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Exhibit 10.25
TRANSITION AGREEMENT
AGREEMENT dated as of February 5, 1997, between Consumers Packaging
Inc., a corporation organized under the federal laws of Canada ("Consumers"),
Anchor Glass Acquisition Corporation, a Delaware corporation ("New Anchor"), and
Xxxxx-Xxxxxxxx Glass Container Inc., a Delaware corporation ("OI", and, together
with Consumers and New Anchor, the "Buyers").
WITNESSETH:
WHEREAS, Consumers, OI and Anchor Glass Container Corporation (the
"Seller") are parties to an Asset Purchase Agreement, dated as of December 18,
1996 (as amended, the "Asset Purchase Agreement") pursuant to which New Anchor
and OI are purchasing substantially all of the Seller's assets, and assuming
substantially all of the Seller's liabilities (the "Acquisition"); and
WHEREAS, the Buyers desire to record their agreement as to certain
transition arrangements in connection with the Acquisition;
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
1. Transition Services. During the six month period (or such other
period as may be provided in Annex A attached hereto) commencing on the date
hereof (the "Transition Period"), New Anchor agrees to provide, or to cause its
affiliates to provide, to OI or its affiliates, as may be requested from time to
time by OI or any of its affiliates, the same type, quality and relative level
of services that the Seller or its affiliates have provided to the business of
the Seller being acquired by OI in the Acquisition at comparable times and
periods during the 24 full months preceding the date of the Acquisition. Except
as otherwise indicated in Annex A hereto, such services will be provided for
charges based upon the same methodologies that have been used during the
12-month period immediately preceding the date of the Acquisition to determine
the charges by New Anchor or its affiliates for the provision of similar
services to OI and its affiliates. The principal types of services, and the
amount of the fee therefor, or the method for calculating such fee, as the case
may be, are set forth in Annex A hereto. Except as the parties may otherwise
agree, the Transition Period shall automatically be extended for an additional
six-month period for any or all transition services (or any portion of any such
services) at the same charges and on the same terms as during the initial
six-month period.
2. Billing and Payment. OI agrees to pay, and to cause any of its
affiliates receiving services pursuant to this Agreement to pay, promptly any
bills and invoices that it receives from New Anchor or its affiliates for
services provided under this Agreement, subject to receiving, if requested, any
appropriate support documentation for such bills and invoices. Such charges
shall be billed at the end of each calendar month of the Transition Period.
3. Interim License Agreement. (a) New Anchor hereby grants to OI and
its affiliates, for the term of the Transition Period, a non-exclusive,
royalty-free right and license to
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use in the manufacture, use and sale of products any of the patents, copyrights,
trademarks, trade names, service marks, services names, technology, know-how,
processes, trade secrets, inventions, proprietary data, formulae, research and
development data, computer software programs and other intangible property, and
any applications for the same, acquired by New Anchor from the Seller in the
Acquisition.
(b) The parties acknowledge and agree that the trademarks, trade names,
service marks and service names included in the foregoing license (the
"Trademarks") are the sole and exclusive property of New Anchor except as
otherwise provided herein and subject to the terms and conditions stated in this
Agreement.
(c) The parties shall refrain from using the Trademarks in a form and
manner or for a subject matter as to (i) reduce the value of the Trademarks and
(ii) wrongfully cause injury to the other's business.
(d) OI and its affiliates will not sell any products under any of the
Trademarks pursuant to the grant of paragraph 3(a) hereof that shall fail to
comply with (i) quality standards and specifications, including labeling
specifications, employed by the Seller in commerce prior to the Acquisition, or,
where no such standards and specifications exist, a level of quality comparable
to the quality standards generally accepted for other leading competitive brands
of the same product in the same markets from time to time, or (ii) a level of
quality comparable to that which may be adopted by OI for its or its other
licensees' products. With a view to insuring the maintenance of such standards,
authorized agents selected by mutual consent of the parties shall have access at
reasonable times during the Transition Period for quality inspection purposes to
the premises wherein such products are manufactured or held for sale.
(e) OI shall maintain during the term of the license granted under this
paragraph 3, with insurance carriers with a rating of at least A from A.M. Best
Co., public liability insurance, including, without limitation, products
liability coverage, with minimum limits of $56,000,000 each occurrence. OI shall
furnish to New Anchor evidence of such insurance in the form of Certificates of
Insurance. New Anchor shall be named as an additional insured on all insurance
policies required of OI under this paragraph 3(e). Product liability insurance
policies required under this paragraph 3(e) shall be "occurrence" type policies
and shall not be "claims made" policies. All Certificates of Insurance shall
provide evidence of the type of policies being provided. Product liability
insurance shall continue in effect for New Anchor's benefit for a period of two
years from the date hereof.
(f) OI shall not transfer, sell or assign its rights under this
paragraph 3 without the prior written consent of New Anchor, which shall not be
unreasonably withheld, except that no consent shall be required for a transfer
of rights to an affiliate of OI or a successor in all or substantially all of
the business acquired by OI from the Seller in the Acquisition.
4. Purchase of Certain Inventories. (a) Upon the terms and subject to
the conditions of this Agreement, OI agrees to purchase from New Anchor and New
Anchor agrees to sell, transfer, assign and deliver, or cause to be sold,
transferred, assigned and delivered, to OI, free and clear of all liens and
encumbrances, (i) all finished goods inventories associated with
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products held for sale to Coors Brewing Company or its affiliates as of the date
of the Acquisition and (ii) all molds and other tools exclusively associated
with such products and acquired by New Anchor from the Seller in the
Acquisition. The purchase price therefor shall be determined by mutual agreement
between the parties, such determination to be made at the time of, in connection
with and using the same methodologies as those used in the determination of the
Allocation statement (as defined in the Asset Purchase Agreement); provided that
the purchase price for the finished goods being acquired pursuant to this
paragraph 4(a) shall be equal to the prices for such finished goods under the
Supply Agreement dated as of the date hereof between New Anchor and OI (the
"Supply Agreement").
(b) Upon the terms and subject to the conditions of this Agreement, New
Anchor agrees to purchase from OI and OI agrees to sell, transfer, assign and
deliver, or cause to be sold, transferred, assigned and delivered, to New
Anchor, free and clear of all liens and encumbrances, (i) all raw materials,
work-in-process, finished goods, supplies and other inventories associated with
products being manufactured for sale, or held for sale, as of the date of the
Acquisition to X.X. Xxxxxxx Co., Xxxxxxxx Inc. or any other customer of Anchor
as of the date of the Acquisition that is intended by the parties thereafter to
be a customer of New Anchor and acquired by OI from the Seller in the
Acquisition and (ii) all molds and other tools exclusively associated with such
products and acquired by OI from the Seller in the Acquisition. The purchase
price therefor shall be determined by mutual agreement between the parties, such
determination to be made at the time of, in connection with and using the same
methodologies as those used in the determination of the Allocation Statement (as
defined in the Asset Purchase Agreement); provided that (i) the purchase price
for the finished goods being acquired pursuant to this paragraph 4(b) shall be
equal to the aggregate average selling price for such finished goods charged by
Anchor during the three-month period immediately preceding the Acquisition and
(ii) the purchase price for the other inventories being acquired pursuant to
this paragraph 4(b) shall be equal to the aggregate net costs thereof reflected
on the books and records of Anchor as of the date of the Acquisition plus a
percentage or percentages of such net costs equal to the gross margin percentage
or percentages earned by Anchor on finished goods incorporating such inventories
(with one such percentage to be calculated for each product type) based upon the
aggregate average selling price for such finished goods charged by Anchor and
the aggregate average costs of goods sold (excluding outbound freight charges)
for such finished goods experienced by Anchor, in each case during the
three-month period immediately preceding the Acquisition.
(c) The purchase prices for the assets being sold pursuant to
paragraphs 4(a) and 4(b) above shall be payable on the date of the Acquisition,
or, if such purchase prices shall not then have been determined, as soon
thereafter as practicable; provided, however, that such purchase prices shall be
paid on the same day either in cash or by way of off-set against the purchase
price otherwise payable by one party to the other.
(d) The finished goods being sold to OI pursuant to paragraph 4(a)
above shall be held by New Anchor and shipped in accordance with shipping
instructions provided by OI pursuant to, and the costs of such shipment borne by
New Anchor as provided by, the terms of the Supply Agreement. The other assets
being sold to OI pursuant to paragraph 4(a) above and the assets being sold to
New Anchor pursuant to paragraph 4(b) above shall be held by New
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Anchor or OI, as the case may be, and shipped in accordance with instructions
given by, and at the expense of, the other party; provided that all such
shipments must be made within six months of the date of the Acquisition.
(e) NEW ANCHOR AND OI MAKE NO INDEMNITY, REPRESENTATION OR WARRANTY,
EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE ASSETS BEING SOLD TO THE OTHER
HEREUNDER.
5. General Intent. Each of Consumers and New Anchor agree to use its
best efforts to provide all transition assistance that OI or its affiliates may
reasonably request during the Transition Period and to use its best efforts to
assist OI and its affiliates to end their respective need to use such assistance
as soon as reasonably possible (including, without limitation, the delivery when
requested of all appropriate files and records except to the extent necessary to
continue to perform the services provided hereunder). OI agrees to use, and
agrees to cause its affiliates to use, their respective best efforts to end
their respective need to use such assistance as soon as reasonably possible and
in all events (unless the parties otherwise agree), with respect to each
respective service provided, not later than the end of the period for which such
particular service is provided hereunder as specified in Annex A hereto or, if
no specific period is indicated for any such particular service, not later than
the end of the Transition Period.
6. Validity of Documents. The parties hereto shall be entitled to rely
upon the genuineness, validity or truthfulness of any document, instrument or
other writing presented in connection with this Agreement unless such document,
instrument or other writing appears on its face to be fraudulent, false or
forged.
7. Partial Termination. Except as otherwise indicated in Annex A
hereto, any and all services (or any portion of any such services) to be
provided under paragraph 1 hereof and/or the license granted under paragraph 3
hereof are terminable at OI's option at any time during the term of this
Agreement on five days' prior notice to New Anchor.
8. Confidentiality. Consumers and New Anchor shall hold, and shall
cause their affiliates to hold, all confidential or proprietary information
relating to OI or its affiliates confidential and will not disclose any of such
information to any party unless legally compelled to disclose such information,
in which event Consumers or New Anchor, as the case may be, shall provide OI
with written notice of such legal compulsion to disclose and shall use its
reasonable efforts to afford, or cause its affiliates to afford, OI and its
affiliates a reasonable period of time to contest such disclosure.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of New York, without regard to the
conflicts of law rules of such state.
10. Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other parties hereto.
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11. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
12. Severability. If any provision of this Agreement (or any portion
thereof) or the application of any such provision (or any portion thereof) to
any person or circumstance shall be held invalid, illegal or unenforceable in
any respect by a court of competent jurisdiction, such invalidity, illegality or
unenforceabilty shall not affect any other provision hereof (or the remaining
portion thereof) or the application of such provision to any other persons or
circumstances.
13. Consent to Jurisdiction. Each party hereto irrevocably submits to
the exclusive jurisdiction of (a) the Supreme Court of the State of New York,
New York County, (b) the United States District Court for the Southern District
of New York and (c) to the extent applicable, the United States Bankruptcy Court
for the District of Delaware for the purposes of any suit, action or other
proceeding arising out of or related to this Agreement, or any transaction
contemplated hereby but for not other purpose. Each party hereto agrees to
commence any action, suit or proceeding relating hereto either in the United
States District Court for the Southern District of New York or if such suit,
action or proceeding may not be brought in such court for jurisdictional
reasons, in the Supreme Court of the State of New York, New York County or, to
the extent applicable, the United States Bankruptcy Court for the District of
Delaware. Each party hereto further agrees that service of any process, summons,
notice or document by U.S. registered mail to such party's respective address
set forth in Section 13.01 of the Asset Purchase Agreement shall be effective
service of process for any action, suit or proceeding in New York with respect
to any matters to which it has submitted to jurisdiction in this paragraph 13.
Each party hereto irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in (i) the Supreme Court of the State of
New York, New York County, (ii) the United States District Court for the
Southern District of New York or (iii) to the extent applicable, the United
States Bankruptcy Court for the District of Delaware, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum. Each of Consumers and New Anchor also
hereby irrevocably and unconditionally waives to the extent not prohibited by
applicable law and agrees not to assert, by way of motion, as a defense or
otherwise, in any such action, suit or proceeding, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that the venue of any
such action, suit or proceeding brought in one of the above-named courts is
improper, or that this agreement or the transactions contemplated hereby may not
be enforced in of by such court.
14. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT, ANY OTHER DOCUMENT REFERRED TO HEREIN OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto as of the date first
written above.
CONSUMERS PACKAGING INC.
By: /s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: Chairman and CEO
ANCHOR GLASS ACQUISITION CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: Chairman and CEO
XXXXX-XXXXXXXX GLASS CONTAINER INC.
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: Vice President
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ANNEX A
TRANSITION SERVICES CALCULATION OF FEE(1)
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Financial and Administrative Services
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1. General ledger services
2. Accounts payable processing
3. Administration of stores inventory
(perpetual systems)
4. Administration of payroll and benefits
plans for hourly employees
5. Administration of payroll and benefits
plans for salaried employees
6. Administration of the order entry,
production scheduling, inventory and
customer release systems for finished
goods
7. Manufacturing and production
reporting
TAX SERVICES
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1. Sales & use tax return preparation Hourly basis for entire period any Consumers
or New Anchor representative prepares
returns
2. Property tax return preparation Hourly basis for entire period any Consumers
or New Anchor representative prepares
returns
3. Business license tax preparation Hourly basis for entire period any Consumers
or New Anchor representative prepares
returns
4. Payroll tax return preparation Hourly basis for entire period any Consumers
or New Anchor representative prepares
returns
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(1) The fee charged is calculated using the same methodology as that used
during the 12-month period immediately preceding the Acquisition,
unless specified otherwise.
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5. Unemployment tax return preparation Hourly basis for entire period any Consumers
or New Anchor representative prepares
returns
6. Excise tax return preparation Hourly basis for entire period any Consumers
or New Anchor representative prepares
returns
7. Preparation of 1996 1099's/1096's Hourly basis for entire period any Consumers
or New Anchor representative prepares
returns
Environmental Consulting Services
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1 Services relating to obtaining Title V Amount charged by the consultant for services
permits for each plant (services being performed at OI's request
provided by ERM-South Inc. pursuant
to a contract between ERM-South Inc.
and Consumers)
2. Consulting services related to possible Amount charged by the consultant for services
ground contamination at each plant performed at OI's request.
(services being provided by Xxxxxx
Xxxxxx pursuant to a contract
between Xxxxxx Xxxxxx and
Consumers)
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