
Additional
Matters..........................................................80
8.7 Vacation
80
8.8 Welfare
Plans.......................................................................80
8.9 WARN
81
8.10 Annual
Bonuses......................................................................81
8.11 Transition
Services.................................................................81
8.12 Pre-Closing
Claims..................................................................82
8.13 No Third-Party
Beneficiary
Rights...................................................82
ARTICLE IX
INDEMNIFICATION
9.1 Survival
Period.....................................................................82
9.2
Indemnification by
Seller...........................................................83
9.3
Indemnification by
Buyer............................................................87
9.4
Indemnification
Calculations........................................................87
9.5
Indemnification
Procedures..........................................................89
9.6 Constar
Action; NAC Action; and Schedule 9.2(a) Claims
Indemnification..............90
ARTICLE X
MISCELLANEOUS
10.1 Certain
Definitions.................................................................91
10.2 Termination and
Abandonment.........................................................94
10.3 Fees and
Expenses...................................................................96
10.4 Notices
96
10.5 Entire
Agreement....................................................................97
10.6 No Third Party
Beneficiaries........................................................98
10.7
Assignability.......................................................................98
10.8 Amendment and
Modification;
Waiver..................................................98
10.9 Public
Announcements................................................................99
10.10 Section Headings Table
of Contents..................................................99
10.11
Severability........................................................................99
10.12
Counterparts........................................................................99
10.13
Enforcement........................................................................100
10.14 Choice of
Forum....................................................................100
10.15 Waiver of Jury
Trial...............................................................100
10.16 Governing
Law......................................................................101
10.17
Interpretation.....................................................................101
SCHEDULES
Schedule 1.3(a)(i)
Net Working Capital
Schedule 1.3(a)(ii)
2004 Budget
Schedule 1.3(a)(iii)
Pension Deficiency Amounts
Schedule 5.14(b)
Specified Health Care Products
EXHIBITS
Exhibit A
Form of Transition Services Agreement
Exhibit B(i)-B(ix)
Form of Contract Manufacturing Agreements
Exhibit C
Form of Resin Purchase Agreement
Exhibit D-(i) to D-(iii) Form
of Intellectual Property Agreements
INDEX OF DEFINED TERMS
Term
Page
1991 Cross
License............................................................................29
1991 Toyo
Agreement...........................................................................29
2003 Unaudited Pro Forma Financial
Statements.................................................11
2004 Adjusted Unaudited Pro Forma Financial
Statements........................................68
2004 Audited Financial
Statements.............................................................68
2004
Budget....................................................................................2
2004 March Adjusted Unaudited Pro Forma
Financial Statements..................................69
2004 Unaudited Pro Forma Financial
Statements.................................................68
2005
Plan.....................................................................................69
Accrued
Time..................................................................................80
Acquisition
Transactions......................................................................64
Additional
Agreements.........................................................................54
Additional Material
Contracts.................................................................32
Adjusted Unaudited Pro Forma Financial
Statements.............................................11
Adjustment
Statement...........................................................................2
Adjustments...................................................................................91
Affected
Party................................................................................76
Affiliate.....................................................................................91
Agreement......................................................................................1
Alternative
Financing.........................................................................55
Apportioned Tax
Attributes....................................................................20
Assignment
Contracts..........................................................................56
Audited Financial
Statements..................................................................10
Australian
Restructuring......................................................................74
Basket........................................................................................84
Books and
Records.............................................................................58
Burdensome
Condition..........................................................................51
Business......................................................................................91
Business
Day..................................................................................91
Business
Employee.............................................................................91
Buyer..........................................................................................1
Buyer Disclosure
Schedule.....................................................................43
Buyer Indemnified
Parties.....................................................................83
Buyer
Subs.....................................................................................6
Buyer Tax
Act.................................................................................76
Buyer's Acquired
Business.....................................................................62
Buyer's Competing
Operations..................................................................62
Buyer's Competitive
Business..................................................................61
Buyer's
Returns...............................................................................73
Buyer's
Taxes.................................................................................73
Cap...........................................................................................85
Capital Expenditures
Amount....................................................................2
Capital Expenditures Deficiency
Amount.........................................................3
Capital
Stock.................................................................................91
Cash..........................................................................................91
CBA
Consents..................................................................................78
Cleanup.......................................................................................91
Closing........................................................................................5
Closing Cash
Amount............................................................................2
Closing
Date...................................................................................5
Closing Date Balance
Sheet.....................................................................2
Closing
Deadline..............................................................................95
COBRA.........................................................................................81
Code..........................................................................................19
Collective Bargaining
Agreements..............................................................78
Commitment
Letters............................................................................44
Commitment Termination
Notice.................................................................95
Commodity
Closures............................................................................61
Company........................................................................................1
Company Intellectual
Property.................................................................30
Company Material
Contracts....................................................................32
Company
Plans.................................................................................24
Competition
Laws...............................................................................9
Conclusive Adjustment
Statement................................................................4
Conclusive
Statement...........................................................................4
Confidentiality
Agreement.....................................................................46
Consent
Contracts.............................................................................56
Contract Manufacturing
Agreements.............................................................53
Contributed
Assets............................................................................60
Control.......................................................................................92
Controlling
Party.............................................................................76
Corporate
Restructuring........................................................................8
CPT...........................................................................................90
Deficiency
Amount..............................................................................2
Employee
Plan.................................................................................23
Environmental
Laws............................................................................22
ERISA.........................................................................................23
ERISA
Affiliate...............................................................................23
Excess
Amount..................................................................................2
Executed Material
Agreements..................................................................34
Executed Material Confidential
Agreements.....................................................35
Executed Material Confidential
Summaries......................................................35
Financing.....................................................................................44
FIRPTA
Certificate............................................................................70
Foreign Benefit
Plan..........................................................................25
Foreign Subsidiary Capital
Stock...............................................................6
Foreign Subsidiary Purchase
Agreements.........................................................7
Foreign Subsidiary Purchase Incremental
Taxes..................................................7
GAAP..........................................................................................92
Governmental
Approval.........................................................................92
Governmental
Authority........................................................................21
Governmental
Licenses.........................................................................21
Guarantees....................................................................................59
Hazardous
Materials...........................................................................92
Health Care
Products..........................................................................62
Historical Financial
Statements...............................................................10
HSR
Act........................................................................................9
Indebtedness..................................................................................92
Indemnified
Party.............................................................................89
Indemnifying
Party............................................................................89
Indemnity
Notice..............................................................................90
Information
Memorandum........................................................................93
Intellectual
Property.........................................................................30
Intellectual Property
Agreements..............................................................54
IP
Contracts..................................................................................28
ISRA..........................................................................................65
June Adjusted Unaudited Pro Forma Financial
Statements........................................67
June Unaudited Financial
Statements...........................................................67
June Unaudited Pro Forma Financial
Statements.................................................67
Knowledge.....................................................................................93
Law...........................................................................................93
Lease.........................................................................................16
Leased Real
Property..........................................................................16
Lenders.......................................................................................44
Liens.........................................................................................93
Losses........................................................................................83
March Unaudited Financial
Statements..........................................................68
March Unaudited Pro Forma Financial
Statements................................................69
Material Adverse
Effect.......................................................................93
Material
Contracts............................................................................32
May 31 Unaudited Pro Forma Balance
Sheet......................................................11
May Unaudited Financial
Statement.............................................................10
May Unaudited Pro Forma Financial
Statements..................................................11
Monthly Unaudited Pro Forma Financial
Statements..............................................66
Net Working
Capital............................................................................3
Neutral
Auditor................................................................................3
NJDEP.........................................................................................66
O-I............................................................................................1
O-I
Agreements................................................................................55
O-I Disclosure
Schedule........................................................................6
O-I
Mexico....................................................................................57
O-I
Names.....................................................................................58
O-I
Parties...................................................................................16
Other Material
Contracts......................................................................33
Owens Illinois Plastic Container
Business.....................................................93
Owned Real
Property...........................................................................15
P&G...........................................................................................28
P&G
Agreement.................................................................................28
Parcel........................................................................................15
Parent
Plans..................................................................................77
Parties........................................................................................1
Party..........................................................................................1
Payment
Date..................................................................................81
Pension
Plans.................................................................................79
Permitted
Liens...............................................................................16
Person........................................................................................93
Plan..........................................................................................74
Plastic Molding
Technology....................................................................30
Pre-Closing
Periods...........................................................................75
Pro Rata Bonus
Payment........................................................................81
Purchase.......................................................................................1
Purchase
Price.................................................................................1
Qualified Employee
Plan.......................................................................24
R&B
Agreement.................................................................................29
Real
Property.................................................................................16
Release.......................................................................................93
Remediation
Standard..........................................................................93
Representatives...............................................................................46
Resin Purchase
Agreement......................................................................54
Resolution
Period..............................................................................3
Retained
Assets...............................................................................60
Retained Inactive
Employee....................................................................50
Retained Inactive
Employees...................................................................78
Retained
Indebtedness..........................................................................2
Retained
Subsidiaries..........................................................................8
Retiree Medical
Plans.........................................................................80
Returns.......................................................................................18
SAS
100.......................................................................................67
Schedule 9.2(a)
Claims........................................................................84
Securities
Act................................................................................44
Seller.........................................................................................1
Seller Bonus
Plans............................................................................81
Seller Indemnified
Parties....................................................................87
Seller
IP.....................................................................................31
Seller's Acquired
Business....................................................................61
Seller's Closure
Business.....................................................................61
Seller's Competing
Operations.................................................................61
Seller's Health Care
Business.................................................................61
Seller's
Returns..............................................................................72
September Adjusted Unaudited Pro Forma
Financial Statements...................................68
September Unaudited Financial
Statements......................................................67
September Unaudited Pro Forma Financial
Statements............................................67
Significant
Agreement.........................................................................34
Spare Parts
Amount.............................................................................2
Spare Parts Deficiency
Amount..................................................................3
Spare Parts Excess
Amount......................................................................3
Specified
Subsidiaries.........................................................................8
Statement......................................................................................2
Stock..........................................................................................1
Straddle
Period...............................................................................73
Subsidiary....................................................................................94
Tax...........................................................................................18
Tax
Claim.....................................................................................76
Taxes.........................................................................................18
Termination
Fee...............................................................................96
Third Party
Claim.............................................................................89
Three Party
Agreements........................................................................55
Top 10
Suppliers..............................................................................39
Top 20
Customers..............................................................................39
Toyo..........................................................................................29
Transfer
Taxes................................................................................77
Transition Services
Agreement.................................................................53
Unaudited Pro Forma Financial
Statements......................................................11
Unexecuted Material Agreement
Summaries.......................................................34
Unexecuted Material
Agreements................................................................34
Unexecuted Material Confidential Agreement
Summaries..........................................35
Unexecuted Material Confidential
Agreements...................................................35
Union
Employees...............................................................................78
WARN
Act......................................................................................81
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STOCK PURCHASE AGREEMENT, dated as of July 28, 2004 (the
"Agreement"), among Graham Packaging
Company, L.P., a Delaware limited
partnership ("Buyer"), OI Plastic Products
FTS, Inc., a Delaware corporation
("Seller"), an indirect and wholly owned
subsidiary of Owens-Illinois, Inc., a
Delaware corporation ("O-I"), and O-I.
Buyer, Seller and O-I are collectively
referred to herein as the "Parties" and
each individually as a "Party."
W I T N E S S E T H:
WHEREAS, Seller owns 82,383 shares of common stock, no par
value, of Owens-Brockway Plastic Products
Inc., a Delaware corporation (the
"Company"), constituting all the issued and
outstanding Capital Stock (as
defined below) of the Company (all such
shares being referred to herein as the
"Stock");
WHEREAS, O-I and Seller desire to sell to Buyer, and Buyer
desires to purchase from Seller, the Stock
upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, the Board of Directors of each of O-I and Seller,
and the general partner of Buyer has
approved the sale and purchase of the
Stock upon the terms and subject to the
conditions set forth in this Agreement
(the "Purchase"); and
WHEREAS, prior to the consummation of the Purchase, O-I and
Seller shall cause the Corporate
Restructuring (as defined below) to be
completed.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties,
covenants and agreements set forth in
this Agreement, and intending to be legally
bound hereby, the Parties agree as
follows:
ARTICLE I
THE PURCHASE; CERTAIN RELATED MATTERS
1.1 The Purchase. Subject to the satisfaction or waiver of
the conditions set forth in this Agreement,
at the Closing (as defined below),
Seller shall, and O-I shall or shall cause
Seller to, sell, convey, assign,
transfer and deliver to Buyer the Stock
representing the entire issued and
outstanding Capital Stock of the Company,
free and clear of all Liens (as
defined below).
1.2 Purchase Price. The purchase price for the Stock shall be
$1,200,000,000 (the "Purchase Price"),
subject to the purchase price
adjustments set forth in Section 1.3. The
Purchase Price shall be payable in
immediately available federal funds to a
U.S. bank account of Seller designated
by Seller in writing to Buyer at least two
Business Days (as defined below)
prior to Closing.
1.3 Purchase Price Adjustments.
(a) Within 90 calendar days after the Closing Date, Buyer
shall prepare and deliver to Seller a
balance sheet of the Company and its
Subsidiaries as of the close of business on
the Closing Date (the "Closing Date
Balance Sheet") and a statement (the
"Statement") setting forth the (i) Net
Working Capital (as defined below)
reflected in the Closing Date Balance Sheet,
and the components and calculation thereof,
as of the close of business of the
Company and its Subsidiaries on the Closing
Date, (ii) the aggregate amount of
any Indebtedness (as defined below)
outstanding as of the Closing Date
excluding Indebtedness incurred in
connection with the Financing (as defined
below) (the "Retained Indebtedness"), net
of any Cash (as defined below)
reflected on the Closing Date Balance Sheet
(the "Closing Cash Amount"), (iii)
the aggregate amount of capital
expenditures made by the Company and its
Subsidiaries from January 1, 2004 through
the Closing Date (the "Capital
Expenditures Amount") and (iv) the
aggregate amount of spare parts reflected in
the Closing Date Balance Sheet (the "Spare
Parts Amount"). All spare parts of
the Company and its Subsidiaries reflected
on the Closing Date Balance Sheet
are usable in machinery and equipment
currently used or held for use in the
Business and are free of any obvious
damage. The Closing Date Balance Sheet and
the Statement will be prepared in
accordance with the principles and procedures
set forth on Schedule 1.3(a)(i), GAAP (as
defined below) consistently applied,
and to the extent consistent with GAAP, the
methods used in preparing the
Audited Financial Statements (as defined
below) and the Unaudited Pro Forma
Financial Statements (as defined below);
provided, however, that the principles
and procedures set forth on Schedule
1.3(a)(i) shall govern the preparation of
the Closing Date Balance Sheet and the
Statement. Concurrently therewith, Buyer
shall cause to be prepared and delivered to
Seller a statement (the "Adjustment
Statement") setting forth the calculations
of (A) the amount by which the Net
Working Capital as shown on the Statement
(x) exceeds $195,908,000 (as such
amount may be amended by the Parties (as
defined below) as set forth on
Schedule 1.3(a)(i), the "Excess Amount") or
(y) is less than $195,908,000 (as
such amount may be amended by the Parties
as set forth on Schedule 1.3(a)(i),
the "Deficiency Amount"), (B) the amount of
Retained Indebtedness, net of the
Closing Cash Amount, (C) the amount, if
any, by which the Capital Expenditures
Amount is less than (x) if the Closing
occurs prior to January 1, 2005, (1) the
aggregate amount of capital expenditures
planned to be made by the Company and
its Subsidiaries pursuant to the Company's
2004 capital budget attached hereto
as Schedule 1.3(a)(ii) (the "2004 Budget")
for each full calendar month in 2004
elapsed prior to the Closing Date plus (2)
the product of the amount of capital
expenditures planned to be made by the
Company and its Subsidiaries pursuant to
the 2004 Budget during the calendar month
in which the Closing occurs and a
fraction, the numerator of which is the
actual number of days elapsed in the
calendar month in which the Closing occurs
and the denominator of which is the
actual number of days in the calendar month
in which the Closing occurs or (y)
if the Closing occurs on or after January
1, 2005, an amount equal to the sum
of (1) $43,700,000 and (2) the product of
$60,000,000 and a fraction, the
numerator of which is the number of days
elapsed from January 1, 2005 to the
Closing Date and the denominator of which
is 365 (the amount determined
pursuant to clause (x) or (y) above, as
applicable, the "Capital Expenditures
Deficiency Amount"), (D) the amount by
which the Spare Parts Amount as shown on
the Statement (x) exceeds $25,400,000 (the
"Spare Parts Excess Amount") or (y)
is less than $23,400,000 (the "Spare Parts
Deficiency Amount") and (E) the
Pension Deficiency Amount. "Net Working
Capital" shall mean (without
duplication) (a) the sum of inventory (raw
materials, work in process,
in-transit inventory, finished goods and
supplies, net of all related reserves
and excluding the LIFO reserve); provided,
however, in no event for purposes of
calculating Net Working Capital shall
inventory exceed $155,500,000, plus trade
accounts receivable (net of all related
reserves) plus prepaid expenses
(excluding any prepaid or deferred Taxes
(as defined below)) less (b) trade
accounts payable plus salaries and wages
plus other accrued liabilities
(excluding any accrued Taxes or
Indebtedness). In addition, within 90 calendar
days after the Closing Date, each of O-I
and Buyer shall use its commercially
reasonable best efforts to have the
Designated Actuary (as defined in Schedule
1.3(a)(iii)) prepare and deliver the
Pension Deficiency Amount Report (as
defined in Schedule 1.3(a)(iii)) in
accordance with Schedule 1.3(a)(iii),
setting forth the aggregate amount of any
Pension Deficiency Amount (as defined
in Schedule 1.3(a)(iii)) as of the Closing
Date as determined in accordance
with Schedule 1.3(a)(iii).
(b) After receipt of the Statement and the Adjustment
Statement, Seller will have 30 calendar
days to review the Statement and the
Adjustment Statement together with the work
papers used in their preparation.
Unless Seller delivers written notice to
Buyer setting forth the specific items
disputed by Seller, on or prior to the
thirtieth day after its receipt of the
Statement and the Adjustment Statement,
Seller will be deemed to have accepted
and agreed to the Statement and the
Adjustment Statement and such agreement
will be final and binding. If Seller so
notifies Buyer of its objections to any
of the Statement or the Adjustment
Statement, Buyer and Seller will, within 30
days following the notice (the "Resolution
Period"), attempt to resolve their
differences. Any resolution by Buyer and
Seller during the Resolution Period as
to any disputed amounts will be final,
binding and conclusive.
(c) If Buyer and Seller do not resolve all disputed items on
the Statement and Adjustment Statement by
the end of the Resolution Period,
then all items remaining in dispute will be
submitted within 30 days after the
expiration of the Resolution Period to a
partner of PricewaterhouseCoopers or
such other national independent accounting
firm mutually acceptable to Buyer
and Seller (the "Neutral Auditor"). The
Neutral Auditor shall act as an
arbitrator to determine only those items in
dispute. Buyer, Seller and O-I
shall cooperate with the Neutral Auditor
and, subject to customary
confidentiality and indemnity agreements,
provide the Neutral Auditor with
access to the books, records, personnel and
representatives of it and such
other information as such firm may require
in order to render its
determination. All fees and expenses
relating to the work, if any, to be
performed by the Neutral Auditor will be
allocated between Buyer, on the one
hand, and Seller and O-I, on the other
hand, in the same proportion that the
aggregate amount of the disputed items so
submitted to the Neutral Auditor that
is unsuccessfully disputed by each such
Party (as finally determined by the
Neutral Auditor) bears to the total amount
of such disputed items so submitted.
The Neutral Auditor will deliver to Buyer
and Seller a written determination
(such determination to include a work sheet
setting forth all material
calculations used in arriving at such
determination and to be based solely on
information provided to the Neutral Auditor
by Buyer and Seller) of the
disputed items within 45 days of receipt of
the disputed items, which
determination will be final, binding and
conclusive. Notwithstanding the
foregoing, the Neutral Auditor shall not be
permitted or authorized to
determine an amount with respect to any
disputed item that is outside of the
range between the amounts of such disputed
item as finally proposed by Buyer,
on the one hand, and Seller and O-I, on the
other hand. The final, binding and
conclusive Statement and Adjustment
Statement, which either are agreed upon by
Buyer and Seller or are delivered by the
Neutral Auditor in accordance with
this Section 1.3, will be the "Conclusive
Statement" and the "Conclusive
Adjustment Statement," respectively. In the
event that either Buyer or Seller
fails to submit its statement regarding any
items remaining in dispute within
the time determined by the Neutral Auditor,
then the Neutral Auditor shall
render a decision based solely on the
evidence timely submitted to the Neutral
Auditor by Buyer and Seller.
(d) If the Conclusive Adjustment Statement contains a
Deficiency Amount, the Purchase Price will
be reduced dollar-for-dollar by such
Deficiency Amount and Seller and O-I,
jointly and severally, shall pay to Buyer
an amount in cash equal to such Deficiency
Amount. If the Conclusive Adjustment
Statement contains an Excess Amount, the
Purchase Price will be increased
dollar-for-dollar by such Excess Amount,
and Buyer shall pay to Seller an
amount in cash equal to such Excess Amount.
If the Conclusive Adjustment
Statement contains a Spare Parts Deficiency
Amount, the Purchase Price will be
reduced dollar-for-dollar by such Spare
Parts Deficiency Amount and Seller and
O-I, jointly and severally, shall pay to
Buyer an amount in cash equal to such
Spare Parts Deficiency Amount. If the
Conclusive Adjustment Statement contains
a Spare Parts Excess Amount, the Purchase
Price will be increased
dollar-for-dollar by such Spare Parts
Excess Amount, and Buyer shall pay to
Seller an amount in cash equal to such
Spare Parts Excess Amount. The Purchase
Price will also be reduced
dollar-for-dollar by the Retained Indebtedness net
of the Closing Cash Amount, the Pension
Deficiency Amount and the Capital
Expenditures Deficiency Amount, if any, and
Seller and O-I, jointly and
severally, shall pay to Buyer an amount in
cash equal to the Capital
Expenditures Deficiency Amount, Pension
Deficiency Amount and Retained
Indebtedness net of the Closing Cash
Amount; provided, however, with respect to
items of Retained Indebtedness, in lieu of
making a payment to Buyer in the
amount of such Retained Indebtedness, to
the extent permitted under the
agreements to such Indebtedness and to the
extent such Indebtedness is then
outstanding, Seller and O-I may elect to
redeem, repay and cancel in full all
such items of Retained Indebtedness or
otherwise eliminate all liability
(contingent or otherwise) of the Companies
and its Subsidiaries for such items
of Retained Indebtedness and deliver to
Buyer evidence thereof, in form and
substance satisfactory to Buyer. To the
extent any Retained Indebtedness is
denominated in a currency other than
dollars, the equivalent thereof in dollars
shall be determined in accordance with
Schedule 1.3(a)(i). All payments to be
made pursuant to this Section 1.3(d) will
be made no later than the fifth
Business Day following the date on which
Buyer and Seller agree to, or the
Neutral Auditor delivers, the Conclusive
Statement and the Conclusive
Adjustment Statement. Any payment required
to be made by Buyer, on the one
hand, or Seller and O-I, on the other hand,
pursuant to this Section 1.3(d)
shall bear interest from the Closing Date
through the date of payment at a rate
of interest equal to the prime rate per
annum publicly announced from time to
time by Citibank, N.A. at its principal
office in New York City, and shall be
payable by wire transfer of immediately
available funds to an account or
accounts designated by the Party entitled
to receive such funds at least two
Business Days prior to the date when such
payment is due.
1.4 Closing. Unless this Agreement shall have been terminated
and the transactions herein contemplated
shall have been abandoned pursuant to
Section 10.2, and subject to the
satisfaction or waiver of the conditions set
forth in Article VI, the closing of the
Purchase (the "Closing") will take
place at 10:00 a.m. on the second Business
Day (the "Closing Date"), following
the satisfaction or waiver of each of the
conditions set forth in Article VI
(other than those conditions that by their
nature are to be satisfied at the
Closing (but subject to the satisfaction or
waiver thereof)), at the offices of
Skadden, Arps, Slate, Meagher & Flom
LLP, Four Times Square, New York, NY
10036, unless another date, time or place
is agreed to in writing by the
Parties. The Closing shall be deemed
effective as of 12:01 a.m., New York City
time, on the Closing Date.
1.5 Closing Deliveries.
(a) At the Closing, Buyer shall deliver, or cause one or more
of its Affiliates to deliver, to
Seller:
(i) the Purchase Price as provided in Section 1.2;
(ii) the documents described in Section 6.3; and
(iii) such other documents and instruments as counsel for
Buyer and Seller mutually agree to be reasonably necessary to
consummate the transactions described herein.
(b) At the Closing, O-I and Seller shall deliver, or cause
one or more of their Affiliates to deliver,
to Buyer:
(i) stock certificates evidencing the Stock duly endorsed,
for transfer to Buyer or accompanied by stock powers duly executed
in
blank and with any required stock Transfer Tax stamps affixed
thereto;
(ii) the documents described in Section 6.2;
(iii) a document duly executed by Seller reciting that such
document shall become effective simultaneously with the Closing
that
(A) consents to the appointment as officers and directors of
the
Company and each of its Subsidiaries of those persons designated
by
notice given by Buyer to the Company at least two days prior to
the
Closing, naming such persons and (B) effects the resignation of
existing officers and directors of the Company and each of its
Subsidiaries;
(iv) all of the Books and Records (as defined below) of
Seller and O-I relating to the Company, its Subsidiaries and
the
Business (as defined below);
(v) evidence, satisfactory in form and substance to Buyer,
that all Indebtedness (other than as set forth on Section 5.12 of
the
schedule of disclosures delivered by O-I and Seller to Buyer
concurrent with the execution of this Agreement (the "O-I
Disclosure
Schedule") or as may be otherwise agreed by Buyer and Seller) has
been
redeemed or repaid by Seller or with respect to items of
Indebtedness
referred to in clause (e) or clause (f) of the definition of
Indebtedness, Seller shall have otherwise eliminated all
liability
(contingent or otherwise) of the Company and its Subsidiaries for
such
items of Indebtedness, any Liens that existed in connection
therewith
have been released and discharged and all guarantees set forth
on
Section 1.5(b)(v) of the O-I Disclosure Schedule made by the
Company
and any of its Subsidiaries of Indebtedness of Seller or any of
its
Affiliates have been released;
(vi) such instruments of transfer and other documents and
instruments as shall be necessary to consummate the transfer, if
any,
of the Foreign Subsidiary Capital Stock (as defined below) in
accordance with the provisions of the Foreign Subsidiary
Purchase
Agreements (as defined below); and
(vii) such other documents and instruments as counsel for
Buyer and Seller mutually agree to be reasonably necessary to
consummate the transactions described herein.
1.6 Foreign
Subsidiaries. Not later than the earlier of (i)
15 days following receipt by Buyer of all
Tax and other relevant financial
information relating to the Foreign
Subsidiaries as reasonably requested by
Buyer and an opportunity to review such
information with O-I and (ii) 30 days
following the date hereof, Buyer shall have
the right to provide to O-I a
written list identifying the Affiliate(s)
of Buyer (the "Buyer Subs") that
Buyer proposes to acquire directly the
Capital Stock of one or more of the
following Subsidiaries on the Closing Date
(the "Foreign Subsidiary Capital
Stock"): each of the Specified Subsidiaries
(as defined below), Lancop, S.A. de
C.V., Continental PET Holdings, S. de R.L.
de C.V., Continental PET
Technologies de Mexico, S.A., de C.V.,
Owens-Illinois Plastic Products de
Mexico, S. de R.L. de C.V., Consultores en
Controles, S.A. de C.V. and
Especialidades Technologicas, S.A. de C.V.;
provided that Buyer shall not
unreasonably delay in providing such list
to O-I within the relevant period.
Within 10 days following Seller's receipt
of the foregoing written list, O-I
and Buyer shall negotiate, and cause their
respective Affiliates to, execute
and deliver commercially reasonable
agreement(s) (the "Foreign Subsidiary
Purchase Agreements") pursuant to which the
Buyer Subs shall acquire the
Foreign Subsidiary Capital Stock directly
from the Affiliates of O-I that own
such Foreign Subsidiary Capital Stock for
no additional consideration, and each
such Foreign Subsidiary Purchase Agreement
shall set forth the portion of the
Purchase Price as the Parties may
reasonably agree allocable to each seller of
Foreign Subsidiary Capital Stock.
Notwithstanding the foregoing, to the extent
that the structure contemplated by the
Foreign Subsidiary Purchase Agreements
(i) differs materially from the steps set
forth in Section 5.13(c) of the O-I
Disclosure Schedule with respect to the
Corporate Restructuring and (ii)
results in any material incremental Taxes
("Foreign Subsidiary Purchase
Incremental Taxes") to O-I, Buyer shall
indemnify Seller for such Foreign
Subsidiary Purchase Incremental Taxes as
set forth in Section 7.5(b)(ii).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF O-I AND SELLER
O-I and
Seller, jointly and severally, represent and warrant
to Buyer as follows, in each case, as of
the date hereof and as of the Closing
Date (or, in each case, if made as of a
specific date, as of such date):
2.1 Due Organization.
(a) Seller is a corporation duly organized, validly existing
and in good standing under the Laws (as
defined below) of the State of
Delaware. Seller has all requisite
corporate power and authority to enter into
this Agreement and the Additional
Agreements (as defined below) to which it is
a party and to perform its obligations
under this Agreement and the Additional
Agreements.
(b) Each of the Company and its Subsidiaries is duly
organized, validly existing and in good
standing under the Laws of the
jurisdiction of its organization. Each of
the Company and its Subsidiaries (i)
has all requisite corporate or other power
and authority to own its properties
and assets and to carry on its business as
it is now being conducted and (ii)
is duly qualified to own its properties and
assets and transact business as a
foreign corporation and is in good standing
in each jurisdiction in which such
qualification is required, except to the
extent the failure to so qualify would
not, individually or in the aggregate,
reasonably be expected to have a
Material Adverse Effect (as defined below).
Seller has delivered, or caused to
be delivered, to Buyer true, correct and
complete copies of the certificate of
incorporation and bylaws or similar
organizational documents of the Company and
each of its Subsidiaries as presently in
effect. Section 2.1(b) of the O-I
Disclosure Schedule sets forth the name and
jurisdiction of incorporation of
the Company and each of its Subsidiaries
and the jurisdictions in which the
Company and each of its Subsidiaries is
qualified to do business.
2.2 Authorization and Validity of this Agreement and the
Additional Agreements. The execution,
delivery and performance by Seller of
this Agreement and the Additional
Agreements to which it is a party and the
consummation by it of the transactions
contemplated hereby and thereby have
been duly authorized by its board of
directors and all other necessary
corporate action on the part of Seller, and
no other corporate action on the
part of Seller is necessary for the
execution, delivery and performance by
Seller of this Agreement and the Additional
Agreements to which it is a party
and the consummation by it of the
transactions contemplated hereby and thereby.
This Agreement has been, and each of the
Additional Agreements to which it is a
party have been, or at the Closing will be,
duly and validly executed and
delivered by Seller and, assuming the due
authorization, execution and delivery
by the other parties hereto and thereto
(other than O-I), is a legal, valid and
binding obligation of Seller, enforceable
against Seller in accordance with
their respective terms, except to the
extent that its enforceability may be
limited by bankruptcy, insolvency,
reorganization, moratorium or other laws
relating to or affecting creditors' rights
generally and by general equity
principles.
2.3 Subsidiaries.
(a) Except as set forth on Section 2.3(a) of the O-I
Disclosure Schedule, (i) the Company does
not own, directly or indirectly, nor
have the right or option to acquire, any
Capital Stock of any Person (as
defined below) or have any direct or
indirect equity or ownership interest in
any business or Person and (ii) neither the
Company nor any of its Subsidiaries
is a party to any partnership agreement,
joint venture agreement or similar
arrangement with any other Person.
(b) Section 2.3(b) of the O-I Disclosure Schedule lists the
entities owned by the Company or any of its
Subsidiaries as of the date hereof
that will be transferred to O-I or its
Affiliates (other than the Company and
any of its Subsidiaries) prior to the
Closing Date (such entities, the
"Retained Subsidiaries").
(c) Subject to Section 1.6, Section 7.4(b) and Section
7.4(c), Section 2.3(c) of the O-I
Disclosure Schedule lists the entities owned
by O-I or its Affiliates (other than the
Company and any of its Subsidiaries)
as of the date hereof that will be
transferred to the Company or any of its
Subsidiaries prior to the Closing Date
(such entities, the "Specified
Subsidiaries," and the transactions
described in Sections 2.3(b) and 2.3(c),
collectively with the transfer of assets
contemplated by Section 5.13, the
"Corporate Restructuring").
2.4 No Conflict. Except as set forth on Section 2.4 of the
O-I Disclosure Schedule, the execution,
delivery and performance by Seller of
this Agreement and the Additional
Agreements to which it is a party and the
consummation by Seller of the transactions
contemplated hereby and thereby: (a)
does not and will not violate or conflict
with in any material respect any
provision of Law applicable to Seller, the
Company or any of its Subsidiaries
or any of their respective properties or
assets; (b) does not and will not
require any consent or approval of, or
filing with or notice to, any
Governmental Authority (as defined below)
under any provision of Law applicable
to Seller, the Company or any of its
Subsidiaries, except for the requirements
of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the
"HSR Act"), and any consent, approval,
filing or notice as may be required
under similar Laws in any applicable
jurisdiction outside the United States
(collectively, "Competition Laws"), and
except for any consent, approval,
filing or notice requirements that become
applicable solely as a result of the
specific regulatory status of Buyer or its
Affiliates or that Buyer or its
Affiliates are otherwise required to
obtain; (c) does not and will not violate
or conflict with any provision of the
certificate of incorporation, bylaws or
similar organizational documents of Seller,
the Company or any of its
Subsidiaries; and (d) does not and will not
require any consent, approval or
notice under, and does not and will not
conflict with, or result in the breach
or termination of, or constitute (or but
for the passage of time, the giving of
notice or both would constitute) a default
or give rise to any right of payment
under, or result (or but for the passage of
time, the giving of notice or both
would result) in the acceleration of the
performance by Seller or the Company
or any of its Subsidiaries under, or the
termination, amendment or cancellation
of any indenture, mortgage, deed of trust,
lease, license, franchise, contract,
agreement or any other similar instrument
or obligation to which Seller or the
Company or any of its Subsidiaries is a
party or by which any of them, or any
of their respective properties or assets
are bound or encumbered, except in
this clause (d) for violations, conflicts,
breaches, or defaults which, or
consents, approvals or waivers (in each
case, other than with respect to any
Company Material Contract (as defined
below) or IP Contract (as defined below))
the absence of which would not,
individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect
or would not prevent or materially
delay the consummation of the transactions
contemplated by this Agreement and
the Additional Agreements.
2.5 Capitalization; Ownership of Stock.
(a) The authorized Capital Stock of the Company consists of
300,000 shares of common stock, no par
value per share, 82,383 of which are
outstanding as of the date hereof. Seller
is, and will be on the Closing Date,
the record and beneficial owner of the
Stock. The Stock represents all of the
issued and outstanding Capital Stock of the
Company and there are no other
authorized shares of or other interests in
the Capital Stock of the Company.
Except as set forth on Section 2.5(a) of
the O-I Disclosure Schedule, Seller
holds the Stock free and clear of all
Liens. The Stock has been duly authorized
and validly issued and is fully paid and
nonassessable. Upon the consummation
of the Purchase, Buyer will have good and
marketable title to the Stock, free
and clear of all Liens.
(b) Section 2.5(b) of the O-I Disclosure Schedule sets forth
the authorized and outstanding Capital
Stock of each Subsidiary of the Company
and each Specified Subsidiary. Except as
set forth on Section 2.5(b) of the O-I
Disclosure Schedule, all the outstanding
shares of Capital Stock of each
Subsidiary and each Specified Subsidiary
have been validly issued and are fully
paid and nonassessable and are or, in the
case of the Specified Subsidiaries,
on the Closing Date, will be owned by the
Company or a wholly-owned Subsidiary
of the Company free and clear of all
Liens.
(c) There are no (i) outstanding options, warrants, calls,
voting agreements or other rights of any
kind relating to the sale, transfer,
issuance or voting of any Capital Stock of
any class of, or other ownership
interests in, the Company or any of its
Subsidiaries that have been issued,
granted or entered into by Seller, the
Company or any of its Subsidiaries or
any of their Affiliates or any securities
convertible into or evidencing the
right to purchase any Capital Stock of any
class of, or other ownership
interests in, the Company or any of its
Subsidiaries, (ii) shares of the
Capital Stock of the Company or any of its
Subsidiaries reserved for any
purpose, (iii) preemptive or similar rights
with respect to the issuance, sale
or other transfer (whether present, past or
future) of the Capital Stock of the
Company or any of its Subsidiaries; or (iv)
agreements or other obligations
(contingent or otherwise) that may require
the Company or any of its
Subsidiaries to repurchase, redeem or
otherwise acquire any of its Capital
Stock.
2.6 Financial Statements.
(a) Section 2.6(a) of the O-I Disclosure Schedule contains
true, correct and complete copies of:
(i) the audited combined balance sheet of the
Owens-Illinois Plastic Container Business (as defined below) as
of
December 31, 2003 and December 31, 2002 and the related
combined
statements of results of operations, cash flows and net parent
investment for each of the three years in the period ended
December
31, 2003 (together with the notes thereto and related report of
independent auditors, the "Audited Financial Statements");
(ii) the unaudited combined balance sheet of the
Owens-Illinois Plastic Container Business as of May 31, 2004 and
the
related unaudited combined statement of results of operations for
the
five month period then ended (together with the notes thereto,
the
"May Unaudited Financial Statement" and, together with the
Audited
Financial Statements, the "Historical Financial Statements");
(iii) the pro forma unaudited consolidated balance sheet of
the Business as of December 31, 2003, and the related pro forma
unaudited consolidated results of operations for the year ended
December 31, 2003 (together with the notes thereto, the "2003
Unaudited Pro Forma Financial Statements");
(iv) the pro forma unaudited consolidated balance sheet of
the Business as of May 31, 2004 (the "May 31 Unaudited Pro
Forma
Balance Sheet") and the related pro forma unaudited
consolidated
results of operations for the five month period then ended
(together
with the notes thereto, the "May Unaudited Pro Forma Financial
Statements" and, together with the 2003 Unaudited Pro Forma
Financial
Statements, the "Unaudited Pro Forma Financial Statements");
and
(v) (A) a schedule setting forth reconciliations from EBIT
to EBITDA, both as
derived from the 2003 Unaudited Pro Forma Financial
Statements, to adjusted EBIT and adjusted EBITDA before
corporate
allocations, both as presented in section 8 of the Information
Memorandum, by application of the Adjustments and (B) a
schedule
setting forth reconciliations from EBIT and EBITDA, both as
derived
from the May Unaudited Pro Forma Financial Statements, to
adjusted
EBIT and adjusted EBITDA before corporate allocations, by
application
of the Adjustments (the schedules in clause (A) and (B), the
"Adjusted
Unaudited Pro Forma Financial Statements").
(b) The Historical Financial Statements have been, and if
delivered, the June Unaudited Financial
Statements (as defined below), the
September Unaudited Financial Statements
(as defined below), the March
Unaudited Financial Statements (as defined
below) and the 2004 Audited
Financial Statements (as defined below)
will be, prepared from the Books and
Records (as defined below) of the Company
and its Subsidiaries and Affiliates
in accordance with GAAP applied on a
consistent basis throughout the periods
covered thereby, except as may be indicated
in the notes thereto. Except as set
forth on Section 2.6(b) of the O-I
Disclosure Schedule, the Historical
Financial Statements present fairly in all
material respects, and if delivered
the June Unaudited Financial Statements,
September Unaudited Financial
Statements, March Unaudited Financial
Statements and the 2004 Audited Financial
Statements will present fairly in all
material effects, the combined financial
position and combined statements of results
of operations of the Owens-Illinois
Plastic Container Business, as of the dates
and for the periods stated therein,
subject in the case of the June Unaudited
Financial Statements and, if
delivered the September Unaudited Financial
Statements and March Unaudited
Financial Statements, to normal year-end
adjustments consistent with past
practice that are not or will not be
material either individually or in the
aggregate.
(c) The Unaudited Pro Forma Financial Statements have been,
and if delivered, the June Unaudited Pro
Forma Financial Statements (as defined
below), the September Unaudited Pro Forma
Financial Statements (as defined
below), the March Unaudited Financial
Statements (as defined below) and the
2004 Unaudited Pro Forma Financial
Statements (as defined below) will be,
prepared from the Books and Records of the
Company and its Subsidiaries and
Affiliates in accordance with GAAP applied
on a consistent basis throughout the
periods covered thereby, except as may be
indicated in the notes thereto.
Except as set forth on Section 2.6(c) of
the O-I Disclosure Schedule, the
Unaudited Pro Forma Financial Statements
present fairly in all material
respects, and, if delivered, the June
Unaudited Pro Forma Financial Statements,
the September Unaudited Pro Forma Financial
Statements, the March Unaudited
Financial Statements and the 2004 Unaudited
Pro Forma Financial Statements will
present fairly in all material respects,
the pro forma combined financial
position and the pro forma combined
statements of results of operations of the
Business, as of the dates and for the
periods then ended, giving effect to the
Corporate Reorganization as if consummated
on the last day of the periods
presented for purposes of the combined
balance sheets and as if consummated on
the first day of the periods presented for
purposes of the combined statements
of operations.
(d) The Adjusted Unaudited Pro Forma Financial Statements
reflect and, if delivered, the June
Adjusted Unaudited Pro Forma Financial
Statements (as defined below), the
September Adjusted Unaudited Pro Forma
Financial Statements (as defined below),
the March Adjusted Unaudited Pro Forma
Financial Statements (as defined below) and
the 2004 Adjusted Unaudited Pro
Forma Financial Statements will reflect,
the application of the Adjustments to
the Pro Forma Unaudited Financial
Statements, the June Unaudited Pro Forma
Financial Statements, the September
Unaudited Pro Forma Financial Statements,
the March Unaudited Pro Forma Financial
Statements and the 2004 Adjusted
Unaudited Pro Forma Financial Statements,
respectively. The Adjustments have
been prepared from the Books and Records of
the Company and its Subsidiaries
and Affiliates, except for the adjustment
for the cost of stand-alone insurance
coverage that represents management's best
estimate of the related cost.
2.7 Absence of Material Adverse Change. Except (i) as set
forth on Section 2.7 of the O-I Disclosure
Schedule and (ii) for the
consummation of the Corporate
Restructuring, since December 31, 2003, the
Company and each of its Subsidiaries have
conducted and operated the Business
in the ordinary course of business
consistent with past practice, and none of
the Company or any of its Subsidiaries
has:
(a) redeemed, purchased or otherwise acquired, directly or
indirectly, any Stock or other Capital
Stock of the Company or any of its
Subsidiaries or declared, set aside for
payment or paid any dividends or other
distributions (whether Cash, Capital Stock
or property) with respect to any of
their Capital Stock;
(b) issued, sold or transferred any of its Capital Stock,
securities convertible into its Capital
Stock or warrants, options or other
rights to acquire its Capital Stock, or any
bonds or other securities issued by
it;
(c) borrowed or become liable as a guarantor for any amount
in excess of $1,000,000 in the aggregate,
except for current liabilities
incurred in the ordinary course of business
consistent with past practice and
liabilities under contracts entered into in
the ordinary course of business
consistent with past practice;
(d) paid, discharged or satisfied any Lien in excess of
$1,000,000, other than in the ordinary
course of business consistent with past
practice;
(e) mortgaged, pledged or subjected to any Lien in excess of
$1,000,000 any of its properties or assets,
except Liens for current property
Taxes or assessments not yet due and
payable and those arising in the ordinary
course of business consistent with past
practice;
(f) sold, assigned or transferred any of its material assets,
except in the ordinary course of business
consistent with past practice, or
canceled without adequate consideration any
material debts owing to or held by
it;
(g) made or granted any bonus or any wage or salary increase
to any employee or group of employees
(other than in the ordinary course of
business consistent with past practice, or
as required pursuant to the terms of
any existing Employee Plan (as defined
below) or any existing Collective
Bargaining Agreement (as defined below)) or
made or granted any increase in any
employee benefits (other than in the
ordinary course of business consistent
with past practice, or as required pursuant
to the terms of any existing
Employee Plan or any existing Collective
Bargaining Agreement), or amended or
terminated any existing Employee Plan or
adopted any new Employee Plan (other
than as required pursuant to the terms of
any existing Collective Bargaining
Agreement or as required by applicable
Law);
(h) other than as reflected in the Company's 2003 capital
budget or 2004 Budget or for departures or
substitutions made to such capital
budgets in the ordinary course of business
consistent with past practice, made
any capital expenditures or commitments
individually in excess of $1,000,000 or
in the aggregate in excess of
$5,000,000;
(i) made any loans or advances to, or sold, transferred or
leased any properties or assets to, or
guarantees for the benefit of, any
Person, including its officers or directors
or any of its Affiliates, in excess
of $250,000 individually or $1,000,000 in
the aggregate (other than loans or
advances made to employees in the ordinary
course of business consistent with
past practice and not exceeding $25,000
individually and $250,000 in the
aggregate and other than loans pursuant to
the Company's 401(k) plan in
accordance with the terms thereof);
(j) modified any Company Material Contract (as defined
below), Lease (as defined below) or IP
Contract in any material respect or
waived any material rights or obligations
thereunder or terminated or consented
to the termination of any Company Material
Contract, Lease or IP Contract prior
to the stated termination or expiration
date thereof, except in the ordinary
course of business consistent with past
practice;
(k) entered into any other transaction or agreement requiring
the Company or any of its Subsidiaries to
make aggregate annual payments in
excess of $1,500,000 or aggregate payments
in excess of $4,000,000;
(l) written down the value of any (i) inventory (including
write-downs by reason of shrinkage or
mark-down) or (ii) written off as
uncollectable any notes or accounts
receivable, except in the case of each of
clause (i) and (ii), for write-downs and
write-offs in the ordinary course of
business consistent with past practice and
not exceeding in the aggregate
$1,000,000;
(m) disposed of or permitted to lapse any rights to the use
of any material Intellectual Property (as
defined below) except for
non-exclusive licenses and other
dispositions in the ordinary course of
business consistent with past practice, or
disclosed to any Person other than
representatives of Buyer any material trade
secret relating to the Business
(including any material confidential
information, financing and marketing
information, technology, know-how,
inventions, proprietary processes, formulae,
algorithms, models and methodologies)
except pursuant to a non-disclosure
agreement or obligation of
confidentiality;
(n) suffered any damage, destruction or loss, whether or not
covered by insurance, which has had any
material adverse change in the
financial condition, business or results of
operations, assets or operations of
the Company and its Subsidiaries and the
Business, taken as a whole;
(o) merged or consolidated with or acquired substantially all
or a material part of the assets of, or
entered into a transaction with a
Variable Interest Entity (as defined in
FASB Interpretation No. 46), or
otherwise acquired any business of, any
Person;
(p) except as may otherwise be required by applicable Law or
by GAAP, (i) made any change in any method
of accounting or accounting
practices, including for financial or Tax
purposes or (ii) made or revoked any
Tax election, except in the ordinary course
of business;
(q) cancelled, waived or made any settlement, release,
assignment or compromise relating to or
affecting any action, suit, proceeding,
claim, arbitration or litigation with a
value in excess of $1,000,000
individually or in the aggregate;
(r) suffered any damage, destruction or loss (whether or not
covered by insurance) with respect to any
of its properties or assets in excess
of $1,000,000;
(s) made any material revaluation of any assets of the
Company or any of its Subsidiaries;
(t) made any request or demand to any Person to pay any
amounts under or in respect of any accounts
receivable of the Company or any of
its Subsidiaries prior to the stated
maturity thereof, or any factoring or
other disposition of any accounts
receivable of the Company or any of its
Subsidiaries, in each case, except in the
ordinary course of business
consistent with past practice, or made any
discharge or forgiveness of any
obligations of any obligor thereunder;
(u) deferred or delayed the payment of accounts payable of
the Company or any of its Subsidiaries
beyond the stated maturity thereof,
other than in the ordinary course of
business consistent with past practice;
(v) adopted any plan of liquidation, dissolution, merger,
consolidation, restructuring,
recapitalization or other reorganization of the
Company or any of its Subsidiaries;
(w) suffered a Material Adverse Effect nor has there been any
event, occurrence or development that
would, individually or in the aggregate,
reasonably be expected to have a Material
Adverse Effect; or
(x) agreed, whether in writing or otherwise, committed or
arranged to take any of the actions
described in this Section 2.7.
2.8 Absence of Undisclosed Liabilities; No Indebtedness.
(a) Except as set forth on Section 2.8(a) of the O-I
Disclosure Schedule, since December 31,
2003, none of the Company or its
Subsidiaries has incurred or assumed any
obligations or liabilities (whether
accrued, absolute, contingent, unliquidated
or otherwise, whether due or to
become due and regardless of when or by
whom asserted) that would be required
to be reflected or reserved against on a
consolidated balance sheet, or notes
thereto, of the Company and its
Subsidiaries prepared in accordance with GAAP,
except (i) liabilities incurred in the
ordinary course of business consistent
with past practice, (ii) liabilities
reflected on the May 31 Unaudited Pro
Forma Balance Sheet and (iii) liabilities,
debts or obligations that would not,
individually or in the aggregate,
reasonably be expected to have a Material
Adverse Effect.
(b) Except as set forth on Section 5.12 of the O-I Disclosure
Schedule or as may be otherwise agreed by
Buyer and Seller, on the Closing
Date, the Company and each of its
Subsidiaries will have no Indebtedness.
2.9 Real Property Ownership. Section 2.9(a) of the O-I
Disclosure Schedule lists all real property
owned (the "Owned Real Property")
by each of the Company and its Subsidiaries
as of the date hereof, which
Section 2.9(a) of the O-I Disclosure
Schedule includes the legal address and
use of each Parcel (as defined below) and
the owner thereof. With respect to
each parcel of Owned Real Property (each, a
"Parcel"):
(i) except as disclosed on Section 2.9(a)(i) of the O-I
Disclosure Schedule, the entity owning such Parcel has record
and
marketable fee simple title to such Parcel and all buildings,
fixtures
and improvements situated thereon, free and clear of all Liens,
other
than (A) installments of special assessments not yet delinquent or
the
amount or validity of which is being contested in good faith by
appropriate proceedings and for which adequate reserves for
monies
owed are reflected in the Financial Statements in accordance
with
GAAP, (B) Taxes not yet due and payable or the amount or validity
of
which is being contested in good faith by appropriate proceedings
and
for which adequate reserves for monies owed are reflected in
the
Historical Financial Statements in accordance with GAAP, (C)
statutory
liens arising or incurred in the ordinary course of business, such
as
carriers', warehousemen's, materialmen's and mechanic's liens
and
other similar liens, with respect to which the underlying
obligations
are not delinquent or the amount or validity of which is being
contested in good faith by appropriate proceedings and for
which
adequate reserves for monies owed are reflected in the
Historical
Financial Statements in accordance with GAAP or (D)
encumbrances,
encroachments, covenants, restrictions or other agreements or
imperfections of title that do not impair the use, occupancy or
marketability of the property (real or personal) subject thereto
as
currently used in the Business (clauses (A) through (D) hereof,
collectively "Permitted Liens");
(ii) each Parcel is in compliance with all applicable
building, zoning, subdivision, land use and other similar
applicable
Laws affecting such Parcel, except as would not, individually or
in
the aggregate, reasonably be expected to have a Material
Adverse
Effect; and
(iii) there are no outstanding options or rights of first
refusal to purchase any Parcel or any material portion thereof
or
interest therein.
2.10 Leased Real Property.
(a) Section 2.10(a) of the O-I Disclosure Schedule lists all
real property leased (the "Leased Real
Property" and together with the Owned
Real Property, collectively, the "Real
Property") by the Company and each of
its Subsidiaries as of the date hereof
pursuant to any real property lease
providing for annual payments by the
Company or any such Subsidiary of an
amount in excess of $100,000 per year
(each, a "Lease"), which Section 2.10(a)
of the O-I Disclosure Schedule includes the
legal address and use of the
premises demised under each Lease, the
lessor and lessee (or sublessor and
sublessee, in the case of a sublease), the
term, under the applicable Lease and
the rent. With respect to each lease, and
except as disclosed on Section
2.10(a)(i) of the O-I Disclosure Schedule,
(i) the tenant under each Lease has
legal and valid leasehold title to such
Lease, free and clear of all Liens
other than Permitted Liens, (ii) such Lease
is pursuant to a written Lease that
has been executed and is in full force and
effect, (iii) neither the Company
nor its applicable Subsidiary that is a
party to such Lease nor, to the
Knowledge (as defined below) of Seller or
the Company or any of its
Subsidiaries (collectively, the "O-I
Parties") any other party to such Lease,
is in material breach or default, and no
event has occurred which, with notice
or lapse of cure period, would constitute
such a material breach or default or
permit termination, modification or
acceleration, under such Lease, (iv) each
Lease is the legal, valid and binding
obligation of the tenant thereunder and
will continue to be binding in accordance
with its terms following the Closing,
except as may result from actions that may
be taken by Buyer or its Affiliates
following the Closing, (v) to the Knowledge
of the O-I Parties no party to such
Lease has repudiated any provision thereof,
(vi) each Lease grants the Company
or its applicable Subsidiary the exclusive
right to use and occupy the premises
demised thereunder, subject to the terms of
the applicable Lease, (vii) no
Lease has been assigned, mortgaged or
hypothecated and no Lease has otherwise
been encumbered, except for Permitted Liens
and (viii) except as would not,
individually or in the aggregate,
reasonably be expected to have a Material
Adverse Effect, all covenants to be
performed by the Company or its applicable
Subsidiary and, to the Knowledge of the O-I
Parties, all covenants to be
performed by the lessor or lessee (or
sublessor or sublessee, in the case of a
sublease) under each Lease, have been
performed in all respects.
(b) Section 2.10(b) of the O-I Disclosure
Schedule separately identifies all
Leases for which consents, waivers or
approval must be obtained on or prior to
the Closing Date (or which have been
obtained) in order for such Lease to
continue in effect according to their
terms, as in effect immediately prior to
and on the date hereof, after the Closing
Date.
2.11 Real Property.
(a) The Real Property constitutes all the interests in real
property owned, leased, used or held for
use by the Company or any of its
Subsidiaries in connection with, or that
are necessary for, or otherwise
material to, the conduct of the Business as
presently conducted.
(b) (i) None of the O-I Parties has received notice of any
pending, proposed or threatened
condemnation, proceedings or litigation or
administrative actions relating to any Real
Property, (ii) neither Seller nor
the Company or any of its Subsidiaries has
received notice of any order
outstanding, pending or threatened relating
to the ownership, lease, use,
occupancy or operation of any Real Property
and (iii) there are no parties
(other than one or more of the Company and
any of its Subsidiaries) in
possession of any Real Property, other than
tenants under written leases or
subleases who are in possession of space to
which they are entitled.
(c) Prior to the date hereof, Seller has delivered, or caused
to be delivered, to Buyer true, correct and
complete copies of all Leases,
deeds, mortgages, surveys, licenses,
leases, title insurance policies
(including any underlying documents
relating to Permitted Liens), if any,
certificates of occupancy or equivalent
documentation with respect to the Real
Property and other material documents
relating to or affecting the title to the
Real Property in the possession or control
of Seller, the Company or any of its
Subsidiaries.
2.12 Condition of Properties. Except as set forth on Section
2.12 of the O-I Disclosure Schedule, the
buildings, machinery, fixtures,
equipment and other tangible assets
necessary for the conduct of the Business
as presently conducted, owned or leased by
the Company and any of its
Subsidiaries are in sufficiently good
operating condition and repair to permit
their use in the continuing operations of
the Company and each of its
Subsidiaries as such operations are
presently conducted, subject to normal wear
and tear and that currently require no
material maintenance, repairs or
replacements, except for ordinary
maintenance, repairs or replacements, which
are not material in nature or cost.
2.13 Tax Matters.
(a) Certain Defined Terms. For purposes of this Agreement,
the following definitions shall apply:
(i) the term "Tax" and "Taxes" shall mean all taxes,
assessments, customs, duties, fees, or other like charges of any
kind
whatsoever, however denominated, including any interest, penalties
or
other additions to tax that may become payable in respect
thereof,
imposed by any federal, territorial, state, local or foreign
government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the
generality
of the foregoing, all income or profits taxes (including
federal
income taxes and state income taxes), payroll and employee
withholding
taxes, unemployment insurance taxes, social security taxes, sales
and
use taxes, ad valorem taxes, excise taxes, franchise taxes,
gross
receipts taxes, business license taxes, occupation taxes, real
and
personal property taxes, stamp taxes, environmental taxes,
transfer
taxes, and other obligations of the same or of a similar nature to
any
of the foregoing;
(ii) the term "Returns" shall mean all reports, estimates,
declarations of estimated Tax, information statements and
returns
relating
to, or required to be filed in connection with, any Taxes.
(b) Except as set forth on Section 2.13(b) of the O-I
Disclosure Schedule, (i) all Returns
required to be filed by or on behalf of
the Company and any of its Subsidiaries
have been duly filed on a timely basis
and are true, correct and complete, (ii)
all Taxes due or claimed to be due
with respect to the Company and any of its
Subsidiaries by any Governmental
Authority have been paid in full, (iii)
each of the Company and its
Subsidiaries has withheld and paid over all
material Taxes required to have
been withheld and paid over, and complied
with all information reporting
requirements, including maintenance of
required records with respect thereto,
in connection with amounts paid or owing to
any employee, creditor, independent
contractor or third party for all periods
for which the statute of limitations
has not expired and (iv) there are no Liens
on any of the assets of any of the
Company and its Subsidiaries with respect
to Taxes, other than liens for Taxes
not yet due and payable for which
appropriate reserves have been established.
Except as set forth on Section 2.13(b) of
the O-I Disclosure Schedule, since
December 31, 2003, none of the Company nor
any of its Subsidiaries has incurred
any liability for Taxes other than (A) in
the ordinary course of business
consistent with past practice or (B) in
connection with the Corporate
Restructuring.
(c) Except as set forth on Section 2.13(c) of the O-I
Disclosure Schedule: (i) there is no audit
by a Governmental Authority or
Taxing authority in process or pending with
respect to any Tax or Return of the
Company and/or any of its Subsidiaries;
(ii) no deficiencies exist or have been
asserted, in writing, with respect to any
Taxes of the Company and any of its
Subsidiaries and neither the Company nor
any of its Subsidiaries has received
written notice that it has not filed a
material Return or paid Taxes required
to be filed or paid by it; (iii) neither
the Company nor any of its
Subsidiaries are a party to any action or
proceeding for assessment or
collection of any Taxes, nor has such event
been asserted, in writing against
the Company or any of its Subsidiaries or
any of their assets; and (iv) no
waiver or extension of any statute of
limitations is in effect or has been
requested with respect to any material
Taxes of the Company or any of its
Subsidiaries.
(d) Except as set forth on Section 2.13(d) of the O-I
Disclosure Schedule, neither the Company
nor any of its Subsidiaries is a party
to any tax allocation agreement or tax
sharing agreement, and neither the
Company nor any of its Subsidiaries has
assumed the liability for Taxes of any
other Person under contract or
otherwise.
(e) Except
as set forth on Section 2.13(e) of the O-I
Disclosure Schedule, none of the Company
nor any of its Subsidiaries has sought
or received a written ruling from any
Governmental Authority and no closing
agreement pursuant to Section 7121 of the
Internal Revenue Code of 1986, as
amended (the "Code") (or any similar
provision of state, local or foreign Law)
has been entered into by or with respect to
the Company or any of its
Subsidiaries.
(f) Except as set forth on Section 2.13(f) of the O-I
Disclosure Schedule, no jurisdiction where
the Company or any of its
Subsidiaries does not file a Return has
made a claim that such entity is
required to file a Return for such
jurisdiction.
(g) Except as set forth on Section 2.13(g) of the O-I
Disclosure Schedule, none of the Company or
any of its Subsidiaries has (i)
entered into any settlement or compromise
regarding any Tax liability or (ii)
entered into any agreement to adjust any
Tax attribute.
(h) Except as set forth on Section 2.13(h) of the O-I
Disclosure Schedule, none of the Company or
any of its Subsidiaries has been,
since January 1, 1998, or currently is, a
member of a federal consolidated (or
state or local combined, unitary or
similar) group other than the group of
which O-I is the common parent.
(i) Since January 1, 1999, none of the Company or any of its
Subsidiaries has been a "distributing
corporation" or a "controlled
corporation" with respect to any
distribution to which Section 355 of the Code
is applicable.
(j) Other than any Returns which have not yet been required
to be filed, the Company has made available
to Buyer true, correct and complete
copies of its and its Subsidiaries' U.S.
federal income Tax Returns and all
material state, local and/or foreign
Returns for each of the taxable years
ended December 31, 2003, 2002, 2001 and
2000. Seller has delivered, or caused
to be delivered, to Buyer true, correct and
complete copies of each of (i) all
audit reports, letter rulings, technical
advice memoranda and similar documents
issued by a Governmental Authority relating
to the U.S. federal, state, local
or foreign Taxes due from or with respect
to the Company and any of its
Subsidiaries and (ii) any closing
agreements entered into by the Company or any
of its Subsidiaries with any Tax authority
in each case existing on the date
hereof.
(k) None of the Company's non-U.S. Subsidiaries is a passive
foreign investment company as defined under
Sections 1291 through 1298 of the
Code.
(l) The Company and its Subsidiaries have conducted all
intercompany transactions on terms
commensurate with third-party terms as
provided for in section 482 of the Code and
any similar provisions of state,
local and non-U.S. Law.
(m) To the Knowledge of the O-I Parties, the Company and its
Subsidiaries have not participated and do
not participate in international
boycotts as defined under Section 999(b) of
the Code and have complied with all
reporting requirements to substantiate such
nonparticipation.
(n) The Company has made valid elections under Treasury
Regulation 301.7701-3(c) for all of its
Subsidiaries electing disregarded
entity status for U.S. income tax
purposes.
(o) None of the Subsidiaries of the Company has been subject
to the dual consolidated loss rules as
defined in Section 1503(d) of the Code
and the Treasury Regulations promulgated
thereunder.
(p) The sum of (i) net operating loss for U.S. federal income
Tax purposes and (ii) the product of (A)
credits for U.S. federal income tax
purposes and (B) 1/.35 shall equal at least
$100 million (collectively, the
"Apportioned Tax Attributes"). The
Apportioned Tax Attributes will be (x)
valid, (y) allocated to the Company and its
Subsidiaries effective immediately
after Closing and (z) available to be
carried forward to Taxable periods of the
Company and its Subsidiaries beginning
after the Closing Date (A) in accordance
with the Code including the rules of
Sections 172 and 39 of the Code and (B)
subject to applicable limitations under the
Code (including limitations caused
by any ownership change (as defined in the
Code) arising from any of the
transactions contemplated by this Agreement
under Sections 382 and 383 of the
Code) and other applicable Law.
(q) With respect to Returns relating to income and franchise
Taxes with potential Tax liability of at
least $1,000,000 and except as set
forth on Section 2.13(q) of the O-I
Disclosure Schedule, such Returns of the
Company and its Subsidiaries have been
examined by the applicable Governmental
Authorities (or the applicable statutes of
limitation for the assessment of
Taxes for such periods have expired) for
all periods through and including
December 31, 1999, and no material
deficiencies were asserted as a result of
such examinations that have not been
resolved and fully paid.
(r) Seller has provided to Buyer the opportunity to review
each duly executed Form 8832 making valid
elections under Treasury Regulation
301.7701-3(c) for all of its Subsidiaries
electing disregarded entity status
for U.S. income Tax purposes.
2.14 Legal Proceedings. Except as set forth on Section 2.14
of the O-I Disclosure Schedule, (a) there
are no claims, filed complaints,
arbitrations, actions, charges, suits,
proceedings, orders or, to the Knowledge
of the O-I Parties, investigations, pending
or, to the Knowledge of the O-I
Parties, threatened against or affecting,
in each case, the Company, any of its
Subsidiaries, the Business or any of the
assets or properties owned or used by
the Company or any of its Subsidiaries at
law or in equity, or before or by any
domestic or foreign federal, state,
municipal, foreign or other governmental
department, commission, board, bureau,
agency, court or instrumentality or any
arbitrator or arbitration panel (each, a
"Governmental Authority"), (b) there
are no pending or, to the Knowledge of the
O-I Parties, threatened actions that
would prevent or delay O-I or Seller from
consummating the transactions
contemplated hereby or by the Additional
Agreements and (c) none of the
Company, its Subsidiaries or the Business
are subject to any outstanding order,
writ, injunction, judgment, ruling, charge
or decree of any court or any
Governmental Authority that would,
individually or in the aggregate, reasonably
be expected to have a Material Adverse
Effect. Except as would violate the
terms of any applicable protective order or
would result in the loss of legal
privilege, Seller has made available to
Buyer true, correct and complete copies
of all pleadings, material correspondence
and other material documents relating
to each of the claims, filed complaints,
arbitrations, actions, charges, suits,
proceedings, orders and investigations set
forth on Section 2.14 of the O-I
Disclosure Schedule.
2.15 Government Licenses, Permits and Related Approvals;
Environmental Matters. Except as set forth
on Section 2.15 of the O-I
Disclosure Schedule:
(a) Except where failure to own or possess would not,
individually or in the aggregate,
reasonably be expected to have a Material
Adverse Effect, the Company and each of its
Subsidiaries owns or possesses all
permits, licenses, franchises,
certificates, approvals and other authorizations
that are required under applicable Laws by
such entity in the conduct of the
Business as it is presently conducted
(collectively, the "Governmental
Licenses"), including all Governmental
Licenses required under applicable Laws
relating to (i) pollution or the protection
of the environment or human health
(to the extent related to exposure to
Hazardous Materials (as defined below)),
(ii) Releases (as defined below) or
threatened Releases of Hazardous Materials,
(iii) the manufacture, processing,
distribution, use, transport, handling,
treatment, storage or disposal of any
Hazardous Material and (iv)
record-keeping notification, disclosure and
reporting requirements respecting
Hazardous Materials (collectively,
"Environmental Laws"). All such Governmental
Licenses are in full force and effect.
(b) No loss of any Governmental License is pending, or, to
the Knowledge of the O-I Parties,
threatened as a result of the transactions
contemplated by this Agreement, the
Additional Agreements or otherwise, except
for normal expiration in accordance with
the terms thereof or where the loss
would not, individually or in the
aggregate, reasonably be expected to have a
Material Adverse Effect. No transfers of
any permits or other governmental
authorizations under Environmental Laws,
and no additional permits or other
governmental authorizations under
Environmental Laws, will be required to
permit Buyer to conduct the Business in
full compliance with all applicable
Environmental Laws immediately following
the Closing Date, as conducted by the
Company and its Subsidiaries immediately
prior to the Closing Date.
(c) The Company and each of its Subsidiaries has complied
within the applicable statute of
limitations period, and are in compliance with
all terms and conditions of all
Governmental Licenses and with all other
limitations, restrictions, conditions,
standards, prohibitions, requirements,
obligations, schedules and timetables
contained in any applicable Environmental
Laws, except where failure to be in
compliance would not, individually or in
the aggregate, reasonably be expected to
have a Material Adverse Effect. There
are no past or present actions, activities,
circumstances, conditions, events
or incidents that may prevent or interfere
with such compliance in the future.
(d) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material
Adverse Effect: the Company and each
of its Subsidiaries has complied within the
applicable statute of limitations
period, and are in compliance with all Laws
applicable to the Business or any
Real Property of the Company and its
Subsidiaries and to which the Company and
its Subsidiaries are subject (including all
such Environmental Laws), and
neither Seller, the Company nor any of its
Subsidiaries has received any
written or oral notice or claim against the
Company and its Subsidiaries
alleging a violation of any such Laws.
(e) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material
Adverse Effect, none of Seller, the
Company or its Subsidiaries has received
any written or oral notice or claim
alleging that the Company or any of its
Subsidiaries is or may be liable to any
Person (including potential liability for
investigation costs, cleanup costs,
response costs, natural resource damages,
personal injuries or penalties) as a
result of a Release or threatened Release
of Hazardous Material under
applicable Environmental Laws, at any
location, whether or not currently or
previously owned or operated by Seller, the
Company or its Subsidiaries and
none of Seller, the Company or its
Subsidiaries has filed any notice required
under applicable Environmental Laws of any
such Release or violation.
(f) Except where it would not, individually or in the
aggregate, reasonably be expected to have a
Material Adverse Effect, (i)
neither the Company nor any of its
Subsidiaries is subject to any outstanding
order from or agreement with any
Governmental Authority or person respecting
environmental or health matters under any
Environmental Laws and (ii) neither
the Company nor any of its Subsidiaries is
a party to any pending judicial or
administrative proceedings or is the
subject of any investigations by any
Governmental Authority, pursuant to any
Environmental Laws.
(g) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material
Adverse Effect, there are no past or
present (or to the Knowledge of the O-I
Parties, future) actions, activities,
circumstances, conditions, events or
incidents, including the Release,
threatened Release or presence of any
Hazardous Material that could result in
an environmental claim against the Company
or its Subsidiaries, or to the
Knowledge of the O-I Parties, against any
Person whose liability for any
environmental claim the Company or any of
its Subsidiaries has or may have
retained or assumed either contractually or
by operation of Law, under
Environmental Laws.
(h) Seller has made available to Buyer true and correct
copies of any material reports, studies,
analyses and similar documents
possessed by Seller, the Company or any of
its Subsidiaries pertaining to
Hazardous Materials in, on, or beneath or
adjacent to any property currently or
formerly owned, operated or leased by the
Company or any of its Subsidiaries,
or regarding the Company's or any of its
Subsidiaries compliance with
applicable Environmental Laws.
2.16 Employee Benefit Plans.
(a) Section 2.16(a) of the O-I Disclosure Schedule contains a
true, correct and complete list of each
deferred compensation and each
incentive compensation, stock purchase,
stock option and other equity
compensation plan, program, agreement or
arrangement; each severance or
termination pay, medical, surgical,
hospitalization, life insurance and other
"welfare" plan, fund or program (within the
meaning of Section 3(1) of the
Employee Retirement Income Security Act of
1974, as amended ("ERISA")); each
profit-sharing, stock bonus or other
"pension" plan, fund or program (within
the meaning of Section 3(2) of ERISA); each
employment, termination or
severance agreement; and each other
employee benefit plan, fund, program,
agreement or arrangement, in each case,
that is sponsored, maintained or
contributed to or required to be
contributed to by Seller, O-I, the Company or
any of its Subsidiaries or by any trade or
business, whether or not
incorporated, that together with Seller,
O-I, the Company or any of its
Subsidiaries would be deemed a "single
employer" within the meaning of Section
4001(b) of ERISA (an "ERISA Affiliate"), or
to which the Company or any of its
Subsidiaries is a party, for the benefit of
any present or former employee,
consultant or director of the Company or
any of its Subsidiaries (each, an
"Employee Plan"). Except as contemplated by
this Agreement or the Additional
Documents, neither the Company, any of its
Subsidiaries nor any ERISA Affiliate
has any commitment or formal plan, whether
legally binding or not, to create
any additional employee benefit plan or
modify or change any existing Employee
Plan that would materially increase the
liability of the Company or any of its
Subsidiaries. Section 2.16(a) of the O-I
Disclosure Schedule separately
identifies those Employee Plans that are
sponsored, maintained, contributed to,
or required to be contributed to solely by
the Company and its Subsidiaries,
and not by Seller, or O-I or any of their
other ERISA Affiliates (other than
the Company and its Subsidiaries) ("Company
Plans").
(b) Except as described on Section 2.16(b) of the O-I
Disclosure Schedule or except as would not,
individually or in the aggregate,
reasonably be expected to have a Material
Adverse Effect:
(i) each Employee Plan has been administered and is in
compliance with the terms of such Employee Plan and all
applicable
Laws, including ERISA and the Code;
(ii) each Employee Plan intended to be qualified within the
meaning of Section 401 of the Code has received a favorable
determination letter as to its qualification from the Internal
Revenue
Service, and nothing has occurred that could reasonably be expected
to
result in the revocation of such letter; and
(iii) there are no pending or, to the Knowledge of the O-I
Parties, threatened claims and no pending or, to the Knowledge of
the
O-I Parties, threatened litigation involving any Employee Plan
(other
than routine claims for benefits) by participants or
beneficiaries
covered under such Employee Plans.
(c) With respect to each Employee Plan, Seller has delivered,
or caused to be delivered, to Buyer true,
correct and complete copies of the
Employee Plan and any amendments thereto
(or if the Employee Plan is not a
written Employee Plan, a description
thereof), any related trust or other
funding vehicle, the most recent summary
plan description and any summaries of
material modifications thereto and the most
recent determination letter
received from the Internal Revenue Service
with respect to each Employee Plan
intended to qualify under Section 401 of
Code.
(d) Except as set forth on Section 2.16(d) of the O-I
Disclosure Schedule, none of the Employee
Plans is a "multiemployer plan," as
such term is defined in Section 3(37) of
ERISA. No liability under Title IV or
Section 302 of ERISA has been incurred by
Seller, O-I, the Company, any of its
Subsidiaries or any ERISA Affiliate that
has not been satisfied in full, and no
condition exists that presents a material
risk to Seller, O-I, the Company, any
of its Subsidiaries or any ERISA Affiliate
of incurring any such material
liability, in each case other than
liability for premiums due the Pension
Benefit Guaranty Corporation (which
premiums have been paid when due). Insofar
as the representation made in this Section
2.16(d) applies to Sections 4064,
4069 or 4204 of Title IV of ERISA, it is
made with respect to any employee
benefit plan, program, agreement or
arrangement subject to Title IV of ERISA to
which Seller, O-I, the Company, any of its
Subsidiaries or any ERISA Affiliate
made, or was required to make,
contributions during the five year period ending
on the last day of the most recent plan
year ended prior to the Closing Date.
With respect to each Employee Plan that is
subject to Section 302 or Title IV
of ERISA or Section 412 of the Code
("Qualified Employee Plan"), no accumulated
funding deficiency (as defined in Section
402 of ERISA or Section 412 of the
Code) exists nor has any funding waiver
from Internal Revenue Service has been
received or requested with respect to any
such Qualified Employee Plan.
(e) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material
Adverse Effect, neither the Company
or any of its Subsidiaries, any Employee
Plan, any trust created thereunder, or
any trustee thereof, has engaged in a
transaction with respect to any Employee
Plan in connection with which the Company
or any of its Subsidiaries could be
subject to either a civil penalty assessed
pursuant to Sections 409 or 502(i)
of ERISA or a tax imposed pursuant to
Sections 4975 or 4976 of the Code.
(f) Except as set forth on Section 2.16(f) of the O-I
Disclosure Schedule, no Employee Plan
provides medical, surgical or
hospitalization benefits (whether or not
insured) for employees or former
employees of the Company or any of its
Subsidiaries for periods extending
beyond such employee's retirement or other
termination of service, other than
(i) coverage mandated by applicable Law or
(ii) benefits the full cost of which
is borne by the current or former employee
(or such employee's beneficiary).
(g) Except as set forth on Section 2.16(g) of the O-I
Disclosure Schedule, the consummation of
the transactions contemplated by this
Agreement or by the Additional Agreements
will not, either alone or in
combination with another event, (i) entitle
any current or former employee or
officer of the Company or any Subsidiary to
severance pay, termination pay,
separation pay, retention pay or
"change-in-control" or "change-of-control"
payments, except as expressly provided in
this Agreement or (ii) accelerate the
time of payment or vesting, or increase the
amount of compensation due any such
employee or officer. No amounts payable
under the Employee Plans, or any other
plan, agreement or arrangement, will fail
to be deductible by the Company or
its Subsidiaries, for federal income Tax
purposes by virtue of Section 280G of
the Code.
(h) With respect to each Employee Plan that is not subject to
U.S. Law (each, a "Foreign Benefit Plan"),
except as set forth on Section
2.16(h) of the O-I Disclosure Schedule or
except as would not, individually or
in the aggregate, reasonably be expected to
have a Material Adverse Effect:
(i) all employer and employee contributions to each Foreign
Benefit Plan required by applicable Law or by the terms of such
Foreign Benefit Plan as of the date hereof have been made, or,
if
applicable, accrued, in accordance with normal accounting
practices;
and
(ii) each Foreign Benefit Plan required to be registered
has been registered and has been maintained in good standing
with
applicable regulatory authorities.
(i) With respect to all hourly Business Employees (as defined
below), all Accrued Time (as defined below)
with respect to the period
commencing in the fiscal year in which
Closing Date occurs and ending on the
Closing Date will be accrued on the Closing
Date Balance Sheet.
(j) Other than the bonuses that will be paid by O-I or Seller
pursuant to Section 8.10, the pro rata
portion of the annual bonuses under the
Benefit Plans for active Business
Employees, in respect of the period
commencing in the fiscal year in which the
Closing Date occurs and ending on
the Closing Date, will be accrued on the
Closing Date Balance Sheet.
2.17 Intellectual Property.
[This section has been omitted and filed on a confidential
basis with the Commission.]
2.18 Insurance.
(a) Section 2.18(a) of the O-I Disclosure Schedule sets forth
(i) a true, correct and complete list of
all insurance policies, other
insurance arrangements and other contracts
or arrangements for the transfer or
sharing of insurance risks by the Company
or any of its Subsidiaries in force
on the date hereof with respect to the
Business or any assets of the Company or
any of its Subsidiaries, together with a
statement of the aggregate amount of
general and product liability claims paid
out and any such claims pending under
each such insurance policy or other
arrangement and (ii) a description of any
deductibles with respect to such policies.
The Company and each of its
Subsidiaries has in force policies of
insurance underwritten by reputable
insurance companies or associations in
amounts and with retentions and
deductibles and covering such risks as are
in accordance with reasonable
business practices. All such policies are
in full force and effect, all
premiums due thereon have been paid by the
Company or any of its Subsidiaries
(or will have been paid prior to the end of
any grace period), and the Company
and each of its Subsidiaries is otherwise
in compliance in all material
respects with the terms and provisions of
such policies. Other than in the
ordinary course of business, neither the
Company nor any of its Subsidiaries
has received any notice of cancellation or
non-renewal of any such policy or
arrangement nor is the termination of any
of such policies or arrangements
threatened.
(b) To the Knowledge of the O-I Parties, since December 31,
2003, neither the Company nor any of its
Subsidiaries has been affected in any
way as a result of flood, fire, explosion
or other casualty (whether or not
covered by insurance). To the Knowledge of
the O-I Parties, none of the Company
or any of its Subsidiaries is aware of any
such circumstance that would
reasonably be expected to have a Material
Adverse Effect.
2.19 Material Contracts.
(a) Except (i) as set forth on Section 2.19(a) of the O-I
Disclosure Schedule (collectively,
"Material Contracts" and, together with the
Additional Material Contracts (as defined
below), the "Company Material
Contracts"), (ii) for this Agreement, any
Foreign Subsidiary Purchase Agreement
and any agreements necessary to effect the
Corporate Restructuring and the
Australia Restructuring and (iii) for
agreements entered into following the
date hereof in the ordinary course of
business consistent with past practice
(such agreements, to the extent they would
be required to be set forth on
Section 2.19(a) of the O-I Disclosure
Schedule if they were in effect on the
date hereof, the "Additional Material
Contracts"), none of the Company or any
of its Subsidiaries is a party to or bound
by, nor are any of their properties
or assets or the Business affected by
any:
(i) loan agreement, note, mortgage, security agreement or
indenture relating to the borrowing of money or to the mortgaging
or
pledging of any of its assets, in each case, pursuant to which
the
outstanding indebtedness is in excess of $1,000,000;
(ii) agreement with respect to the lending or investing of
funds in excess of $1,000,000;
(iii) guaranty of any obligation for borrowed money or
otherwise in excess of $1,000,000, other than endorsements made
for
collection in the ordinary course of business consistent with
past
practice;
(iv) indemnification or other reimbursement obligation in
excess of $1,000,000;
(v) license or royalty agreement involving annual payments
in 2003 or 2004 by the Company or any of its Subsidiaries to
third
parties of more than $1,000,000;
(vi) vendor or supply agreement pursuant to which the
Company or one of its Subsidiaries makes purchases involving
the
payment of $1,000,000 or more in any 12 consecutive month
period,
which agreements have a remaining term of one year or more;
(vii) contract that prohibits the Company or any of its
Subsidiaries from freely engaging in any business in any
geographic
region or from competing with any Person;
(viii) agreement (other than this Agreement and the
Additional Agreements) relating to the acquisition or disposition
of
any Person (whether by merger, sale of stock, sale of assets or
otherwise);
(ix) employment contract providing for annual base salary
and bonus in excess of $200,000 with respect to any employee of
the
Company or any Subsidiary;
(x) Collective Bargaining Agreement or similar contract
with any labor union, works council or other labor organization
relating to wages, hours and other conditions of employment in
effect
as of the date hereof;
(xi) any agreement with respect to any hedging, swap,
forward, future or derivative transaction or option or similar
agreement involving, or settled by reference to, one or more
rates,
currencies, commodities, equity or debt instruments or securities,
or
economic, financial or pricing indices or measures of economic,
financial or pricing risk or value or any similar transaction or
any
combination of these transactions;
(xii) partnership, limited liability company, joint venture
agreement or other agreement involving a sharing of profits or
expenses;
(xiii) any other contract not described above that involves
the payment by, or liability of, the Company or any of its
Subsidiaries of $1,500,000 or more in any 12 consecutive month
period
or $4,000,000 in the aggregate; and
(xiv) any other contract not described above that involves
the payment to the Company or any of its Subsidiaries of $1,500,000
or
more in any 12 consecutive month period or $4,000,000 in the
aggregate.
(b) (i) Except as set forth on Section 2.19(b)(i) of the O-I
Disclosure Schedule, each Material Contract
and, when executed and delivered,
each Additional Material Contract the
subject of which is covered by Sections
2.19(a)(i)-2.19(a)(xiii) (the "Other
Material Contracts"), is or will be valid,
binding and enforceable in all material
respects against the Company or, if any
Subsidiary of the Company is the party to
such Other Material Contract, such
Subsidiary and to the Knowledge of the O-I
Parties, each other party thereto,
in each case, in accordance with their
respective terms, (ii) except as set
forth on Section 2.19(b)(ii) of the O-I
Disclosure Schedule, each of the
Company and its Subsidiaries has performed
all material obligations under the
Other Material Contracts required to be
performed by it and the Company and
each of its Subsidiaries is not in default,
has not received any written notice
or claim of default under any Other
Material Contract and to the Knowledge of
the O-I Parties each other party thereto
has performed all material obligations
under the Other Material Contracts required
to be performed by it and (iii)
except as set forth on Section 2.19(b)(iii)
of the O-I Disclosure Schedule,
none of the Company or any of its
Subsidiaries is in material breach of any
Other Material Contract and to the
Knowledge of the O-I Parties each other
party to any Other Material Contract is not
in material breach of any Other
Material Contract. Except as set forth on
Section 2.19(b)(iv) of the O-I
Disclosure Schedule, Seller has made
available to Buyer true, correct and
complete copies of each Material Contract
and, prior to the Closing, Seller
shall have delivered to Buyer true, correct
and complete copies of each
Additional Material Contract.
(c)
Section 2.19(c)(i) of the O-I Disclosure Schedule sets
forth a true, complete and correct list of
each agreement or contract that
involves the payment to the Company or any
of its Subsidiaries of $1,500,000 or
more in any 12 consecutive month period or
$4,000,000 in the aggregate (each, a
"Significant Agreement") that has been duly
executed and delivered by the
parties thereto (collectively, the
"Executed Material Agreements"). Each
Executed Material Agreement is valid,
binding and enforceable in all material
respects against the Company or, if any
Subsidiary of the Company is the party
to such Executed Material Agreement, such
Subsidiary and, to the Knowledge of
the O-I Parties, each other party thereto,
in each case, in accordance with its
respective terms. Except as set forth on
Section 2.19(c)(ii) of the O-I
Disclosure Schedule, each of the Company
and its Subsidiaries has performed all
of its material obligations under the
Executed Material Agreements required to
be performed by it and none of the Company
or any of its Subsidiaries is in
default or breach, or has received any
written notice or claim of default or
breach, under any Executed Material
Agreement and to the Knowledge of the O-I
Parties each other party thereto has
performed all of its material obligations
under the Executed Material Agreements
required to be performed by it and is
not in default or breach thereunder. Except
as set forth on Section
2.19(c)(iii) of the O-I Disclosure
Schedule, Seller has made available to Buyer
true, correct and complete copies of each
Executed Material Agreement.
(d) Section 2.19(d)(i) of the O-I Disclosure Schedule sets
forth a true, complete and correct list of
each Significant Agreement that has
not been duly executed and delivered by all
of the parties thereto (the
"Unexecuted Material Agreements"). Section
2.19(d)(i) of the O-I Disclosure
Schedule sets forth a summary of all
material terms and conditions of business
as currently conducted between the Company
or a Subsidiary of the Company, as
the case may be, and the third party to
such Unexecuted Material Agreements
(the "Unexecuted Material Agreement
Summaries"). The Unexecuted Material
Agreement Summaries are true, complete and
accurate in all material respects.
(e) Section 2.19(e)(i)
of the O-I Disclosure Schedule sets
forth a true, complete and correct list of
each Executed Material Agreement
that is subject to confidentiality
provisions prohibiting disclosure to Buyer
(the "Executed Material Confidential
Agreements"). O-I has in its possession
true, complete and correct copies of the
Executed Material Confidential
Agreements and upon notification from the
relevant third party to such Executed
Material Confidential Agreement that the
confidentiality provision has been
waived with respect to a review of such
agreement by Buyer, will deliver true,
complete and correct copies of the Executed
Material Confidential Agreements to
Buyer. Section 2.19(e)(ii) of the O-I
Disclosure Schedule sets forth a summary
of terms of the Executed Material
Confidential Agreements (the "Executed
Material Confidential Summaries"). The
Executed Material Confidential Summaries
are true, complete and accurate in all
material respects. Except as set forth
on Section 2.19(e)(iii) of the O-I
Disclosure Schedule, each of the Company and
its Subsidiaries has performed all of its
material obligations under the
Executed Material Confidential Agreements
required to be performed by it and
none of the Company or any of its
Subsidiaries is in default or breach, or has
received any written notice or claim of
default or breach, under any Executed
Material Confidential Agreement and to the
Knowledge of the O-I Parties each
other party thereto has performed all of
its material obligations under the
Executed Material Confidential Agreements
required to be performed by it and is
not in default or breach thereunder.
(f) Section 2.19(f)(i) of the O-I Disclosure Schedule sets
forth a true, complete and correct list of
each Unexecuted Material Agreement
that is subject to confidentiality
provisions prohibiting disclosure to Buyer
(the "Unexecuted Material Confidential
Agreements"). O-I has in its possession
true, complete and correct copies of the
Unexecuted Material Confidential
Agreements and upon notification from the
relevant third party to such
Unexecuted Material Confidential Agreement
that the confidentiality provision
has been waived with respect to a review of
such agreement by Buyer, will
deliver true, complete and correct copies
of the Unexecuted Material
Confidential Agreements to Buyer. Section
2.19(f)(ii) of the O-I Disclosure
Schedule sets forth a summary of terms and
conditions of business as currently
conducted between the Company or a
Subsidiary of the Company, as the case may,
and the third party to such Unexecuted
Material Confidential Agreements (the
"Unexecuted Material Confidential Agreement
Summaries"). The Unexecuted
Material Confidential Summaries are true,
complete and accurate in all material
respects.
2.20 Transactions with Affiliates. Except as set forth
herein, including, as set forth in Article
V, in Section 2.20 of the O-I
Disclosure Schedule or pursuant to the
transactions expressly contemplated
hereby, the Company and its Subsidiaries
have not engaged in any material
transaction, outside the ordinary course of
business consistent with past
practice, with O-I or its Affiliates (other
than the Company and its
Subsidiaries) since December 31, 2003,
which was (i) not on arm's length terms
or (ii) undertaken in contemplation of the
sale of the Company.
2.21 Brokers, Finders, etc. Except for the Person set forth
on Section 2.21 of the O-I Disclosure
Schedule, whose fee is the sole
responsibility of O-I or its Affiliates
(other than the Company and its
Subsidiaries), none of Seller or any of its
Affiliates has employed, nor is
Seller on any of its Affiliates subject to
any valid claim of, any broker,
agent, investment banker, financial
advisor, finder, consultant or other
intermediary in connection with the
transactions contemplated by this Agreement
or by the Additional Agreements who might
be or is entitled to a fee or
commission in connection with such
transactions contemplated hereby or thereby.
2.22 Employment-Related Matters. Except as set forth in
Section 2.22 of the O-I Disclosure
Schedule:
(a) (i) The Company and any of its Subsidiaries are neither
party to, nor bound by, any labor
agreement, collective bargaining agreement,
or any other labor-related agreements or
arrangements with any labor union or
labor organization or works council and
(ii) no employees of the Company or any
of its Subsidiaries are represented by any
labor organization with respect to
their employment with the Company or any of
its Subsidiaries;
(b) To the Knowledge of the O-I Parties, no labor union,
labor organization, or group of employees
of the Company or any of its
Subsidiaries has made a pending demand for
recognition or certification, and
there are no representation or
certification proceedings or petitions seeking a
representation proceeding presently pending
or threatened in writing to be
brought or filed with the National Labor
Relations Board or any other labor
relations tribunal or authority, and no
campaigns are being conducted to
solicit cards from any employees of the
Company or its Subsidiaries, or to
otherwise organize such employees, to
authorize representation by any labor
organization;
(c) Since January 1, 2002, there has been no labor strike,
slowdown, work stoppage, dispute, or
lockout in effect or, to the Knowledge of
the O-I Parties, threatened with respect to
any employees of the Company or any
of its Subsidiaries;
(d) No unfair labor practice charge or complaint is pending
or, to the Knowledge of the O-I Parties,
threatened by or on behalf of any
employee of the Company or any of its
Subsidiaries;
(e) Neither the Company nor any of its Subsidiaries is a
party to, or otherwise bound by, any
consent decree with, or citation by, any
Governmental Authority relating to
employees or employment practices;
(f) The Company and its Subsidiaries are in material
compliance with all applicable Laws
relating to employment, employment
practices and the termination of
employment, including any obligations pursuant
to the WARN Act (as defined below) and any
similar foreign, state or local Law
relating to plant closings and layoffs;
(g) The Company and each of its Subsidiaries have not been
delinquent in payments to, or on behalf of,
any employees or former employees
for any services or amounts required to be
reimbursed or otherwise paid, except
as would not, individually or in the
aggregate, reasonably be expected to have
a Material Adverse Effect;
