UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 13, 2004
NEWELL RUBBERMAID INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 1-9608 36-3514169
(State or Other (Commission (IRS Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
10 B Glenlake Parkway
Suite 600
Atlanta, Georgia 30328
(Address of Principal Executive (Zip Code)
Offices)
Registrant's Telephone Number, Including Area Code: (770) 407-3800
Item 2. Acquisition or Disposition of Assets.
On April 13, 2004, Newell Rubbermaid Inc. (the "Company")
completed the sale of its Burnes{R} picture frame, Anchor{R} glass and
Mirro{R} Cookware businesses to Global Home Products, LLC, an
affiliate of Cerberus Capital Management L.P., for a purchase price of
approximately $320 million, paid in a combination of cash and the
Company's retention of accounts receivable of the divested businesses.
A portion of this amount equal to $10 million will be applied as a
credit to the purchaser against fees for transition services to be
provided by the Company. The purchase price is subject to various
post-closing adjustments, principally with regard to changes in
working capital. The disposition was effected through the sale of the
capital stock of the Company's principal subsidiaries engaged in the
Burnes{R} Picture Frame and Anchor{R} Glass businesses and of
substantially all the assets used primarily in the cookware and
bakeware business conducted under the brands Mirro{R}, WearEver{R},
AirBake{R}, Regal{R}, Club{R} and Royal Diamond{R}. Copies of the
Stock and Asset Purchase Agreement and Amendment No. 1 thereto are
attached, respectively, as Exhibit 2.1 and Exhibit 2.2 hereto.
Item 7. Financial Statements and Exhibits.
(b) Pro Forma Financial Information.
The accompanying unaudited pro forma consolidated
balance sheet as of December 31, 2003 and the related unaudited pro
forma consolidated statements of operations for each of the
years ended December 31, 2003, 2002 and 2001 are based on the
historical financial condition and results of operations of the
Company, adjusted to give effect to the sale of the Company's
Burnes{R} Picture Frame, Anchor{R} Glass and Mirro{R} Cookware
businesses described in Item 2 as well as the sales of the Company's
Panex Brazilian low-end cookware division and its Frames Europe
businesses in France, Spain and the United Kingdom on January 31,
2004. The pro forma consolidated balance sheet has been
prepared assuming the sales occurred as of December 31, 2003. The
pro forma consolidated statements of operations have been
prepared assuming that the sales occurred as of January 1, 2001.
The accompanying unaudited pro forma financial statements are not
necessarily indicative of the financial condition or results of
operations that would have been reported had the sales occurred on
the dates specified, nor is it indicative of the Company's future
financial condition or results of operations. The unaudited pro forma
financial statements should be read in conjunction with the historical
consolidated financial statements of the Company, including the notes
thereto, in the Company's Form 10-K for the year ended December 31, 2003.
NEWELL RUBBERMAID INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED, IN MILLIONS EXCEPT PER SHARE DATA)
TWELVE MONTHS ENDED DECEMBER 31, 2003
-------------------------------------
PRO FORMA
ADJUSTMENTS
AS REPORTED (A) PRO FORMA
----------- ------------ ---------
Net sales $7,750.0 ($792.0) $6,958.0
Cost of products sold 5,682.8 (683.7) 4,999.1
--------- -------- --------
GROSS MARGIN 2,067.2 (108.3) 1,958.9
Selling, general and administrative expenses 1,352.9 (113.1) 1,239.8
Impairment charge 289.4 (254.9) 34.5
Goodwill Amortization - - -
Restructuring costs 245.0 (60.8) 184.2
--------- -------- --------
OPERATING INCOME 179.9 320.5 500.4
Nonoperating expenses (income)
Interest expense, net 140.1 - 140.1
Other, net 19.7 - 19.7
--------- -------- --------
Net nonoperating expenses 159.8 - 159.8
--------- -------- --------
INCOME BEFORE INCOME TAXES 20.1 320.5 340.6
Income taxes 66.7 58.5 125.2
--------- -------- --------
(LOSS)/INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE (46.6) 262.0 215.4
Cumulative effect of accounting change,
net of tax - - -
--------- -------- --------
NET (LOSS)/INCOME ($46.6) $262.0 $215.4
========= ======== ========
Earnings per common share from
continuing operations:
Basic
Before Cumulative Effect of Accounting Change ($0.17) $0.79
Cumulative Effect of Accounting Change - -
--------- --------
Net (loss)/Income from Continuing Operations
per common share ($0.17) $0.79
Diluted
Before Cumulative Effect of Accounting Change ($0.17) $0.79
Cumulative Effect of Accounting Change - -
--------- --------
Net (loss)/Income from Continuing
Operations per common share ($0.17) $0.79
Average common shares outstanding:
Basic 274.1 274.1
Diluted 274.1 274.1
NEWELL RUBBERMAID INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED, IN MILLIONS EXCEPT PER SHARE DATA)
TWELVE MONTHS ENDED DECEMBER 31, 2002
-------------------------------------
PRO FORMA
AS REPORTED ADJUSTMENTS PRO FORMA
(A)
----------- ------------ ---------
Net sales $7,453.9 ($956.0) $6,497.9
Cost of products sold 5,394.2 (742.0) 4,652.2
-------- -------- --------
GROSS MARGIN 2,059.7 (214.0) 1,845.7
Selling, general and administrative expenses 1,307.3 (125.3) 1,182.0
Impairment charge - - -
Goodwill Amortization - - -
Restructuring costs 122.7 (20.8) 101.9
-------- -------- --------
OPERATING INCOME 629.7 (67.9) 561.8
Nonoperating expenses (income)
Interest expense, net 137.3 - 137.3
Other, net 23.9 - 23.9
-------- -------- --------
Net nonoperating expenses 161.2 - 161.2
-------- -------- --------
INCOME BEFORE INCOME TAXES 468.5 (67.9) 400.6
Income taxes 157.0 (22.7) 134.3
-------- -------- --------
(LOSS)/INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 311.5 (45.2) 266.3
Cumulative effect of accounting change,
net of tax (514.9) - (514.9)
-------- -------- --------
NET (LOSS)/INCOME ($203.4) ($45.2) ($248.6)
======== ======== ========
Earnings per common share from
continuing operations:
Basic
Before Cumulative Effect of Accounting Change $1.17 $1.00
Cumulative Effect of Accounting Change (1.93) (1.93)
-------- --------
Net (loss)/Income from Continuing Operations
per common share ($0.76) ($0.93)
Diluted
Before Cumulative Effect of Accounting Change $1.16 $0.99
Cumulative Effect of Accounting Change (1.92) (1.92)
-------- --------
Net (loss)/Income from Continuing
Operations per common share ($0.76) ($0.93)
Average common shares outstanding:
Basic 267.1 267.1
Diluted 268.0 268.0
NEWELL RUBBERMAID INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED, IN MILLIONS EXCEPT PER SHARE DATA)
TWELVE MONTHS ENDED DECEMBER 31, 2001
-------------------------------------
PRO FORMA
AS REPORTED ADJUSTMENTS PRO FORMA
(A)
------------ ----------- -----------
Net sales $6,909.3 ($924.9) $5,984.4
Cost of products sold 5,046.6 (687.6) 4,359.0
-------- -------- --------
GROSS MARGIN 1,862.7 (237.3) 1,625.4
Selling, general and administrative expenses 1,168.2 (139.1) 1,029.1
Impairment charge - - -
Goodwill Amortization 56.9 (10.3) 46.6
Restructuring costs 66.7 (5.6) 61.1
-------- -------- --------
OPERATING INCOME 570.9 (82.3) 488.6
Nonoperating expenses (income)
Interest expense, net 137.5 - 137.5
Other, net 17.5 - 17.5
-------- -------- --------
Net nonoperating expenses 155.0 - 155.0
-------- -------- --------
INCOME BEFORE INCOME TAXES 415.9 (82.3) 333.6
Income taxes 151.3 (30.0) 121.3
-------- --------- --------
(LOSS)/INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 264.6 (52.3) 212.3
Cumulative effect of accounting change,
net of tax - - -
-------- -------- --------
NET (LOSS)/INCOME $264.6 ($52.3) $212.3
======== ======== ========
Earnings per common share from
continuing operations:
Basic
Before Cumulative Effect of Accounting Change $0.99 $0.79
Cumulative Effect of Accounting Change - -
-------- --------
Net (loss)/Income from Continuing Operations
per common share $0.99 $0.79
Diluted
Before Cumulative Effect of Accounting Change $0.99 $0.79
Cumulative Effect of Accounting Change - -
-------- --------
Net (loss)/Income from Continuing
Operations per common share $0.99 $0.79
Average common shares outstanding:
Basic 266.7 266.7
Diluted 267.0 267.0
EXPLANATORY NOTE TO CONSOLIDATED STATEMENTS OF OPERATIONS AMOUNTS
(A) To eliminate the revenues and expenses of the businesses which were sold.
NEWELL RUBBERMAID INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2003
(DOLLARS IN MILLIONS)
(UNAUDITED)
PRO FORMA
ADJUSTMENTS
AS REPORTED (A) PRO FORMA
------------- ------------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 144.4 $ 198.6 $ 343.0
Accounts receivable, net 1,442.6 (32.5) 1,410.1
Inventories, net 1,066.3 (179.5) 886.8
Deferred income taxes 152.7 - 152.7
Prepaid expenses and other 194.2 (10.8) 183.4
-------- ------- --------
TOTAL CURRENT ASSETS 3,000.2 (24.2) 2,976.0
OTHER LONG-TERM INVESTMENTS 15.5 - 15.5
OTHER ASSETS 196.2 (15.4) 180.8
PROPERTY, PLANT AND EQUIPMENT, NET 1,761.1 (136.0) 1,625.1
GOODWILL, NET 1,989.0 - 1,989.0
DEFERRED INCOME TAXES 68.1 - 68.1
OTHER INTANGIBLE ASSETS, NET 450.6 - 450.6
-------- ------- --------
TOTAL ASSETS $7,480.7 ($175.6) $7,305.1
======== ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 21.9 - 21.9
Accounts payable 777.4 (75.8) 701.6
Accrued compensation 131.1 (7.6) 123.5
Other accrued liabilities 996.3 (24.8) 971.5
Income taxes 81.8 (1.0) 80.8
Current portion of long-term debt 13.5 - 13.5
-------- ------- --------
TOTAL CURRENT LIABILITIES 2,022.0 (109.2) 1,912.8
LONG-TERM DEBT 2,868.6 - 2,868.6
OTHER NONCURRENT LIABILITIES 572.1 (1.0) 571.1
MINORITY INTEREST 1.7 - 1.7
STOCKHOLDERS' EQUITY:
Common stock 290.1 - 290.1
Treasury stock, at cost (411.6) - (411.6)
Additional paid-in capital 439.9 - 439.9
Retained earnings 1,865.7 (115.3) 1,750.4
Accumulated other comprehensive loss (167.8) 49.9 (117.9)
-------- ------- --------
TOTAL STOCKHOLDERS' EQUITY 2,016.3 (65.4) 1,950.9
-------- ------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,480.7 ($175.6) $7,305.1
======== ======= ========
EXPLANATORY NOTE TO PRO FORMA CONSOLIDATED BALANCE SHEET
(A) To record the sale of the businesses net of accounts receivable
retained and certain fees and purchase price adjustments. Based on the
net book value of the assets sold, an estimated loss on disposal of $115.3
million is reflected in retained earnings. The actual loss on disposal
to be reported from discontinued operations in the Company's consolidated
statement of operations for the quarter ended March 31, 2004 is subject
to change pending final determination of the net assets of the businesses,
transaction costs, and other adjustments.
(c) Exhibits.
Exhibit
Number Description
------- -----------
2.1 Stock and Asset Purchase Agreement, dated as of
March 12, 2004, by and between Newell Rubbermaid
Inc. and Global Home Products LLC*
2.2 Amendment No. 1 to Stock and Asset Purchase
Agreement, dated as of April 13, 2004, by and
between Newell Rubbermaid Inc. and Global Home
Products LLC
* Schedules and other attachments to the Stock and Asset Purchase
Agreement, which are listed in the forepart of the Agreement, are
omitted. The Company agrees to furnish supplementally a copy of
any schedule or other attachment to the Securities and Exchange
Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
NEWELL RUBBERMAID INC.
Date: April 28, 2004 By: /s/ Dale L. Matschullat
-----------------------------
Dale L. Matschullat
Vice President - General
Counsel & Corporate Secretary
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
2.1 Stock and Asset Purchase Agreement, dated as of
March 12, 2004, by and between Newell Rubbermaid
Inc. and Global Home Products LLC*
2.2 Amendment No. 1 to Stock and Asset Purchase
Agreement, dated as of April 13, 2004, by and
between Newell Rubbermaid Inc. and Global Home
Products LLC
* Schedules and other attachments to the Stock and Purchase
Agreement, which are listed in the forepart of the Agreement,
are omitted. The Company agrees to furnish supplementally a
copy of any schedule or other attachment to the Securities and
Exchange Commission upon request.
EXHIBIT 2.1
-----------
======================================================================
STOCK AND ASSET PURCHASE AGREEMENT
BY AND BETWEEN
NEWELL RUBBERMAID INC.
AND
GLOBAL HOME PRODUCTS LLC
DATED AS OF MARCH 12, 2004
======================================================================
TABLE OF CONTENTS
-----------------
ARTICLE I PURCHASE AND SALE OF STOCK AND ASSETS . . . . . . . . . 1
SECTION 1.1 PURCHASED SHARES . . . . . . . . . . . . . . 1
SECTION 1.2 PURCHASED ASSETS . . . . . . . . . . . . . . 2
SECTION 1.3 EXCLUDED ASSETS . . . . . . . . . . . . . . . 4
SECTION 1.4 ASSUMED LIABILITIES . . . . . . . . . . . . . 5
SECTION 1.5 EXCLUDED LIABILITIES . . . . . . . . . . . . 6
SECTION 1.6 PERFORMANCE OF EXCLUDED LIABILITIES . . . . . 8
ARTICLE II PURCHASE PRICE . . . . . . . . . . . . . . . . . . 8
SECTION 2.1 AMOUNT AND FORM OF PURCHASE PRICE . . . . . . 8
SECTION 2.2 PAYMENT OF CLOSING PAYMENT . . . . . . . . . 9
SECTION 2.3 ADJUSTMENT OF PURCHASE PRICE . . . . . . . . 9
SECTION 2.4 ESTIMATED OTHER ADJUSTMENT AMOUNT . . . . . . 15
SECTION 2.5 ALLOCATION OF PURCHASE PRICE; SECTION 338
ELECTIONS AND FORMS . . . . . . . . . . . . . 16
ARTICLE III CLOSING . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.1 CLOSING DATE . . . . . . . . . . . . . . . . 18
SECTION 3.2 CLOSING DELIVERIES . . . . . . . . . . . . . 18
SECTION 3.3 THIRD-PARTY CONSENTS . . . . . . . . . . . . 20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . 21
SECTION 4.1 ORGANIZATION AND GOOD STANDING . . . . . . . 21
SECTION 4.2 CAPITAL STRUCTURE OF ACQUIRED COMPANIES;
SUBSIDIARIES . . . . . . . . . . . . . . . . 22
SECTION 4.3 AUTHORIZATION, VALIDITY AND EXECUTION . . . . 22
SECTION 4.4 CONSENTS AND APPROVALS; NO VIOLATIONS . . . . 23
SECTION 4.5 FINANCIAL STATEMENTS; UNDISCLOSED
LIABILITIES . . . . . . . . . . . . . . . . . 24
SECTION 4.6 INVENTORY . . . . . . . . . . . . . . . . . . 24
SECTION 4.7 ACCOUNTS RECEIVABLE . . . . . . . . . . . . . 24
SECTION 4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . 25
SECTION 4.9 REAL PROPERTY . . . . . . . . . . . . . . . . 25
SECTION 4.10 INTELLECTUAL PROPERTY . . . . . . . . . . . . 28
SECTION 4.11 BUSINESS CONTRACTS . . . . . . . . . . . . . 32
SECTION 4.12 TITLE . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.13 LITIGATION . . . . . . . . . . . . . . . . . 33
SECTION 4.14 COMPLIANCE WITH LAWS; PERMITS . . . . . . . . 34
SECTION 4.15 TAXES . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.16 EMPLOYEE BENEFIT PLANS . . . . . . . . . . . 35
SECTION 4.17 EMPLOYEE AND LABOR MATTERS . . . . . . . . . 37
SECTION 4.18 ENVIRONMENTAL MATTERS . . . . . . . . . . . . 38
SECTION 4.19 TRANSACTIONS WITH AFFILIATES; INTERCOMPANY
TRANSACTIONS AND SERVICES; SHARED ASSETS . . 39
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SECTION 4.20 INSURANCE . . . . . . . . . . . . . . . . . . 40
SECTION 4.21 U.S. REAL PROPERTY HOLDING CORPORATION . . . 40
SECTION 4.22 CUSTOMERS . . . . . . . . . . . . . . . . . . 41
SECTION 4.23 BROKERS . . . . . . . . . . . . . . . . . . . 41
SECTION 4.24 DISCLAIMER OF CERTAIN WARRANTIES . . . . . . 41
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . 41
SECTION 5.1 ORGANIZATION AND STANDING . . . . . . . . . . 42
SECTION 5.2 AUTHORIZATION, VALIDITY AND EXECUTION . . . . 42
SECTION 5.3 CONSENTS AND APPROVALS; NO VIOLATION . . . . 42
SECTION 5.4 SECURITIES LAW REPRESENTATIONS . . . . . . . 42
SECTION 5.5 AVAILABILITY OF FUNDS . . . . . . . . . . . . 43
SECTION 5.6 LITIGATION . . . . . . . . . . . . . . . . . 43
SECTION 5.7 BROKERS . . . . . . . . . . . . . . . . . . . 43
ARTICLE VI CERTAIN AGREEMENTS . . . . . . . . . . . . . . . . 44
SECTION 6.1 CONDUCT OF BUSINESS . . . . . . . . . . . . . 44
SECTION 6.2 TRANSACTIONS WITH THE ACQUIRED COMPANIES AND
ASSET SELLERS . . . . . . . . . . . . . . . . 49
SECTION 6.3 ACCESS . . . . . . . . . . . . . . . . . . . 50
SECTION 6.4 CONSENTS AND CONDITIONS; HSR ACT . . . . . . 51
SECTION 6.5 CONFIDENTIALITY . . . . . . . . . . . . . . . 52
SECTION 6.6 FURTHER ASSURANCES . . . . . . . . . . . . . 53
SECTION 6.7 RELEASE OF GUARANTEES . . . . . . . . . . . . 54
SECTION 6.8 PUBLICITY . . . . . . . . . . . . . . . . . . 54
SECTION 6.9 BUSINESS RECORDS . . . . . . . . . . . . . . 54
SECTION 6.10 BULK TRANSFER LAWS . . . . . . . . . . . . . 54
SECTION 6.11 NON-COMPETE . . . . . . . . . . . . . . . . . 54
SECTION 6.12 CONSULTATION REGARDING ENVIRONMENTAL MATTERS 56
SECTION 6.13 INTANGIBLE PROPERTY USE PHASE OUT . . . . . . 58
SECTION 6.14 COLLECTION OF RECEIVABLES . . . . . . . . . . 59
ARTICLE VII EMPLOYEE MATTERS . . . . . . . . . . . . . . . . . 60
SECTION 7.1 EMPLOYMENT OF BUSINESS EMPLOYEES; SEVERANCE . 60
SECTION 7.2 EMPLOYEE BENEFIT PLANS GENERALLY . . . . . . 60
SECTION 7.3 401(k) PLAN . . . . . . . . . . . . . . . . . 61
SECTION 7.4 WELFARE PLANS . . . . . . . . . . . . . . . . 61
SECTION 7.5 RETIREE HEALTH . . . . . . . . . . . . . . . 62
SECTION 7.6 NON-SOLICITATION . . . . . . . . . . . . . . 62
ARTICLE VIII CONDITIONS TO CLOSING . . . . . . . . . . . . . . 63
SECTION 8.1 CONDITIONS TO PURCHASER'S OBLIGATIONS . . . . 63
SECTION 8.2 CONDITIONS TO SELLER'S OBLIGATIONS . . . . . 64
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ARTICLE IX SURVIVAL AND INDEMNIFICATION . . . . . . . . . . . 65
SECTION 9.1 SURVIVAL OF REPRESENTATIONS . . . . . . . . . 65
SECTION 9.2 INDEMNIFICATION BY SELLER OTHER THAN FOR
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.3 INDEMNIFICATION BY PURCHASER OTHER THAN FOR
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 9.4 LIMITS ON INDEMNIFICATION . . . . . . . . . . 69
SECTION 9.5 PROCEDURE FOR INDEMNIFICATION . . . . . . . . 72
SECTION 9.6 EXCLUSIVE REMEDY . . . . . . . . . . . . . . 73
ARTICLE X TAX MATTERS . . . . . . . . . . . . . . . . . . . 73
SECTION 10.1 TAX INDEMNIFICATION . . . . . . . . . . . . . 73
SECTION 10.2 PREPARATION AND FILING OF TAX RETURNS . . . . 74
SECTION 10.3 REFUNDS, CREDITS AND CARRYBACKS . . . . . . . 74
SECTION 10.4 TAX CONTESTS . . . . . . . . . . . . . . . . 75
SECTION 10.5 COOPERATION . . . . . . . . . . . . . . . . . 76
SECTION 10.6 TIMING DIFFERENCES . . . . . . . . . . . . . 77
SECTION 10.7 CERTAIN DEFINITIONS . . . . . . . . . . . . . 78
SECTION 10.8 SURVIVAL . . . . . . . . . . . . . . . . . . 79
ARTICLE XI TERMINATION . . . . . . . . . . . . . . . . . . . 79
SECTION 11.1 TERMINATION . . . . . . . . . . . . . . . . . 79
SECTION 11.2 EFFECT OF TERMINATION . . . . . . . . . . . . 80
ARTICLE XII MISCELLANEOUS . . . . . . . . . . . . . . . . . . 80
SECTION 12.1 EXPENSES . . . . . . . . . . . . . . . . . . 80
SECTION 12.2 GOVERNING LAW; CONSENT TO JURISDICTION . . . 80
SECTION 12.3 WAIVER OF JURY TRIAL . . . . . . . . . . . . 81
SECTION 12.4 NOTICES . . . . . . . . . . . . . . . . . . . 81
SECTION 12.5 ENTIRE AGREEMENT; AMENDMENT . . . . . . . . . 82
SECTION 12.6 PARTIES IN INTEREST . . . . . . . . . . . . . 82
SECTION 12.7 INTERPRETATION . . . . . . . . . . . . . . . 83
SECTION 12.8 CERTAIN DEFINITIONS . . . . . . . . . . . . . 83
SECTION 12.9 THIRD PARTY BENEFICIARIES . . . . . . . . . . 84
SECTION 12.10 DISCLOSURE SCHEDULE . . . . . . . . . . . . . 84
SECTION 12.11 WAIVER . . . . . . . . . . . . . . . . . . . 85
SECTION 12.12 SEVERABILITY . . . . . . . . . . . . . . . . 85
SECTION 12.13 COUNTERPARTS; DELIVERY BY FACSIMILE . . . . . 85
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DEFINED TERMS
-------------
Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . 24
Acquired Companies . . . . . . . . . . . . . . . . . . . . . . . . 1
Acquired Person . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Acquired Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Affiliated Group . . . . . . . . . . . . . . . . . . . . . . . . . 34
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Allocation Schedule . . . . . . . . . . . . . . . . . . . . . . . . 12
Anchor Entities . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Arbitrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Asset Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 5
Audited Financial Statements . . . . . . . . . . . . . . . . . . . 9
Balance Sheet Date . . . . . . . . . . . . . . . . . . . . . . . . 24
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Business Contracts . . . . . . . . . . . . . . . . . . . . . . . . 20
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Business Employees . . . . . . . . . . . . . . . . . . . . . . . . 60
Business Inventory . . . . . . . . . . . . . . . . . . . . . . . . 24
Business IP . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Business Records . . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Trade Secrets . . . . . . . . . . . . . . . . . . . . . . 31
Closed Property . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Closing Date Balance Sheet . . . . . . . . . . . . . . . . . . . . 9
Closing Net Working Capital . . . . . . . . . . . . . . . . . . . . 9
Closing Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 9
COBRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Collar Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Competing Frame Business . . . . . . . . . . . . . . . . . . . . . 56
Competing Glass Business . . . . . . . . . . . . . . . . . . . . . 56
Confidential Information . . . . . . . . . . . . . . . . . . . . . 52
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . 52
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Controlling Party . . . . . . . . . . . . . . . . . . . . . . . . . 78
Cookware Business . . . . . . . . . . . . . . . . . . . . . . . . . 1
Cookware Business Sellers . . . . . . . . . . . . . . . . . . . . . 1
Coordinator . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Customer Programs . . . . . . . . . . . . . . . . . . . . . . . . . 5
Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Desktop Software . . . . . . . . . . . . . . . . . . . . . . . . . 30
Employee Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . 36
Employee List . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Environmental Claims . . . . . . . . . . . . . . . . . . . . . . . 6
Environmental Condition . . . . . . . . . . . . . . . . . . . . . . 71
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . 7
-iv-
Environmental Liabilities . . . . . . . . . . . . . . . . . . . . . 7
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Estimated Other Adjustment Amount . . . . . . . . . . . . . . . . . 15
Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . 6
Excluded Receivables . . . . . . . . . . . . . . . . . . . . . . . 15
Excluded Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Final Allocation Schedule . . . . . . . . . . . . . . . . . . . . . 17
Final Other Adjustment Amount . . . . . . . . . . . . . . . . . . . 16
Final Statements . . . . . . . . . . . . . . . . . . . . . . . . . 10
Form 8023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Former Property . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Frame Business . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Glass Business . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Governmental Authority . . . . . . . . . . . . . . . . . . . . . . 23
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . 7
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . 72
Indemnified Remedial Action . . . . . . . . . . . . . . . . . . . . 57
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . . 72
Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . 28
International Asset Sellers . . . . . . . . . . . . . . . . . . . . 1
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
IT Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Knowledge of Seller . . . . . . . . . . . . . . . . . . . . . . . . 83
Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Leased Real Property . . . . . . . . . . . . . . . . . . . . . . . 27
Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . 83
Mexican Competition Law . . . . . . . . . . . . . . . . . . . . . . 23
Multiemployer Plan . . . . . . . . . . . . . . . . . . . . . . . . 36
Negative Purchase Price Adjustment . . . . . . . . . . . . . . . . 9
Net Working Capital . . . . . . . . . . . . . . . . . . . . . . . . 11
Non-Controlling Party . . . . . . . . . . . . . . . . . . . . . . . 78
Objection Notice . . . . . . . . . . . . . . . . . . . . . . . . . 16
Ordinary Course of Business . . . . . . . . . . . . . . . . . . . . 84
Other Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Owned Real Property . . . . . . . . . . . . . . . . . . . . . . . . 25
Packaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Patent License Agreements . . . . . . . . . . . . . . . . . . . . . 18
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Permitted Encumbrances . . . . . . . . . . . . . . . . . . . . . . 26
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Positive Purchase Price Adjustment . . . . . . . . . . . . . . . . 9
Post-Closing Period . . . . . . . . . . . . . . . . . . . . . . . . 78
Pre-Closing Period . . . . . . . . . . . . . . . . . . . . . . . . 78
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Preliminary Closing Net Working Capital . . . . . . . . . . . . . . 10
Preliminary Statements . . . . . . . . . . . . . . . . . . . . . . 10
Preliminary Year-End Working Capital . . . . . . . . . . . . . . . 10
Prime Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Property Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Purchase Price Adjustment . . . . . . . . . . . . . . . . . . . . . 9
Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . 3
Purchased Companies . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchased Cookware Business Assets . . . . . . . . . . . . . . . . 2
Purchased International Assets . . . . . . . . . . . . . . . . . . 3
Purchased Shares . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchaser Documents . . . . . . . . . . . . . . . . . . . . . . . . 42
Purchaser Indemnified Parties . . . . . . . . . . . . . . . . . . . 66
Purchaser's Letter . . . . . . . . . . . . . . . . . . . . . . . . 12
Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Registered . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Remedial Action . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Retained IP . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Reverse Transition Services Agreement . . . . . . . . . . . . . . . 18
Section 338(h)(10) Election . . . . . . . . . . . . . . . . . . . . 17
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Seller Documents . . . . . . . . . . . . . . . . . . . . . . . . . 23
Seller Indemnified Parties . . . . . . . . . . . . . . . . . . . . 68
Shared Property . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Significant Customers . . . . . . . . . . . . . . . . . . . . . . . 41
Straddle Period Tax Return . . . . . . . . . . . . . . . . . . . . 78
Subsequent Loss . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Subsidiary Purchasers . . . . . . . . . . . . . . . . . . . . . . . 1
Suit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Tax Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Tax Item . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Tax Proceeding . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Third-Party Claims . . . . . . . . . . . . . . . . . . . . . . . . 72
Transferred Subsidiaries . . . . . . . . . . . . . . . . . . . . . 22
Transition Services Agreement . . . . . . . . . . . . . . . . . . . 18
Unaudited Balance Sheet . . . . . . . . . . . . . . . . . . . . . . 24
Unaudited Financial Statements . . . . . . . . . . . . . . . . . . 24
Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Year-End Balance Sheet . . . . . . . . . . . . . . . . . . . . . . 9
Year-End Net Working Capital . . . . . . . . . . . . . . . . . . . 10
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SCHEDULES
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Schedule 1.2(a)(ii) . Equipment of the Cookware Business Asset Sellers
Schedule 1.2(a)(iii) . . . . . . . . . . . . Certain Contracts of the
Cookware Business Asset Sellers
Schedule 1.2(b)(ii) . . . . . . . . . . . . . Certain Contracts of the
International Asset Sellers
Schedule 1.3(k) . . . . . . . . . . . . . . . . Other Excluded Assets
Schedule 1.4(c) . . . . . . . . . . . . . . . . . . Customer Programs
Schedule 1.4(e) . . . . . . . . . . . . . . . . . . Product Warranties
Schedule 1.4(j) . . . . . . . . . . . . . . Other Assumed Liabilities
Schedule 4.2(a) . . . . . . . . . . . . . . . . . . . Acquired Shares
Schedule 4.2(b) . . . . . . . . . . . . . . . Transferred Subsidiaries
Schedule 4.4 . . . . . . . . . . . . . . . . . . . . . . . . Consents
Schedule 4.5 . . . . . . . . . . . . . Unaudited Financial Statements
Schedule 4.7 . . . . . . . . . . . . . . . . . . Accounts Receivable
Schedule 4.8 . . . . . . . . . . . . . . . Absence of Certain Events
Schedule 4.9(a) . . . . . . . . . . . . . . . . . Owned Real Property
Schedule 4.9(b) . . . . . . . . . . . . . . . . . Leased Real Property
Schedule 4.10(b) . . . . . . . . . . . . . . . Registered Business IP
Schedule 4.10(c) . . . . . . . . . . . . . . . . . License Agreements
Schedule 4.10(d) . . . . . . . . . . . . . . . . . . . . . . Software
Schedule 4.10(j) . . . . . . . . . . . . . . . . . . Certain Filings
Schedule 4.11 . . . . . . . . . . . . . . . . . . . Business Contracts
Schedule 4.13 . . . . . . . . . . . . . . . . . . . . . . . Litigation
Schedule 4.14 . . . . . . . . . . . . . . . . . . . . . . . . Permits
Schedule 4.15(b) . . . . . . . . . . . . . . . . . . Payment of Taxes
Schedule 4.15(c) . . . . . . . . . . . . . . . . Certain Tax Matters
Schedule 4.15(f) . . . . . . . . . . . . . . . . . . Affiliate Groups
Schedule 4.15(g) . . . . . . . . . . . . . . . . . . . . Tax Waivers
Schedule 4.15(h) . . . . . . . . . . . . . . Section 481 Adjustments
Schedule 4.15(i) . . . . . . . . . . . . . . . . . . Tax Proceedings
Schedule 4.15(j) . . . . . . . . . . . . . . . . . . Certain Filings
Schedule 4.16(a) . . . . . . . . . . . . . . . Employee Benefit Plans
Schedule 4.16(c) . . . . . . . . . . . . . . . . Multiemployer Plans
Schedule 4.17(a) . . . . . . . . . . Collective Bargaining Agreements
Schedule 4.18(a) . . . . . . . . . Compliance with Environmental Laws
Schedule 4.18(b) . . . . . . . . . . . . . . . . Environmental Claims
Schedule 4.18(c) . . . . . . . . . . . . Other Environmental Matters
Schedule 4.19(a) . . . . . . . . . . . . Transactions with Affiliates
Schedule 4.19(b) . . . . . . . . . . . . . . . Intercompany Contracts
Schedule 4.19(c) . . . . . . . . . . . . . . . Intercompany Services
Schedule 4.19(d) . . . . . . . . . . . . . . . . . . Shared Contracts
Schedule 4.20 . . . . . . . . . . . . . . . . . . . . . . . Insurance
Schedule 4.22(a) . . . . . . . . . . Significant Customers; Knowledge
Schedule 4.22(b) . . . . . . . . . . . . . . . . . . Certain Persons
Schedule 6.1 . . . . . . . . . . . . . . . . . . Conduct of Business
Schedule 6.1(a)(xiv) . . . . . . . . . . Capital Expenditures Budget
Schedule 6.1(a)(xviii) . . . . . . . . . . . . . Promotional Programs
Schedule 6.1(a)(xix) . . . . . . . . . . . . . . . Obsolete Inventory
Schedule 6.2(a) . . . . . . . . . . . . . Transfer of Certain Assets
from the Acquired Companies
Schedule 6.2(d) . . . . . . . . . . . . . Transfer of Certain Assets
to the Acquired Companies
Schedule 6.6 . . . . . . . . . . . . . . . . . . . Certain Customers
Schedule 6.11(c) . . . . . . . . . . . . . . . . . . . . Non-Compete
Schedule 7.1 . . . . . . . . . . . . . . . . . . . . . . . Severance
Schedule 8.1(g) . . . . . . . . . . . . . . . . . . Required Consents
Schedule 9.2(b)(vii) . . . . . . . . Certain Indemnification Matters
Schedule 12.8(c) . . . . . . . . . . . . . . . . Knowledge of Seller
Schedule 12.8(d) . . . . . . . . . . . . . . Material Adverse Effect
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EXHIBITS
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Exhibit A-I . . . . . . . . . . . . . . . . . . . Purchased Companies
Exhibit A-II . . . . . . . . . . Subsidiaries of Purchased Companies
Exhibit B-I . . . . . . . . . . . . . Cookware Business Asset Sellers
Exhibit B-II . . . . . . . . . . . . . . International Asset Sellers
Exhibit C . . . . . . . . . . . . . . . . . Closing Payment Allocation
Exhibit D . . . . . . . . . . . Form of Transition Services Agreement
Exhibit E-I . . . . . . . . . . . . . Form of Patent License Agreement
Exhibit E-II . . . . . . . . . . . . Form of Patent License Agreement
Exhibit F . . . . . . . . . . . . . . . . . . . Accounting Principles
Exhibit G . . . . . . . . . . . . . . . . . . Equity Commitment Letter
-ix-
STOCK AND ASSET PURCHASE AGREEMENT
----------------------------------
This STOCK AND ASSET PURCHASE AGREEMENT (this "Agreement"),
dated as of March 12, 2004, is made by and between NEWELL RUBBERMAID
INC., a Delaware corporation ("Seller"), and GLOBAL HOME PRODUCTS LLC,
a Delaware limited liability company ("Purchaser").
RECITALS
WHEREAS, Seller and certain of its Subsidiaries are engaged
in the design, manufacture, marketing, distribution and sale of (a)
consumer and specialty glass products through operations based in
North America (the "Glass Business"), (b) photograph frames, albums
and storage products in North America (the "Frame Business") and (c)
cookware and bakeware under the brands Mirro{R}, WearEver{R},
AirBake{R}, Regal{R}, Club{R} and Royal Diamond{R} (the "Cookware
Business", and together with the Glass Business and the Frame
Business, the "Business"); and
WHEREAS, on the terms and subject to the conditions set
forth herein, Seller desires to sell to Purchaser and certain
Affiliates of Purchaser designated by Purchaser in writing at least 10
Business Days prior to Closing ("Subsidiary Purchasers"), and
Purchaser and the Subsidiary Purchasers desire to purchase from
Seller, the Business through the sale, assignment, transfer and
delivery to Purchaser and the Subsidiary Purchasers of (a) all of the
issued and outstanding shares of capital stock (the "Purchased
Shares") of the Subsidiaries of Seller listed on EXHIBIT A-I (the
"Purchased Companies" and, together with their respective Subsidiaries
listed on EXHIBIT A-II, the "Acquired Companies") and (b) certain
assets of Seller and the Subsidiaries of Seller listed on EXHIBIT B-I
(the "Cookware Business Asset Sellers") and of the Subsidiaries of
Seller listed on EXHIBIT B-II (the "International Asset Sellers", and
together with the Cookware Business Asset Sellers, the "Asset
Sellers"), subject to the assumption by Purchaser and the Subsidiary
Purchasers of certain liabilities.
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants and agreements herein
contained, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK AND ASSETS
SECTION 1.1 PURCHASED SHARES. On the terms and subject
to the conditions set forth herein, at the Closing, Seller will, or
will cause one or more of its Subsidiaries to, sell, assign, transfer
and deliver to Purchaser and any Subsidiary Purchasers, and Purchaser
and such Subsidiary Purchasers, will purchase, acquire and accept from
Seller, or its applicable Subsidiary or Subsidiaries, all of the
right, title and interest of Seller, or its applicable Subsidiary or
Subsidiaries, in and to the Purchased Shares, free and clear of all
Encumbrances other than Permitted Encumbrances.
SECTION 1.2 PURCHASED ASSETS.
(a) PURCHASED COOKWARE BUSINESS ASSETS. On the terms and
subject to the conditions herein, the exclusions set forth in SECTION
1.3 and the limitations set forth in SECTION 3.3, at the Closing,
Seller will cause the Cookware Business Asset Sellers to sell, assign,
transfer and deliver to Purchaser and any Subsidiary Purchasers, and
Purchaser and such Subsidiary Purchasers will purchase, acquire and
accept from the Cookware Business Asset Sellers all of the right,
title and interest of the Cookware Business Asset Sellers in and to
the following assets, properties, rights, contracts and claims of the
Cookware Business Asset Sellers, which are owned, leased or licensed
by a Cookware Business Asset Seller on the Closing Date, in each case
free and clear of all Encumbrances other than Permitted Encumbrances
(collectively, the "Purchased Cookware Business Asset"):
(i) All inventories of raw materials, work-in-process,
finished goods and packaging materials (including any such items
held by third parties on consignment or in transit at the time of
the Closing) (collectively, "Inventory") related primarily to the
Cookware Business;
(ii) All machinery, equipment, furniture, furnishings,
fixtures, tools, molds and other tangible personal property
("Equipment") related primarily to the Cookware Business which
include all of the items listed on SCHEDULE 1.2(a)(ii);
(iii) All contracts, agreements, commitments, purchase
orders, notes, bonds, mortgages, indentures, deeds of trust,
leases, licenses and other arrangements, whether written or oral
(collectively, "Contracts"), (A) listed on SCHEDULE 1.2(a)(iii)
or (B) entered into in the Ordinary Course of Business and
related primarily to the Cookware Business;
(iv) All Intellectual Property (A) listed under the
caption "Cookware Business" on SCHEDULE 4.10(b) and owned by a
Cookware Business Asset Seller or (B) currently used exclusively
in the Cookware Business, including complete and in-process
finished-product drawings, tooling drawings, product
manufacturing drawings and instructions for manufacturing,
analysis and notes related to the design of cookware products,
and similar works used in the analysis, design and manufacture of
cookware products, all of the foregoing to the extent currently
used exclusively in the Cookware Business;
(v) All books and records, including all business
records, research material, tangible data, documents, personnel
records with respect to Business Employees, invoices, customer
lists, vendor lists, service provider lists, sales and
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promotional literature, catalogs and advertising material used
for the marketing of products or services (collectively,
"Business Records"), in each case related primarily to the
Cookware Business;
(vi) All permits (including zoning permits),
approvals, authorizations, licenses, franchises, certificates,
privileges, immunities, orders, registrations, easements and
rights from Governmental Authorities (collectively, "Permits"),
to the extent transferable and related primarily to the Cookware
Business;
(vii) All rights, causes of action, claims and credits
to the extent related primarily to any Purchased Cookware
Business Asset or any Assumed Liability, including all
guarantees, warranties, indemnities and similar rights in favor
of a Cookware Business Asset Seller in respect of any Purchased
Cookware Business Asset or any Assumed Liability; and
(viii) All other assets of the Cookware Business Asset
Sellers reflected on the Unaudited Balance Sheet.
(b) PURCHASED INTERNATIONAL ASSETS. On the terms and
subject to the conditions herein, the exclusions set forth in SECTION
1.3 and the limitations set forth in SECTION 3.3, at the Closing,
Seller will cause the International Asset Sellers to sell, assign,
transfer and deliver to Purchaser and any Subsidiary Purchasers, and
Purchaser and such Subsidiary Purchasers will purchase, acquire and
accept from the International Asset Sellers all of the right, title
and interest of the International Asset Sellers in and to the
following assets, properties, rights, contracts and claims of the
International Asset Sellers, which are owned, leased or licensed by an
International Asset Seller on the Closing Date, in each case free and
clear of all Encumbrances other than Permitted Encumbrances
(collectively, the "Purchased International Assets", and together with
the Purchased Cookware Business Assets, the "Purchased Assets"):
(i) All Inventory related primarily to the Business;
(ii) All Contracts (A) listed on SCHEDULE 1.2(b)(ii)
or (B) entered into in the Ordinary Course of Business and
related primarily to the Business;
(iii) All accounts and notes receivable of the
Business, other than intercompany accounts and notes receivable;
(iv) All Intellectual Property (A) listed under the
captions "Glass Business", "Frame Business" and "Cookware
Business" on SCHEDULE 4.10(b) and owned by an International Asset
Seller or (B) currently used exclusively in the Business;
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(v) All Business Records related primarily to the
Business;
(vi) All Permits to the extent transferable and
related primarily to the Business;
(vii) All rights, causes of action, claims and credits
to the extent related primarily to any Purchased International
Asset or any Assumed Liability, including all guarantees,
warranties, indemnities and similar rights in favor of an
International Asset Seller in respect of any Purchased
International Asset or any Assumed Liability; and
(viii) All other assets reflected on the Unaudited
Balance Sheet.
SECTION 1.3 EXCLUDED ASSETS. All assets, properties,
rights, contracts and claims, wherever located, whether tangible or
intangible, real or personal, of the Asset Sellers not included in the
definition of Purchased Assets (collectively, the "Excluded Assets")
will not be sold, assigned, transferred or delivered to Purchaser or
the Subsidiary Purchasers, including:
(a) All cash, cash equivalents, marketable securities and
similar investments, bank accounts, lockboxes and deposits, and any
rights or interests in, to, or with the cash management system of the
Asset Sellers;
(b) All Excluded Receivables;
(c) All intercompany receivables owed to any Asset Seller
by Seller or any Subsidiary of Seller (other than the Acquired
Companies and except to the extent any such receivables are included
on the Unaudited Balance Sheet);
(d) All rights of the Asset Sellers under any Contract
other than the Contracts included in the Purchased Assets;
(e) All Intellectual Property that is not included in the
Purchased Assets, including all rights of the Asset Sellers to use the
"Newell Rubbermaid Inc." trade name or trademark, or any part or
derivation thereof, together with all goodwill associated therewith,
represented thereby or pertaining thereto;
(f) All real property, including any Closed Property;
(g) All assets used in connection with the centralized
management functions provided by Seller;
(h) All refunds of or credits with respect to any Excluded
Tax, as further described in SECTION 10.3(a), plus any interest paid
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by the relevant taxing authority with respect to such refund or
credit;
(i) All Employee Benefit Plans and any trusts, insurance
arrangements or other assets held pursuant to, or set aside to fund
the obligations of Seller or its Subsidiaries under, any such Employee
Benefit Plans, other than as provided in SECTIONS 7.3 and 7.4(b);
(j) All insurance policies and all rights of the Asset
Sellers of every nature and description under or arising out of such
insurance policies; and
(k) The assets listed on SCHEDULE 1.3(k).
SECTION 1.4 ASSUMED LIABILITIES. At the Closing,
Purchaser or any Subsidiary Purchasers will assume and be liable for,
and will pay, perform and discharge as and when due, the following
debts, claims, liabilities, obligations, damages or expenses (whether
known or unknown, vested or unvested, asserted or unasserted, absolute
or contingent, accrued or unaccrued, assessed or unassessed,
liquidated or unliquidated, actual or potential, and due to or become
due) (each, a "Liability") of the Asset Sellers, as and to the extent
not satisfied or extinguished as of the Closing Date (collectively,
the "Assumed Liabilities"):
(a) All Liabilities of the Asset Sellers to the extent
reflected or reserved against on the Unaudited Balance Sheet;
(b) All obligations under the Contracts included in the
Purchased Assets, other than with respect to breaches or defaults
occurring prior to the Closing Date;
(c) All Liabilities of the Business accruing before, on or
after the Closing Date under customer programs and related
arrangements relating exclusively to the Business, whether written or
oral, including discounts, allowances, rebates, promotions,
advertising allowances, buyback programs, customer credits and coupons
(the "Customer Programs") that are reflected on the Unaudited Balance
Sheet (all of which are listed on SCHEDULE 1.4(c)) or listed on
SCHEDULE 1.4(c);
(d) All Liabilities for product liability claims relating
to products of the Business arising out of occurrences on or after the
Closing Date;
(e) All Liabilities accruing before, on or after the
Closing Date with respect to any product warranty (pursuant to the
warranties disclosed on SCHEDULE 1.4(e)) or product return relating to
products of the Business that were designed, manufactured, marketed,
distributed or sold on or prior to the Closing Date or that were held
in the Inventory included in the Purchased Assets;
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(f) All Liabilities for claims incurred by a Business
Employee (or his or her eligible spouse and dependents) consisting of
(i) Liabilities with respect to the transferred accounts referred to
in SECTION 7.3, (ii) Liabilities with respect to the transferred
accounts referred to in SECTION 7.4(b) and (iii) Liabilities described
in SECTION 7.5;
(g) Any Liabilities for claims related to occurrences on or
after the Closing Date by any Business Employee, including workers
compensation or similar claims;
(h) All Liabilities arising on or after the Closing Date
under the Worker Adjustment and Retraining Notification Act related
exclusively to the Business, Purchaser or any Subsidiary Purchaser;
and
(i) All other Liabilities listed on SCHEDULE 1.4(j).
SECTION 1.5 EXCLUDED LIABILITIES. Purchaser and the
Subsidiary Purchasers will not assume or be liable for any Liabilities
of Asset Sellers other than the Assumed Liabilities (collectively, the
"Excluded Liabilities"), including:
(a) All Liabilities of any Asset Sellers under debt
instruments, loan agreements, indentures, debentures, guarantees or
other written obligations which involve indebtedness for borrowed
money;
(b) All intercompany payables owed by any Asset Seller to
Seller or any Subsidiary of Seller;
(c) All Liabilities under Employee Benefits Plans other
than Assumed Liabilities;
(d) All Liabilities for product liability claims relating
to products of the Business arising out of occurrences prior to the
Closing Date;
(e) Any Liabilities for claims incurred by any employee
other than a Business Employee (or his or her eligible spouse and
dependents) or for claims related to occurrences prior to the Closing
Date by any Business Employee, including workers compensation or
similar claims; and
(f) All Environmental Liabilities relating to any Former
Property, Closed Property or Shared Property.
(g) For purposes of this Agreement:
(i) "Environmental Claims" refers to any complaint,
summons, citation, notice, directive, order, claim, litigation,
investigation, notice of violation, judicial or administrative
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proceeding, judgment, letter or other written communication from
any Governmental Authority or any third party alleging violations
of Environmental Laws or Releases of Hazardous Materials from (i)
any assets, properties or businesses of the Business or any
predecessor in interest; (ii) from adjoining properties or
businesses; or (iii) from or onto any facilities which received
Hazardous Materials generated by the Business or any predecessor
in interest;
(ii) "Environmental Laws" includes the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.
9601 et seq., as amended; the Resource Conservation and Recovery
Act, 42 U.S.C. 6901 et seq., as amended; the Clean Air Act, 42
U.S.C. 7401 et seq., as amended; the Clean Water Act, 33 U.S.C.
1251 et seq., as amended; the Occupational Safety and Health Act,
29 U.S.C. 655 et seq., the Ecological Balance and Environmental
Act (LEY GENERAL DEL EQUILIBRIO ECOLOGICO Y LA PROTECCION AL
AMBIENTE), the National Waters Act of Mexico (LEY DE AGUAS
NACIONALES), the General Law for the Prevention and Integral
Management of Wastes (LEY GENERAL PARA LA PREVENCION Y GESTION
INTEGRAL DE LOS RESIDUOS) and any other Law, including any
guidance documents published by any Governmental Authority,
imposing liability or establishing standards of conduct for
protection of human health, safety and the environment;
(iii) "Environmental Liabilities" means any Damages
(including treble damages and expense related to any
environmental site assessments or Remedial Actions) incurred as a
result of any Environmental Claim filed by any Governmental
Authority or any third party which relate to any violations of
Environmental Laws, Remedial Actions, Releases or threatened
Releases of Hazardous Materials from or onto (A) any property
presently or formerly owned by the Business or any predecessor in
interest, or (B) any facility which received Hazardous Materials
generated by the Business or any predecessor in interest;
(iv) "Hazardous Materials" shall include, without
regard to amount and/or concentration (a) any element, compound,
or chemical that is defined, listed or otherwise classified as a
contaminant, pollutant, toxic pollutant, toxic or hazardous
substances, extremely hazardous substance or chemical, hazardous
waste, medical waste or infectious waste, special waste, or solid
waste under Environmental Laws; (b) petroleum, petroleum-based or
petroleum-derived products; (c) polychlorinated biphenyls; (d)
any substance exhibiting a hazardous waste characteristic
including corrosivity, ignitibility, toxicity or reactivity as
well as any radioactive or explosive materials; and (e) asbestos-
containing materials and (f) any other substance subject to
regulation under Mexican Official Norms Nom-052-SEMARNAT 1993 and
NOM-053-SEMARNAT 1993;
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(v) "Release" means any spilling, leaking, pumping,
emitting, emptying, discharging, injecting, escaping, leaching,
migrating, dumping, or disposing of Hazardous Materials
(including the abandonment or discarding of barrels, containers
or other closed receptacles containing Hazardous Materials) into
the environment;
(vi) "Remedial Action" means all actions taken to (i)
clean up, remove, remediate, contain, treat, monitor, assess,
evaluate or in any other way address Hazardous Materials in the
indoor or outdoor environment; (ii) prevent or minimize a Release
or threatened Release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment; (iii) perform pre-
remedial studies and investigations and post-remedial operation
and maintenance activities; or (iv) any other actions authorized
by 42 U.S.C. 9601;
(vii) "Closed Property" means any real property
(including buildings, improvements and appurtenant structures
thereto) (i) owned or leased by an Acquired Company, Asset Seller
or predecessor in interest thereof and (ii) used in the operation
of the Business prior to, but not on or after, the Closing Date;
(viii) "Former Property" means any real property
(including buildings, improvements and appurtenant structures
thereto) (i) previously owned or leased by an Acquired Company,
Asset Seller or a predecessor in interest thereof and (ii) used
in the operation of the Business prior to, but not on or after,
the Closing Date; and
(ix) "Shared Property" means any real property
(including buildings, improvements and appurtenant structures
thereto) (i) owned or leased by Seller or one of its Subsidiaries
and (ii) used in connection with both the Business and the
business of Seller or any of its Subsidiaries other than the
Business, other than the Owned Real Property and the Leased Real
Property.
Notwithstanding anything to the contrary contained herein, in no event
shall the Owned Real Property or the Leased Real Property include or
be deemed to include any Closed Property or Former Property.
SECTION 1.6 PERFORMANCE OF EXCLUDED LIABILITIES. Seller
will, and will cause its applicable Subsidiaries to, pay, perform and
discharge as and when due all of the Excluded Liabilities.
ARTICLE II
PURCHASE PRICE
SECTION 2.1 AMOUNT AND FORM OF PURCHASE PRICE. The
aggregate consideration to be paid by Purchaser and the Subsidiary
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Purchasers to Seller in consideration of the Purchased Shares and the
Purchased Assets (the "Purchase Price") will consist of:
(a) $320,000,000 minus the Estimated Other Adjustment
Amount (the "Closing Payment"), subject to the adjustments set forth
in SECTIONS 2.3 and 2.4, to be paid in the manner and at the time set
forth in SECTION 2.2; and
(b) The assumption by Purchaser, or the Subsidiary
Purchasers, of the Assumed Liabilities on and as of the Closing Date.
SECTION 2.2 PAYMENT OF CLOSING PAYMENT. At the Closing,
Purchaser will pay to Seller, by wire transfer of immediately
available funds to the account designated by Seller on or before the
second Business Day prior to the Closing Date, an amount equal to the
Closing Payment.
SECTION 2.3 ADJUSTMENT OF PURCHASE PRICE.
(a) PURCHASE PRICE ADJUSTMENT. Subject to the provisions
of clauses (b) through (g) of this SECTION 2.3, the Purchase Price
will be adjusted following the Closing Date to the extent that the Net
Working Capital as of the Closing Date (before giving effect to the
transactions contemplated by ARTICLE I) (the "Closing Net Working
Capital"), is more or less, as the case may be, than the Net Working
Capital as of December 31, 2003 (the "Year-End Net Working Capital")
(such adjustment is referred to herein as the "Purchase Price
Adjustment"). A "Positive Purchase Price Adjustment" means the amount
by which the Closing Net Working Capital is more than the Year-End Net
Working Capital, and a "Negative Purchase Price Adjustment" means the
amount by which the Closing Net Working Capital is less than the Year-
End Net Working Capital.
(b) PRELIMINARY STATEMENTS.
(i) As promptly as practicable, but in no event later
than 90 calendar days, following the Closing Date, Seller will
(at Purchaser's expense) prepare and deliver, or will cause to be
prepared and delivered, to Purchaser (A) an audited consolidated
balance sheet (including footnotes) of the Business as of
December 31, 2003 (the "Year-End Balance Sheet") and audited
consolidated statements of income and cash flows (including
footnotes) for the fiscal year ended December 31, 2003, (B) an
audited consolidated balance sheet (including footnotes) of the
Business as of the Closing Date (the "Closing Date Balance
Sheet") and audited consolidated statements of income and cash
flows (including footnotes) for the period beginning on January
1, 2004 and ending on the Closing Date (the Year-End Balance
Sheet, the Closing Date Balance Sheet and the consolidated
statements of income and cash flows described in clauses (A) and
(B) are collectively referred to as the "Audited Financial
Statements"), (C) a statement, calculated in accordance with the
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Year-End Balance Sheet, setting forth in reasonable detail
Seller's calculation of Year-End Net Working Capital
("Preliminary Year-End Net Working Capital") and (D) a statement,
calculated in accordance with the Closing Date Balance Sheet,
setting forth in reasonable detail Seller's calculation of Final
Net Working Capital (the "Preliminary Closing Net Working
Capital"; and the statements setting forth the Preliminary Year-
End Net Working Capital and the Preliminary Closing Net Working
Capital are referred to herein as the "Preliminary Statements");
PROVIDED, that if Seller fails to prepare and deliver, or cause
to be prepared and delivered (other than as a result of
Purchaser's failure to comply with SECTION 2.3(b)(ii)), the
Audited Financial Statements and the Preliminary Statements on or
prior to the 90th calendar day following the Closing Date, Seller
will pay to Purchaser, as liquidated damages, an amount equal to
$250,000 for each full week thereafter until the Audited
Financial Statements and the Preliminary Statements are prepared
and delivered. The Audited Financial Statements will be prepared
in accordance with United States generally accepted accounting
principles ("GAAP"), consistently applied, and will be
accompanied by an unqualified report of Seller's independent
accountants. The Preliminary Statements (x) will be calculated
(1) after giving effect to the transactions contemplated by
SECTION 6.2, as of December 31, 2003 or the Closing Date, as the
case may be, (2) as if the Business financial position, in
whichever entity or entities then conducted, was being presented
as a separate and independent entity, and (3) in accordance with
GAAP, consistently applied, and (y) will be accompanied by (I) a
report of Seller's independent accountants stating that the
Preliminary Statements were prepared in accordance with the
requirements of this SECTION 2.3(b) and (II) documentation that
provides reasonable support for each of the amounts included in
the items described on such Preliminary Statements. The
Preliminary Statements, as finally modified pursuant to clauses
(c) through (e) of this SECTION 2.3 to become the final
statements of Year-End Net Working Capital and Closing Net
Working Capital, are referred to herein as the "Final
Statements." All disputes with respect to the Preliminary
Statements and the Audited Financial Statements will be resolved
in accordance with clauses (c) through (e) of this SECTION 2.3.
(ii) From the Closing to the finalization of the Final
Statements, Purchaser will assist, in good faith, Seller and its
independent accountants in the preparation of the Audited
Financial Statements and the Preliminary Statements. During such
period, Purchaser will provide Seller and Seller's independent
accountants access at all reasonable times to the personnel and
Business Records of the Business for such purpose.
(iii) In connection with the preparation of the
Audited Financial Statements and the Preliminary Statements,
Seller will conduct a physical inventory or inventories of the
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Inventory of the Business. Seller will notify Purchaser of the
taking of such inventory at least ten calendar days prior to the
taking of each such inventory and afford Purchaser and its
independent accountants the right to observe the taking of each
such physical inventory. Seller will adjust, in consultation
with Purchaser and its accountants, the results of such physical
inventory to reflect transactions (including transactions such as
sales of goods and services, purchases of raw materials and the
conversion of inventory into accounts receivable) from the date
of such inventory to December 31, 2003, or the Closing Date, as
the case may be. Such physical inventories will include the
valuation determinations (calculated, to the extent applicable,
in accordance with GAAP) in respect of the Inventory covered
thereby and such inventories (and the related valuations) will be
used for the purpose of preparing the Audited Financial
Statements, the Preliminary Statements and the Final Statements.
(iv) "Net Working Capital", as used herein, means
(x) the sum of the current assets (1) of the
Acquired Companies, excluding any cash, cash equivalents,
marketable securities and similar investments of the
Acquired Companies, and (2) included in the Acquired Assets,
minus
(y) the sum of the current liabilities (1) of the
Acquired Companies and (2) included in the Assumed
Liabilities.
Notwithstanding the foregoing, Net Working Capital shall not
include deferred tax assets or deferred tax liabilities. Solely
for purposes of calculating the adjustment pursuant to SECTION
2.4, each of (A) the cash, cash equivalents, marketable
securities and similar investments, if any, of the Acquired
Companies as of the Closing Date and (B) the Excluded Receivables
will be calculated as a stand-alone item (and not as part of Net
Working Capital) on the preliminary and final statement of
Closing Net Working Capital in accordance with the provisions set
forth in this SECTION 2.3 (including the dispute and dispute
resolution provisions in clauses (c) through (e)).
(c) PURCHASER'S REVIEW OF PRELIMINARY STATEMENTS.
(i) Purchaser will have 45 calendar days following
Seller's delivery of the Preliminary Statements to Purchaser to
review and respond to the Preliminary Statements, during which
period Seller will grant Purchaser and Purchaser's independent
accountants reasonable access to the work papers prepared by
Seller's independent accountants (subject to compliance with
Seller's independent accountants' customary procedures for
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release) with respect to the Audited Financial Statements and the
Preliminary Statements.
(ii) Unless Purchaser has delivered to Seller a
written letter of its disagreement with the Preliminary
Statements (the "Purchaser's Letter") on or prior to 5:00 p.m.
(Central Time) on the 45th calendar day following Seller's
delivery of the Preliminary Statements to Purchaser, the
Preliminary Statements will become the Final Statements. If
Purchaser's Letter is delivered in a timely manner, then (A) any
amount set forth in the Preliminary Statements as to which
Purchaser has not objected and proposed an adjustment in
accordance with SECTION 2.3(c)(iii) below in Purchaser's Letter
will be deemed to be accepted and will become part of the Final
Statements, and (B) the Preliminary Statements will become the
Final Statements on the earlier of (1) the date that Seller and
Purchaser resolve in writing all remaining disputed matters
properly specified in Purchaser's Letter or (2) the date that the
Arbitrator delivers to Seller and Purchaser a copy of the Final
Statements and the Purchase Price Adjustment pursuant to SECTION
2.3(e)(vi).
(iii) Purchaser's Letter will (A) set forth in
reasonable detail any proposed adjustment to the Preliminary
Statements and the basis for such adjustment (including a
specific dollar amount and accompanied by a reasonably detailed
explanation) and (B) only include disagreements based on
mathematical errors or based on the Audited Financial Statements
not being calculated in accordance with GAAP or the Preliminary
Statements not being calculated in accordance with SECTION
2.3(b).
(d) MEETING TO RESOLVE PROPOSED ADJUSTMENTS. As soon as
reasonably practicable, but in no event no later than 25 calendar
days, after Purchaser's delivery of Purchaser's Letter, Purchaser and
Seller will meet and endeavor to resolve the unaccepted adjustments
described in Purchaser's Letter. If Purchaser and Seller reach
agreement in writing on such adjustments, the Final Statements will be
the Preliminary Statements modified to reflect the adjustments
accepted pursuant to SECTION 2.3(c)(ii)(A) and those otherwise agreed
to in writing by the parties pursuant to this SECTION 2.3(d).
(e) RESOLUTION BY ARBITRATION.
(i) If Purchaser and Seller do not resolve to their
mutual satisfaction all disputed adjustments in Purchaser's
Letter within 25 calendar days following the meeting provided for
in SECTION 2.3(d), any remaining disputed adjustments that were
properly included in Purchaser's Letter will be settled by the
Chicago, Illinois offices of Deloitte & Touche LLP (or, if such
firm will decline to act or is, at the time of submission
thereto, a principal independent auditor of Purchaser or Seller,
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to another independent accounting firm of national reputation
acceptable to Purchaser and Seller) (either Deloitte & Touche LLP
or such other accounting firm being the "Arbitrator") in
accordance with the following provisions of this SECTION 2.3(e).
(ii) On or prior to the 45th calendar day following
Purchaser's delivery of a Purchaser's Letter to Seller pursuant
to SECTION 2.3(c)(ii), Purchaser and Seller will furnish the
Arbitrator with a copy of the Agreement, the Year-End Balance
Sheet, the Closing Date Balance Sheet, the Preliminary Statements
and Purchaser's Letter. Purchaser and Seller will also give the
Arbitrator access to the Business Records of the Business, as
well as any accounting work papers or other schedules relating to
the preparation of the Year-End Balance Sheet, the Closing Date
Balance Sheet and the Preliminary Statements and Purchaser's
Letter.
(iii) Within 25 calendar days of submitting the
disputed adjustments to the Arbitrator pursuant to SECTION
2.3(e)(ii) that were included in Purchaser's Letter in accordance
with SECTION 2.3(c)(ii), Purchaser and Seller will provide to the
Arbitrator and to each other a copy of a written submission
setting forth their respective positions with respect to each
remaining disputed adjustment described in Purchaser's Letter.
Within 25 calendar days thereafter, Purchaser and Seller may
provide to the Arbitrator and to each other a written rebuttal,
which will be limited to addressing the points raised in the
opposing party's initial written submission. No additional
written submission will be made to the Arbitrator unless
specifically requested by the Arbitrator.
(iv) After receiving the written submissions, rebuttal
responses, if any, and any other written information pursuant to
SECTION 2.3(e)(iii), the Arbitrator will promptly schedule a date
to interview persons designated by each party to present that
party's position. The interviews will be held on at least seven
calendar days' notice to each party, and each party, its counsel
and other advisors may be present and participate in any
questioning at such interviews. The interviewing process will
last no more than two calendar days in the aggregate, unless
otherwise requested by the Arbitrator.
(v) The Arbitrator's engagement will be limited to (A)
reviewing the Year-End Balance Sheet, the Closing Date Balance
Sheet, the Preliminary Statements and the amounts properly placed
in dispute by Purchaser's Letter pursuant to SECTION 2.3(c); (B)
reviewing the parties' written submissions provided pursuant to
SECTION 2.3(e)(iii); (C) determining (1) whether Seller's
proposed amount for an item in the Preliminary Statements or
Purchaser's proposed adjustment thereto in Purchaser's Letter is
calculated more nearly in accordance with SECTION 2.3(b), (2)
whether there were mathematical errors in the Year-End Balance
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Sheet, the Closing Date Balance Sheet or the Preliminary
Statements and (3) whether the Year-End Balance Sheet and the
Closing Date Balance Sheet were prepared in accordance with GAAP
on a consistent basis as described in SECTION 2.3(b); (D)
preparing the Final Statements, which will include those amounts
in the Preliminary Statements accepted by Purchaser pursuant to
SECTION 2.3(c)(ii)(A), those adjustment otherwise agreed to in
writing by the parties pursuant to SECTION 2.3(d), and those
amounts determined by the Arbitrator to be calculated more nearly
in accordance with SECTION 2.3(b); and (E) calculating the
Purchase Price Adjustment. The fees and expenses of the
Arbitrator will be borne by Seller and Purchaser in inverse
proportion as they may prevail on matters resolved by the
Arbitrator, which proportionate allocations will also be
determined by the Arbitrator at the time the determination of the
Arbitrator is rendered on the Final Statements and the Purchase
Price Adjustment.
(vi) The Arbitrator will complete its preparation of
the Final Statements and the Purchase Price Adjustment within 25
calendar days from the date of the final interview conducted
pursuant to SECTION 2.3(e)(iv), and will deliver a copy of the
Final Statements and the Purchase Price Adjustment to Seller and
Purchaser and, together with a report setting forth each disputed
adjustment, the Arbitrator's determination with respect thereto,
and a statement of the Arbitrator's reasons for such
determination. The Arbitrator's determination will be conclusive
and binding upon the parties and may be entered and enforced in
any court of competent jurisdiction.
(f) PAYMENT OF PURCHASE PRICE ADJUSTMENT. If the Closing
Net Working Capital is (A) less than the Year-End Net Working Capital,
Seller will pay Purchaser an amount equal to the Negative Purchase
Price Adjustment, or (B) greater than the Year-End Net Working
Capital, Purchaser will pay Seller an amount equal to the Positive
Purchase Price Adjustment. The Purchase Price Adjustment will be paid
within ten Business Days following the date on which the Preliminary
Statements become the Final Statements (as determined in accordance
with SECTION 2.3(c)(ii)), together with interest thereon at a rate
equal to the average daily rate of interest publicly announced by The
Northern Trust Company in Chicago, Illinois from time to time as its
prime rate (the "Prime Rate") calculated on the basis of the actual
number of days elapsed over 365, from the Closing Date to the date of
payment. The Purchase Price Adjustment will be paid in immediately
available funds by wire transfer pursuant to instructions provided in
writing by the recipient of the funds. If Seller or Purchaser, as
applicable, fails to pay all or any portion of the Negative Purchase
Price Adjustment or Positive Purchase Price Adjustment, respectively
(together, in each case, with interest thereon) to Purchaser or
Seller, as applicable, on or before the 10th Business Day following
the date on which the Preliminary Statements become the Final
Statements, interest at a rate equal to the Prime Rate plus 10.0% will
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accrue and be paid with respect to such due but unpaid amount from
such 10th Business Day until the date such unpaid amount is paid in
full to Purchaser or Seller, as applicable.
(g) NO PURCHASE PRICE ADJUSTMENT. Notwithstanding the
foregoing provisions of this SECTION 2.3, no Purchase Price Adjustment
will be made pursuant to this SECTION 2.3 unless the Purchase Price
Adjustment exceeds the lesser of (x) 5% of the Year-End Net Working
Capital or (y) $10,000,000 (such lesser amount, the "Collar Amount"),
and if the Purchase Price Adjustment exceeds the Collar Amount, then
the amount of the Purchase Price Adjustment in excess of the Collar
Amount will be made.
SECTION 2.4 ESTIMATED OTHER ADJUSTMENT AMOUNT.
(a) At least five Business Days prior to the Closing Date,
Seller will prepare and deliver to Purchaser a written estimate of the
amount (the "Estimated Other Adjustment Amount") equal to (i) the
amount of Excluded Receivables net of reserves (determined, on an
estimated basis, in accordance with GAAP) as of the Closing Date,
minus (ii) the amount of cash, cash equivalents, marketable securities
and similar investments, if any, of the Acquired Companies as of the
Closing Date (and which are therefore acquired by Purchaser).
(b) If the Final Other Adjustment Amount is (A) less than
the Estimated Other Adjustment Amount, Purchaser will pay Seller the
amount by which the Final Other Adjustment Amount is less than the
Estimated Other Adjustment Amount, or (B) greater than the Estimated
Other Adjustment Amount, Seller will pay Purchaser the amount by which
the Final Other Adjustment Amount is greater than the Estimated Other
Adjustment Amount. Any such payment will be paid with ten Business
Days following the date on which the Preliminary Statements become the
Final Statements (as determined in accordance with SECTION
2.3(c)(ii)), together with interest thereon at a rate equal to the
Prime Rate calculated on the basis of the actual number of days
elapsed over 365, from the Closing Date to the date of payment. If
Seller or Purchaser, as applicable, fails to pay all or any portion of
the Final Other Adjustment Amount, (together, in each case, with
interest thereon) to Purchaser or Seller, as applicable, on or before
the 10th Business Day following the date on which the Preliminary
Statements become the Final Statements, interest at a rate equal to
the Prime Rate plus 10.0% will accrue and be paid with respect to such
due but unpaid amount from such 10th Business Day until the date such
unpaid amount is paid in full to Purchaser or Seller, as applicable.
Any payment pursuant to this SECTION 2.4 will be paid in immediately
available funds by wire transfer pursuant to instructions provided in
writing by the recipient of the funds.
(c) For purposes of this Agreement:
(i) "Excluded Receivables" means all accounts and
notes receivable, as of the Closing Date, related to the
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Business, other than accounts and notes receivable of the
International Asset Sellers; and
(ii) "Final Other Adjustment Amount" means an amount
equal to (A) the amount of Excluded Receivables net of reserves
(determined in accordance with GAAP) reflected on the Final
Statement of Closing Net Working Capital, minus (B) the amount of
cash, cash equivalents, marketable securities and similar
investments, if any, of the Acquired Companies reflected on the
Final Statement of Closing Net Working Capital (and which are
therefore acquired by Purchaser).
SECTION 2.5 ALLOCATION OF PURCHASE PRICE; SECTION 338
ELECTIONS AND FORMS.
(a) The Closing Payment (without taking into account the
Estimated Other Adjustment Amount) will be allocated among the
Purchased Assets, the assets of Anchor Hocking Inc. and its Subsidiary
Anchor Hocking Consumer Glass Corporation (together, the "Anchor
Entities") and the stock of the Acquired Companies other than the
Anchor Entities, as set forth on Exhibit C.
(b) As soon as practicable after the Purchase Price
Adjustment, Purchaser will provide a schedule (together with
EXHIBIT C, the "Proposed Allocation Schedule") allocating the portion
of Purchase Price Adjustment that is not treated as interest for
federal income tax purposes (such interest amount to be agreed upon by
Seller and Purchaser) among the Purchased Assets, the assets of the
Anchor Entities and the stock of the Acquired Companies. If Seller
does not deliver a written notice to Purchaser within 30 days of
receipt of the Proposed Allocation Schedule specifying in reasonable
detail the nature of any objection it may have to the Proposed
Allocation Schedule (an "Objection Notice"), the Proposed Allocation
Schedule shall be the final allocation of the Purchase Price and other
relevant items among the Purchased Shares of each Acquired Company and
the Purchased Assets. If Seller does deliver an Objection Notice,
Seller and Purchaser shall attempt to resolve any differences
identified in the Objection Notice within the succeeding 20 days and,
if they are able to resolve all such differences, the allocation
agreed to shall be the final allocation of the Purchase Price and
other relevant items among the Purchased Shares of each Acquired
Company and the Purchased Assets. If they are unable to resolve all
such differences, any remaining disagreed items shall be submitted to
the Arbitrator for resolution within the next 30 days. The Arbitrator
shall be instructed to determine whether the position maintained by
Seller or by Purchaser is the more reasonable position and to select
one of the two positions. The allocation determined by the Arbitrator
shall be the final allocation of the Purchase Price and other relevant
items among the Purchased Shares of each Acquired Company and the
Purchased Assets. The fees and costs of the Arbitrator shall be borne
equally by Purchaser and Seller. The Proposed Allocation Schedule
shall be revised, if necessary, to reflect the final allocation of the
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Purchase Price and other relevant items agreed to by the parties or
determined by the Arbitrator (as so revised, the "Final Allocation
Schedule"). Except as otherwise required by law or pursuant to a
"determination" under Section 1313(a) of the Internal Revenue Code of
1986, as amended (the "Code"), Purchaser and Seller agree to act, and
will cause their Affiliates to act, in accordance with the allocations
contained in the Final Allocation Schedule for all Tax purposes, and
neither Purchaser nor Seller will take any position inconsistent
therewith in any Tax Returns or similar filings (including IRS Forms
8023 and 8594), any Tax refund claim, any Tax litigation, or otherwise
with respect to any Tax.
(c) With respect to Purchaser's acquisition of the stock
of the Anchor Entities, (i) Seller and Purchaser will join in making
an election under Section 338(h)(l0) of the Code, and the Treasury
Regulations promulgated thereunder (the "SECTION 338(h)(10)
Election"), (ii) within 60 days following the Closing Date, Seller and
Purchaser shall prepare, in accordance with the terms set forth in
SECTION 2.5(a), the respective IRS Forms 8023 (the "Form 8023") on
which the Section 338(h)(10) Election shall be made, (iii) within 60
days following the Closing, Seller shall deliver to Purchaser properly
executed Forms 8023 containing information prepared in accordance with
the terms set forth in SECTION 2.5(a), which Purchaser shall file with
the IRS not later than 120 days following the Closing Date, (iv) to
the extent Purchaser notifies Seller that it desires to make any such
elections, Seller and Purchaser shall jointly and timely make
elections under state or local tax law comparable to the Section
338(h)(10) Election with respect to the Anchor Entities not later than
120 days following the Closing Date, (v) Seller and Purchaser shall,
as promptly as practicable following the Closing Date, cooperate with
each other to take all other actions necessary and appropriate
(including filing such forms, returns, elections, schedules and other
documents as may be required) otherwise to effect, perfect and
preserve timely Section 338(h)(10) Election in accordance with
applicable Treasury regulations (or any comparable provisions of state
or local tax law) or any successor provisions and (vi) Seller and
Purchaser shall report the sale and acquisition, respectively, of the
stock of the Anchor Entities consistent with the Section 338(h)(10)
Election (and any comparable elections under state or local tax laws)
and shall take no position to the contrary thereto in any Tax Return,
or in any proceeding before any taxing authority or otherwise.
(d) To the extent permissible or required by law, Seller
and Purchaser shall cooperate in the preparation and timely filing of
(i) any corrections, amendments or supplements to the Forms 8023 and
(ii) any state or local forms or reports that are necessary or
appropriate for purposes of (A) reflecting the Final Allocation
Schedule and (B) complying with the requirements for making any state
or local election that is comparable to the Section 338(h)(10)
Election. To the extent necessary for the valid filing of any such
corrections, amendments, supplements, forms or reports, Seller and
Purchaser shall cooperate in the timely execution thereof.
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ARTICLE III
CLOSING
SECTION 3.1 CLOSING DATE. The closing of the
transactions contemplated hereby (the "Closing") will take place at
10:00 a.m., Central Time, at the location reasonably designated by
Purchaser at least five Business Days prior to the Closing Date, or if
no such location is designated, at the offices of Schiff Hardin LLP,
6600 Sears Tower, Chicago, Illinois, on the last Business Day of the
month in which all of the conditions set forth in ARTICLE VIII hereof
have been satisfied or waived, or at such other time, date and place
as Purchaser and Seller may agree. The date on which the Closing
occurs is referred to herein as the "Closing Date."
SECTION 3.2 CLOSING DELIVERIES.
(a) BY SELLER. At the Closing, Seller will deliver to
Purchaser:
(i) Certificates representing the Purchased Shares,
duly endorsed in blank, or accompanied by stock powers duly
endorsed in blank in proper form for transfer;
(ii) Bills of sale, general assignments of trademarks
and patents and other instruments of assignment and transfer as
may be reasonably necessary to vest in Purchaser and the
appropriate Subsidiary Purchasers all of Seller's or the
appropriate Asset Seller's right, title and interest in and to
the Purchased Assets, in each case, in form and substance
reasonably satisfactory to Purchaser, duly executed by Seller or
the appropriate Asset Seller;
(iii) A transition services agreement, substantially
in the form attached as EXHIBIT D ("Transition Services
Agreement"), duly executed by Seller;
(iv) Supply agreements pursuant to which Seller or an
Asset Seller supplies certain Cookware products to Purchaser,
certain products listed on the chart entitled "Anchor Hocking
Intercompany Purchases" attached to SCHEDULE 4.19(b) and any
other products currently sold by Seller and its Affiliates (other
than the Acquired Companies) for sale or resale by the Business,
and a supply agreement pursuant to which Purchaser or a
Subsidiary Purchaser supplies certain Cookware products to Seller
or an Asset Seller, in each case, upon terms and conditions as
Purchaser and Seller shall agree (the "Supply Agreements"), duly
executed by Seller;
(v) Patent license agreements, substantially in the
forms attached as EXHIBIT E-I and E-II ("Patent License
Agreements"), duly executed by Calphalon Corporation;
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(vi) A certificate executed by an officer of Seller to
the effect that the conditions specified in clauses (a) and (b)
of SECTION 8.1 have been satisfied;
(vii) A certificate executed by the corporate
secretary or an assistant secretary of Seller certifying as of
the Closing Date (A) a true and complete copy of the certificate
of incorporation of Seller, (B) a true and complete copy of the
bylaws of Seller, (C) a true and complete copy of the resolutions
of the board of directors of Seller authorizing the execution,
delivery and performance by Seller of this Agreement and the
consummation of the transactions contemplated hereby and (D)
incumbency matters;
(viii) Certificates, if any, of the appropriate
Governmental Authorities certifying the good standing of each of
Seller, the Acquired Companies organized under the laws of one of
the United States, and the Asset Sellers in its state or
jurisdiction of organization; PROVIDED, that in the event the
Acquired Companies are organized under the laws of Mexico, such
certificates will be FOLIOS MERCANTILES or certificates of lien
(or similar certificates) issued by the applicable Public
Registry of Commerce (REGISTRO PUBLICO DEL COMERCIO), dated no
more than 30 days prior to the Closing Date;
(ix) Resignations effective as of the Closing Date of
the directors and officers of the Acquired Companies; PROVIDED,
that, for purposes of the Mexican Acquired Companies, copies of
the partners meeting resolutions of each Mexican Acquired Company
approving (a) the resignation and appointment of the MIEMBROS DEL
CONSEJO DE GERENTES of such entities, (b) the revocation and
granting of powers of attorney, and (c) the approval for the sale
of equity interest (PARTES SOCIALES), if applicable, shall be
notarized and delivered to Purchaser's representatives in Mexico
on the Closing Date;
(x) The Partners Register (REGISTRO DE SOCIOS), the
Capital Variations Register (LIBRO DE REGISTRO DE VARIACIONES DE
CAPITAL), the Partners Meeting Minutes Book (LIBRO DE ACTAS DE
ASAMBLEAS DE SOCIOS) and the Board Meeting Minutes Book (LIBRO DE
ACTA DE SESIONES DEL CONSEJO DE GERENTES) of each Mexican
Acquired Company, specifying that the equity interest (PARTES
SOCIALES) issued by such companies, have been fully subscribed
and paid for and, where applicable, that title to all the equity
interests (PARTES SOCIALES) of the Mexican Acquired Company has
been transferred to the Purchaser and/or its designees, shall be
delivered to Purchaser's representatives in Mexico on the Closing
Date; and
(xi) An opinion of Schiff Hardin LLP, counsel to
Seller, in form and substance reasonably satisfactory to
Purchaser.
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(b) BY PURCHASER. At the Closing, Purchaser will deliver
to Seller:
(i) The Closing Payment, as provided in SECTION 2.2;
(ii) Instruments evidencing the assumption by
Purchaser and the appropriate Subsidiary Purchasers of the
Assumed Liabilities, in form and substance reasonably acceptable
to Seller, duly executed by Purchaser or the Subsidiary
Purchasers;
(iii) The Transition Services Agreement, duly executed
by Purchaser;
(iv) The Supply Agreements, duly executed by
Purchaser;
(v) The Patent License Agreements, duly executed by
Purchaser and a Subsidiary Purchaser;
(vi) A certificate executed by an officer of Purchaser
to the effect that the conditions specified in clauses (a) and
(b) of SECTION 8.2 have been satisfied;
(vii) A certificate executed by the corporate
secretary or an assistant secretary of Purchaser certifying as of
the Closing Date (A) a true and complete copy of the certificate
of incorporation of Purchaser, (B) a true and complete copy of
the bylaws of Purchaser, (C) a true and complete copy of the
resolutions of the board of directors of Purchaser authorizing
the execution, delivery and performance by Purchaser of this
Agreement and the consummation of the transactions contemplated
by this Agreement and (D) incumbency matters;
(viii) Certificates, if any, of the appropriate
Governmental Authorities certifying the good standing of each of
Purchaser and the Subsidiary Purchasers in its state or
jurisdiction of incorporation; and
(ix) An opinion of Schulte Roth & Zabel LLP, counsel
to Purchaser, in form and substance reasonably satisfactory to
Seller.
SECTION 3.3 THIRD-PARTY CONSENTS.
(a) Notwithstanding anything in this Agreement to the
contrary, to the extent that (i) any Contract included in the
Purchased Assets or (ii) any Contract (other than Contracts to be
transferred prior to the Closing pursuant to SECTION 6.2(a)) to which
any Acquired Company is a party or by which any of their assets is
bound (collectively, the "Business Contracts") may not be properly
assigned or transferred without the consent of a third-party, or if
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the assignment or attempted assignment of any Business Contract, or
the transfer, attempted transfer or deemed transfer of any Purchased
Asset, Owned Real Property or Business Contract would constitute a
violation or breach of any Business Contract or a violation of Law,
nothing in this Agreement will constitute an assignment or an
attempted assignment or deemed assignment thereof and, except as
provided for in SECTION 3.3(c), Purchaser will not assume or be deemed
to assume any liabilities or obligations thereunder or in connection
therewith until properly assigned or transferred. In any such case,
commencing on the Closing Date and for a period of 12 months
thereafter, Seller and Purchaser will use commercially reasonable
efforts to obtain any such consents, and Seller and Purchaser each
will be liable for one-half of any costs incurred in obtaining such
consents.
(b) To the extent that the consents described in
SECTION 3.3(a) are not obtained prior to Closing, Seller will use
commercially reasonable efforts to (i) provide Purchaser with the
economic benefits of any such Purchased Assets, Owned Real Property or
Business Contract until its termination date, (ii) cooperate in any
lawful arrangement designed to provide such benefits to Purchaser and
(iii) enforce, at the request of and for the account of Purchaser, any
rights of Seller arising from any such Business Contract against any
third party, including the right to elect to terminate in accordance
with the terms thereof upon the advice of Purchaser. The failure or
inability to obtain any consent subject to this SECTION 3.3(b) will
not be a breach of this Agreement so long as Seller has carried out
its obligations under this SECTION 3.3(b).
(c) To the extent that Purchaser is provided the benefits
of any Purchased Asset, Owned Real Property or Business Contract
pursuant to SECTION 3.3(b), Purchaser will or will cause the
Subsidiary Purchasers to perform the obligations of Seller thereunder
or in connection therewith, at no cost to Seller, but only to the
extent (i) that such action by Purchaser would not result in any
default thereunder or in connection therewith and (ii) such
performance pertains to the benefits provided to Purchaser. Purchaser
will indemnify Seller against any and all Damages arising out of any
default by Purchaser in the performance of such obligations. The
indemnification of Seller under this SECTION 3.3 will be governed by
the indemnification provisions set forth in ARTICLE IX hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as set
forth below:
SECTION 4.1 ORGANIZATION AND GOOD STANDING. Seller and
each of the Acquired Companies and the Asset Sellers is a corporation,
limited liability company or other business entity duly organized,
validly existing and, where applicable, in good standing under the
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laws of its jurisdiction of organization, and each has all necessary
power and authority to own, lease and operate its properties and to
carry on its business as currently being conducted. Each of Seller,
the Acquired Companies and the Asset Sellers is duly qualified or
licensed as a foreign corporation and, to the extent applicable, is in
good standing in each jurisdiction in which its right, title or
interest in or to any Purchased Assets or the conduct of the Business
by it makes such qualification necessary, except where the failure to
be so duly qualified or licensed would not have a Material Adverse
Effect. True and correct copies of the certificate of incorporation,
the bylaws or other similar organizational instruments, as amended to
date, of Seller, each Acquired Company and each Asset Seller, have
been made available to Purchaser.
SECTION 4.2 CAPITAL STRUCTURE OF ACQUIRED COMPANIES;
SUBSIDIARIES.
(a) SCHEDULE 4.2(a) sets forth (i) the authorized capital
stock or other equity interests of each of the Acquired Companies,
(ii) the number of issued and outstanding shares of capital stock or
other equity interest of each of the Acquired Companies (the "Acquired
Shares"), and (iii) the record and beneficial holder of the Acquired
Shares. The Acquired Shares have been duly authorized and validly
issued and are fully paid and nonassessable, are not subject to any
preemptive or subscription rights and were not issued in violation of
any preemptive or subscription rights. There are no existing options,
warrants, calls, subscriptions or other rights, convertible
securities, trusts or Contracts of any character (x) obligating any of
the Acquired Companies to issue, transfer or sell any shares of
capital stock or other equity interest or securities convertible into
or exchangeable for such shares or equity interests, (y) requiring any
of the Acquired Companies to repurchase, redeem or otherwise acquire
any shares of capital stock or other equity interest or securities
convertible into or exchangeable for such shares or equity interests,
or (z) with respect to the voting of the Acquired Shares. All
Acquired Shares are owned by a Seller or a Subsidiary of Seller,
including a Purchased Company, free and clear of any Encumbrances with
respect thereto.
(b) No Acquired Company owns, directly or indirectly, any
capital stock or other equity interest in any Person that is not one
of the Acquired Companies, except for the capital stock of the
Subsidiaries listed on SCHEDULE 4.2(b) (the "Transferred
Subsidiaries"), to be transferred prior to the Closing pursuant to
SECTION 6.2. The Transferred Subsidiaries are not engaged in any
material respect in the conduct of the Business by the Acquired
Companies.
SECTION 4.3 AUTHORIZATION, VALIDITY AND EXECUTION.
Seller has all necessary corporate power and authority (a) to execute
and deliver this Agreement and the other agreements, documents and
instruments to be executed by Seller or its Subsidiaries in connection
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with the transactions contemplated hereby (such other agreements,
documents and instruments, the "Seller Documents"), (b) to perform (or
cause to be performed) its obligations hereunder and thereunder and
(c) to consummate the transactions contemplated hereby and thereby.
No other corporate or stockholder action is necessary for the
authorization, execution, delivery and performance by Seller and its
Subsidiaries of this Agreement and the Seller Documents. This
Agreement has been, and each of the Seller Documents will be on or
prior to the Closing Date, duly executed and delivered by Seller or
its Subsidiaries, as applicable, and, assuming the due execution of
this Agreement by Purchaser, is a legal, valid and binding obligation
of Seller and its Subsidiaries, enforceable against each in accordance
with its terms, except to the extent that its enforceability may be
subject to applicable bankruptcy, insolvency, reorganization,
moratorium, receivership and similar laws affecting the enforcement of
creditors' rights generally and to general equitable principles.
SECTION 4.4 CONSENTS AND APPROVALS; NO VIOLATIONS.
Except for (i) compliance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the rules
promulgated thereunder, (ii) compliance with the Consent Order dated
October 7, 2002, of the Federal Trade Commission in the Matter of
Libbey Inc. and Newell Rubbermaid Inc., FTC File No. 011-0194, FTC
Docket No. 9301, (iii) the notification before the Mexican Competition
Commission (COMISION FEDERAL DE COMPETENCIA) pursuant to the Mexican
Federal Economic Competition Law (LEY FEDERAL DE COMPETENCIA
ECONOMIOCA; the "Mexican Competition Law"), (iv) other applicable
merger control or similar laws, (iv) filings that may be required by
Seller under the Securities Exchange Act of 1934, as amended, and (vi)
as set forth on SCHEDULE 4.4, the execution by Seller of this
Agreement and the consummation by Seller and its Subsidiaries of the
transactions contemplated hereby (a) will not violate the provisions
of the certificate of incorporation, the bylaws or any other similar
organizational instrument of Seller, any Acquired Company or any Asset
Seller; (b) will not violate any law, statute, ordinance, code,
Permit, rule, regulation, order, decree or notice (collectively,
"Laws") of any foreign, federal, state or local governmental, quasi-
governmental or regulatory body, department, bureau, office,
administrative agency, court or authority ("Governmental Authority")
by which Seller, any Acquired Company or any Asset Seller is bound or
by which any of the Purchased Assets is bound; (c) will not require
any consent or approval of, or the giving of any notice to, or filing
with, any Person on, prior to or subsequent to the Closing Date;
PROVIDED, that this clause (c) does not relate to Real Property, which
is the subject solely of SECTION 4.9; and (d) without giving effect to
SECTION 3.3, will not result in a violation or breach of, conflict
with, constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, cancellation,
payment or acceleration) under any Business Contract, or result in the
creation of any lien, encumbrance, restriction, security interest or
claim of any kind and character ("Encumbrances") upon any of the
Purchased Shares or Purchased Assets, excluding from the foregoing
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clauses (c) and (d) Permits, consents, notices and filings the absence
of which, and violations, breaches, defaults, rights, conflicts or
Encumbrances the existence of which, would not have and would not be
reasonably expected to have a Material Adverse Effect.
SECTION 4.5 FINANCIAL STATEMENTS; UNDISCLOSED
LIABILITIES.
(a) SCHEDULE 4.5(a) sets forth the unaudited pro forma
combined balance sheet of the Business as of December 31, 2003 (the
"Balance Sheet Date", and such balance sheet, the "Unaudited Balance
Sheet"), and the unaudited pro forma combined statement of income of
the Business for the fiscal year ended December 31, 2003 (together
with the Unaudited Balance Sheet, the "Unaudited Financial
Statements"). The Unaudited Financial Statements have been prepared
in accordance with the accounting principles contained in EXHIBIT F
(the "Accounting Principles"), consistently applied throughout the
periods presented. The Unaudited Financial Statements fairly present
in all material respects in accordance with the Accounting Principles
the pro forma financial position and results of operations of the
Business as of the date thereof or the period then ended, as the case
may be, except for the absence of footnotes and normal year-end
adjustments, which, based on the Accounting Principles, will not be
material.
(b) Except as reflected or reserved against on the
Unaudited Balance Sheet, the Business has no Liabilities that would be
required to be reflected on a balance sheet, or any notes thereto,
prepared in accordance with GAAP, except for (i) current liabilities
reflected on the Final Statement of Closing Net Working Capital, (ii)
other post-employment benefit obligations of the Business, (iii)
pension-related obligations of the Business, (iv) Excluded
Liabilities, (v) Liabilities for which Seller is obligated (without
regard to the limitations set forth in SECTION 9.4) to indemnify
Purchaser pursuant to SECTION 9.2, (vi) Taxes and (vii) Liabilities
incurred in connection with the transactions contemplated by this
Agreement. The current liabilities reflected on the Final Statement
of Year End Net Working Capital will not exceed $110,000,000.
SECTION 4.6 INVENTORY. The Inventory included in the
Purchased Assets and the Inventory of the Acquired Companies
(collectively, the "Business Inventory") were acquired or manufactured
in the Ordinary Course of Business and are valued at the lower of cost
(determined on a first-in, first-out (FIFO) basis) or market value,
and following the Closing, Purchaser and the Subsidiary Purchasers
will own the Business Inventory free and clear of all Encumbrances,
other than Permitted Encumbrances.
SECTION 4.7 ACCOUNTS RECEIVABLE.
(a) All accounts receivable of the Business, other than the
Excluded Receivables, reflected on the Unaudited Balance Sheet and all
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accounts receivable of the Business after the Balance Sheet Date have
arisen in the Ordinary Course of Business and represent bona fide
claims against debtors for sales made, services performed or other
charges arising on or before the Closing Date, and all of the goods
delivered and services performed that give rise to such accounts were
delivered or performed in all material respects in accordance with
applicable orders, Contracts or customer requirements.
(b) SCHEDULE 4.7 sets forth a true and correct list of the
accounts receivable of the Business as of February 28, 2004. In
connection with the collection of the accounts receivable set forth on
SCHEDULE 4.7, from February 28, 2004, until the date of this
Agreement, Seller and its Subsidiaries have acted in a manner
reasonably consistent with the past practice of Seller and its
Subsidiaries to collect such accounts receivable for Seller's account.
SECTION 4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except
in connection with the transactions contemplated hereby or as set
forth on SCHEDULE 4.8, from the Balance Sheet Date until the date
hereof, (a) Seller, the Acquired Companies and Asset Sellers have
conducted the Business in the Ordinary Course of Business, (b) Seller,
the Acquired Companies and the Asset Sellers have not taken, committed
to take or permitted to occur any of the events specified in
SECTION 6.1 and (c) the Business has not incurred or sustained any
event or occurrence which has had or would reasonably be expected to
have a Material Adverse Effect.
SECTION 4.9 REAL PROPERTY.
(a) OWNED REAL PROPERTY. SCHEDULE 4.9(a) sets forth a true
and correct list of all real property owned by an Acquired Company or
included in the Purchased Assets (collectively, the "Owned Real
Property"). No Asset Seller owns any real property that is used to
any material extent in connection with the Business that is not listed
on SCHEDULE 4.9(a), except for real property used in connection with
the services described on SCHEDULE 4.19(c) or SCHEDULE 4.19(d) or in
connection with products produced by an Asset Seller and that are to
be sold to Purchaser pursuant to a Supply Agreement. Except as set
forth on SCHEDULE 4.9(a), with respect to each parcel of Owned Real
Property (with respect to each of which exceptions, Seller represents
that copies of all relevant documentation in Seller's possession or
control have been delivered to Purchaser):
(i) An Acquired Company has, or will have on or prior
to Closing, good and marketable fee simple title to (or, with
respect to Owned Real Property located in Mexico, the identified
owner is, or will be on or prior to Closing, the absolute owner
of) such property, free and clear of all Encumbrances other than
(A) (1) Encumbrances reflected on the Unaudited Balance Sheet,
(2) Encumbrances for Taxes, assessments or governmental charges
or levies on property not yet delinquent or the validity of which
are being contested in good faith by appropriate proceedings
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described on SCHEDULE 4.9(a), (3) mechanics', carriers',
workmen's, repairmen's and other like Encumbrances arising or
incurred in the Ordinary Course of Business and securing amounts
which are not delinquent, or which are being contested in good
faith by appropriate proceedings described on SCHEDULE 4.9(a);
and (4) Encumbrances arising under equipment leases with third
parties entered into in the Ordinary Course of Business, securing
amounts which are not delinquent, or which are being contested in
good faith by appropriate proceedings described on SCHEDULE
4.9(a); (B) leases, subleases and similar Contracts listed in
SCHEDULE 4.9(a); (C) Encumbrances consisting of zoning or
planning restrictions, Permits and other restrictions or
limitations on the use of real property or irregularities in
title thereto which do not materially impair the owner's use of
such Owned Real Property in the operation of the Business as
currently conducted; (D) covenants, conditions and restrictions
of record which do not materially impair the owner's use of such
Owned Real Property in the operation of the Business as currently
conducted; (E) private and public easements which do not
materially impair the owner's use of such Owned Real Property in
the operation of the Business as currently conducted, and roads
or highways, if any; and (F) any conditions which do not
materially impair the owner's use of such Owned Real Property in
the operation of the Business as currently conducted that may be
shown by a current, accurate survey or physical inspection of any
Owned Real Property made prior to Closing (collectively,
"Permitted Encumbrances");
(ii) There are no applications or proceedings with
respect to zoning matters, nor any condemnation or eminent domain
proceedings of any kind or proceedings of any other kind for the
taking of the whole or any part of any Owned Real Property for
public or quasi-public use pending, nor any other claim, action
or proceeding or other matter relating to any Owned Real Property
or that would adversely affect the ownership, use, occupancy or
value thereof, pending or, to the Knowledge of Seller,
threatened;
(iii) Other than any leases, subleases or other
Contracts disclosed in SCHEDULE 4.9(a), in respect of which the
tenants named therein are in possession of the entire space which
they are entitled to occupy thereunder, there are no leases,
subleases, licenses, concessions, or other agreements (including
with respect to food services, parking and other concessions),
written or oral, granting to any party or parties the right of
use or occupancy of any portion of the parcels of the Owned Real
Properties or any portion thereof or interest therein, except for
Contracts on a month-to-month basis or which can be terminated by
the relevant Acquired Company or Asset Seller upon 30 days
written notice;
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(iv) There are no outstanding options to purchase,
lease or use, or rights of first refusal or first offer to
purchase any of the Owned Real Properties or any portions thereof
or interests therein or contracts relating to the right to
receive any portion of the income or profits from the sale,
operation or development thereof, except in each case as set
forth on SCHEDULE 4.9(a);
(v) All of the Owned Real Property has adequate rights
of access and has adequate utility service, and there are no
material structural defects in any of the buildings or material
improvements situated on any of the Owned Properties
(vi) To the Knowledge of Seller and except as set
forth on SCHEDULE 4.9(a), there is no document or instrument
affecting any of the Owned Real Property which requires the
consent or approval of any Person for the transactions
contemplated hereby; and
(vii) Except as set forth on SCHEDULE 4.9(a), Seller
has received no written notice that any portion of the Owned Real
Property, or any of the improvements located thereon, violates
any applicable Law relating to zoning, building, land use, health
and safety, fire, air, sanitation and noise control, other than
such violations that do not materially adversely affect the use
or occupancy of such Owned Real Property.
(b) LEASED REAL PROPERTY. SCHEDULE 4.9(b) sets forth a
true and correct list of all real property (i) leased or subleased to
an Acquired Company or (ii) included in the Purchased Assets (the
"Leased Real Property", and together with the Owned Real Property, the
"Real Property"). Seller has made available to Purchaser true and
correct copies of such leases and subleases, each as amended to date.
Except as set forth on Schedule 4.9(b) (with respect to each of which
exceptions, Seller represents that copies of all relevant
documentation in Seller's possession or control have been delivered to
Purchaser), with respect to each lease and sublease of Leased Real
Property:
(i) Each lease or sublease is in full force and effect
in all material respects and is valid and enforceable by Seller
or its Subsidiaries in accordance with its terms, except to the
extent that its enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium, receivership
and similar laws affecting the enforcement of creditors' rights
generally and to general equitable principles;
(ii) Seller and its Subsidiaries have performed all
material obligations required to have been performed by them
under each Real Property Lease and none of Seller or any of its
Subsidiaries has received written notice that it is in breach or
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default (after the expiration of any notice or cure period) under
any Real Property Lease;
(iii) No event has occurred and no condition or
circumstance exists that, with the lapse of time or the giving of
notice or both, would constitute a material default by Seller or
its Subsidiaries thereunder or, to the Knowledge of Seller, any
other party thereto, and no written notice of any such event,
condition or circumstance has been received or issued by Seller
or its Subsidiaries with respect to any Real Property Lease that
has not been waived or a cure thereof accepted in writing;
(iv) No Real Property Lease has been assigned, no
portion of any Leased Real Property has been subleased, and
Seller or one of its Subsidiaries is currently in occupancy of
all of the Leased Real Property;
(v) None of Seller or its Subsidiaries are subject to
any contractual obligations to purchase or acquire an interest in
real property; and
(vi) To the Knowledge of Seller and except as set
forth on SCHEDULE 4.9(b), no provision of any Real Property
lease, or of any Contract or Permit or other document or
instrument affecting any Leased Real Property, requires the
consent or approval of any Person for the transactions
contemplated hereby.
(c) The furniture, fixtures, machinery, equipment and other
tangible personal property owned or leased by Seller and each
Subsidiary in connection with such assets are in satisfactory working
order taken as a whole, ordinary wear and tear excepted, and assuming
completion of the pending capital expenditure project with respect to
the Glass Business furnace re-build.
SECTION 4.10 INTELLECTUAL PROPERTY.
(a) "Intellectual Property" means any and all (i) patents,
(ii) trademarks, service marks, trade names, certification marks,
collective marks, d/b/a's, symbols, brand names, trade dress, slogans,
logos and internet domain names, and other indicia of origin (iii)
inventions, discoveries, ideas, processes, formulae, designs, models,
industrial designs, know-how, confidential and/or proprietary
information, trade secrets, customer lists and confidential
information, whether or not patented or patentable, (iv) copyrights,
writings and other copyrightable works and works in progress,
databases and software, (v) all other intellectual property rights and
foreign equivalent or counterpart rights and forms of protection of a
similar or analogous nature or having similar effect in any
jurisdiction throughout the world, (vi) all registrations and
applications for registration of any of the foregoing, (vii) any
renewals, extensions, continuations, continuations-in-part,
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modifications, divisionals, reexaminations or reissues or equivalent
or counterpart of any of the foregoing in any jurisdiction throughout
the world and (viii) all other intellectual property or proprietary
rights and claims or causes of actions arising out of or related to
any infringement, misappropriation or other violation of any of the
foregoing, including rights to recover for past, present and future
violations thereof. The term "Business IP" means any Intellectual
Property included in the Purchased Assets or owned or primarily used
by an Acquired Company. The term "IT Systems" means electronic data
processing, information, recordkeeping, communications,
telecommunications, account management, inventory management and other
computer systems (including all computer programs, software,
databases, firmware, hardware and related documentation) and internet
websites and related content.
(b) SCHEDULE 4.10(b) sets forth a true and correct list of
the following Business IP included in the Purchased Assets or owned by
an Acquired Company: (i) utility patents and applications therefor;
(ii) design patents and applications therefor; (iii) utility models
and applications therefor; (iv) registered trademarks, registered
trade names and registered service marks, applications therefor and
material unregistered trademarks and service marks; (v) registered
copyrights and applications therefor; and (vi) domain names and domain
name registrations. SCHEDULE 4.10(b) identifies the record and
beneficial owner of each item listed thereon and, in the case of
patents, registrations and applications, the application, patent or
registration number and date. The Business IP set forth on SCHEDULE
4.10(b) is owned by an Acquired Company or an Asset Seller free and
clear of all Encumbrances other than Permitted Encumbrances, and
except for fees and costs required to prosecute and maintain such
Business IP in effect, none of the Acquired Companies or Asset Sellers
are obligated to make any payments of any kind in respect thereof.
(c) SCHEDULE 4.10(c) sets forth a true and correct list of
all material Business IP (i) licensed by or to any Acquired Company or
Asset Seller (other than computer software), and (ii) which is
otherwise the subject of a Contract, including material consent and
settlement agreements. Seller has made available to Purchaser true
and complete copies of all such Contracts. The Acquired Company or
Asset Seller that is a party to each such Contract has performed all
material obligations required to be performed by it, and, to the
Knowledge of Seller, no other party to any such Contract is in default
thereunder. As of the Closing Date, to the Knowledge of Seller, there
exists no event, condition or occurrence which, with the giving of
notice or lapse of time, or both, would constitute a breach or default
under any such Contract. No party to any such Contract has given any
Acquired Company or Asset Seller written notice of its intention to
cancel, terminate or fail to renew any such Contract. No suit,
action, reissue, reexamination, public protest, interference,
arbitration, mediation, opposition, cancellation, Internet domain name
dispute resolution or other proceeding (collectively, "Suit") has been
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threatened in writing, decided or is pending concerning any such
Contract.
(d) SCHEDULE 4.10(d) sets forth a true and correct list of
all material computer software included in the Business IP, other than
(i) Desktop Software, (ii) computer software and firmware in or used
to control or operate any of the machinery or equipment of the
Business and (iii) computer software to be transferred prior to
Closing pursuant to SECTION 6.2. Seller has made available to
Purchaser true and complete copies of all Contracts for the software
listed on SCHEDULE 4.10(d). Each Acquired Company and Asset Seller
that is a party to each such Contract has performed all material
obligations required to be performed by it, and, to the Knowledge of
Seller, no other party to any such Contract is in default thereunder.
As of the Closing Date, to the Knowledge of Seller, there exists no
event, condition or occurrence which, with the giving of notice or
lapse of time, or both, would constitute a breach or default under any
such Contract. No party to any such Contract has given any Acquired
Company or Asset Seller written notice of its intention to cancel,
terminate or fail to renew any such Contract. No Suit has been
threatened in writing, decided or is pending concerning any such
Contract. To the Knowledge of Seller, the Acquired Companies and
Asset Sellers are in compliance in all material respects with the
provisions of any license, lease or other similar agreement pursuant
to which the Companies have rights to use Desktop Software, and no
Suit has been threatened in writing, decided or is pending concerning
same. "Desktop Software" means any third-party computer software that
is licensed for use on desktop or laptop "PC-class" computers or
related local area network servers other than by a written agreement
executed by the licensee, and includes software licensed by shrink
wrap or click wrap licenses, the Microsoft Windows class of operating
system software, and Microsoft Office or similar office productivity
software (including individual programs contained therein).
(e) All Business IP which is issued, registered, renewed or
the subject of a pending application ("Registered") is subsisting. To
the Knowledge of Seller, all Registered Business IP is valid and
enforceable. No such Business IP has been abandoned, canceled or
adjudicated invalid (excepting any expirations in the ordinary
course), or is subject to any outstanding order, judgment or decree
restricting its use or adversely affecting or reflecting an Acquired
Company's or Asset Seller's rights thereto. Any Business IP which is
material to the Business as currently conducted has been Registered.
(f) No Suit is pending concerning any claim or position
that the use of any Business IP or the operation of the Business (or
any portion thereof) has violated any Intellectual Property rights.
No such Suit has been threatened in writing or asserted that has not
been resolved as of the Closing Date. To the Knowledge of Seller, the
operation of the Business does not infringe, misappropriate or
otherwise violate or conflict with the Intellectual Property of any
third party.
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(g) No Suit is pending concerning the Business IP,
including any Suit concerning a claim or position that the Business IP
has been violated or is invalid, unenforceable, unpatentable,
unregisterable, cancelable, not owned or not owned exclusively by an
Acquired Company or Asset Seller. No such claim has been threatened
in writing or asserted in writing that has not been resolved as of the
Closing Date. To the Knowledge of Seller, no valid basis for any such
Suits or claims exists.
(h) Each Acquired Company and Asset Seller owns or
otherwise holds valid rights to use all material Business IP (and to
the Knowledge of the Seller all Business IP) used or contemplated to
be used in its respective portion of the Business. Except as set
forth in SCHEDULE 4.4, all such rights are fully assignable by the
relevant Acquired Company or Asset Seller to any Person, without
payment, consent of any Person or other condition or restriction. The
Business IP, together with the Intellectual Property licensed under
the Patent License Agreement and the Intellectual Property licensed
under the Transitional Services Agreement, constitutes all
Intellectual Property necessary to operate the Business as currently
conducted.
(i) To the Knowledge of Seller, no Person is violating any
Business IP.
(j) As of the Closing Date, each Acquired Company and Asset
Seller has timely made all filings and payments with the appropriate
foreign and domestic agencies required to maintain in subsistence all
Registered Business IP set forth on SCHEDULE 4.10(b). Except as
indicated on SCHEDULE 4.10(j), no due dates for filings or payments
concerning the Registered Business IP (including without limitation
office action responses, affidavits of use, affidavits of continuing
use, renewals, requests for extension of time, maintenance fees,
application fees and foreign convention priority filings) fall due
within ninety (90) days of the Closing Date, whether or not such due
dates are extendable. Except as set forth on SCHEDULE 4.10(j), all
documentation necessary to confirm and effect the relevant Acquired
Company's or Asset Seller's ownership of Business IP, if acquired from
other Persons, has been recorded in the United States Patent and
Trademark Office, the United States Copyright Office and other
official offices.
(k) To the Knowledge of Seller, no unauthorized disclosure
of any trade secrets used in the Business ("Business Trade Secrets")
has been made.
(l) To the Knowledge of Seller, no current or former
employee of an Acquired Company or Asset Seller is or was a party to
any confidentiality agreement and/or agreement not to compete that
restricts or forbids, or restricted or forbade at any time during such
employee's employment by an Acquired Company or Asset Seller such
employee's performance of the Acquired Company's or Asset Seller's
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Business, or any other activity that such employee was hired to
perform or otherwise performed on behalf of or in connection with such
employee's employment by an Acquired Company or Asset Seller.
(m) The material IT Systems, and to the Knowledge of Seller
all IT Systems, owned by or licensed to each Acquired Company and
(insofar as such are included in the Purchased Assets and not within
the scope of SECTION 1.3(k)) each Asset Seller used primarily in the
Business are adequate in all material respects for their intended use
and for the operation of the Business as currently operated, and are
in good working condition (normal wear and tear excepted).
SECTION 4.11 BUSINESS CONTRACTS.
(a) SCHEDULE 4.11 sets forth a true and correct list, as of
the date hereof, of the following Business Contracts (other than
Business Contracts that individually have a future liability not in
excess of $250,000 or are cancelable by an Acquired Company or Asset
Seller upon notice of not more than 90 calendar days for a cost of not
more than $100,000), true and correct copies of which have been made
available to Purchaser:
(i) Contracts for the purchase or sale of assets,
products or services;
(ii) Sole source supply Contracts for the purchase of
Inventory that is otherwise not generally available and that is
used in the manufacture of a Business product;
(iii) Employment or service Contracts in connection
with a MAQUILADORA program of the Business;
(iv) Contracts pursuant to which an Acquired Company
or Asset Seller grants to any Person the right to market,
distribute or resell any Business product, or to represent an
Acquired Company or Asset Seller with respect to any such
product, or act as agent for any Acquired Company or Asset Seller
in connection with the marketing, distribution or sale of any
Business product;
(v) Contracts for the lease of Equipment;
(vi) Contracts containing a covenant that restricts an
Acquired Company or an Asset Seller from engaging in any line of
business or competing with any Person;
(vii) Contracts providing for indemnification by an
Acquired Company, other than in connection with respect to
standard terms and conditions of a Contract for the purchase or
sale of assets, products or services in the Ordinary Course of
Business;
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(viii) Employment, consulting or independent
contractor Contracts, other than unwritten at-will employment
Contracts;
(ix) Contracts relating to a joint venture of the
Business;
(x) Currency exchange, interest rate, commodity
exchange or similar Contracts;
(xi) Contracts for capital expenditures, other than
Contracts for capital expenditures which involve or are
reasonably likely to involve aggregate consideration of not more
than $100,000; and
(xii) Contracts with any director, officer or employee
of Seller or any of its Subsidiaries (in each case, other than
(A) employment agreements covered in clauses (iii) and (viii)
above), (B) payments of compensation for employment to employees
in connection with unwritten at-will employment Contracts, (C)
participation in Employee Benefit Plans by employees, and (D)
Contracts to be terminated pursuant to SECTION 6.2).
(b) Seller and its Subsidiaries have performed in all
material respects all of the obligations required to be performed by
them to date and are not in default under the Contracts listed on
SCHEDULE 4.11, and, to the Knowledge of Seller, no other party to any
such Contract is in default thereunder. Each Contract listed on
SCHEDULE 4.11 is in full force and effect in all material respects and
constitutes the legal, valid and binding obligation of Seller or its
Subsidiaries and, to the Knowledge of Seller, each other party
thereto, enforceable in accordance with its terms, except to the
extent that its enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium, receivership and
similar laws affecting the enforcement of creditors' rights generally
and to general equitable principles.
SECTION 4.12 TITLE. The Asset Sellers have good and valid
title, or an enforceable leasehold interest in, all of the Equipment
included in the Purchased Assets, free and clear of Encumbrances other
than Permitted Encumbrances. Each Acquired Company has good and valid
title to, or an enforceable leasehold interest in, all of its
Equipment, free and clear of Encumbrances other than Permitted
Encumbrances.
SECTION 4.13 LITIGATION. Except as set forth on SCHEDULE
4.13, there is no action, suit or proceeding at law or in equity
against any Acquired Company or the Business pending, or to the
Knowledge of Seller, threatened, which relates to or involves
uninsured amounts of more than $250,000, seeks any injunctive relief,
would, if decided adversely to Seller, an Acquired Company or an Asset
Seller, prohibit, restrain or invalidate the transactions contemplated
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by this Agreement or which is reasonably likely to have a Material
Adverse Effect. Except as set forth on SCHEDULE 4.13, to the
Knowledge of Seller, (a) none of the Acquired Companies nor the
Business has been permanently or temporarily enjoined or barred by
order, judgment or decree of or agreement with any Governmental
Authority from engaging in or continuing any conduct or practice in
connection with the Business, and (b) there is no outstanding order,
judgment, ruling, injunction or decree requiring any Acquired Company
or the Business to take, or refrain from taking, action with respect
to the Business or its assets.
SECTION 4.14 COMPLIANCE WITH LAWS; PERMITS. The Business
is being conducted in compliance in all material respects with all
applicable Laws. SCHEDULE 4.14 sets forth a true and correct list of
all material Permits included in the Purchased Assets or issued to any
Acquired Company. All such Permits are in full force and effect in
all material respects and neither Seller nor any of its Subsidiaries
has received any written notice of, nor is any proceeding pending or,
to the Knowledge of Seller, threatened with respect to, any
suspension, modification, revocation, cancellation or non-renewal, in
whole or in part, of any such Permit. This SECTION 4.14 does not
relate to Real Property, which is the subject solely of SECTION 4.9,
Taxes, which are the subject solely of SECTION 4.15, Employee Benefit
Plans, which are the subject solely of SECTION 4.16, employee and
labor matters, which are the subject solely of SECTION 4.17, or
environmental matters, which are the subject solely of SECTION 4.18.
SECTION 4.15 TAXES.
(a) All returns, statements, forms and reports required to
be filed in respect of any Tax (each, a "Tax Return") that were
required to be filed prior to the Closing Date by, or with respect to,
an Acquired Company or the Business, either separately or as a member
of an affiliated group (within the meaning of Section 1504) of the
Code) or a consolidated, combined, unitary or other group (each, an
"Affiliated Group") have been, or will be, filed, and all such Tax
Returns were true, correct and complete in all material respects when
filed. As used herein, "Taxes" means (i) all taxes, charges, fees,
levies, duties, imposts, contributions or assessments imposed by any
Governmental Authority, including all income, gross receipts, value
added, ad valorem, asset, excise, real property, personal property,
windfall profit, minimum, franchise, stamp, licensing, withholding,
employment, social security, housing, sales, use, transfer,
unemployment and payroll taxes and any other tax, charge, fee, levy,
duty, impost, contribution or assessment, and (ii) any interest,
fines, surcharges, penalties or additions to tax resulting from,
attributable to, or incurred in connection with such taxes, charges,
fees, duties, imposts, contributions and assessments.
(b) Except as set forth on SCHEDULE 4.15(b), all Taxes
shown to be due in respect of the periods covered by the Tax Returns
referred to in Section 4.15(a) (whether or not required to be shown on
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any such Tax Return) have been paid or accrued on the Closing Date
Balance Sheet.
(c) Except as set forth on SCHEDULE 4.15(c), to the
Knowledge of Seller, there is no action, suit, investigation or audit
pending with respect to any Tax of any Acquired Company.
(d) To the Knowledge of Seller, all monies required to be
withheld or collected for payment by the Acquired Companies, including
for sales Taxes and from employees of the Business for income Taxes,
social security and other payroll Taxes, have been collected or
withheld and timely paid (or are being held for payment) to the
respective taxing authorities.
(e) There are no tax sharing or tax allocation agreements
in effect between Seller or any of its Subsidiaries and any other
party under which Purchaser or any of the Acquired Companies could be
liable for, or have any other obligation with respect to, any Taxes or
other claims of any Person.
(f) Since January 1, 1999, none of the Acquired Companies
has been a member of any Affiliated Group except as set forth on
SCHEDULE 4.15(f).
(g) There are not any outstanding waivers or comparable
consents regarding the application of the statute of limitations with
respect to any Tax or Tax Return of any Acquired Company or the
Business, except as set forth on SCHEDULE 4.15(g).
(h) None of the Acquired Companies is required to include
in income any adjustment pursuant to Section 481 of the Code, except
as set forth on SCHEDULE 4.15(h).
(i) Set forth on SCHEDULE 4.15(i) is a description of all
audits or other administrative or judicial proceedings with respect to
any Tax related to any Acquired Company, any Affiliated Group or the
Business that have ended within three years prior to the date of this
Agreement.
(j) Except as set forth on SCHEDULE 4.15(j), none of the
Acquired Companies has filed a disclosure statement pursuant to
Section 6662 of the Code or was required to file any such disclosure
statement to avoid the imposition of any penalty, fine or addition to
tax. None of the Acquired Companies has participated in any way in
any "tax shelter" within the meaning of Section 6111 of the Code or in
any "reportable transaction" within the meaning of the Treasury
Regulations Section 1.6011-4 (as in effect at the relevant time).
SECTION 4.16 EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 4.16(a) identifies each Employee Benefit Plan
in effect on the date hereof. As used herein, "Employee Benefit Plan"
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means each "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement and Income Security Act of 1974, as amended
("ERISA") (other than a multiemployer plan as defined in Section 3(37)
of ERISA (a "Multiemployer Plan")), each bonus, employment, equity
compensation, retiree medical, life insurance, supplemental
retirement, severance or termination, salary continuation or deferred
compensation plan, Contract or arrangement that is currently
maintained or contributed to, or required to be contributed to by
Seller or any Subsidiary of Seller for the benefit of any Business
Employee (or any of their eligible beneficiaries and dependents,
including statutory plans).
(b) Seller has made available to Purchaser (i) a current
and complete copy of each Employee Benefit Plan maintained by an
Acquired Company (including amendments thereto) and (ii) a written
summary of the material terms of each other Employee Benefit Plan.
(c) Except as set forth on SCHEDULE 4.16(c), none of
Seller, any Acquired Company, any Asset Seller or any Person
that,together with any Acquired Company, would be treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code (each,
including any Acquired Company, an "ERISA Affiliate") contributes to a
Multiemployer Plan on behalf of any employee of the Business, and none
of the Employee Benefit Plans provides or promises post-retirement
health or life benefits to any employee of the Business (including any
former employee), except to the extent required under any applicable
state law or under Section 601 of ERISA or 4980B of the Code.
(d) Each Employee Benefit Plan has been administered in all
material respects in accordance with its terms and all applicable
laws, including ERISA and the Code, and contributions required to be
made on behalf of employees of the Business under the terms of any of
the Employee Benefit Plans as of the date of this Agreement have been
timely made, or, if not yet due, have been properly reflected on the
Unaudited Financial Statements.
(e) Each Employee Benefit Plan that is intended to qualify
under Section 401(a) of the Code has either received a favorable
determination letter from the Internal Revenue Service ("IRS") as to
its qualified status or the remedial amendment period for such
Employee Benefit Plan has not yet expired, and each trust established
in connection with any Employee Benefit Plan which is intended to be
exempt from federal income taxation under Section 501(a) of the Code
is so exempt, and to the Knowledge of Seller, no fact or event has
occurred that could adversely affect the qualified status of any such
Employee Benefit Plan or the exempt status of any such trust.
(f) With respect to each Employee Benefit Plan for which an
ERISA Affiliate would have liability subject to Title IV of ERISA, (i)
no proceeding has been commenced by the Pension Benefit Guaranty
Corporation ("PBGC") to terminate such Employee Benefit Plan and no
condition exists which could constitute grounds for the termination of
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any such Employee Benefit Plan by the PBGC, (ii) all premiums have
been paid to the PBGC and (iii) no "reportable event", as defined in
Section 4043(c) of ERISA, for which the 30-day reporting requirement
has not been waived, has occurred.
(g) No action, suit, proceeding, hearing or investigation
with respect to the administration or the investment of the assets of
any Employee Benefit Plan (other than routine claims for benefits)
that could result in liability to an Acquired Company is pending or,
to the Knowledge of Seller, threatened.
(h) No Acquired Company has engaged in a transaction in
connection with which the Acquired Company would be subject to either
a civil penalty pursuant to Section 502(i) of ERISA or tax pursuant to
Section 4975 of the Code.
(i) Except as set forth on SCHEDULE 4.16(a), no Acquired
Company or any ERISA Affiliate maintains or is required to contribute
to any plan, fund (including any superannuation fund) or other similar
program established or maintained outside the United States of America
primarily for the benefit of employees of the Business residing
outside the United States of America, which fund or similar program
provides, or results in, retirement income, a deferral of income in
contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA or the Code, that
could result in liability to an Acquired Company.
(j) The consummation of the transactions contemplated by
this Agreement shall not (i) entitle any Business Employee to any
payment, (ii) increase the amount of any compensation to any such
Business Employee, (iii) accelerate the vesting of any compensation,
stock incentive or other benefit to such person or (iv) result in any
parachute payment under Section 280G of the Code required to be made
by an Acquired Company whether or not such compensation is considered
to be reasonable.
(k) None of Seller's purposes for engaging in the
transactions contemplated by this Agreement is for the evasion of
liability under Section 4069 of ERISA and no Acquired Company has ever
had any liability under Section 4069 of ERISA.
SECTION 4.17 EMPLOYEE AND LABOR MATTERS.
(a) Except as set forth in SCHEDULE 4.17(a), (i) as of the
date hereof, none of the employment terms of the employees of the
Business are subject to the terms of a current collective bargaining
agreement or a collective bargaining agreement under current
negotiation and no labor organization or group of employees of the
Business has made a demand for reorganization or certification, (ii)
none of Seller, the Acquired Companies or Asset Sellers has received
written notice of any complaint against or arbitration proceeding
involving any of the Acquired Companies or the Business which is
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currently pending before the National Labor Relations Board or the
Equal Employment Opportunity Commission or before any analogous entity
in any country with respect to any current or former employee of the
Business or, to the Knowledge of Seller, threatened against any of the
Acquired Companies or the Business and (iii) there are no labor
strikes, disputes, grievances, unfair labor practices pending under
any collective bargaining agreements, slowdowns, work stoppages or
other labor disturbances or difficulties pending or, to the Knowledge
of Seller, threatened against the Acquired Companies or the Business.
(b) The Acquired Companies and the Business are in material
compliance with all laws related to wages, hours, collective
bargaining, legal qualification of employment status, employment
discrimination, immigration, disability, civil rights, rights of
privacy, unfair labor practices, occupational safety and health, other
amounts in connection with the retirement of employees and housing of
employees, and workers compensation as may pertain to Business
Employees.
(c) There are no complaints, charges, or claims against the
Acquired Companies or Asset Sellers pending, or to the Knowledge of
Seller, threatened in writing to be brought or filed, with any
Governmental Authority, court or arbitrator based on, arising out of,
in connection with, or otherwise relating to the employment or
termination of employment of any Business Employee by Seller, the
Acquired Companies or the Asset Sellers that could result in liability
to an Acquired Company.
SECTION 4.18 ENVIRONMENTAL MATTERS.
(a) Except as set forth on SCHEDULE 4.18(a), the Business
is, and has been, in material compliance with all Environmental Laws
and the Business has obtained, and is in material compliance with, all
necessary Permits or authorizations that are required under
Environmental Laws to operate the facilities, assets and properties of
the Business and the Purchased Assets. Seller has fully complied with
all of the requirements under Environmental Laws governing the sale,
transfer or closure of commercial and industrial establishments.
Except as disclosed on SCHEDULE 4.18(a), none of Seller, the Acquired
Companies or an Asset Seller has received any written notice to the
effect that the Business is not in material compliance with any
Environmental Laws.
(b) Except as set forth on SCHEDULE 4.18(b), there is no
existing or, to the Knowledge of Seller, threatened Environmental
Claim asserted against the Business. Except as set forth on SCHEDULE
4.18(b), (i) none of Seller, the Acquired Companies or an Asset Seller
has received any written notice of any Environmental Claims being
asserted against any facilities that may have received Hazardous
Materials generated by the Business or any predecessor in interest,
and (ii) to the Knowledge of Seller, no Environmental Claims are being
asserted against any facilities that may have received Hazardous
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Materials generated by the Business or any predecessor in interest.
Except as set forth on SCHEDULE 4.18(b), none of Seller, the Acquired
Companies or an Asset Seller has received any written notification
alleging any actual, or potential responsibility for, or any inquiry
or investigation regarding, any threatened or pending Environmental
Claim or Release or threatened Release of any Hazardous Materials
either generated at or transported from any facility of the Business.
(c) Except as set forth on SCHEDULE 4.18(c), (i) no
underground tank or other underground storage receptacle for Hazardous
Materials is currently located at any of the Owned Real Property or
Leased Real Property; (ii) there are no polychlorinated biphenyls
(PCBs) or asbestos or solid waste disposal areas located at or on the
Owned Real Property or Leased Real Property, except in compliance with
Environmental Laws; and (iii) no part of any Owned Real Property or
Leased Real Property has been used as a landfill or for the disposal
of Hazardous Materials.
(d) Except as set forth on SCHEDULE 4.18(d), there has been
no Release at any of the properties owned or operated by the Business
or a predecessor in interest, or to the Knowledge of Seller, at any
disposal or treatment facility that received Hazardous Materials
generated by the Business or the Acquired Companies.
SECTION 4.19 TRANSACTIONS WITH AFFILIATES; INTERCOMPANY
TRANSACTIONS AND SERVICES; SHARED ASSETS.
(a) To the Knowledge of Seller and except as set forth in
SCHEDULE 4.19(a), no officer or director of Seller or its Subsidiaries
(i) owns, directly or indirectly, any property, asset or right used by
the Business, or any interest in (excepting not more than five percent
of the stock of any corporation held solely for investment purposes
which is listed on any national securities exchange, listed with the
Nasdaq Stock Market or regularly traded in the over-the-counter
market) or is a sole proprietor, shareholder, partner, director,
officer, employee, consultant or agent of any Person that is engaged
in business as a lessor, lessee, customer or supplier of the Business
or (ii) has any cause of action or other suit, action or claim
against, or owes any amount to, an Acquired Company or Asset Seller
with respect to the Business, except for claims in the Ordinary Course
of Business, such as for accrued vacation pay, relocation or other
accrued benefits under Employee Benefit Plans and similar matters.
(b) SCHEDULE 4.19(b) sets forth each material written
Contract in effect as of the date hereof between any of the Acquired
Companies or Asset Sellers, on the one hand, and Seller or its
Affiliates (other than the Acquired Companies) on the other hand,
which relates in any material respect to the Business.
(c) SCHEDULE 4.19(c) lists (i) the categories of services
material to the Business that Seller or its Affiliates (other than the
Acquired Companies) provides to the Acquired Companies and Asset
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Sellers in connection with the operation of the Business as presently
conducted and (ii) the categories of goods bought or sold between
Seller or its Affiliates (other than the Acquired Companies) on the
one hand, and the Acquired Companies on the other hand, other than in
the case of (i) and (ii), (x) the services described in EXHIBIT A to
the Transition Services Agreement and (y) the transactions that are
the subject of the Supply Agreements.
(d) SCHEDULE 4.19(d) identifies any asset, right,
privilege, Contract, Permit or arrangement which materially benefits
or is utilized for any material purpose in the Business and as to
which none of the Acquired Companies would have a direct ownership or
Contract right (with a Person other than Seller or its Affiliates) to
continue use or ownership thereof, upon the terms in effect on the
date hereof, following consummation of the transactions contemplated
by this Agreement, other than (i) the assets, rights, privileges,
Permits and Contracts listed on SCHEDULE 6.2(d); (ii) the assets,
rights and privileges owned, leased or licensed and used by Seller or
its Affiliates (other than the Acquired Companies) in providing
services that are listed in SCHEDULE 4.19(c) or described in EXHIBIT A
to the Transition Services Agreement; (iii) the transactions that are
the subject of the Supply Agreements; (iv) the intellectual property
assets that are the subject of the Patent License Agreement; (v) the
working capital assets and other financial assets and insurance
policies and arrangements provided by Seller and its Affiliates (other
than the Acquired Companies).
SECTION 4.20 INSURANCE. SCHEDULE 4.20 contains a true and
correct list of all material insurance policies or binders of fire,
casualty, liability, burglary, fidelity, workers' compensation,
vehicular, health, life and other insurance (collectively, the
"Policies") maintained, owned or held on the date hereof by Seller or
its Subsidiaries that relate to the Business. All Policies are in
full force and effect in all material respects, all premiums due and
payable thereon have been paid (other than retroactive or
retrospective premium adjustments or other payments that may be
required under the relevant Policy that are not yet, but may be,
required to be paid with respect to any period ending prior to the
Closing Date), and no written notice of cancellation or termination
has been received with respect to any such Policy that has not been
replaced on substantially similar terms prior to the date of such
cancellation. SCHEDULE 4.20 sets forth all material information
(including nature of coverage, limits, deductibles and premiums)
pertaining to all Policies.
SECTION 4.21 U.S. REAL PROPERTY HOLDING CORPORATION. None
of the Acquired Companies is now or has ever been a "United States
Real Property Holding Corporation," as defined in Section 897(c)(2) of
the Code and Section 1.897-2(b) of the regulations thereunder.
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SECTION 4.22 CUSTOMERS.
(a) SCHEDULE 4.22(a) sets forth a true and correct list of
the top ten customers of the Business (the "Significant Customers").
None of the individuals listed on SCHEDULE 4.22(a) has received or
become aware of notice from any Significant Customer (except that the
representation and warranty with respect to the Persons listed on
SCHEDULE 4.22(b) with respect to fiscal 2004 is set forth exclusively
in SECTION 4.22(b)) that it intends or is reasonably likely to
terminate substantially all or any material portion of its purchases
of Business products. SCHEDULE 1.4(c) sets forth a list of material
Customer Programs of the Business as of the date hereof.
(b) To the Knowledge of the individuals listed on SCHEDULE
4.22(a), no reason exists that would be reasonably expected to result
in the failure to achieve the budgeted amounts for the programs and
revenues reflected in the Business' 2004 estimated sales (dated
January 20, 2004 (for the Frame Business) and January 21, 2004 (for
the Cookware Business) and provided on February 23, 2004 (for the
Glass Business), in each case as attached on Schedule 4.22(b)) in
connection with sales to the Persons listed on SCHEDULE 4.22(b) (other
than the loss of sales to such Persons by the Glass Business for
fiscal 2004 of no greater than the aggregate amount set forth opposite
each such Person's name on SCHEDULE 4.22(b)). None of the individuals
listed on SCHEDULE 4.22(a) has been advised or threatened, or has
become aware of any such advice or threat, by the Persons listed on
SCHEDULE 4.22(b), either orally or in writing, with any adverse
changes to expected sales to such Persons from such sales as described
in the Business' 2004 budget.
SECTION 4.23 BROKERS. Except for Lehman Brothers Inc. and
Robert W. Baird & Co. Incorporated, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Seller or
any of its Subsidiaries. Seller is solely responsible for the fees
and expenses of Lehman Brothers Inc. and Robert W. Baird & Co.
Incorporated.
SECTION 4.24 DISCLAIMER OF CERTAIN WARRANTIES. SELLER
MAKES NO REPRESENTATION OR WARRANTY TO PURCHASER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE ACQUIRED COMPANIES, THE ASSET SELLERS, THE
PURCHASED ASSETS OR THE ASSUMED LIABILITIES, INCLUDING ANY
REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY, OTHER THAN AS
EXPRESSLY PROVIDED IN THIS ARTICLE IV.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as set
forth below:
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SECTION 5.1 ORGANIZATION AND STANDING. Purchaser and
each Subsidiary Purchaser is an entity duly organized, validly
existing and, where applicable, in good standing under the laws of its
jurisdiction of organization.
SECTION 5.2 AUTHORIZATION, VALIDITY AND EXECUTION.
Purchaser has all necessary corporate power and authority (a) to
execute and deliver this Agreement and the other agreements, documents
and instruments to be executed by Purchaser or the Subsidiary
Purchasers in connection with the transactions contemplated hereby
(such other agreements, documents and instruments, the "Purchaser
Documents"), (b) to perform (or cause to be performed) its obligations
hereunder and thereunder and (c) to consummate the transactions
contemplated hereby and thereby. No other action is necessary for the
authorization, execution, delivery and performance by Purchaser and
the Subsidiary Purchasers of this Agreement and the Purchaser
Documents. This Agreement has been, and each of the Purchaser
Documents will be on or prior to the Closing Date, duly executed and
delivered by Purchaser or the Subsidiary Purchasers, as applicable,
and, assuming the due execution of this Agreement by Seller, is a
legal, valid and binding obligation of Purchaser and the Subsidiary
Purchasers, enforceable against each in accordance with its terms,
except to the extent that its enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium,
receivership and similar laws affecting the enforcement of creditors'
rights generally and to general equitable principles.
SECTION 5.3 CONSENTS AND APPROVALS; NO VIOLATION. Except
for (i) compliance with the HSR Act and (ii) other applicable merger
control or similar laws, the execution by Purchaser of this Agreement
and the consummation by Purchaser and the Subsidiary Purchasers of the
transactions contemplated hereby (a) will not violate the provisions
of the certificate of incorporation, the bylaws or any other similar
organizational instrument of Purchaser or the Subsidiary Purchasers;
(b) will not violate any statute, rule, regulation, order or decree of
any Governmental Authority by which Purchaser or any Subsidiary
Purchaser is bound; and (c) will not require any Permit, consent or
approval of, or the giving of any notice to, or filing with, any
Person on or prior to the Closing Date by or for Purchaser.
SECTION 5.4 SECURITIES LAW REPRESENTATIONS.
(a) Purchaser is acquiring the Purchased Shares in good
faith solely for its own account with the present intention of holding
such Purchased Shares for purposes of investment, and Purchaser is not
acquiring the Purchased Shares with a view to or for subdivision,
distribution, fractionalization or distribution thereof, in whole or
in part, or as an underwriter or conduit to other beneficial owners or
subsequent purchasers.
(b) Purchaser acknowledges and understands that the
Purchased Shares have not been registered under the Securities Act of
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1933, as amended, and the rules and regulations promulgated thereunder
(the "Securities Act") or qualified under the securities or "blue sky"
laws of applicable states in reliance upon exemptions from
registration or qualification thereunder and the Purchased Shares may
not be sold, offered, transferred, assigned, pledged, hypothecated or
otherwise disposed of or encumbered, except in compliance with the
Securities Act and such laws.
(c) Purchaser has such knowledge and experience in
financial and business matters that it is capable of evaluating the
merits and risks of an investment in the Purchased Shares.
(d) Purchaser has received and reviewed carefully
information regarding the Acquired Companies, the Purchased Shares,
the Purchased Assets, the Assumed Liabilities and the Business and
has, to the extent it has deemed necessary or advisable, reviewed the
aforementioned information and this Agreement with its investment,
tax, accounting and legal advisors. Purchaser and such advisors have
been given a full opportunity to ask questions of and to receive
answers from Seller concerning the acquisition of the Purchased
Shares, the Acquired Companies, the Purchased Assets, the Assumed
Liabilities and the Business and have received or been given access to
such information and documents as are necessary to verify the accuracy
of the information furnished to Purchaser concerning an investment in
the Purchased Shares as Purchaser or such advisors have requested.
SECTION 5.5 AVAILABILITY OF FUNDS. Purchaser or its
Affiliates have sufficient funds available on hand or through existing
credit facilities to enable Purchaser to consummate the transactions
contemplated hereby and to permit Purchaser to perform all of its
obligations under this Agreement. Attached hereto as EXHIBIT G is a
true and correct copy of an equity commitment letter from Cerberus
Capital Management, L.P. in connection with the consummation of the
transactions contemplated hereby.
SECTION 5.6 LITIGATION. There is no action, suit or
proceeding at law or in equity against Purchaser or any of its
Affiliates pending, or to the knowledge of Purchaser, threatened which
would, if decided adversely to Purchaser, prohibit the transactions
contemplated by this Agreement or which is reasonably likely to have a
material adverse effect on Purchaser's ability to consummate the
transactions contemplated by this Agreement.
SECTION 5.7 BROKERS. No broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Purchaser or
any of its Affiliates.
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ARTICLE VI
CERTAIN AGREEMENTS
SECTION 6.1 CONDUCT OF BUSINESS. During the period from
the date hereof to the Closing Date, Seller will cause the Acquired
Companies and the Asset Sellers to conduct the Business in the
Ordinary Course of Business. Notwithstanding the immediately
preceding sentence, during the period from the date hereof to the
Closing Date, except (x) as may be approved by Purchaser, (y) as is
otherwise permitted, contemplated or required by this Agreement,
including SECTION 6.2, or by law and (z) as set forth on SCHEDULE 6.1
attached hereto:
(a) With respect to the Acquired Companies, Seller will not
permit any Acquired Company to:
(i) Amend the certificate of incorporation, bylaws or
other similar corporate governance instrument of an Acquired
Company, or subdivide or reclassify in any way any of its capital
stock or change or agree to change in any manner the rights of
its outstanding capital stock;
(ii) Declare or pay any dividend or make any other
distribution whether or not upon or in respect of any of its
capital stock, or other equity interests, of a Purchased Company;
PROVIDED, HOWEVER, that (i) dividends and distributions may
continue to be made by Subsidiaries of a Purchased Company to a
Purchased Company, and from one wholly owned Subsidiary of a
Purchased Company to another wholly owned Subsidiary of a
Purchased Company, and (ii) dividends and distributions of cash
may continue to be made by Acquired Companies to Seller;
(iii) Redeem, purchase or otherwise acquire any of the
capital stock or other equity interests of any Person, including
any Acquired Company;
(iv) Issue or sell any shares of capital stock or
other equity interests of any Acquired Company, or securities
convertible into or exchangeable for, or options, warrants or
rights to purchase or subscribe to, such shares or equity
interests;
(v) Adopt or amend any collective bargaining agreement
which is a Business Contract, or adopt or amend in any material
respect any Employee Benefit Plan in which Business Employees
participate, other than as required by law;
(vi) Adopt a plan of liquidation or resolutions
providing for the liquidation, dissolution, merger, consolidation
or other reorganization;
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(vii) Grant to any Business Employee any increase in
compensation or benefits, except (A) for stay bonuses paid by
Seller or its Affiliates (other than the Acquired Companies) in
connection with the transactions contemplated hereby, (B) in the
Ordinary Course of Business or (C) as required under any existing
Contracts;
(viii) Incur or assume any liabilities, obligations or
indebtedness for borrowed money or guarantee any such
liabilities, obligations or indebtedness or, except in the
Ordinary Course of Business, incur or assume any debt, obligation
or liability (whether absolute or contingent and whether or not
currently due and payable);
(ix) Make any loan or advance to its officers,
directors, employees, consultants, agents or equity holders,
other than travel advances, expense reimbursement and similar
payments in the Ordinary Course of Business or pursuant to
Seller's relocation program;
(x) Permit, allow or suffer any of assets of the
Acquired Companies to become subjected to any Encumbrance, other
than Permitted Encumbrances;
(xi) Loan or advance any amount to, or sell, transfer
or lease any of the assets of the Acquired Companies to, or enter
into any agreement or arrangement with, Seller or any of its
Affiliates (other than an Acquired Company), except for (A)
dividends and distributions permitted under clause (ii) above,
(B) intercompany transactions in the Ordinary Course of Business
and (C) payments pursuant to existing Contracts;
(xii) Make any change in any method of accounting or
accounting practice or policy other than those required by GAAP;
(xiii) Merge or consolidate with, or acquire all or
any significant portion of the assets of any business or any
Person, or agree to change in any material respect the character
of its business;
(xiv) Make or incur any capital expenditure that is
not reflected in the capital expenditures budget of the Business
set forth in SCHEDULE 6.1(a)(xiv) or that in the aggregate
exceeds $100,000;
(xv) Subject to SECTION 6.1(a)(xvii), sell, lease,
distribute or otherwise dispose of any assets of the Acquired
Companies, other than (A) sales of Inventory in the Ordinary
Course of Business and (B) sales of other assets that do not
exceed $100,000 in the aggregate;
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(xvi) Make or change any Tax election, adopt or change
any Tax accounting method, enter into any closing agreement,
settle any Tax claim or assessment, surrender any right to claim
a Tax refund or credit or take or fail to take any other action
if such action or failure to take such action would materially
increase the Tax liability of any Acquired Company;
(xvii) Enter into, materially modify or terminate any
lease of real property, except any renewals of existing leases in
the Ordinary Course of Business;
(xviii) Unless authorized in writing by Purchaser,
sell "excess" Inventory (as designated by Seller pursuant to the
Accounting Principles) with a book value greater than $1,000,000
(in the aggregate with Inventory sold pursuant to SECTION
6.1(b)(ix)) except at ordinary margins for non-excess inventory
or in connection with promotional programs listed on SCHEDULE
6.1(a)(xviii);
(xix) Unless authorized in writing by Purchaser, sell
in any month "obsolete" Inventory (as designated by Seller
pursuant to the Accounting Principles) with a book value (in the
aggregate with Inventory sold pursuant to SECTION 6.1(b)(x))
greater than the amount set forth for such month on SCHEDULE
6.1(a)(xix);
(xx) Enter into any (A) employment or consulting
Contract or (B) any other Contract (other than supplier, vendor
and customer Contracts entered into in the Ordinary Course of
Business) either involving consideration in excess of $250,000
under each such Contract or $2,000,000 under such Contracts in
the aggregate (other than the renewal of existing Business
Contracts on generally similar terms) or outside the Ordinary
Course of Business, excluding those Contracts which are fully
performed by an Acquired Company prior to the Closing Date or
which are cancelable by an Acquired Company within 90 days after
notice for a cost of not more than $100,000;
(xxi) Accelerate, terminate, materially modify or
cancel any Business Contract involving consideration in excess of
$250,000 under each such Business Contract or $2,000,000 under
such Contracts in the aggregate;
(xxii) Waive any right of value material to the
Business;
(xxiii) Make any change in its accounting methods,
principles or practices or make any change in depreciation or
amortization policies or rates adopted by it, except insofar as
may have been required by a change in GAAP; PROVIDED, that
neither Seller nor any Acquired Company shall, without the prior
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written consent of the Purchaser, elect the early adoption of any
change in financial accounting standards promulgated by the FASB;
(xxiv) Revalue any portion of its assets, properties
or businesses including any write-down of the value of inventory
or other assets or any write-off of notes or accounts receivable
other than as provided by GAAP or the Accounting Principles;
(xxv) Materially change any of its business policies
material to the Business, including advertising, marketing,
pricing, purchasing, personnel, sales, returns, budget or product
acquisition policies;
(xxvi) Transfer to or from the Business any employees
from or to, respectively, Seller or any of its Affiliates; or
(xxvii) Agree, whether or not in writing, to do any of
the foregoing; and
(b) With respect to the Asset Sellers, Seller will not
permit any Asset Seller to:
(i) Adopt or amend any collective bargaining agreement
which is a Business Contract, or adopt or amend in any material
respect any Employee Benefit Plan in which Business Employees
participate, other than (A) in connection with the adoption or
amendment of an Employee Benefit Plan that applies generally to
employees of Seller or its Subsidiaries and (B) as required by
law;
(ii) Adopt a plan of liquidation or resolutions
providing for the liquidation, dissolution, merger, consolidation
or other reorganization;
(iii) Grant to any Business Employee any increase in
compensation or benefits, except (A) for stay bonuses paid by
Seller or its Affiliates in connection with the transactions
contemplated hereby, (B) in the Ordinary Course of Business or
(C) as required under any existing Contracts;
(iv) Permit, allow or suffer any of the Purchased
Assets to become subjected to any Encumbrance, other than
Permitted Encumbrances;
(v) Sell, transfer or lease any of the Purchased
Assets to, or enter into any agreement or arrangement with,
Seller or any of its Affiliates (other than an Acquired Company),
except for (A) intercompany transactions in the Ordinary Course
of Business and (B) payments pursuant to existing contracts;
(vi) Sell, lease or otherwise dispose of any of the
Purchased Assets, other than sales of Inventory in the Ordinary
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Course of Business (except as prohibited by SECTION 6.1(b)(ix) or
(x));
(vii) Enter into any (A) employment or consulting
Contract or (B) any other Contract (other than supplier, vendor
and customer Contracts entered into in the Ordinary Course of
Business) relating primarily to the Business either involving
consideration in excess of $250,000 under each such Contract or
$2,000,000 under such Contracts in the aggregate (other than the
renewal of existing Business Contracts on generally similar
terms) or outside the Ordinary Course of Business, excluding
those Contracts which are fully performed by an Asset Seller
prior to the Closing Date or which are cancelable by an Asset
Seller within 90 days after notice for a cost of not more than
$100,000;
(viii) Accelerate, terminate, materially modify or
cancel any Business Contract involving consideration in excess of
$250,000 under each such Business Contract or $2,000,000 under
such Contracts in the aggregate;
(ix) Unless authorized in writing by Purchaser, sell
"excess" Inventory (as designated by Seller pursuant to the
Accounting Principles) with a book value greater than $1,000,000
(in the aggregate with Inventory sold pursuant to SECTION
6.1(a)(xviii)) except at ordinary margins for non-excess
inventory or in connection with promotional programs listed on
SCHEDULE 6.1(a)(xviii);
(x) Unless authorized in writing by Purchaser, sell in
any month obsolete Inventory (as designated by Seller pursuant to
the Accounting Principles) with a book value (in the aggregate
with Inventory sold pursuant to SECTION 6.1(a)(xix)) greater than
the amount set forth for such month on SCHEDULE 6.1(a)(xix);
(xi) Waive any right of value material to the
Business;
(xii) Make any change in its accounting methods,
principles or practices or make any change in depreciation or
amortization policies or rates adopted by it, in each case, of
the Business, except insofar as may have been required by a
change in GAAP; PROVIDED, that neither Seller nor any Asset
Seller shall, without the prior written consent of the Purchaser,
elect the early adoption of any change in financial accounting
standards promulgated by the FASB as it relates to the Business;
(xiii) Revalue any portion of the Purchased Assets,
including any write-down of the value of inventory or other
assets or any write-off of notes or accounts receivable other
than as provided by GAAP or the Accounting Principles;
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(xiv) Materially change any of the policies material
to the Business, including advertising, marketing, pricing,
purchasing, personnel, sales, returns, budget or product
acquisition policies; or
(xv) transfer to or from the Business any employees
from or to, respectively, Seller or any of its Affiliates; or
(xvi) Agree, whether or not in writing, to do any of
the foregoing.
SECTION 6.2 TRANSACTIONS WITH THE ACQUIRED COMPANIES AND
ASSET SELLERS.
(a) Prior to the Closing Date, Seller will cause (i) all or
substantially all cash, cash equivalents, marketable securities and
similar investments, all Excluded Receivables, and all intercompany
accounts held by the Acquired Companies, and all Tax refunds of
(including interest payable by any Governmental Authority with respect
to such Taxes) received for periods ending on or prior to the Closing
Date of the Acquired Companies, and (ii) all other assets, including
capital stock of the Transferred Subsidiaries, liabilities and
Contracts of each Acquired Company that are not related primarily to
the Business, as listed on SCHEDULE 6.2(a), to be transferred to or
assumed by, as the case may be and to the extent allowed by applicable
law, Seller or one of its Subsidiaries (other than an Acquired
Company).
(b) At or prior to the Closing: (i) all arrangements
calling for the transfer of funds by or to any Acquired Company in
connection with Seller's cash management system will be terminated as
of the Closing; and (ii) all Contracts between any Acquired Company,
on the one hand, and Seller or any of Subsidiaries of Seller other
than an Acquired Company, on the other hand, including (A) those
pertaining to the allocation or sharing of liability for Taxes and (B)
those relating to the design, manufacture, marketing, distribution and
sale of products of the Business will, in each case, be terminated as
of the Closing.
(c) At or prior to the Closing Date, Seller will terminate
any participation in Seller's receivables financing arrangements by
the Business, and will provide that, effective upon the Closing, the
Business will have no further liabilities under such arrangements.
From and after the Closing, (i) Seller and its Subsidiaries (other
than the Acquired Companies) will promptly deliver to Purchaser any
cash or other property received directly or indirectly by it with
respect to accounts receivable of the Business (A) that are not
Excluded Receivables and (B) for sales made by the Business after the
Closing Date, and (ii) Purchaser and the Subsidiary Purchasers will
promptly deliver to Seller any cash or other property received
directly or indirectly by it with respect to (A) Excluded Receivables
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or (B) any business of Seller or its Subsidiaries other than the
Business.
(d) Seller will cause the assets listed on SCHEDULE 6.2(d)
to be transferred to an Acquired Company in a manner and pursuant to
transfer and other documentation reasonably satisfactory to Purchaser.
SECTION 6.3 ACCESS.
(a) Seller will permit Purchaser and its appropriate
representatives to have reasonable access, prior to the Closing Date,
to the properties and the books and records of the Business during
normal working hours and upon reasonable notice to familiarize itself
with such properties and the business of the Business, and to other
information and employees and personnel of Seller reasonably requested
by Purchaser and related to the Business, as Purchaser reasonably
deems necessary or advisable; PROVIDED, that Purchaser will not
unreasonably disrupt the personnel and operations of the Business or
other operations or activities of the Asset Sellers; PROVIDED,
FURTHER, that nothing herein will require Seller or its Subsidiaries
(a) to undertake unreasonable efforts to re-format, manipulate or
reconfigure any information or data regarding the Business; (b) to
provide Purchaser with access to or copies of any information that
must be maintained as confidential in accordance with the terms of a
written agreement with a third party; PROVIDED, that Seller represents
and warrants that, to the Knowledge of Seller, the only Contracts not
provided pursuant to the foregoing clause (b) are Contracts relating
to the sale of the Business or any portion thereof or which are not
Business Contracts; or (c) to provide Purchaser with access to or
copies of any information that relates to any businesses or operations
of Seller and its Subsidiaries other than the Business; PROVIDED,
FURTHER, that nothing contained herein will permit Purchaser to
conduct any soil, groundwater or other testing. The access and
production of information and materials provided for in this
SECTION 6.3(a) will be coordinated by H. Jason Mullins, Manager,
Corporate Development of Seller (the "Coordinator") or by such other
person as the Coordinator designates from time to time and Purchaser,
its Affiliates and Representatives will contact the Coordinator or
persons designated by the Coordinator with respect to coordinating and
obtaining such access or information and materials.
(b) Seller will permit Purchaser and its appropriate
representatives reasonable access following the Closing Date to the
books and records of the Business (or of Seller and its Subsidiaries,
to the extent that such information is related to the historical
financial statements of the Business and is required by Purchaser to
prepare financial statements that comply with SEC Regulation S-X) to
the extent retained by Seller; PROVIDED, that prior to the seventh
anniversary of the Closing Date, Seller and the Asset Sellers will not
destroy or dispose of any such books and records without the prior
written consent of Purchaser. Seller shall use commercially
reasonable efforts to cause its independent accountants to permit
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access to their work papers relating to pre-Closing periods, both
before and after the Closing Date, subject to the execution of a
standard consent as customarily required by such independent
accountants. Seller shall, as reasonably requested, use commercially
reasonable efforts to cause its independent accountants to cooperate
with Purchaser, at Purchaser's sole expense, following the Closing
Date, including in connection with the preparation by Purchaser of
historical financial statements for the Business and in connection
with public offerings or private placements of securities (which
cooperation shall include delivery of comfort letters, delivery of
consents for inclusion in registration statements as experts, consent
to the use of its audit reports in offering documents and other
matters reasonably requested by Purchaser). Seller shall use its
commercially reasonable efforts to cause applicable employees to
execute and deliver to Purchaser, as and when reasonably requested by
Purchaser, customary management representation letters as required by
Purchaser's or Seller's independent accountants in connection with
historical audits of the financial statements of the business.
(c) Purchaser will permit Seller and its appropriate
representatives reasonable access following the Closing Date to the
books and records of the Business relating to pre-Closing periods
during normal working hours and upon reasonable notice to the extent
reasonably requested, and to employees and personnel of Purchaser
reasonably requested by Seller and related to the Business, as Seller
reasonably deems necessary or advisable, in each case in connection
with its defense and management of any product liability, workers
compensation, bankruptcy or other claim for which Seller is liable or
alleged to be liable; PROVIDED, that Seller will not unreasonably
disrupt the personnel and operations of the Business.
SECTION 6.4 CONSENTS AND CONDITIONS; HSR ACT.
(a) Upon the terms and subject to the conditions hereof,
each of the parties hereto will use commercially reasonable efforts to
take, or cause to be taken, all appropriate action, and to do, or
cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated hereby and to cause the Closing to occur,
including using commercially reasonable efforts to obtain all Permits,
consents, qualifications and orders of Governmental Authorities and
parties to Business Contracts as are necessary for the consummation of
the transactions contemplated hereby, to effect all necessary
registrations and submissions of information requested by Governmental
Authorities, and to fulfill the conditions to the transactions
contemplated hereby. No party will take any actions that would, or
that could reasonably be expected to, result in any of the conditions
set forth in ARTICLE VIII not being satisfied.
(b) Without limiting the generality of the foregoing, as
promptly as practicable after the date hereof, Purchaser and Seller
each will properly prepare and file any other filings required by any
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Governmental Authority relating to the transactions contemplated
hereby (including filings, if any, required under the HSR Act or the
Mexican Competition Law) (collectively, the "Other Filings").
Purchaser and Seller will each promptly notify the other of the
receipt of any comments on, or any request for amendments or
supplements to, any Other Filings by any Governmental Authority or
official, and Purchaser and Seller will each supply the other with
copies of all correspondence between Purchaser or Seller, as the case
may be, and any other appropriate governmental official with respect
to any Other Filings. Purchaser and Seller hereby covenant and agree
to use commercially reasonable efforts to secure termination of any
waiting periods under the HSR Act and obtain the approval of any
Governmental Authority necessary to consummate the transactions
contemplated hereby; PROVIDED, HOWEVER, that nothing contained herein
will require Purchaser or any of its Affiliates to (i) agree to sell,
divest, dispose of or hold separate any assets or businesses, or
otherwise take or commit to take any action that limits its freedom of
action with respect to, or its ability to retain, one or more of its
businesses, product lines or assets, or (ii) litigate, pursue or
defend against any administrative or judicial action or proceeding
(including any temporary restraining order or preliminary injunction)
challenging any of the transactions contemplated hereby as violative
of any antitrust law. Purchaser will be responsible for all of the
filing fees payable under the HSR Act, the Mexican Competition Law and
any other antitrust law, except to the extent related to the Consent
Order described in SECTION 4.4(ii).
SECTION 6.5 CONFIDENTIALITY.
(a) Purchaser acknowledges that the information being
provided to it in connection with the transactions contemplated hereby
is subject to the terms of a confidentiality agreement dated December
5, 2003, between Purchaser and Seller (the "Confidentiality
Agreement"), the terms of which are incorporated herein by reference.
Effective upon the Closing, the Confidentiality Agreement will
terminate with respect to information relating solely to the Business;
PROVIDED, HOWEVER, that Purchaser acknowledges that any and all other
information provided to it by Seller or its representatives or
Affiliates concerning Seller will remain subject to the terms and
conditions of the Confidentiality Agreement after the Closing Date.
(b) For a period of three years after the Closing Date,
Seller will, subject to clause (c) below, keep confidential prior to
and after Closing, and will not disclose to any Person, any
Confidential Information to the extent it relates to the Business.
For purposes of this Agreement, "Confidential Information" means any
non-public information about the Business, other than information
which is or becomes generally available to the public other than as a
result of a disclosure by Seller or any person acting on behalf of
Seller. To the extent that any Confidential Information does not
relate exclusively to the Business, Seller may, without the consent of
Purchaser, disclose such information to any purchaser or potential
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purchaser (by any means, including by asset sale, stock sale or
merger) of all or any portion of Seller's business, provided that (i)
such purchaser or potential purchaser signs a customary
confidentiality agreement that covers such information, and (ii)
Seller uses commercially reasonable efforts to enforce such
confidentiality agreement with respect to such information.
(c) Notwithstanding the foregoing, the obligations of
confidentiality contained herein, as they relate to the transactions
contemplated by this Agreement, will not apply to the federal tax
structure or federal tax treatment of such transactions, and each
party hereto (and any employee, representative, or agent of any party
hereto) may disclose to any and all persons, the federal tax structure
and federal tax treatment of such transactions. The preceding
sentence is intended to cause such transactions to be treated as not
having been offered under conditions of confidentiality for purposes
of Section 1.6011-4(b)(3) (or any successor provision) of the Treasury
Regulations promulgated under Section 6011 of the Code, and will be
construed in a manner consistent with such purpose. In the event that
Seller or its Affiliates is requested or required (by deposition,
interrogatories, requests for information or documents in legal
proceedings, subpoenas, civil investigative demand or similar
process), in connection with any proceeding, to disclose any
Confidential Information, Seller will give Purchaser prompt written
notice of such request or requirement so that Purchaser may seek an
appropriate protective order or other remedy or waive compliance with
the provisions of this SECTION 6.5(b), and Seller will reasonably
cooperate with Purchaser to obtain such protective order upon
Purchaser's request and at Purchaser's expense. If, in the absence of
a protective order or the receipt of a waiver hereunder, Seller or any
of its Affiliates is nonetheless compelled to disclose Confidential
Information to or at the direction of any Governmental Authority or
else stand liable for contempt or suffer other censure, penalty or
adverse consequences, Seller or any of its Affiliates may disclose
such specifically requested Confidential Information to or at the
direction of such Governmental Authority only after first notifying
Purchaser.
SECTION 6.6 FURTHER ASSURANCES. From and after the
Closing, as and when requested by any party, each party will execute
and deliver, or cause to be executed and delivered, all such documents
and instruments and will take, or cause to be taken, at the requesting
party's expense, all such further or other actions, as such other
party may reasonably deem necessary or desirable to consummate the
transactions contemplated by this Agreement. Prior to the Closing,
Seller will notify Purchaser promptly upon if any of the individuals
listed on SCHEDULE 4.22(a) receives or becomes aware of notice from
any of the Persons listed on SCHEDULE 6.6 that it intends to or is
reasonably likely terminate substantially all or any material portion
of purchases of Business products.
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SECTION 6.7 RELEASE OF GUARANTEES. Purchaser will
reasonably cooperate with Seller, at Seller's request, to assist
Seller in seeking to cause Seller and its Affiliates (other than an
Acquired Company) to be released and removed, as promptly as
practicable after the Closing, as guarantors under any Business
Contract provided that such cooperation shall not require Purchaser to
incur any material expense.
SECTION 6.8 PUBLICITY. Prior to the Closing, neither of
the parties hereto will issue any press release or make any other
public statement, in each case relating to or connected with or
arising out of this Agreement or the matters contained herein, without
obtaining the prior approval of the other party, except as may be
required by law or by any listing agreement with or listing rules of a
national securities exchange or trading market or inter-dealer
quotation system in which case, the party proposing to issue such
press release or make such public statement will use commercially
reasonable efforts to consult in good faith with the other party
before issuing such press release or making such public statement.
The requirements of this SECTION 6.8 will be in addition to those
included in the Confidentiality Agreement.
SECTION 6.9 BUSINESS RECORDS. After the Closing,
Purchaser and the Subsidiary Purchasers will afford Seller and its
attorneys, accountants, officers and other representatives reasonable
access, during normal business hours, to the books and records of the
Business as the same existed prior to Closing (and will permit such
Persons to examine and copy such books and records to the extent
reasonably requested by such Person), and will cause the directors,
officers and employees of the Business to furnish all information
requested by Seller, in connection with financial reporting and Tax
matters (including financial and Tax audits and Tax contests), third-
party litigation and other similar business purposes. Purchaser and
the Subsidiary Purchasers will not destroy or dispose of any such
books and records without the prior written consent of Seller;
PROVIDED, HOWEVER, that Purchaser will be entitled to destroy any of
such books and records after the seventh anniversary of the Closing
Date with the prior written consent of Seller; PROVIDED FURTHER,
HOWEVER, that if Seller does not consent to the destruction of such
books and records, Purchaser may deliver them to Seller.
SECTION 6.10 BULK TRANSFER LAWS. Purchaser hereby waives
compliance by Seller with the provisions of any so-called "bulk
transfer law" of any jurisdiction in connection with the sale of the
Purchased Assets to Purchaser and the Subsidiary Purchasers.
SECTION 6.11 NON-COMPETE.
(a) (i) For a period of three years from the Closing Date,
Seller will not, and Seller will cause its Affiliates not to, engage,
directly or indirectly, as a principal or for its own account, solely
or jointly with others, or through any form of ownership in another
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Person, in (A) a Competing Frame Business or (B) a Competing Glass
Business, and (ii) for a period of one year from the Closing Date,
Seller will, and Seller will cause its Affiliates to, refrain from re-
entering the moderate cookware segment, except in each case with
respect to the transactions contemplated by the Transition Services
Agreement, the Supply Agreements or as otherwise permitted below.
(b) Notwithstanding anything to the contrary contained
herein, nothing in this SECTION 6.11 will:
(i) Prohibit or restrict the ownership solely for
investment purposes of less than five percent of the stock of a
publicly-held corporation whose stock is traded on a national
securities exchange or listed with the Nasdaq Stock Market and
who engages in a Competing Frame Business, a Competing Glass
Business or the moderate cookware segment.
(ii) Prohibit or restrict any Person that is not an
Affiliate of Seller on the Closing Date and that becomes a
controlling Affiliate of Seller following the Closing Date, by
way of a bonafide third-party acquisition of Seller (by way of
merger, asset sale or other combination or otherwise not intended
to be a device for the purpose of avoiding this SECTION 6.11),
from continuing to engage in a Competing Frame Business, a
Competing Glass Business or the moderate cookware segment in
which it is engaged at the time it becomes such a controlling
Affiliate of Seller;
(iii) Prohibit or restrict Seller or any of its
Affiliates from acquiring equity interests in, or assets of, a
Person (such Person, together with any Affiliate (or portion of
any Affiliate) acquired with such Person, the "Acquired Person"),
PROVIDED if the revenues of such Acquired Person (or generated
from such Acquired Person's acquired assets) and any Affiliates
of Seller from a Competing Frame Business, a Competing Glass
Business or the moderate cookware segment in North America in the
last 12 full months prior to such acquisition are greater than
$25,000,000 in such period, Seller will, and Seller will cause
such Acquired Person and such Affiliates of Seller to, divest
itself or themselves of the assets and operations of such
Acquired Person and such Affiliates of Seller that relate
primarily to the Competing Frame Business, the Competing Glass
Business or the moderate cookware segment in North America within
12 months following the date of such acquisition; or
(iv) Require Seller or its Affiliates to prohibit or
restrict the resale in North America by any Person (including any
customer or distributor) not affiliated with Seller of products
manufactured at manufacturing facilities located outside of North
America.
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(c) As used in this SECTION 6.11:
(i) "Competing Frame Business" means the design,
manufacture, marketing, distribution or sale in North America of
photograph frames, photograph albums and products expressly
marketed for the storage of photographs that have been
manufactured or sold by the Acquired Companies or Asset Sellers
within the 12-month period immediately prior to the Closing and
any similar photographic frame products;
(ii) "Competing Glass Business" means the design or
manufacture in North America, or the marketing, distribution or
sale directly into the North America market, of consumer and
specialty glass products that have been manufactured or sold by
the Acquired Companies or Asset Sellers within the 12-month
period immediately prior to the Closing and any other glass
products similar in design or function; PROVIDED, that "Competing
Glass Business" will not include (A) the existing activities
described in SCHEDULE 6.11(c) hereof or (B) the design,
manufacture, marketing, distribution and sale of any products
that contain, use or include glass parts as components of
products that are not primarily made of glass (E.G., A GLASS LID
FOR A METAL FRYING PAN).
(d) If the final judgment of a court of competent
jurisdiction declares that any term or provision of this SECTION 6.11
is invalid or unenforceable, the parties hereto agree that the court
making the determination of invalidity or unenforceability will have
the power to reduce the scope, duration, or area of the term or
provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision
that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this
Agreement will be enforceable as so modified after the expiration of
the time within which the judgment may be appealed.
(e) Seller agrees that Purchaser and its Affiliates may
suffer irreparable harm from a breach of any of the covenants and/or
agreements contained in this SECTION 6.11. In the event of an alleged
breach by Seller or any of its Affiliates of any of the provisions of
this SECTION 6.11, Purchaser or its Affiliates may, in addition to all
other rights and remedies existing in their favor, apply to any court
of competent jurisdiction for specific performance, injunctive or
other relief in order to enforce or prevent any violations of the
provisions of this SECTION 6.11.
SECTION 6.12 CONSULTATION REGARDING ENVIRONMENTAL MATTERS.
(a) With respect to any report, application or other
written submission made by Purchaser to a Governmental Authority
regarding any environmental matters at any of the Owned Real Property
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or Leased Real Property, Purchaser shall provide Seller with a copy of
such report, application or written submission no later than the time
as it is being submitted to the Governmental Authority, provided that
such report, application or other written submission is related to a
circumstance for which Purchaser is or will be seeking
indemnification.
(b) If Seller is obligated to indemnify Purchaser
Indemnified Parties pursuant to SECTION 9.2(c) for any matter
involving a Remedial Action ("Indemnified Remedial Action", the
following procedures shall apply with respect to the conduct of such
Remedial Action:
(i) Seller shall be responsible for managing all
Indemnified Remedial Actions and shall have the right to select
environmental consultants subject to the written approval of
Purchaser, where such approval will not be unreasonably withheld;
PROVIDED, HOWEVER, that Purchaser shall be entitled to undertaken
and manage any Indemnified Remedial Actions resulting from
discovery of a Release or violation of Environmental Law that
would cause either imminent or substantial harm to health or the
environment or a reasonably anticipated material adverse effect
on the business of Purchaser and its Subsidiaries. Seller shall
not agree to meet with any Governmental Authority or third party
claimant regarding the Indemnified Remedial Action except where
required by Law or with the written consent of Purchaser, where
such consent will not be unreasonably withheld. Purchaser shall
have the right to attend and participate in any meeting with any
Governmental Authority or third party claimant regarding the
Indemnified Remedial Action, except for meetings taking place as
part of an unscheduled site inspection.
(ii) Seller shall provide Purchaser or its designees
with quarterly status reports regarding the status of each
Indemnified Remedial Action. Seller shall provide to Purchaser
or its designees all documents prepared in connection with each
Indemnified Remedial Action in draft form 15 days prior to
finalizing such documents and shall reasonably consider
Purchaser's or its designees' comments, including method and
timing of any investigation, the selection of the remedy and any
additional decisions impacting the Business. Seller shall
provide Purchaser with final copies of all documents at the time
of the submission of such documents to any third party or
Governmental Authority.
(iii) Seller may choose a Remedial Action that is most
financially and technologically feasible; provided, that Seller
may not choose an option that would impose restrictive covenants,
institutional controls or deed restrictions upon any Real
Property without the written consent of Purchaser or its
designees, which consent shall be granted or denied after taking
into consideration the reasonably anticipated land use of the
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Real Property, minimization of disruption to operations of the
Business, any future construction and any potential material
reduction in value of the affected Real Property.
(iv) Seller and its representatives will exercise
their commercially reasonable efforts to avoid interference with
the use of the property, assets and the operation of the Business
when managing an Indemnified Remedial Action. Purchaser agrees
to provide reasonable access to Seller, its employees,
consultants and contractors to the extent access is necessary to
perform any work required under the Indemnified Remedial Action;
PROVIDED, HOWEVER, that Seller, its employees, consultants and
contractors provide Purchaser with a minimum of ten days' written
notice to such access and the parties agree to enter into a
commercially reasonable access agreement consistent with the
terms of this paragraph. Upon Seller's written request,
Purchaser agrees to use commercially reasonable efforts to make
available to Seller access to utilities, including water and
electricity, necessary to implement such Indemnified Remedial
Action. If Seller requests access to utilities, Seller agrees to
use commercially reasonable efforts to have its use of the
utilities separately metered, it being the intent of the parties
that each shall pay for that portion of monthly utility charges
attributable to such party's use. If, in Purchaser's reasonably
opinion, utility services cannot be separately metered, Seller
agrees to reimburse Purchaser for such amount as Purchaser and
Seller agree represents the portion of charges attributable to
Seller's use of utility services.
(v) If any permits, authorizations or program
applications must be executed by or obtained in the name of
Purchase or any Purchaser Affiliate in order to perform
Indemnified Remedial Action, Purchaser shall execute or cause to
be executed any such applications, provided that Seller shall be
responsible for preparing and assembling such applications and
delivering such applications to Purchaser in a timely manner.
SECTION 6.13 INTANGIBLE PROPERTY USE PHASE OUT.
(a) "RETAINED IP" means trademarks, service marks, brand
names, logos or trade, corporate or business names of Seller or of any
of its Subsidiaries that are not included in the Purchased Assets or
owned by an Acquired Company but are used by the Business on packaging
or printed advertising and promotional materials, invoices,
letterhead, company forms, business cards, product instructions or
like materials (collectively, the "Packaging") included in the
Purchased Assets or the assets of an Acquired Company as of the
Closing Date.
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(b) Subject to Section 6.13(e), Purchaser shall remove the
Retained IP from all buildings, signs and vehicles of the Business
within six months after the Closing Date.
(c) Purchaser shall cease using the Retained IP in its
electronic databases and web sites within 90 days after the Closing
Date.
(d) The Purchaser, any Subsidiary Purchaser and the
Acquired Companies may use the Packaging or sell the Business
Inventories after the Closing Date (without altering or modifying such
Packaging and Business Inventories), until such Packaging is exhausted
and in any event no more than 12 months after the Closing Date.
Seller and its Subsidiaries, as applicable, hereby grant to Purchaser,
any Subsidiary Purchaser and the Acquired Companies a non-exclusive,
nontransferable, non-sublicensable (except to Purchaser's Affiliates)
license to use Retained IP in such countries as Seller or its
Subsidiaries, as applicable, have rights in such Retained IP, during
such period as the Packaging is being used up by the Purchaser and its
Affiliates and during the periods set forth in Sections 6.13(b) and
(c). In the event that the Purchaser or its Affiliates manufactures
or produces products after the Closing Date for use with Packaging,
Seller may reasonably request, and the Purchaser or its Affiliates
shall provide, samples of such products to examine and ensure that
such products are of a quality level not materially different from the
existing Business Inventories at Closing. In the event that the
products used with the Packaging are of materially inferior quality,
Seller may request that the Purchaser or its Affiliates raise the
quality of the products being manufactured for use with the Packaging.
If the Purchaser and its Affiliates have not, within forty-five (45)
days of such notice by Seller, provided Seller with evidence that the
quality of its products used in connection with Packaging are
substantially similar in level of to the products manufactured prior
to Closing, the Purchaser and its Affiliates shall cease to use such
Packaging in connection with such products.
(e) Notwithstanding anything herein to the contrary,
Purchaser shall not be required at any time to remove the Retained IP
from schematics, plans, manuals, drawings, machines, machinery and the
like of the Business in existence as of the Closing Date to the extent
that such instrumentalities are used in the ordinary internal conduct
of the Business and are not generally observed by the public or
intended for use as means to effectuate or enhance sales.
SECTION 6.14 COLLECTION OF RECEIVABLES. In connection
with the collection of the Excluded Receivables, Seller agrees, and
agrees to cause its Subsidiaries and representatives, to act in a
manner reasonably consistent with the past practice of Seller and its
Subsidiaries to collect for Seller's account the Excluded
Receivables; PROVIDED, that Seller will not initiate legal proceedings
to collect any Excluded Receivables of a material customer of the
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Business without the prior written consent of Purchaser (not to be
unreasonably withheld or delayed).
ARTICLE VII
EMPLOYEE MATTERS
SECTION 7.1 EMPLOYMENT OF BUSINESS EMPLOYEES; SEVERANCE.
(a) At least two Business Days prior to the Closing, Seller
will deliver to Purchaser a true and correct list of all employees of
Seller or any Subsidiary of Seller (i) whose services are used
exclusively in the Business as of such date, including all such
employees absent due to vacation, holiday, sickness, short-term
disability or other approved leave or absence who are expected to
return to work before the first anniversary of the date of this
Agreement and (ii) those other employees whom Purchaser and Seller
agree will be offered employment by Purchaser (the "Employee List").
Purchaser or a Subsidiary Purchaser will offer employment, effective
on the Closing, to, and will cause the Acquired Companies to continue
employment of, all employees on the Employee List whose employment
with Seller or its Subsidiaries has not terminated on or prior to the
Closing. The employees of the Acquired Companies and the employees
who accept Purchaser's or a Subsidiary Purchaser's offer of employment
are collectively referred to herein as "Business Employees".
(b) Nothing in this Agreement shall create a contract of
employment or alter the at-will status of any Business Employee.
Notwithstanding any provision contained in this Agreement to the
contrary, Purchaser or a Subsidiary Purchaser shall not be prohibited
by this SECTION 7.1 from terminating the employment of any Business
Employee following the Closing Date.
(c) If during the 12-month period following the Closing
Date, Purchaser or any Subsidiary of Purchaser terminates the
employment of any Business Employee, Purchaser will provide such
Business Employee severance benefits in accordance with SCHEDULE 7.1
or as otherwise required pursuant to the terms of any collective
bargaining agreement applicable to such Business Employee.
(d) For a reasonable period following the Closing, Seller
shall use commercially reasonable efforts to continue to retain the
individual listed on Schedule 7.1(d) to serve as a consultant to
Purchaser in connection with the transition, and Purchaser shall
reimburse Seller for the cash compensation due to the individual for
such period (on the same basis on which Seller has compensated the
individual with respect to consulting fees).
SECTION 7.2 EMPLOYEE BENEFIT PLANS GENERALLY.
(a) Seller and its Subsidiaries will take such action as is
necessary such that, as of the Closing Date, the Acquired Companies
cease participation in each Employee Benefit Plan. Except as
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otherwise provided herein, after the Closing Date Seller will retain
all liabilities for claims under such Employee Benefit Plans, whether
such claims are made before, on or after the Closing Date.
(b) Purchaser will credit the Business Employees for their
service with Seller, the Acquired Companies, the Asset Sellers and
their Affiliates (and any predecessors in interest) for purposes of
eligibility and vesting under Purchaser's plans in which Business
Employees participate after the Closing Date, and any applicable
vacation or severance policies or programs, but not to the extent such
credit would result in a duplication of benefits. Purchaser will
permit Business Employees (and their eligible spouses and
beneficiaries) to participate in Purchaser's plans without being
subject to any waiting periods or any restrictions or limitations for
pre-existing conditions, except to the extent any such person has not
satisfied any corresponding applicable waiting period or limitation
under the Employee Benefit Plans. Purchaser's plans will credit each
Business Employee (and any spouses and dependents) with the amount, if
any, paid during the calendar year in which the Closing Date occurs
under the Employee Benefit Plans towards deductibles, co-pays and out-
of-pocket maximums.
SECTION 7.3 401(k) PLAN. As soon as practicable
following the Closing Date, Seller or its Subsidiaries, as applicable,
will spin-off and transfer the account balances (including loan
accounts and liabilities) of each Business Employee who on the Closing
Date is a participant in the Newell Rubbermaid 401(k) Savings Plan to
a 401(k) plan established or maintained by Purchaser, in a trustee-to-
trustee transfer in accordance with Section 414(l) of the Code.
SECTION 7.4 WELFARE PLANS.
(a) Seller or its Subsidiaries (other than any Acquired
Company) will retain all Liabilities for claims incurred by a Business
Employee (and his or her eligible spouse and dependents) on or prior
to the Closing Date under the Employee Benefit Plans that are welfare
benefit plans within the meaning of Section 3(1) of ERISA and all
short term disability, salary continuation, severance plans or
arrangements (the "Welfare Plans"). For this purpose claims under any
medical, dental, vision, or prescription drug plan generally will be
deemed to be incurred on the date that the service giving rise to such
claim is performed and not when such claim in made; PROVIDED, HOWEVER,
that with respect to claims relating to hospitalization the claim will
be deemed to be incurred on the first day of such hospitalization and
not on the date that such services are performed. Claims for
disability under any long or short term disability plan will be
incurred on the date the Business Employee is first absent from work
because of the condition giving rise to such disability and not when
the Business Employee is determined to be eligible for benefits under
the applicable Welfare Plan. Seller will provide any continuation
coverage required under Part 6 of Title I of ERISA or applicable state
law ("COBRA") to each "qualified beneficiary" as that term is defined
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in COBRA whose first "qualifying event" (as defined in COBRA) occurs
on or prior to the Closing Date and each "M&A Qualified Beneficiary",
as defined under Treasury designation Section 54.4980B-9.
(b) Notwithstanding the foregoing, as soon as practicable
following the Closing Date, Seller or its Subsidiaries, as applicable,
will spin-off and transfer all of the accounts of its Section 125
flexible spending plan attributable to Business Employees to a new
Section 125 flexible spending plan established by Purchaser. Seller
and its Subsidiaries (other than the Acquired Companies) will have no
liability with respect to Purchaser's Section 125 flexible spending
plan after the Closing Date, including liability for any claims
incurred prior to the Closing Date.
SECTION 7.5 RETIREE HEALTH. As of the Closing Date,
Purchaser will establish for Business Employees a retiree health
insurance plan that provides benefits comparable to, and on the same
terms and conditions as, benefits provided under Seller's current
medical plan immediately prior to the Closing Date with respect to
each Business Employee who on the Closing Date is a participant in
such medical plan (I.E., would be entitled to retiree medical coverage
under such plan had such Business Employee remained employed, and
terminated employment, with Sellers, Asset Sellers or any Acquired
Company). In the event that Seller's current medical plan for
retirees is amended, modified or changed prospectively or
retroactively with respect to benefits provided to retirees, Purchaser
shall only be responsible for offering retiree health insurance
benefits on the same terms and conditions as existed under Seller's
current medical plan for retirees immediately prior to the Closing
Date. Notwithstanding anything in this Agreement to the contrary,
Purchaser will not assume any liabilities with respect to any retiree
health insurance benefits of any current or former employee of Seller
or its Subsidiaries who is not a Business Employee, and any such
benefits will continue to be provided under the medical plan for
retirees. With respect to Business Employees whose employment is
subject to a collective bargaining agreement, any retiree health
benefits will be provided in accordance with the terms of the
applicable collective bargaining agreement. Unless otherwise set
forth in a collective bargaining agreement, the Purchaser shall have
the right to amend or terminate the plan or arrangement providing
retiree health benefits to Business Employees at any time.
SECTION 7.6 NON-SOLICITATION.
(a) For two years following the Closing Date, Purchaser and
its Affiliates will not (i) directly or indirectly solicit or seek to
induce any employee of Seller or any of its Affiliates to leave his or
her employment or position with Seller or any of its Affiliates or
(ii) hire any person who was an Employee of Seller or any of its
Affiliates within 90 days prior to the date of such hire.
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(b) For two years following the Closing Date, Seller and
its Affiliates will not (i) directly or indirectly solicit or seek to
induce any Business Employee to leave his or her employment or
position with Purchaser or any of its Affiliates or (ii) hire any
person who was a Business Employee or an employee of the Business
within 90 days prior to the date of such hire.
(c) Notwithstanding the foregoing, the restrictions set
forth in this SECTION 7.6 will not prohibit either party or its
respective Affiliates from: (i) advertising employment opportunities
in any general solicitation, including national newspaper, trade
journal or other publication in a major metropolitan area or any
third-party Internet website posting, or negotiating with, offering
employment to or employing any Person contacted through such medium,
(ii) participating in any third-party hiring fair or similar event
open to the public or negotiating with, offering employment to or
employing any Person contacted through such medium or (iii)
soliciting, negotiating with, offering employment to or employing any
Person at any time (A) following 90 days after the termination by such
Person of his or her employment with a party or any of its Affiliates
or (B) at any time after the termination by a party or any of its
Affiliates of such Person's employment with such party or any of its
Affiliates.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.1 CONDITIONS TO PURCHASER'S OBLIGATIONS. The
obligation of Purchaser to consummate the transactions contemplated by
this Agreement is conditioned upon the satisfaction or waiver, at or
prior to the Closing, of the following conditions, PROVIDED, HOWEVER,
that Purchaser may not rely on the failure of any of the following
conditions in this SECTION 8.1 to be satisfied if such failure was
caused by Purchaser's failure to act in good faith or to use
commercially reasonable efforts to cause the Closing to occur, as
required by SECTION 6.5.
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties set forth in ARTICLE IV hereof will be true and correct
in all respects as if made on and as of the Closing Date (except to
the extent that such representations and warranties expressly relate
to a specific date in which case such representations and warranties
will be true and correct as of such date), except, in the case of the
representations and warranties other than those set forth in SECTIONS
4.1, 4.2(a) and 4.3, and determined without the "materiality" or
"Material Adverse Effect" qualifications in such other representations
and warranties, for such inaccuracies in, breaches of and omissions
from such representations and warranties as would not have, or would
not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect or materially and adversely affect Seller's
or any of the Asset Seller's ability to consummate the transactions
contemplated hereby or to perform its obligations hereunder.
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(b) COVENANTS. Seller will have performed in all material
respects all of the covenants and agreements required to be performed
by it under this Agreement at or prior to the Closing.
(c) NO PROHIBITION. No statute, rule, regulation or
executive order or judgment, decree, temporary restraining order,
preliminary or permanent injunction or other order enacted, entered,
promulgated, enforced or issued by any Governmental Authority, or
other legal restraint or prohibition preventing or seeking to restrain
prohibit or invalidate (to the extent such statute, rule, regulation,
or executive order or judgment, decree, temporary restraining order,
injunction or other order is reasonably likely to so restrain,
prohibit or invalidate) the consummation of the transactions
contemplated hereby shall have been instituted or be in effect.
(d) ANTITRUST AND GOVERNMENT APPROVALS. Any waiting period
(and any extension thereof) under the HSR Act applicable to the
transactions contemplated hereby will have expired or will have been
terminated, and all other filings with, notices to and consents,
authorizations and approvals of any Governmental Authority that are
required for the consummation of the transactions contemplated hereby
will have been made and obtained.
(e) CLOSING DELIVERIES. The deliveries described in
SECTION 3.2(a) (other than any deliveries pursuant to SECTION
3.2(a)(viii) the absence of which is not material) shall have been
received by Purchaser substantially in the form attached as exhibits
or, if not so attached, in form reasonably satisfactory to Purchaser.
(f) NO MATERIAL ADVERSE EFFECT. There has not been any
change or changes in the business, financial condition or results of
operations of any of the Businesses since the date of this Agreement
which, individually or in the aggregate, has had or would be
reasonably expected to have a Material Adverse Effect.
(g) THIRD-PARTY CONSENTS. Seller shall have obtained
written consents in form and substance reasonably satisfactory to
Purchaser from the Persons listed on SCHEDULE 8.1(g).
SECTION 8.2 CONDITIONS TO SELLER'S OBLIGATIONS. The
obligation of Seller to consummate the transactions contemplated by
this Agreement is conditioned upon the satisfaction or waiver, at or
prior to the Closing, of the following conditions, PROVIDED, HOWEVER,
that Seller may not rely on the failure of any of the following
conditions in this SECTION 8.2 to be satisfied if such failure was
caused by Seller's failure to act in good faith or to use commercially
reasonable efforts to cause the Closing to occur, as required by
SECTION 6.5.
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties set forth in ARTICLE V hereof will be true and correct
in all respects as if made on and as of the Closing Date (except to
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the extent that such representations and warranties expressly relate
to a specific date in which case such representations and warranties
will be true and correct as of such date), except, in the case of the
representations and warranties other than those set forth in SECTIONS
5.1 and 5.2, and determined without the "materiality" or "Material
Adverse Effect" qualifications in such other representations and
warranties, for such inaccuracies in, breaches of and omissions from
such representations and warranties as would not, or would not
reasonably be expected to, individually or in the aggregate,
materially and adversely affect Purchaser's ability to consummate the
transactions contemplated hereby or to perform its obligations
hereunder.
(b) COVENANTS. Purchaser will have performed in all
material respects all of the covenants and agreements required to be
performed by it under this Agreement at or prior to the Closing.
(c) NO PROHIBITION. No statute, rule, regulation or
executive order or judgment, decree, temporary restraining order,
preliminary or permanent injunction or other order enacted, entered,
promulgated, enforced or issued by any Governmental Authority, or
other legal restraint or prohibition preventing or seeking to restrain
prohibit or invalidate (to the extent such statute, rule, regulation,
or executive order or judgment, decree, temporary restraining order,
injunction or other order is reasonably likely to so restrain,
prohibit or invalidate) the consummation of the transactions
contemplated hereby shall have been instituted or be in effect.
(d) ANTITRUST AND GOVERNMENT APPROVALS. Any waiting period
(and any extension thereof) under the HSR Act applicable to the
transactions contemplated hereby will have expired or will have been
terminated, and all other filings with, notices to and consents,
authorizations and approvals of any Governmental Authority that are
required for the consummation of the transactions contemplated hereby
will have been made and obtained.
(e) CLOSING DELIVERIES. The deliveries described in
SECTION 3.2(b) (other than deliveries pursuant to SECTION
3.2(b)(viii), the absence of which is not material) shall have been
received by Seller substantially in the form attached as exhibits or,
if not so attached, in form reasonably satisfactory to Seller.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
SECTION 9.1 SURVIVAL OF REPRESENTATIONS. The
representations and warranties made in this Agreement will terminate
90 calendar days after the later of (a) delivery by Purchaser's
auditor to Purchaser of its audit of the financial statements of the
Business, or such Subsidiaries of Purchaser that include the Business,
for the fiscal year ended December 31, 2004, or (b) June 30, 2005;
PROVIDED, HOWEVER, that any claims of a breach of any such surviving
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representation or warranty made in good faith in writing and received
by Seller prior to such termination date will survive such date to the
extent of the facts alleged in such claim; and PROVIDED, FURTHER, that
the representations contained in SECTION 4.18 shall survive until the
fifth anniversary of the Closing Date; and provided further that the
representations contained in SECTION 4.2 AND 4.16 shall survive the
Closing Date until the expiration of the applicable statute of
limitations. The covenants and agreements contained herein to be
performed or complied with after the Closing (other than the covenant
and agreement to indemnify against breaches of certain representations
and warranties, which will survive only until the expiration of the
underlying representation and warranty) will survive the execution and
delivery of this Agreement, the Closing and the consummation of the
transactions contemplated hereby.
SECTION 9.2 INDEMNIFICATION BY SELLER OTHER THAN FOR
TAXES.
(a) Subject to the limitations set forth in SECTION 9.4(a)
through (i), Seller will indemnify Purchaser, its Subsidiaries and
their respective officers, directors, employees and agents (the
"Purchaser Indemnified Parties") against, and hold them harmless from,
any loss, liability, assessment, Tax, fine, penalty, claim, damage,
expense or cost of mitigation actually suffered or paid (including
reasonable legal fees and expenses) ("Damages") arising from any
breach of any representation or warranty of Seller in this Agreement
(other than with respect to Taxes and other than the representations
and warranties contained in SECTION 4.18).
(b) Subject to the limitations set forth in SECTION 9.4(e)
through (i), Seller will indemnify the Purchaser Indemnified Parties
against, and hold them harmless from, any Damages arising from:
(i) Any breach of any covenant by Seller set forth in
this Agreement (other than with respect to Taxes);
(ii) Any Excluded Liability;
(iii) Product liability claims relating to products of
the Business arising out of occurrences prior to the Closing
Date;
(iv) Any claims, including workers compensation and
similar claims, made by or with respect to current or former
employees of the Acquired Companies who are not Business
Employees or by Business Employees relating to occurrences prior
to the Closing Date;
(v) The assets, liabilities and Contracts
transferred, assumed or terminated pursuant to SECTION 6.2;
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(vi) The failure to comply with any "bulk sales"
notice requirement in connection with the transactions
contemplated hereby;
(vii) The bankruptcy matters set forth on SCHEDULE
9.2(b)(vii);
(viii) Any casualty or condemnation of any Owned Real
Property or Leased Real Property occurring after the date hereof
and prior to the Closing; and
(ix) Any claims (other than Assumed Liabilities and
claims that are the subject of SECTION 9.2(b)(iii) or (iv))
arising out of occurrences prior to the Closing Date that are
covered by insurance of which Seller or any Seller Affiliate,
including any Acquired Company, is a beneficiary that was in
effect with respect to the Business prior to the Closing Date.
For purposes of determining whether claims are covered by insurance as
provided in SECTION 9.2(b)(ix), the decision as to coverage of the
insurance carrier (typically, The Traveler's Insurance Company) will
be conclusive; PROVIDED that (i) Seller will submit to the relevant
insurance carrier all such claims asserted by Purchaser for which
there is a reasonable basis for coverage, and (ii) after such efforts
to establish coverage as Seller elects to make, Seller will afford
Purchaser an opportunity to contest any denial of coverage directly
against the insurance carrier. As and when requested by Purchaser,
Seller will, at Purchaser's expense, execute and deliver, or cause to
be executed and delivered, all such documents and instruments and will
take, or cause to be taken, all such further or other actions, as
Seller may reasonably deem necessary or desirable to permit Purchaser
to so contest such denials.
(c) Subject to the limitations set forth in SECTION 9.4(c)
and (e) through (m), Seller will indemnify the Purchaser Indemnified
Parties against, and hold them harmless from, any Environmental
Liabilities arising from:
(i) any breach of the representations and warranties
contained in SECTION 4.18; and
(ii) any condition, whether known or unknown, existing
prior to the Closing Date relating to:
(A) Releases or threatened Releases of Hazardous
Materials at or from the assets, facilities and properties owned
and operated by the Business or any predecessor in interest,
including the Real Property, any Former Property, any Closed
Property or any Shared Property;
(B) Releases or threatened Releases of Hazardous
Materials at any disposal or treatment facilities that received
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Hazardous Materials generated by the Business or any predecessor
in interest;
(C) Violations of Environmental Laws relating to the
Business, the Purchased Assets, the Real Property, any Former
Property, any Closed Property or any Shared Property;
(D) Personal injury (including wrongful death) or
property damage (real or personal) arising out of exposure to
Hazardous Materials used, handled, generated, transported or
disposed by the Business or Hazardous Materials at or emanating
from the assets, facilities and properties owned and operated by
the Business or any predecessor in interest, including any Owned
Real Property and Leased Real Property; or
(E) Environmental Claim; or
(F) The generation, migration, use, treatment,
storage, recovery, transport, Release, disposal or other handling
of Hazardous Materials in violation of Environmental Laws in
connection with either the Business or the Purchased Assets or in
connection with any Owned Real Property, any Leased Real
Property, any Former Property, any Closed Property or any Shared
Property.
SECTION 9.3 INDEMNIFICATION BY PURCHASER OTHER THAN FOR
TAXES.
(a) Subject to the limitations set forth in SECTION 9.4(a),
(b), (c), (e), (f), (h) and (i), Purchaser will indemnify Seller, its
Subsidiaries and their respective officers, directors, employees and
agents (the "Seller Indemnified Parties"), against, and hold them
harmless from, any Damages arising from any breach of any
representation or warranty of Purchaser in this Agreement.
(b) Subject to the limitations set forth in SECTION 9.4(e),
(f), (h) and (i), Purchaser will indemnify the Seller Indemnified
Parties against, and hold them harmless from, any Damages arising
from:
(i) Any breach of any covenant by Purchaser set forth
in this Agreement (other than with respect to Taxes);
(ii) Any Assumed Liability;
(iii) Any obligation of Seller or any of its Affiliates
(other than the Acquired Companies) as guarantors under any
Business Contract; and
(iv) Product liability claims relating to products of
the Business arising out of occurrences on or after the Closing
Date;
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(v) All Liabilities for claims incurred by a Business
Employee (or his or her eligible spouse and dependents)
consisting of (A) Liabilities described in SECTION 7.3, (B)
Liabilities described in SECTION 7.4(b) and (C) Liabilities
described in SECTION 7.5; and
(vi) All Liabilities for claims related to occurrences
on or after the Closing Date by any Business Employee, including
workers compensation and similar claims.
(c) Subject to the limitations set forth in SECTION 9.4(c),
(e), (f), (h) and (i), Purchaser will indemnify the Seller Indemnified
Parties against, and hold them harmless from, any Damages arising from
all Environmental Liabilities related to the generation, migration,
treatment, storage, recovery, Release, transport or disposal of
Hazardous Materials in violation of Environmental Laws (A) in
connection with either the Business or the Purchased Assets, at any
time on or after the Closing Date, or (B) in connection with the Owned
Real Property and the Leased Real Property at any time on or after the
Closing Date; PROVIDED that Purchaser shall have no obligation under
this SECTION 9.3(c) to indemnify the Seller Indemnified Parties
insofar as Seller is obligated to indemnify the Purchaser Indemnified
Parties for such Liabilities.
SECTION 9.4 LIMITS ON INDEMNIFICATION.
(a) Neither Seller nor Purchaser will be required to
indemnify any Purchaser Indemnified Party or Seller Indemnified Party,
respectively, pursuant to SECTION 9.2(a) or 9.3(a), respectively, for
any individual item where the Damages relating thereto for which
Seller or Purchaser, as applicable, would otherwise be required to
indemnify the Purchaser Indemnified Parties or Seller Indemnified
Parties, respectively, hereunder are less than $50,000.
(b) Neither Seller nor Purchaser will be required to
indemnify any Purchaser Indemnified Party or any Seller Indemnified
Party, respectively, pursuant to SECTION 9.2(a) or 9.3(a),
respectively, unless the aggregate amount of Damages for which Seller
or Purchaser, as applicable, would otherwise be required to indemnify
the Purchaser Indemnified Parties or Seller Indemnified Parties,
respectively, hereunder exceeds $15,000,000, and in such case Seller
or Purchaser, as applicable, will only be required to indemnify the
Purchaser Indemnified Parties or the Seller Indemnified Parties,
respectively, for Damages in excess of the first $15,000,000 of
aggregate Damages.
(c) Notwithstanding anything to the contrary contained in
this Agreement, the maximum amount of Damages for which Seller or
Purchaser will be obligated to indemnify the Purchaser Indemnified
Parties or Seller Indemnified Parties, respectively, for under SECTION
9.2(a) and (C) or SECTION 9.3(a) and (c), respectively, will be
$100,000,000.
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(d) Seller will have no liability for a breach of SECTION
4.19(c) or 4.19(d) for failing to disclose any service or Contract
that is required thereby to be listed on SCHEDULE 4.19(c) or 4.19(d),
as applicable, if either (i) Seller currently provides such service in
the operation of its business to its existing business units, or has a
Contract with a third-party vendor with respect to the services
provided to the Business under such Contract and such service of
Purchaser or provided by the third-party vendor can be adapted without
material burden to perform such service for the Business or (ii) the
Business is able to obtain (after using commercially reasonable
efforts) such products or services on substantially equivalent terms
and conditions (as to the Business) from a no less qualified third-
party vendor.
(e) In case any event occurs which would otherwise entitle
either party to assert a claim for indemnification hereunder, no
Damages will be deemed to have been sustained by such party to the
extent of (i) any Tax savings actually realized by such party with
respect thereto in the year in which such event occurs or in any
earlier year, or (ii) any proceeds received by such party from any
insurance policies with respect thereto. In the event a party (x)
actually realizes a tax benefit as a result of an event that entitles
such party to indemnification hereunder in a year after such event
occurs, (y) such tax benefit was not taken into account in the
calculation of Damages previously payable to such party and (z) such
party received payment of Damages owed to it as a result of such
indemnifiable event, such party shall pay to the party that made such
indemnification payment the amount of such tax benefit actually
realized in such later year, such payment to occur no later than 30
calendar days following the filing of the Tax Return reflecting such
benefit.
(f) Notwithstanding anything to the contrary in this
Agreement, Damages shall expressly exclude consequential damages,
special damages, incidental damages, indirect damages, punitive
damages, lost profits and similar items, unless arising out of a Third
Party Claim.
(g) The amount of any Damages claimed by Purchaser
hereunder will be reduced to the extent that Purchaser receives the
benefit of an adjustment pursuant to SECTION 2.3 hereof in which the
item that is the subject of the indemnification claim was specifically
taken into account in the determination of the Final Statement.
(h) To the extent that Seller or Purchaser discharges any
claim for indemnification hereunder, the Indemnifying Party will be
subrogated to all related rights of the Indemnified Party against
third parties.
(i) Each Indemnified Party will be obligated in connection
with any claim for indemnification under SECTIONS 9.2 and 9.3 to use
commercially reasonable efforts to mitigate Damages upon and after
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becoming aware of any event which could reasonably be expected to give
rise to such Damages.
(j) Seller will have no obligation to indemnify the
Purchaser Indemnified Parties pursuant to SECTION 9.2(c) insofar as
the Environmental Liabilities arise from any Purchaser Indemnified
Party soliciting involvement by a Governmental Authority or any
Purchaser Indemnified Party conducting, or causing to be conducted,
any soil, groundwater or other subsurface testing, drilling or
excavation, that, in each such case, is not required by a Governmental
Authority or Environmental Law; provided however, that this SECTION
9.2(j) will not apply to any soil, groundwater or other subsurface
testing, drilling or excavation conducted (1) to address, prevent or
mitigate any Release or threatened Release or violation of
Environmental Law; (2) in response to an Environmental Condition;
provided, however, that such Environmental Condition was not set forth
on SCHEDULE 4.18 nor was such Environmental Condition identified as a
Recognizable Environmental Condition (as that term is defined by ASTM
1527-00) in the Purchaser's Phase I Environmental Site Assessments
conducted prior to Closing; (3) in response to a request by a third
party to conduct due diligence related to a proposed sale or lease of
any property or asset, any divestiture, any financing, a public
offering or obtaining any insurance; (4) during the normal course of
operation of the Business, including construction, expansion,
operation, maintenance, redevelopment or repair of the assets,
facilities and properties owned and operated by the Business; (5) to
implement Best Management Practices, as defined by an Governmental
Authority or Environmental Law; or (6) or otherwise as required by
Law.
(k) "Environmental Condition" refers to the presence or
likely presence of (a) a violation of Environmental Law or (b) a
Release or threatened Release of Hazardous Materials in soil,
subsurface, surface water or groundwater on, in, under or from the
assets facilities and properties owned and operated by the Business.
(l) Seller will have no obligation to indemnify the
Purchaser Indemnified Parties pursuant to SECTION 9.2(c) after the
fifth anniversary of the Closing Date, except that if a claim for such
indemnification is made in good faith in writing and received by
Seller prior to the fifth anniversary of the Closing Date such claim
will survive such anniversary.
(m) Seller's obligation to indemnify the Purchaser
Indemnified Parties pursuant to SECTION 9.2(c) for Remedial Action to
be conducted after the Closing Date is subject to the condition that
(in compliance with applicable Law and in consultation with Purchaser
to the extent provided in SECTION 6.12), Seller shall (i) control the
planning, selection, design and implementation of all Remedial Action,
including consulting with Purchaser and using commercially reasonable
efforts to implement the least expensive remedial alternative
consistent with Environmental Law and approved by the applicable
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Governmental Authority, such as institutional controls or other
mechanisms for eliminating risk pathways, as permitted by applicable
Law, (ii) control the selection of consultants and contractors, and
(iii) not be required to conduct, or be responsible for Damages with
respect to, any Remedial Action that is not necessary to comply with
applicable legal requirements for an industrial facility.
SECTION 9.5 PROCEDURE FOR INDEMNIFICATION. Any party
seeking indemnification under this ARTICLE IX (an "Indemnified Party")
will give each party from whom indemnification is being sought (each,
an "Indemnifying Party") notice of any matter for which such
Indemnified Party is seeking indemnification, stating the amount of
the Damages, if known, and method of computation thereof, and
containing a reference to the provisions of this Agreement in respect
of which such right of indemnification is claimed or arises. The
obligations of an Indemnifying Party under this ARTICLE IX with
respect to Damages arising from any claims of any third party which
are subject to the indemnification provided for in this ARTICLE IX
(collectively, "Third-Party Claims") will be governed by and
contingent upon the following additional terms and conditions: if an
Indemnified Party receives, after the Closing Date, initial notice of
any Third-Party Claim, the Indemnified Party will give the
Indemnifying Party notice of such Third-Party Claim within such time
frame as necessary to allow for a timely response and in any event
within 30 calendar days of the receipt by the Indemnified Party of
such notice; PROVIDED, HOWEVER, that the failure to provide such
timely notice will not release the Indemnifying Party from any of its
obligations under this ARTICLE IX except to the extent the
Indemnifying Party is prejudiced by such failure. The Indemnifying
Party will be entitled to assume and control the defense of such
Third-Party Claim at its expense and through counsel of its choice if
it gives notice of its intention to do so to the Indemnified Party
within 45 calendar days of the receipt of such notice from the
Indemnified Party; PROVIDED, HOWEVER, that if there exists a conflict
of interest that would make it inappropriate in the reasonable
judgment of the Indemnified Party (upon and in conformity with advice
of counsel) for the same counsel to represent both the Indemnified
Party and the Indemnifying Party, then the Indemnified Party will be
entitled to retain one counsel (plus one local counsel, if necessary),
reasonably acceptable to the Indemnifying Party, at the expense of the
Indemnifying Party, provided that the Indemnified Party and such
counsel will contest such Third-Party Claims in good faith. In the
event the Indemnifying Party exercises the right to undertake any such
defense against any such Third-Party Claim as provided above, the
Indemnified Party will cooperate with the Indemnifying Party in such
defense and make available to the Indemnifying Party, at the
Indemnifying Party's expense, all witnesses, pertinent records,
materials and information in the Indemnified Party's possession or
under the Indemnified Party's control relating thereto as is
reasonably required by the Indemnifying Party. Similarly, in the
event the Indemnified Party is, directly or indirectly, conducting the
defense against any such Third-Party Claim, the Indemnifying Party
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will cooperate with the Indemnified Party in such defense and make
available to the Indemnified Party, at the Indemnifying Party's
expense, all such witnesses, records, materials and information in the
Indemnifying Party's possession or under the Indemnifying Party's
control relating thereto as is reasonably required by the Indemnified
Party. The Indemnifying Party will not, without the written consent
of the Indemnified Party (which will not be unreasonably withheld or
delayed), settle or compromise any Third-Party Claim or consent to the
entry of any judgment which does not include as an unconditional term
thereof the delivery by the claimant or plaintiff to Indemnified Party
of a written release from all liability in respect of such Third-Party
Claim. No Third-Party Claim which is being defended in good faith by
the Indemnifying Party or which is being defended by the Indemnified
Party as provided above in this SECTION 9.5 will be settled by the
Indemnified Party without the written consent of the Indemnifying
Party (which will not be unreasonably withheld or delayed).
SECTION 9.6 EXCLUSIVE REMEDY. Other than the remedies
set forth in SECTION 6.11 and with respect to indemnification for
Taxes, which are subject to ARTICLE X, the indemnification provided
for in this ARTICLE IX will constitute the sole remedy of any party to
the Agreement with respect to breaches by any other party to the
Agreement of any of the representations, warranties, agreements or
covenants contained in the Agreement.
ARTICLE X
TAX MATTERS
SECTION 10.1 TAX INDEMNIFICATION.
(a) Seller will be liable for and will pay, and will
indemnify Purchaser Indemnified Parties against, all Excluded Taxes.
(b) Purchaser will be liable for and will pay, and will
indemnify Seller Indemnified Parties against any and all Taxes imposed
on or payable with respect to the Acquired Companies or the Business,
other than Excluded Taxes.
(c) Seller and Purchaser shall each be liable for and shall
pay 50 percent of any and all sales and use Taxes, recording fees,
stamp Taxes and any other similar transfer Taxes that may be imposed
upon, payable, collectible or incurred in connection herewith and the
transactions contemplated hereby, regardless of the Person liable for
such Taxes under applicable law, except that Purchaser shall be solely
liable for all such incremental Taxes that are imposed upon, payable,
collectible or incurred in connection with or as a result of the
Section 338(h)(10) Election. Seller and Purchaser will use
commercially reasonable efforts to minimize the amount of such Taxes.
(d) Seller or Purchaser, as the case may be, will provide
reimbursement for any Tax paid by one party, all or a portion of which
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is the responsibility of the other party pursuant to SECTION 10.1.
Payment by the Indemnifying Party of any amount due under this SECTION
10.1 will be made within ten calendar days following written notice by
the indemnified party that payment of such amount is due (specifying
in reasonable detail the nature of the Tax paid) and without right of
offset; PROVIDED, that, if the Indemnified Party is required to make a
payment to a taxing authority, the Indemnifying Party will not be
required to make any payment earlier than three calendar days before
such payment is due.
SECTION 10.2 PREPARATION AND FILING OF TAX RETURNS.
(a) Seller will timely prepare and file or will cause to be
timely prepared and filed (i) any combined, consolidated or unitary
Tax Return that includes Seller or any of its Affiliates, and (ii) any
Tax Return of the Acquired Companies for any taxable period that ends
on or before the Closing Date. For any Straddle Period Tax Return of
the Acquired Companies that is the responsibility of Seller under this
SECTION 10.2(a), Seller will deliver to Purchaser for its review,
comment and approval (which approval will not be unreasonably
withheld, conditioned or delayed) a copy of such proposed Tax Return
(accompanied by an allocation between the Pre-Closing Period and the
Post-Closing Period of the Taxes shown to be due on such Tax Return)
at least 30 calendar days prior to the due date (giving effect to any
validly obtained extensions) thereof.
(b) Purchaser will, except to the extent that such Tax
Returns are the responsibility of Seller under SECTION 10.2(a), timely
prepare and file or will cause to be timely prepared and filed all Tax
Returns with respect to the Acquired Companies. For any Straddle
Period Tax Return of the Acquired Companies that is the responsibility
of Purchaser under this SECTION 10.2(b), Purchaser will deliver to
Seller for its review, comment and approval (which approval will not
be unreasonably withheld, conditioned or delayed) a copy of such
proposed Tax Return (accompanied by an allocation between the Pre-
Closing Period and the Post-Closing Period of the Taxes shown to be
due on such Tax Return) at least 30 calendar days prior to the due
date (giving effect to any validly obtained extensions) thereof.
SECTION 10.3 REFUNDS, CREDITS AND CARRYBACKS.
(a) Seller will be entitled to any refunds or credits of or
against any Excluded Taxes. Purchaser will, at Seller's reasonable
request and at Seller's sole expense, cause the relevant entity to
file for and use commercially reasonable efforts to obtain any refund
or credit to which Seller is entitled. Subject to SECTION 10.3(c),
Purchaser will be entitled to any refunds or credits of or against any
Taxes other than refunds or credits of or against Excluded Taxes.
Seller will, at Purchaser's reasonable request, and at Purchaser's
sole expense, cause the relevant entity to file for and use
commercially reasonable efforts to obtain any refund or credit to
which Purchaser is entitled.
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(b) Purchaser will cause the Acquired Companies promptly to
forward to Seller or to reimburse Seller for any refunds or credits
due Seller (pursuant to the terms of this ARTICLE X) after receipt
thereof, and Seller will promptly forward to Purchaser or reimburse
Purchaser for any refunds or credits due Purchaser (pursuant to the
terms of this Article X) after receipt thereof.
(c) Purchaser agrees that none of the Acquired Companies
will elect to carry back any item of loss, deduction or credit that
arises in any taxable period ending after the Closing Date and that
relates to or affects any Excluded Tax (a "Subsequent Loss") into any
taxable period ending on or before the Closing Date. In the case of
the Purchased Companies, Purchaser will make the election under
Section 1.1502-21(c)(3)(i) of the Code on its first U.S. consolidated
federal income tax return filed for the Purchased Companies.
SECTION 10.4 TAX CONTESTS.
(a) If any taxing authority asserts a Tax Claim in respect
of the Acquired Companies, then the party hereto first receiving
notice of such Tax Claim promptly will provide written notice thereof
to the other party hereto; PROVIDED, HOWEVER, that the failure of such
party to give such prompt notice will not relieve the other party of
any of its obligations under this ARTICLE X, except to the extent that
such failure precludes the contest of such Tax Claim. Such notice
will specify in reasonable detail the basis for such Tax Claim to the
extent the party giving such notice is aware of such basis and will
include a copy of the relevant portion of any correspondence received
from the taxing authority.
(b) Seller will have the right to control, at its own
expense, in any audit, examination, contest, litigation or other
proceeding by or against any taxing authority (a "Tax Proceeding") in
respect of the Acquired Companies for any taxable period that ends on
or before the Closing Date; PROVIDED, HOWEVER, that (i) Seller will
provide Purchaser with a timely and reasonably detailed account of
each stage of such Tax Proceeding, (ii) Seller will consult with
Purchaser before taking any significant action in connection with such
Tax Proceeding, (iii) Seller will consult with Purchaser and offer
Purchaser an opportunity to comment before submitting any written
materials prepared or furnished in connection with such Tax
Proceeding, (iv) Seller will defend such Tax Proceeding diligently and
in good faith as if it were the only party in interest in connection
with such Tax Proceeding, (v) Purchaser will be entitled to
participate, at its own expense, in such Tax Proceeding and receive
copies of any written materials relating to such Tax Proceeding
received from the relevant taxing authority, and (vi) Seller will not
settle, compromise or abandon any such Tax Proceeding without
obtaining the prior written consent of Purchaser, which consent will
not be unreasonably withheld, conditioned or delayed.
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(c) In the case of a Tax Proceeding for a Straddle Period
of the Acquired Companies, the Controlling Party will have the right
to control, at its own expense, such Tax Proceeding; provided,
however, that (i) the Controlling Party will provide the Non-
Controlling Party with a timely and reasonably detailed account of
each stage of such Tax Proceeding, (ii) the Controlling Party will
consult with the Non-Controlling Party before taking any significant
action in connection with such Tax Proceeding, (iii) the Controlling
Party will consult with the Non-Controlling Party and offer the Non-
Controlling Party an opportunity to comment before submitting any
written materials prepared or furnished in connection with such Tax
Proceeding, (iv) the Controlling Party will defend such Tax Proceeding
diligently and in good faith as if it were the only party in interest
in connection with such Tax Proceeding, (v) the Non-Controlling Party
will be entitled to participate in such Tax Proceeding, at its own
expense, if such Tax Proceeding could have an adverse impact on the
Non-Controlling Party or any of its Affiliates and (vi) the
Controlling Party will not settle, compromise or abandon any such Tax
Proceeding without obtaining the prior written consent, which consent
will not be unreasonably withheld, conditioned or delayed, of the Non-
Controlling Party.
(d) Purchaser will have the right to control, at its own
expense, any Tax Proceeding involving the Acquired Companies (other
than a Tax Proceeding described in clauses (b) and (c) of this SECTION
10.4).
(e) The Controlling Party will indemnify and hold the Non-
Controlling Party, its Subsidiaries and their respective officers,
directors, employees and agents, harmless from any Taxes (and any
related costs imposed by a court or other tribunal) arising out of or
resulting from the Controlling Party's failure to comply with its
obligations under clauses (b), (c) or (d) of this SECTION 10.4, as the
case may be.
SECTION 10.5 COOPERATION. Each party hereto will, and
will cause its Affiliates to, provide to the other party hereto such
cooperation, documentation and information as either of them
reasonably may request in (a) filing any Tax Return, amended Tax
Return or claim for refund, (b) determining a liability for Taxes or
an indemnity obligation under this ARTICLE X or a right to refund of
or credit for Taxes, (c) conducting any Tax Proceeding or (d)
determining an allocation of Taxes between a Pre-Closing Period and
Post-Closing Period. Such cooperation and information will include
making available copies of all relevant portions of relevant Tax
Returns, together with all relevant portions of relevant accompanying
schedules and relevant work papers, relevant documents relating to
rulings or other determinations by taxing authorities and relevant
records concerning the ownership and Tax basis of property and other
information, that any such party may possess. Each party will retain
all Tax Returns, schedules and work papers, and all material records
and other documents relating to Tax matters, of the relevant entities
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for their respective Tax periods ending on or prior to the Closing
Date until the expiration of the statute of limitations, including
extensions thereto consent to by such party or with respect to which
such party shall have received written notice, plus 30 calendar days,
for the Tax periods to which the Tax Returns and other documents
relate. Thereafter, the party holding such Tax Returns or other
documents may dispose of them after offering the other party
reasonable notice and opportunity to take possession of such Tax
Returns and other documents at such other party's own expense. Each
party will make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents
or information so provided.
SECTION 10.6 TIMING DIFFERENCES. Purchaser agrees that if
as a result of any audit adjustment (or adjustment in any other Tax
Proceeding) made with respect to any Tax Item that relates to or
affects any Excluded Tax, by any taxing authority with respect to a
Pre-Closing Period, Purchaser, any Subsidiary Purchaser of any
Acquired Company, actually realizes a reduction in cash Taxes payable
in a Post-Closing Period and such reduction exceeds $1,000,000, then
Purchaser, such Subsidiary Purchaser or such Acquired Company will pay
to Seller the amount of such reduction within fifteen calendar days of
filing the Tax Return in which such reduction is realized or utilized.
If as a result of the foregoing audit adjustment Purchaser incurs any
additional Tax and such additional Tax exceeds $1,000,000, then Seller
will pay to Purchaser the amount of such additional Tax within fifteen
calendar days of the due date for making payment of such additional
Tax. For purposes of determining the amount and timing of any
reduction in cash Taxes payable or any additional Tax incurred by
Purchaser, any Subsidiary Purchaser and any Acquired Company as a
result of any such adjustment, such amount shall be deemed to equal
the difference between the amount of Tax payable by Purchaser, any
Subsidiary Purchaser or an Acquired Company, as the case may be,
taking into account such adjustment and the Taxes that would have been
payable by Purchaser, any Subsidiary Purchaser or an Acquired Company,
as the case may be, if such adjustment had not occurred. If Purchaser
shall have made a payment pursuant to this Section 10.6 and Purchaser,
any Subsidiary Purchaser or any Acquired Company shall thereafter lose
all or any portion of the benefit of any reduction in cash Taxes
payable that resulted from the adjustment that gave rise to such
payment (it being understood that a reduction in cash Taxes payable
shall not be considered to be lost as a result of the inability of
Purchaser, any Subsidiary Purchaser or any Acquired Company to carry
back a net operating loss to the taxable year such reduction in cash
Taxes payable was realized), Seller shall repay to Purchaser the
amount of such lost reduction in cash Taxes payable within 15 days of
receipt of notice from Purchaser specifying in reasonable detail the
amount of such lost reduction. Nothing in this SECTION 10.6 shall
have any effect on the rights and obligations of the parties under the
remainder of this ARTICLE X.
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SECTION 10.7 CERTAIN DEFINITIONS. For purposes of this
Agreement:
(a) "Controlling Party" means (i) with respect to Tax
Proceedings described in SECTION 10.4(b), Seller, (ii) with respect to
Tax Proceedings described in SECTION 10.4(c), whichever of Seller or
Purchaser is reasonably expected to bear the greater Tax liability in
connection with a Straddle Period Tax Proceeding, and (iii) with
respect to Tax Proceedings described in SECTION 10.4(d), Purchaser;
(b) "Excluded Taxes" means (a) any Taxes imposed on or
payable with respect to any of the Acquired Companies or the Business
for any Pre-Closing Period (other than Taxes imposed with respect to
the Acquired Companies or the Business resulting from any act or
transaction by Purchaser or any of its Affiliates (including the
Acquired Companies) after the Closing that is not in the Ordinary
Course of Business), (b) any Taxes of Seller or any of its Affiliates
for which the Acquired Companies may be liable under Section 1.1502-6
of the Treasury Regulations (or any similar provision of state, local,
or non-U.S. Tax law), (c) any Taxes (other than the transfer and other
Taxes that are the subject of Section 10.1(c)) that result from or
that would not have been imposed but for the inaccuracy or breach of
any representation, warranty or covenant of Seller in this Agreement
with respect to any Tax and (d) any Taxes that result from or would
not have been imposed but for the making of a Section 338(h)(10)
Election or any similar election under state or local law, regardless
of the taxable period in which such Tax arises. For purposes hereof,
in the case of any period that begins before and ends after the
Closing Date, (i) Property Taxes of the Acquired Companies or the
Business allocable to the Pre-Closing Period will be equal to the
amount of such Property Taxes for the entire period multiplied by a
fraction, the numerator of which is the number of calendar days during
such period that are in the Pre-Closing Period and the denominator of
which is the number of calendar days in the entire period, and (ii)
Taxes (other than Property Taxes) of the Acquired Companies or the
Business allocable to the Pre-Closing Period will be computed as if
such taxable period ended on the Closing Date;
(c) "Non-Controlling Party" means whichever of Seller or
Purchaser is not the Controlling Party with respect to a Tax
Proceeding described in SECTION 10.4;
(d) "Post-Closing Period" means any taxable period (or
portion thereof) beginning after the Closing Date;
(e) "Pre-Closing Period" means any taxable period (or
portion thereof) ending on or before the Closing Date;
(f) "Property Taxes" means real, personal, and intangible
ad valorem property Taxes;
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(g) "Straddle Period Tax Return" means any Tax Return with
respect to a taxable period beginning on or prior to and ending after
the Closing Date;
(h) "Tax Claim" means any claim with respect to Taxes made
by any taxing authority that, if pursued successfully, would
reasonably be expected to serve as the basis for a claim for
indemnification under this ARTICLE X; and
(i) "Tax Item" means any item of income, gain, loss,
deduction, credit, recapture of credit or any other item that
increases or decreases Taxes paid or payable.
SECTION 10.8 SURVIVAL. The representations and warranties
set forth in SECTION 4.15 and the obligations of Seller, Purchaser and
their respective Affiliates pursuant to this ARTICLE X shall survive
the Closing Date and will terminate 90 calendar days after the
expiration of the applicable statute of limitations (including
extensions thereof).
ARTICLE XI
TERMINATION
SECTION 11.1 TERMINATION. Anything herein or elsewhere to
the contrary notwithstanding, this Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time prior to
the Closing:
(a) By the mutual consent of Seller and Purchaser;
(b) By either Seller or Purchaser:
(i) If the Closing will not have occurred on or prior
to the 90th day after the date hereof; or
(ii) If any Governmental Authority will have issued an
order, decree or ruling or taken any other action, in each case
permanently restraining, enjoining or otherwise prohibiting the
material transactions contemplated by this Agreement and such
order, decree, ruling or other action will have become final and
non-appealable, or there shall be an applicable statute, rule or
regulation which makes all or any material portion of the
purchase and sale of the Purchased Shares or the Purchased Assets
contemplated hereby illegal or otherwise prohibited;
PROVIDED, HOWEVER, that the party seeking termination pursuant to
this clause (b) of this SECTION 11.1 is not in breach in any
material respect of any of its representations, warranties,
covenants or agreements contained in this Agreement;
(c) By Seller in the event of a material breach of any
covenant or agreement to be performed or complied with by Purchaser
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pursuant to the terms of this Agreement or of any representation or
warranty of Purchaser contained in this Agreement, which breach (i)
has continued without cure for a period of 30 days following written
notice thereof by Seller to Purchaser or if such breach cannot be
cured and (ii) would result in a condition to Closing set forth in
SECTION 8.2 of this Agreement not being satisfied (which condition has
not been waived by Seller in writing); or
(d) By Purchaser in the event of a material breach of any
covenant or agreement to be performed or complied with by Seller
pursuant to the terms of this Agreement or of any representation or
warranty of Seller contained in this Agreement, which breach (i) has
continued without cure for a period of 30 days following written
notice thereof by Purchaser to Seller or if such breach cannot be
cured and (ii) would result in a condition to Closing set forth in
SECTION 8.1 of this Agreement not being satisfied (which condition has
not been waived by Purchaser in writing).
SECTION 11.2 EFFECT OF TERMINATION. In the event that
this Agreement is terminated by Seller or Purchaser pursuant to
SECTION 11.1, Written notice thereof will forthwith be given to the
other and all further obligations of the parties hereto under this
Agreement (other than pursuant to SECTION 6.6(a), this Section 11.2
and SECTIONS 12.1, 12.2, 12.3, 12.4, 12.5, 12.6, 12.9 and 12.11, all
of which will continue in full force and effect) will terminate
without further action by any party and without liability or other
obligation of either party to the other party hereunder; PROVIDED,
HOWEVER, that no party will be released from liability hereunder if
this Agreement is terminated and the transactions abandoned by reason
of (a) any breach, as of the date of this Agreement, of any
representation or warranty made by such party, (b) any breach of any
covenant or agreement to be performed or complied with by such party
or (c) any willful breach of this Agreement.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 EXPENSES. Whether or not the transactions
contemplated hereby are consummated, and except as otherwise expressly
provided herein, the parties hereto will pay all of their own costs
and expenses relating to the transactions contemplated by this
Agreement, including the costs and expenses of their respective
counsel, financial advisors and accountants.
SECTION 12.2 GOVERNING LAW; CONSENT TO JURISDICTION.
(a) The interpretation and construction of this Agreement,
and all matters relating hereto, will be governed by the laws of the
State of New York applicable to contracts made and to be performed
entirely within the State of New York without giving effect to any
conflict of law provisions thereof, except that, notwithstanding
clause (b) below, the Federal Arbitration Act, 9 U.S.C. Section 1-16,
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will govern all issues relating to the arbitrability and arbitration
of any claim or dispute relating to, and any interpretation of,
SECTION 2.3 or 2.4 and the enforcement of any determination pursuant
thereto.
(b) Each of the parties agrees that any legal action or
proceeding with respect to this Agreement may be brought in the
federal and state courts located in the State of New York, and, by
execution and delivery of this Agreement, each party hereto hereby
irrevocably submits itself in respect of its property, generally and
unconditionally, to the exclusive jurisdiction of the aforesaid courts
in any legal action or proceeding arising out of this Agreement. Each
of the parties hereto hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with
this Agreement brought in the courts referred to in the preceding
sentence. Each party hereto hereby consents to process being served
in any such action or proceeding by the mailing of a copy thereof to
the address set forth in SECTION 12.4 hereof below its name and agrees
that such service upon receipt will constitute good and sufficient
service of process or notice thereof. Nothing in this paragraph will
affect or eliminate any right to serve process in any other manner
permitted by law.
SECTION 12.3 WAIVER OF JURY TRIAL. The parties hereto
hereby irrevocably waive their respective rights to trial by jury of
any cause of action, claim, counterclaim or cross-complaint in any
action or other proceeding brought by any party hereto against any
other party or parties hereto with respect to any matter arising out
of, or in any way connected with or related to, this Agreement or any
portion thereof, whether based upon contractual, statutory, tortious
or other theories of liability. Each party represents that it has
consulted with counsel regarding the meaning and effect of the
foregoing waiver of its right to a jury trial.
SECTION 12.4 NOTICES. Any notice or other communications
required or permitted hereunder will be sufficiently given if
delivered in person, transmitted via facsimile (but only if followed
by transmittal by recognized overnight courier or hand delivery), or
sent by registered or certified mail, postage prepaid, or recognized
overnight courier service addressed as follows:
(a) If to Purchaser: Global Home Products LLC
c/o Cerberus Capital Management,
L.P.
299 Park Avenue
New York, New York 10171
Attention: Lenard Tessler
Tel: (212) 891-2100
Fax: (212) 284-7818
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with a copy to: Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Attention: Marc Weingarten
Tel: (212) 756-2000
Fax: (212) 593-5955
(b) If to Seller: Newell Rubbermaid Inc.
6833 Stalter Drive, Suite 101
Rockford, Illinois 61108
Attention: Dale L. Matschullat
Tel: (815) 381-8114
Fax: (815) 381-8160
with a copy to: Schiff Hardin LLP
6600 Sears Tower
Chicago, Illinois 60606
Attention: Frederick L. Hartmann
Tel: (312) 258-5500
Fax: (312) 258-5600
or such other address or number as will be furnished in writing by any
such person, and such notice or communication will be deemed to have
been given (a) as of the date so personally delivered or transmitted
via facsimile, (b) on the third Business Day after the mailing thereof
or (c) on the first Business Day after delivery by recognized
overnight courier service.
SECTION 12.5 ENTIRE AGREEMENT; AMENDMENT. This Agreement,
including the Exhibits, Schedules and other documents referred to
herein which form a part hereof, and the Confidentiality Agreement,
contain the entire understanding of the parties hereto with respect to
the subject matter contained herein and therein. This Agreement
supersedes all prior agreements and understandings between the parties
with respect to such subject matter other than the Confidentiality
Agreement. This Agreement may not be amended except by a written
instrument executed by the parties hereto.
SECTION 12.6 PARTIES IN INTEREST. This Agreement may not
be transferred, assigned, pledged or hypothecated by any party hereto
(whether by operation of law or otherwise) without the prior written
consent of the other party, except that Purchaser may assign all or a
portion of its rights and obligations under this Agreement to one or
more Affiliates; PROVIDED, HOWEVER, that in the event Purchaser
assigns all or a portion of its rights and obligations under this
Agreement, Purchaser hereby unconditionally and irrevocably guarantees
to Seller the prompt and full discharge by such Affiliates of
Purchaser of all of Purchaser's obligations under this Agreement in
accordance with the terms hereof. Purchaser also hereby agrees that,
if such Affiliates of Purchaser fail to perform and discharge promptly
all such obligations and liabilities in accordance with such terms,
Purchaser will, forthwith, upon demand, perform and discharge the
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same, and Seller need not pursue any claims against any such
Affiliates prior to proceeding directly against Purchaser. The
unconditional obligation of Purchaser hereunder will not be affected,
impaired or released by any extension, waiver or amendment (other than
such Affiliates' performance). This Agreement will be binding upon
and will inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
SECTION 12.7 INTERPRETATION. The words "hereof," "herein"
and "herewith" and words of similar import will, unless otherwise
stated, be construed to refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Article, Section,
Paragraph, Exhibits and Schedule references are to the Articles,
Sections, Paragraphs, Exhibits and Schedules of this Agreement unless
otherwise specified. The table of contents and headings contained in
this Agreement are for reference purposes only and will not affect in
any way the meaning or interpretation of this Agreement. Whenever the
words "include," "includes," "including" or similar expressions are
used in this Agreement, they will be understood be followed by the
words "without limitation." The words describing the singular number
will include the plural and vice versa, and words denoting any gender
will include all genders and words denoting natural persons will
include corporations and partnerships and vice versa. The phrase
"made available" in this Agreement will mean that the information
referred to has been made available if requested by the party to whom
such information is to be made available. The parties have
participated jointly in the negotiation and drafting of this
Agreement. In the event of an ambiguity or question of intent or
interpretation arises, this Agreement will be construed as if drafted
jointly by the parties and no presumption or burden of proof will
arise favoring or disfavoring any party by virtue of the authorship of
any provisions of this Agreement.
SECTION 12.8 CERTAIN DEFINITIONS. For purposes of this
Agreement:
(a) "Affiliate" of any Person means another Person that
directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, such first Person;
(b) "Business Day" means any day that is not a Saturday, a
Sunday or other day on which banks are required or authorized by law
to be closed in the City of Chicago, Illinois or New York, New York;
(c) "Knowledge of Seller" means the actual knowledge of the
existence or non-existence of a fact by one of the Persons identified
in SCHEDULE 12.8(c) hereto;
(d) "Material Adverse Effect" means any change, effect,
event or occurrence that is materially adverse to, or has a materially
adverse effect on, the business, financial condition or results of
operations of the Business, taken as a whole, other than any change,
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effect, event or occurrence (i) resulting from general economic,
financial, or market conditions, (ii) resulting from conditions or
circumstances generally affecting the industries in which the Business
operates not having a disproportionate effect on the Business, (iii)
resulting from the Petition described in SCHEDULE 12.8(d) hereto and
related proceedings or (iv) except with respect to the Persons listed
on SCHEDULE 4.22(b), resulting from the announcement of the
transactions contemplated herein or in any other agreement or document
executed and delivered in connection with this Agreement.
(e) "Ordinary Course of Business" means the ordinary course
of business of the Business, consistent with past practice;
(f) "Person" means any individual, trustee, firm,
corporation, partnership, limited liability company, trust, joint
venture, bank, Government Authority, trust or other organization or
entity; and
(g) "Subsidiary" means, with respect to any Person, any
other Person, whether incorporated or unincorporated, of which (i)
such Person or any other Subsidiary of such Person is a general
partner (excluding such partnerships where such Person or any
Subsidiary of such Person does not have a majority of the voting
interest in such partnership) or (ii) at least a majority of the
securities or other interests having by their terms ordinary voting
power to elect a majority of the board of directors or others
performing similar functions with respect to such Person is directly
or indirectly owned or controlled by such Person or by any one or more
of its Subsidiaries, or by such Person and one or more of its
Subsidiaries.
SECTION 12.9 THIRD PARTY BENEFICIARIES. Each party hereto
intends that this Agreement will not benefit or create any right or
cause of action in or on behalf of any Person other than the parties
hereto.
SECTION 12.10 DISCLOSURE SCHEDULE. Unless otherwise
defined therein, all capitalized terms used in the schedules will have
the meanings ascribed to them herein, and all section references in
the schedules refer to the corresponding section hereof. The
attachments to the schedules form an integral part of the schedules
and are incorporated by reference for all purposes as if set forth
fully therein. The headings contained in the schedules are for
convenience of reference purposes only and will not affect in any way
the meaning or interpretation of this Agreement or the schedules. No
reference to or disclosure of any item or other matter in the
schedules will be construed as an admission or indication that such
item or other matter is material or that such item or other matter is
required to be referred to or disclosed in the schedules. No
disclosure in the schedules relating to any possible breach or
violation of any Contract or Law will be construed as an admission or
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indication that any such breach or violation exists or has actually
occurred.
SECTION 12.11 WAIVER. Except as otherwise provided in this
Agreement, any failure of either of the parties to comply with any
obligation, covenant, agreement or condition herein may be waived by
the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver
or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition will not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
SECTION 12.12 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 is
held invalid, illegal or unenforceable in any respect by a court of
competent jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision hereof (or the
remaining portion thereof) or the application of such provision to any
other Persons or circumstances.
SECTION 12.13 COUNTERPARTS; DELIVERY BY FACSIMILE. This
Agreement may be executed in two or more counterparts, all of which
taken together will constitute one instrument, and will become
effective when one or more such counterparts have been signed by each
of the parties and delivered to the other party. Executed signature
pages delivered by facsimile will be treated in all respects as
original signatures.
* * *
-85-
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be duly executed, all as of the date first above written.
NEWELL RUBBERMAID INC.
By: /s/ Hartley D. Blaha
-----------------------------------------
Name: Hartley D. Blaha
Title: Vice President Corporate Development
GLOBAL HOME PRODUCTS LLC
By: /s/ Lenard Tessler
-----------------------------------------
Name: Lenard Tessler
Title: Managing Director
-Signature Page-
EXHIBIT 2.2
-----------
AMENDMENT NO. 1
TO
STOCK AND ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO THE STOCK AND ASSET PURCHASE AGREEMENT,
is entered into as of April 13, 2004 (this "Amendment"), by and
between NEWELL RUBBERMAID INC., a Delaware corporation ("Seller") and
GLOBAL HOME PRODUCTS LLC, a Delaware limited liability company
("Purchaser"). Capitalized terms used in this Amendment and not
otherwise defined in this Amendment shall have the meanings given them
in the Purchase Agreement (defined below).
W I T N E S S E T H:
WHEREAS, Purchaser and Seller have entered into that certain
Stock and Asset Purchase Agreement, dated as of March 12, 2004 (the
"Purchase Agreement"), pursuant to which Purchaser will purchase the
Business from Seller on the terms and subject to the conditions set
forth therein.
WHEREAS, the parties hereto desire to amend the Purchase
Agreement as set forth below.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set
forth in the Purchase Agreement and herein, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
AMENDMENT
1.1 AMENDMENT.
(a) Section 9.2(b) of the Purchase Agreement is hereby amended and
restated in its entirety to read as follows:
"(b) Subject to the limitations set forth in SECTION
9.4(e) through (i), Seller will indemnify Purchaser Indemnified
Parties against, and hold them harmless from, any Damages arising
from:
(i) Any breach of any covenant by Seller set
forth in this Agreement (other than with respect to Taxes);
(ii) Any Excluded Liability;
(iii) Product liability claims relating to
products of the Business arising out of occurrences prior to the
Closing Date;
(iv) Any claims, including workers compensation
and similar claims, made by or with respect to current or former
employees of the Acquired Companies who are not Business Employees or
by Business Employees relating to occurrences prior to the Closing
Date;
(v) The assets, liabilities and Contracts
transferred, assumed or terminated pursuant to SECTION 6.2;
(vi) The failure to comply with any "bulk sales"
notice requirement in connection with the transactions contemplated
hereby;
(vii) The bankruptcy matters set forth on
SCHEDULE 9.2(b)(vii);
(viii) Any casualty or condemnation of any Owned
Real Property or Leased Real Property occurring after the date hereof
and prior to the Closing;
(ix) Any claims (other than Assumed Liabilities
and claims that are the subject of SECTION 9.2(b)(iii) or (iv))
arising out of occurrences prior to the Closing Date that are covered
by insurance of which Seller or any Seller Affiliate, including any
Acquired Company, is a beneficiary that was in effect with respect to
the Business prior to the Closing Date;
(x) The (A) lien currently recorded with the
Public Registry of Property of Durango, Durango, Mexico related to a
seizure of the business of Intercraft Burnes, S. de R.L. de C.V. as a
going concern for an amount of MXP$109,086,930.83 as ordered by
Official Communication number 5831, in connection with the tax credits
H-87457, H-87459, H-87460 and H-87461 as requested by the Ministry of
Finance of Public Credit, or any failure to remove such lien, and (B)
pledge registered on May 14, 1993 of the equity interest of Intercraft
Burnes, S. de R.L. de C.V. in favor of Comerica Bank-Illinois, or any
failure to remove such pledge;
(xi) Any claims or losses arising from the
failure to terminate on or prior to the Closing Date the UCC financing
statement filed by Mirado S.A. against Intercraft Company or its
subsidiaries in connection with the Receivables Purchase and Servicing
Agreement, dated as of September 18, 2001, between each subsidiary of
Newell named on the signature pages thereto, Newell Rubbermaid Inc.
and Mirado S.A.;
(xii) Any claims that sublicensing the Licensed
Trademarks (as defined in the Trademark License Agreement made as of
October 29, 1999 between Regal Ware, Inc. and Newell Operating Company
("Trademark License Agreement")) pursuant to the sublicense (the
"Sublicense Agreement") dated the date hereof between Purchaser and
Seller (A) conflicts with or violates the Trademark License Agreement,
(B) requires the consent or other approval of Regal Ware, Inc. or any
Affiliate thereof, (C) results in the termination of the Trademark
License Agreement or a default thereunder or (D) otherwise entitles
Regal Ware, Inc. or any Affiliate thereof to any fees, damages or
other relief;
(xiii) Any claims by customers of the Frame
Business, including by set-off or other reduction of amounts owed,
received by Purchaser or its Affiliates on or prior to the 90th day
after the date hereof for rebills, reductions, credits or other
chargebacks that arise out of or are related to such customers'
dissatisfaction with the service provided by the Frame Business prior
to the date hereof relating to the shipment of orders on time and
complete; provided that the maximum amount of Damages for which Seller
will be obligated to indemnify the Purchaser Indemnified Parties
pursuant to this Section 9.2(b)(xiii) will be $2,000,000; and provided
further that Seller will not be obligated to indemnify Purchaser with
respect to a claim pursuant to this Section 9.2(b)(xiii) if a
Purchaser Indemnified Party induced such claim to be brought by the
applicable customer;
(xiv) Any claims that use by Purchaser or any of
its Subsidiaries of the Licensed Trademarks in accordance with the
provisions of the Sublicense Agreement infringes or violates the
Licensed Trademarks; and
(xv) Any claims arising out of or relating to the
termination of the employment of (A) Rodrigo Cavazos Vargas under the
Contrato Individual De Trabajo Por Tiempo Indefinido dated April 1,
2003 by and between Prestservco, S. de R.L. de C.V. and Rodrigo
Cavazos Vargas, or (B) Carlos L. Hernandez Vazques under the Contrato
Individual De Trabajo Por Tiempo Indefinido dated May 19, 2003 by and
between Prestservco, S. de R.L. de C.V. and Carlos L. Hernandez
Vazquez.
For purposes of determining whether claims are covered by insurance as
provided in SECTION 9.2(b)(ix), the decision as to coverage of the
insurance carrier (typically, The Traveler's Insurance Company) will
be conclusive; PROVIDED that (i) Seller will submit to the relevant
insurance carrier all such claims asserted by Purchaser for which
there is a reasonable basis for coverage, and (ii) after such efforts
to establish coverage as Seller elects to make, Seller will afford
Purchaser an opportunity to contest any denial of coverage directly
against the insurance carrier. As and when requested by Purchaser,
Seller will, at Purchaser's expense, execute and deliver, or cause to
be executed and delivered, all such documents and instruments and will
take, or cause to be taken, all such further or other actions, as
Seller may reasonably deem necessary or desirable to permit Purchaser
to so contest such denials."
(b) The definition of "Excluded Receivables" contained in Section
2.4(c) of the Purchase Agreement shall be amended and restated as
follows: ""Excluded Receivables" means all accounts and notes
receivable (including Chargeback Amounts and rebills with respect to
Historical Receivables), as of the Closing Date, related to the
Business, other than accounts and notes receivable of the
International Asset Sellers other than Newell Industries Canada Inc.;
and".
(c) Section 1.2(b)(iii) of the Purchase Agreement shall be amended
and restated as follows: "All accounts and notes receivable of the
Business, other than (A) intercompany accounts and notes receivable,
and (B) the accounts receivable of Newell Industries Canada Inc.;"
(d) Each of (i) Trademark License Agreement and the Intellectual
Property (as defined in the Trademark License Agreement) subject
thereto and (ii) License Agreement dated May 1, 1999 between The Coca-
Cola Company and Anchor Hocking Consumer Glass Division, as amended
pursuant to an addendum dated January 4, 2001, and extended pursuant
to the License Agreement effective January 1, 2003 between the Coca-
Cola Company and Calphalon Corporation amended June 24, 2003 (the
"Coke License Agreement") and the Intellectual Property (as defined in
the Coke License Agreement) subject thereto and the inventory
utilizing such Intellectual Property, will not be included in the
Purchased Assets and will not be assigned to Purchaser pursuant to the
Purchase Agreement. In addition, notwithstanding anything to the
contrary in the Purchase Agreement, (i) the inventory utilizing the
Intellectual Property (as defined in the Coke License Agreement) as of
December 31, 2003 and as of the Closing Date will not be included in
the Year-End Net Working Capital or in the Closing Net Working
Capital, respectively, and (ii) the restrictions contained in Section
6.11 of the Purchase Agreement will not apply to the distribution or
sale by Seller or its Affiliates of the inventory as of the Closing
Date utilizing the Intellectual Property (as defined in the Coke
License Agreement).
(e) The Coke License Agreement shall not be included on SCHEDULE
8.1(g) to the Purchase Agreement, and no consent shall be required
thereunder pursuant to Section 8.1(g) of the Purchase Agreement.
(f) The reference to "Acquired Assets" in Section 2.3(b)(iv)(x)(2) of
the Purchase Agreement shall be changed to "Purchased Assets".
(g) Section 6.11(c)(ii) of the Purchase Agreement shall be amended
and restated as follows: ""Competing Glass Business" means the design
or manufacture in North America, or the marketing, distribution or
sale directly into the North America market, of consumer and specialty
glass products that have been manufactured or sold by the Acquired
Companies or Asset Sellers within the 12-month period immediately
prior to the Closing and any other glass products similar in design or
function, including any Products (as defined in the Anchor/Newell
Supply Agreement to be entered into on the Closing Date between Newell
SAS and Anchor Hocking Operating Company LLC (the "Anchor/Newell
Supply Agreement"); PROVIDED, that "Competing Glass Business" will not
include (A) the existing activities described in SCHEDULE 6.11(c)
hereof or (B) the design, manufacture, marketing, distribution and
sale of any products that contain, use or include glass parts as
components of products that are not primarily made of glass (E.G., a
glass lid for a metal frying pan)."
(h) Section 7.1 of the Purchase Agreement shall be amended by adding
the following at the end thereof: "Without limiting the generality of
SECTION 6.3 hereof, following the Closing Seller shall supply to
Purchaser, upon Purchaser's reasonable request, information with
respect to the Business Employees as employees of Seller and its
Subsidiaries, such as payroll related benefit information (for
example, benefits eligibility and historical contribution amounts) and
claims history, to the extent permitted by applicable law."
(i) (1) For purposes of this clause (i):
(A) "Chargeback" shall mean the payment of less than the
full invoiced amount in respect of any Excluded Receivable or
Historical Receivable (whether or not attributable to a Customer
Program), other than as a result of a customer's inability to pay the
full amount of an Excluded Receivable (as a result of bankruptcy or
otherwise);
(B) "Chargeback Amount" shall mean the unpaid amount in
respect of (I.E., the amount withheld from the payment of the full
invoice amount of) an Excluded Receivable or Historical Receivable;
(C) "Historical Receivable" shall mean any account or note
receivable related to the Business with respect to which payment (A)
of less than the full invoiced amount has been made on or at any time
prior to the Closing Date and (B) is still owed with respect to the
unpaid portion thereof as of the Closing Date, other than any such
account or note receivable of the International Asset Sellers (other
than Newell Industries Canada Inc.);
(D) "Recent Historical Chargeback" shall mean any
Chargeback relating to a Historical Receivable, which Chargeback was
made or incurred within 30 days prior to the Closing Date; and
(E) "Aged Historical Chargeback" shall mean any Chargeback
relating to a Historical Receivable, which Chargeback was made or
incurred more than 30 days prior to the Closing Date.
(2) Notwithstanding anything to the contrary contained in
SECTION 2.4 of the Purchase Agreement, (A) the calculation and amount
of "Excluded Receivables net of reserves" for all purposes under
SECTION 2.4 of the Purchase Agreement shall not be reduced by any
Chargeback or rebill reserve relating to the Excluded Receivables or
Historical Receivables, and (B) Chargebacks and rebills and reserves
therefor relating to Excluded Receivables and Historical Receivables
shall not be included as current liabilities in any calculation or
determination of Net Working Capital.
(3) From the Closing Date through and including the 120th day
following the Closing Date, Seller shall (A) notify Purchaser of any
Chargeback relating to an Excluded Receivable within five Business
Days following the date on which a Chargeback relating to an Excluded
Receivable occurs (each such notified Chargeback is referred to herein
as a "Notified Chargeback"), and (B) provide such information in
Seller's possession relating to Historical Receivables, Recent
Historical Chargebacks and Aged Historical Chargebacks as Purchaser
may reasonably request. Purchaser shall review and investigate the
facts underlying (A) each such Notified Chargeback, promptly following
receipt of notice of each Notified Chargeback, and (B) each Recent
Historical Chargeback, promptly following the Closing Date, and shall
determine in good faith, in accordance with the following sentence,
whether such Notified Chargeback was appropriately claimed or asserted
against the related Excluded Receivable and whether such Recent
Historical Chargeback was appropriately claimed or asserted against
the related Historical Receivable. The review, investigation and
determination by Purchaser described in the foregoing sentence shall
be conducted and made, as applicable, on a basis consistent with the
manner in which such reviews, investigations and determinations were
conducted and made with respect to Chargebacks for accounts and notes
receivable of the Business prior to the Closing, with the exception
that the time periods for performing such reviews, investigations and
determinations may be expedited to comply with the time and delivery
requirements set forth in this Section 1.1(i). Any Notified
Chargeback and Recent Historical Chargeback that Purchaser promptly,
and in any event prior to the 120th day after the Closing Date, (A)
determines was not appropriately claimed or asserted against the
related Excluded Receivable or related Historical Receivable, as
applicable, in accordance with the foregoing two sentences, and
notifies Seller of such determination, and (B) provides Seller with
(1) a reasonable explanation as to why such Notified Chargeback or
Recent Historical Chargeback was not appropriately claimed or asserted
against the related Excluded Receivable or Historical Receivable, as
applicable, and (2) documentation reasonably acceptable to Seller
supporting such determination and explanation by Purchaser, shall be
referred to herein as a "Rebill". Each (A) other Notified Chargeback,
(B) Aged Historical Chargeback and (C) Recent Historical Chargeback
that is not a Rebill shall be referred to herein as a "Reimbursable
Chargeback".
(4) Purchaser shall promptly, and in any event within five
business days after Purchaser's determination of a Notified Chargeback
or Recent Historical Chargeback as a Rebill, rebill on behalf of
Seller and for Seller's account the applicable customer for such
Rebill, and notify Seller of such determination and Rebill. Any and
all payments made in respect of any Rebill, regardless of when paid,
shall be for Seller's account, and Purchaser shall remit promptly to
Seller any payment made to Purchaser in respect of any Rebill.
(5) Seller shall, within five days after the 120th day following
the Closing Date, notify Purchaser in writing of any Rebills that have
been rebilled by Purchaser pursuant to clause (4) above with respect
to which Seller has not received payment in full (and the amount of
such Rebills which have not been paid in full) on or prior to the
120th day following the Closing Date (the aggregate amount of such
Rebills that have not been paid to Seller as of the 120th day
following the Closing Date shall be referred to herein as the
"Undiscounted Rebill Amount").
(6) Purchaser shall, within ten days following the 120th day
following the Closing Date, pay to Seller, by wire transfer of
immediately available funds to an account specified by Seller, an
amount equal to the sum of (A) the aggregate amount of the Chargeback
Amounts for the Reimbursable Chargebacks and (B) 50% of the
Undiscounted Rebill Amount, provided that in no event shall Purchaser
be obligated to pay to Seller an amount pursuant to this Section
1.1(i)(6) in excess of the Final Other Adjustment Amount minus the
amount collected by Seller in respect of the Excluded Receivables
subsequent to the Closing Date.
(7) Seller shall cooperate with Purchaser in providing such
information and documents in Seller's possession as reasonably
requested by Purchaser after the Closing to timely conduct the reviews
and investigations, and to make the determinations, described in
Section 1.1(i)(3) above. Purchaser and Seller shall cooperate with
each other and provide the other party with such information and
access as reasonably requested by the other party after the Closing to
timely collect the Rebills for Seller's account, and Purchaser and
Seller shall use commercially reasonable efforts to collect such
Rebills for Seller's account prior to the 120th day after the Closing
Date.
(8) From and after the Closing Date, neither Purchaser nor
Seller shall induce or encourage any customer of the Business to fail
to pay any portion of any Excluded Receivable.
(j) Notwithstanding anything to the contrary contained in the
Purchase Agreement, the (i) Lease Agreement for 9301 Amberglen
Boulevard, Austin, Texas 78729, dated May 23, 2002, as amended on
December 5, 2003, by and between Newell Rubbermaid Inc. for its
Intercraft Divisions and Austin Jack LLC, and (ii) Assignment of Lease
relating to the lease (as amended) described in clause (i), dated as
of the Closing Date, by and among NNN AmberOaks, LLC, a Texas limited
liability company, TREIT-AmberOaks, LP, a Texas limited partnership,
NNN AmberOaks 1, LLC, NNN AmberOaks 2, LLC, NNN AmberOaks 3, LLC, each
one a Texas limited liability company (as Lessor), acting by and
through Triple Net Properties Realty, Inc. (as Agent for Lessor) as
successor in interest to Austin Jack, L.L.C., a Delaware limited
liability corporation and Newell Rubbermaid, Inc. (as Lessee/Assignor)
and Burnes Operating Company LLC. (as Assignee), shall each be treated
under the Purchase Agreement as Assumed Liabilities and Business
Contracts with respect to the indemnification provisions in Section
9.3(b)(ii) and 9.3(b)(iii) of the Purchase Agreement.
ARTICLE II
GENERAL PROVISIONS
2.1 RATIFICATION; ENTIRE AGREEMENT.
This Amendment shall not affect any terms or provisions of the
Purchase Agreement other than those amended hereby and is only
intended to amend, alter or modify the Purchase Agreement as expressly
stated herein. Except as amended hereby, the Purchase Agreement
remains in effect, enforceable against each of the parties, and is
hereby ratified and acknowledged by each of the parties. The Purchase
Agreement (including the Schedules and Exhibits), as amended by this
Amendment, constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
2.2 COUNTERPARTS.
This Amendment may be executed in two or more counterparts
(including by means of telecopied signature pages), all of which shall
be considered one and the same agreement and shall become effective
when two or more counterparts have been signed by each of the parties
and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
2.3 GOVERNING LAW.
This Amendment shall be governed and construed in accordance with
the laws of the State of New York, without regard to the laws that
might be applicable under conflicts of laws principles.
2.4 SEVERABILITY.
Whenever possible, each provision of this Amendment shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Amendment is held to be
invalid, illegal or unenforceable in any respect under any applicable
law or rule in any jurisdiction, such invalidity, illegality or
enforceability shall not affect any other provision or any other
jurisdiction.
2.5 SUCCESSORS AND ASSIGNS.
This Amendment is binding upon and shall inure to the benefit of
each of the parties and their respective successors and assigns.
2.6 HEADINGS.
The headings, captions and arrangements used in this Amendment
are for convenience only and will not affect the interpretation of
this Amendment.
IN WITNESS WHEREOF, Purchaser and Seller have caused this Amendment to
be signed by their respective officers thereunto duly authorized, all
as of date first written above.
GLOBAL HOME PRODUCTS LLC
By: /s/ George E. Hamilton
-------------------------
Name: George E. Hamilton
Title: Chief Executive Officer
NEWELL RUBBERMAID, INC.
By: /s/ Dale L. Matschullat
-------------------------
Name: Dale L. Matschullat
Title: Vice President -
General Counsel
