Exhibit 10 (ag)
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
among
PLAYTEX PRODUCTS, INC.,
BINKY-GRIPTIGHT, INC.,
▇▇▇▇▇ ▇▇▇▇▇ GRIPTIGHT LIMITED
and
L.W.G. HOLDINGS LIMITED
January 26, 1998
--------------------------------------------------------------------------------
TABLE OF CONTENTS
SUMMARY OF TRANSACTION.......................................................1
ARTICLE I SALE OF ASSETS AND TERMS OF PAYMENT...............................1
1.01 Assets Being Sold (the "Purchased Assets").................1
(a) Furniture, Machinery and Equipment...................1
(b) Inventories..........................................1
(c) Contracts and Commitments............................1
(d) Accounts Receivable..................................2
(e) Books and Records....................................2
(f) Proprietary Rights...................................2
1.02 Retained Assets............................................2
1.03 Assumed Liabilities........................................2
1.04 Retained Liabilities.......................................3
1.05 Purchase Price.............................................3
1.06 Closing Balance Sheet......................................3
1.07 Purchase Price Allocation..................................4
1.08 Absolute Sale..............................................4
1.09 Other Contracts............................................4
1.10 Bulk Sale Tax Notice.......................................4
ARTICLE II RELATED AGREEMENTS...............................................4
2.01 Noncompetition Agreement...................................4
2.02 Assignment of Trademark Rights.............................5
2.03 Technology License Agreement...............................5
2.04 ▇▇▇▇ of Sale...............................................5
2.05 Manufacturing Agreement....................................5
2.06 Promissory Note............................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER,
PARENT AND LWG..................................................5
3.01 Organization and Good Standing; No Investments.............5
3.02 Authorization; Compliance with Other Instruments and Law...5
3.03 Financial Statements.......................................6
3.04 Operation of the Business in the Ordinary Course...........7
3.05 Tax Matters................................................7
-i-
3.06 Material Contracts and Commitments.........................7
3.07 Licenses, Permits and Authorizations.......................8
3.08 Title to Purchased Assets..................................8
3.09 Proprietary Rights.........................................8
3.10 Litigation and Other Claims................................8
3.11 No Material Adverse Change.................................9
3.12 Compliance with Laws.......................................9
3.13 Insurance..................................................9
3.14 Condition of Purchased Assets..............................9
3.15 Full Disclosure............................................9
ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS
OF BUYER........................................................10
4.01 Organization and Good Standing............................10
4.02 Due Authorization.........................................10
4.03 Satisfaction of Assumed Liabilities.......................11
4.04 Performance of Assumed Contracts..........................11
ARTICLE V CLOSING CONDITIONS ..............................................11
5.01 Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby..........................11
(a) No Order, Decree or Injunction......................11
5.02 Conditions to the Obligations of Seller, LWG and Parent
to Effect the Transactions Contemplated Hereby............11
(a) Covenants Performed; Representations and
Warranties True.....................................11
(b) Opinion Letter......................................12
5.03 Conditions to the Obligations of Buyer to Effect the
Transactions Contemplated Hereby..........................13
(a) Covenants Performed; Representations and
Warranties True.....................................13
(b) Opinion Letter......................................13
(c) Consents Obtained...................................15
(d) CPSC Settlement Concluded...........................15
(e) No Material Adverse Change..........................15
ARTICLE VI THE CLOSING.....................................................15
6.01 Time and Place of Closing.................................15
6.02 Instruments of Transfer, Etc..............................15
(a) Seller..............................................16
-ii-
(b) Buyer...............................................16
(c) Parent..............................................16
(d) LWG.................................................16
ARTICLE VII POST-CLOSING COVENANTS.........................................16
7.01 Expenses..................................................16
7.02 Further Assurances........................................17
7.03 Commissions and Fees......................................17
7.04 Sales, Transfer and Use Taxes.............................17
7.05 Nondisclosure.............................................17
7.06 Indemnification...........................................18
(a) By Seller and Parent................................18
(b) By Buyer............................................18
(c) Environmental Claim Definition......................18
7.07 Defense of Claims.........................................19
7.08 Access to Records.........................................20
7.09 Payment of Intercompany Payable...........................21
7.10 Surrender of Binky Name...................................21
7.11 Musical Pacifiers.........................................21
7.12 Molds and Designs.........................................21
7.13 Removal of Purchased Assets and Transition Services.......21
ARTICLE VIII MISCELLANEOUS.................................................22
8.01 Binding Effect............................................22
8.02 Assignment................................................22
8.03 Counterparts..............................................22
8.04 Governing Law.............................................22
8.05 Arbitration...............................................22
8.06 Survival..................................................23
8.07 Notices...................................................23
(a) To Buyer............................................23
(b) To Seller or Parent.................................23
8.08 Amendment and Modification................................24
8.09 Waiver of Compliance......................................24
8.10 Interpretation............................................24
8.11 Entire Agreement..........................................24
-iii-
Page/Section
Schedule Description Reference
-------- ----------- ------------
1.01(a) Fixed Assets 1 [ss.1.01(a)]
1.01(b) Transferred Styles 1 [ss.1.01(b)]
1.01(c) Contracts 1 [ss.1.01(c)]
1.01(f) Proprietary Rights 2 [ss.1.01(f)]
1.06 Closing Balance Sheet 3 [ss.1.06]
1.07 Purchase Price Allocation 4 [ss.1.07]
3.03 GAAP Exceptions 6 [ss.3.03]
3.04 Certain Changes and Events 7 [ss.3.04]
3.07 Licenses, Permits and 8 [ss.3.07]
Authorizations
3.08 Title Exceptions 8 [ss.3.08]
3.09 Proprietary Rights 8 [ss.3.09]
3.10 Litigation 8 [ss.3.10]
3.11 Material Adverse Changes 9 [ss.3.11]
3.13 Insurance 9 [ss.3.13]
5.03(d) CPSC Settlement 15 [ss.5.03(d)]
-iv-
Page/Section
Exhibit Description Reference
------- ----------- ------------
A Form of Noncompetition 4 [ss. 2.01]
Agreement
B Form of Trademark Assignment 5 [ss.2.02]
C Form of Technology License 5 [ss.2.03]
D Form of ▇▇▇▇ of Sale 5 [ss.2.04]
E Form of Manufacturing Agreement 5 [ss.2.05]
F Form of Promissory Note 5 [ss.2.06]
-v-
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of January 29, 1998 between PLAYTEX
PRODUCTS, INC., a Delaware corporation ("Buyer"), BINKY-GRIPTIGHT, INC., a New
Jersey corporation ("Seller"), ▇▇▇▇▇ ▇▇▇▇▇ GRIPTIGHT LIMITED, an English company
("LWG"), and L.W.G. HOLDINGS LIMITED, an English company ("Parent").
SUMMARY OF TRANSACTION
Parent owns all of the outstanding capital stock of Seller and of
LWG. Seller wishes to sell, and Buyer wishes to purchase, substantially all of
the assets of Seller related to or used in connection with Seller's business of
selling pacifiers under the "Binky" brand name (herein the "Business"). To
effect such transaction and in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and intending
to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
SALE OF ASSETS AND TERMS OF PAYMENT
1.01 Assets Being Sold (the "Purchased Assets"). At the Closing (as
defined in Section 6.01 hereof), Seller agrees to sell and transfer to Buyer,
and Buyer agrees to purchase, all of Seller's assets related to or used in
connection with the Business as they shall exist on the Closing Date (as defined
in Section 6.01 hereof), except for the Retained Assets (as defined in Section
1.02 hereof), including without limitation the following assets:
(a) Furniture, Machinery and Equipment. All of the furniture,
machinery, equipment, and other fixed assets of Seller (the "Furniture and
Equipment"), substantially all of which are listed in Schedule 1.01(a)
hereto;
(b) Inventories. All inventories of Seller related to the Business,
consisting of pacifiers of the styles listed in Schedule 1.01(b) hereto
(the "Transferred Styles"), except as otherwise provided in Section 1.02
hereof;
(c) Contracts and Commitments. Subject to the provisions of Section
1.09 hereof, all of the right, title and interest of Seller in, to and
under all pending and executory contracts, agreements, commitments and
understandings relating to the Business which are specifically listed in
Schedule 1.01(c) hereto including, without limitation, those with respect
to: (w) the licensing of Proprietary Rights (as hereinafter defined), (x)
the sale of products of Seller, including all unfilled orders received
from Seller's customers, a complete list of which is included in Schedule
1.01(c) hereto, (y) the purchase of materials, supplies or services by
Seller, and (z) the Material Contracts as defined in Section 3.06;
1
(d) Accounts Receivable. All of Seller's accounts receivable
(including, without limitation, trade and sundry receivables) and notes
receivable relating to the Business, subject to any trade credits or
offsets owed to customers of Seller which are properly reflected in the
Closing Balance Sheet;
(e) Books and Records. All of Seller's books and records relating to
the Business, including all sales and credit records, advertising and
sales material, literature, customer lists, financial and accounting
records and other business books and records, except as otherwise provided
in Section 1.02 hereof; and
(f) Proprietary Rights. Seller's U.S. and foreign (if any)
trademarks (including, without limitation, worldwide rights to the "Binky"
trademark), service marks and goodwill appurtenant thereto, and
applications therefor, copyrights, trade names, brand names, technology
licenses and goodwill of Seller relating to the Business ("Proprietary
Rights"), a complete list of which is included in Schedule 1.01(f) hereto.
1.02 Retained Assets. Notwithstanding the foregoing, the Purchased
Assets shall not include: (i) Seller's interest in any leasehold premises and
any real property lease agreements of Seller; (ii) all rights, title and
interest in and to the name "Griptight"; (iii) the capital stock of Monital
Signal Corp. held by Seller; (iv) tax credits, tax refunds and tax receivables
of every kind to which Seller is or may become entitled; (v) Seller's corporate
minute books, stock books, stock transfer ledgers, tax returns, financial
statements, work papers related to preparation thereof, general ledgers, cash
receipts ledgers, disbursement/payable ledgers, sales ledgers, payroll journals,
payroll tax returns and all vendor invoices; (vi) all of Seller's inventories of
Christmas musical pacifiers, items number 2800, 2800CL, 2800DP and 2851 and all
components thereof (if any); (vii) any Furniture and Equipment which Buyer has
not removed from Seller's premises within 30 days after the Closing Date; (viii)
the cash and cash equivalent items of Seller as of the Closing Date, including,
without limitation, time deposits, certificates of deposit, marketable
securities and the proceeds of accounts receivable paid on or prior to the
Closing Date; (ix) all of Seller's right, title and interest in and to the
Agreement (the "Joy Baby Agreement") dated February 15, 1989 between Seller and
Joy Baby, Inc.; and (x) all assets of Seller which do not relate to and are not
used in connection with the Business.
1.03 Assumed Liabilities. Buyer agrees to assume, perform and
discharge only those accounts payable of Seller's business incurred as a result
of Buyer's operations conducted prior to the Closing Date which are specifically
reflected in the Closing Balance Sheet (as defined in Section 1.06 below), to
the extent and only to the extent that adequate provisions or reserves therefor
are included in the Closing Balance Sheet. Such Closing Balance Sheet shall
include only the following Assumed Liabilities: (i) Seller's accounts payable on
the Closing Date; (ii) Seller's payable to its Malaysian supplier as of the
Closing Date (which payable has been assigned to LWG); and (iii) Seller's
intercompany payable to LWG as of the Closing Date reduced by the amount payable
by
2
Parent to Seller on the Closing Date (collectively, to the extent reflected in
the Closing Balance Sheet, the "Assumed Liabilities").
1.04 Retained Liabilities. The Assumed Liabilities shall not include
any of Seller's accounts payable or other indebtedness or liabilities incurred,
related to, or arising as a result of operations conducted, actions taken or
events occurring on or prior to the Closing Date which are not reflected in full
on the Closing Balance Sheet, including specifically, but without limitation,
(i) all environmental liabilities and claims, (ii) all litigations, arbitrations
and other third party claims and proceedings (including, without limitation, any
liabilities, fines or other obligations to the Consumer Products Safety
Commission (the "CPSC") with respect to acts occurring or products sold prior to
the Closing Date), (iii) all employee liabilities, workers compensation
liabilities and employee benefit liabilities and obligations (including
specifically, but without limitation, post-retirement medical benefits,
severance pay, bonuses, incentive pay and deferred compensation), (iv) all tax
liabilities, including without limitation, all foreign, federal, state or local
income, franchise, gross receipts, property, sales, use or value added taxes or
any interest, additions to tax or penalties thereon, (v) all product liability
claims relating to products manufactured or sold on or prior to the Closing Date
(regardless of when the relevant injury or damage occurs or when the claim is
asserted); (vi) all liabilities and obligations under or related to the Joy Baby
Agreement; and (vii) all other liabilities and obligations (known, unknown,
contingent or other) which are not specifically reflected on the Closing Balance
Sheet (the "Retained Liabilities"). Buyer shall not assume any liabilities or
obligations of Seller except those specifically assumed by Buyer pursuant to the
provisions of Section 1.03, and Seller and Parent agree to indemnify and hold
harmless Buyer with respect to the Retained Liabilities in the manner provided
in Section 7.06 hereof.
1.05 Purchase Price. Buyer, in consideration for the Purchased
Assets being sold pursuant to this Agreement, agrees to pay to Seller $405,000
(the "Purchase Price"), and agrees to assume the Assumed Liabilities. The
Purchase Price will be delivered to Seller in cash at Closing by wire transfer
of immediately available funds to the account of Seller at such bank as Seller
specifies in writing at least two business days prior to the Closing Date.
1.06 Closing Balance Sheet. Seller has prepared and delivered to
Buyer (and Buyer has reviewed) the unaudited balance sheet of Seller as of the
close of business on the Closing Date reflecting only the Purchased Assets and
the Assumed Liabilities (the "Closing Balance Sheet") attached hereto as
Schedule 1.06, which includes appropriate provisions, accruals or reserves for
bad debts, returns and credits and for obsolete inventory, prepared by Seller's
accountants in accordance with United States generally accepted accounting
principles (hereinafter "GAAP") applied on a basis consistent with the prior
practices of Seller in preparing the Financial Statements (as hereinafter
defined) except for such exceptions to GAAP which are specified in Schedule 1.06
hereto. In connection with preparing the Closing Balance Sheet, Seller conducted
a complete physical inventory of the Purchased Assets as of the Closing Date,
and Buyer and its accountants attended and participated in the taking of such
physical inventory.
3
1.07 Purchase Price Allocation. Seller and Buyer agree to allocate
the purchase price for the Purchased Assets in the manner reflected in Schedule
1.07 hereto, which allocation the parties shall adhere to for the purposes of
all federal, state and local tax returns filed by them subsequent to the
Closing, including the determination by Seller of taxable gain or loss on the
sale of the Purchased Assets hereunder and the determination by Buyer of its tax
basis with respect to the Purchased Assets.
1.08 Absolute Sale. Seller agrees that the sale, conveyance,
transfer and delivery of the Purchased Assets to Buyer shall be free and clear
of all title defects, liabilities, obligations, liens, encumbrances, charges and
claims of any kind, except any liabilities and obligations expressly assumed by
Buyer pursuant to Section 1.03 hereof and any matters described in Schedule 3.08
hereto.
1.09 Other Contracts. This Agreement shall not constitute an
agreement to assign, sublease or sublicense, as the case may be, any contracts,
leases, licenses, agreements or arrangements (for purposes of this Section 1.09
collectively called "Contracts") if such attempted assignment, sublease or
sublicense, without the consent of the other party or parties thereto, is not
permitted as a matter of law or in accordance with the terms of the Contracts or
would constitute a breach of the Contracts or would in any way impair the rights
of Seller or Buyer thereunder. Seller will use its best efforts to obtain, or
will assist Buyer to obtain, such consents as may be necessary or appropriate to
vest in Buyer all of Seller's right, title and interest in all such Contracts.
If any such consent is not obtained or if any assignment, attempted assignment,
sublease or sublicense is not so permitted or would be ineffective or would
impair Buyer's rights thereunder, Seller will cooperate with Buyer in any
reasonable arrangement designed to provide for Buyer the benefits under any such
Contracts.
1.10 Bulk Sale Tax Notice. Seller and Buyer agree to comply with any
instructions received from the New Jersey Division of Taxation (the "NJDT")
which result from Buyer's notice filing under N.J.S.A. 54:32B-22(c). Seller and
Buyer agree that any tax escrow required by the NJDT shall, to the extent
permissible, be satisfied by the existence of the Promissory Note (as
hereinafter defined) with appropriate set-off rights.
ARTICLE II
RELATED AGREEMENTS
Simultaneously with the Closing hereunder the following agreements
(the "Related Agreements") will be executed and delivered by the parties:
2.01 Noncompetition Agreement. An agreement (the "Noncompetition
Agreement") among Buyer, Seller, LWG and Parent, in the form of Exhibit A
hereto, pursuant to which Seller, LWG and Parent will agree to certain
non-competition covenants.
4
2.02 Assignment of Trademark Rights. An assignment agreement (the
"Trademark Assignment") in the form of Exhibit B hereto, pursuant to which
Seller will assign to Buyer all of Seller's right, title and interest in, to and
under all trademarks and applications therefor included in the Purchased Assets.
2.03 Technology License Agreement. An agreement between Buyer,
Playtex Manufacturing, Inc. ("PMI") and LWG (the "Technology License") in the
form of Exhibit C hereto, providing for the license to Buyer of certain patents,
designs and intellectual property rights of LWG.
2.04 ▇▇▇▇ of Sale. A ▇▇▇▇ of sale (the "▇▇▇▇ of Sale") in the form
of Exhibit D hereto transferring title to the Purchased Assets to Buyer.
2.05 Manufacturing Agreement. An agreement between PMI and LWG, in
the form of Exhibit E hereto, pursuant to which LWG will manufacture and supply
certain products to Buyer (the "Manufacturing Agreement").
2.06 Promissory Note. An unsecured promissory note (the "Promissory
Note") of Buyer, in the form of Exhibit F hereto, payable to LWG representing a
portion of the Intercompany Payable (as hereinafter defined) in the principal
amount of $500,000 payable on July 26, 1998 and bearing interest at the rate of
7.25% per annum.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLER, PARENT AND LWG
Seller, Parent and LWG jointly and severally represent and warrant
to, and covenant with, Buyer that as of the Closing Date:
3.01 Organization and Good Standing; No Investments. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New Jersey, and has the corporate power and authority to own,
lease and operate its properties and assets (including the Purchased Assets) and
to conduct its business as it is now being conducted. Seller is duly qualified
to do business in all jurisdictions in which Seller owns, leases or operates
property related to the Business or otherwise conducts the Business. Seller has
no equity or similar investments, direct or indirect, in any corporation,
partnership, limited liability company, association, joint venture or other
entity which are necessary for Buyer to conduct the Business.
3.02 Authorization; Compliance with Other Instruments and Law.
Seller, LWG and Parent each has full corporate power and authority to enter into
this Agreement, the Related Agreements and any other agreements and documents to
be executed and delivered by them at Closing as contemplated hereby
(collectively, the "Closing Documents"), to consummate the
5
transactions contemplated hereby and thereby and to perform their obligations
hereunder and thereunder. The execution, delivery and performance of this
Agreement, the Related Agreements and the Closing Documents and the consummation
of the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of each of Seller, LWG and Parent.
This Agreement has been duly executed and delivered by Seller, LWG and Parent,
and is a valid and binding obligation of each of Seller, LWG and Parent,
enforceable in accordance with its terms and the Related Agreements and the
Closing Documents will, when executed and delivered by Seller, LWG and Parent at
Closing, constitute valid and binding obligations of each of Seller, LWG and
Parent, enforceable in accordance with their terms. The execution, delivery and
performance of this Agreement, the Related Agreements and the Closing Documents
will not (i) conflict with or result in a breach or violation of any provision
of the Certificate of Incorporation or By-Laws of Seller or the Memorandum and
Articles of Association of LWG and Parent or of any order, writ, injunction,
judgment, decree, law, statute, rule or regulation to which Seller, LWG or
Parent is a party or by which Seller, LWG or Parent or the Purchased Assets may
be bound or affected; or (ii) result in a default (or give rise to any right of
termination, cancellation or acceleration) or result in the creation of any
lien, encumbrance, security agreement, charge, pledge, equity or other claim or
right of any person in or to the Purchased Assets under the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which Seller, LWG or Parent is a party or by which
Seller, LWG or Parent or the Purchased Assets may be bound. All necessary
authorizations of the transactions contemplated by this Agreement required to be
obtained by Seller, LWG or Parent from any Federal, state, local or foreign
government or agency shall have been obtained prior to the Closing, and any
filings, notifications or disclosures required by law or regulation of any such
government or agency shall have been made in such form as is acceptable as
filed. Buyer shall cooperate with Seller, LWG and Parent, with respect to the
aforesaid filings, notifications or disclosures to the extent necessary to
obtain said authorizations. Seller, LWG and Parent will each deliver to Buyer at
the Closing true and complete copies of all resolutions of its board of
directors by which the execution, delivery and performance of this Agreement,
the Related Agreements and the Closing Documents and the consummation of the
transactions contemplated hereby and thereby were authorized, certified by the
Secretary or Assistant Secretary of each of Seller, LWG and Parent as of the
Closing Date.
3.03 Financial Statements. Seller has previously furnished to Buyer
true and correct copies of (i) the audited balance sheet of Seller as at March
31, 1997 and the unaudited balance sheets of Seller as of September 30, 1997 and
December 31, 1997; and (ii) the related audited statement of income of Seller
for the fiscal year ended March 31, 1997, and the unaudited income statements
for the seven month period ended September 30, 1997 and for the nine month
period ended December 31, 1997 (collectively, the "Financial Statements"). The
balance sheets included in the Financial Statements (including the related notes
thereto) present fairly the financial position of Seller as of their respective
dates, and the related statements of income included in the Financial Statements
present fairly the results of operations of Seller for the periods then ended,
all in conformity with GAAP applied on a consistent basis except for such
exceptions from GAAP as
6
are specified in Schedule 3.03 hereof. The Financial Statements dated as at and
for the nine month period ended December 31, 1997 are hereinafter referred to as
the "Recent Financial Statements".
The Closing Balance Sheet presents fairly the financial condition of
Seller reflected therein as at the Closing Date in accordance with GAAP, except
as specified on Schedule 1.06.
3.04 Operation of the Business in the Ordinary Course. Except as
otherwise contemplated by this Agreement, since the close of business on March
31, 1997, the Business has been operated in the ordinary course and
substantially in the manner such Business was heretofore conducted (including,
without limitation, with respect to inventory levels, sales levels, promotional
programs, distribution, spending and pricing), and there has not been, except as
disclosed on Schedule 3.04 hereto:
(a) any purchase or other acquisition of property (except for
purchases of inventory in the ordinary course), any sale, lease or other
disposition of property, or any single expenditure in excess of $50,000;
(b) any material incurrence of liability not reflected in the
Financial Statements;
(c) any public controversy Seller is aware of which is critical of
Seller of any of its products or its manufacture of products other than
isolated customer and consumer complaints in the ordinary course of
business; or
(d) any change by Seller in accounting methods, principles or
practices.
3.05 Tax Matters. There is no tax obligation of Seller which
constitutes, or may in the future constitute, a lien on the Purchased Assets,
and, if any such lien exists or arises, it will be promptly discharged by
Seller.
3.06 Material Contracts and Commitments. Schedule 1.01(c) hereto
constitutes a full and complete list, as of the date hereof, of all: (a)
agreements or commitments relating to contract manufacturing, product or
inventory purchase arrangements for the Business; (b) license agreements
relating to Proprietary Rights, software or other intangible assets used by the
Business; and (c) contracts and commitments of Seller relating to the Business
which involve aggregate obligations of Seller in excess of $10,000 per contract
or which have a remaining term, as of the date hereof, of over six months in
length of obligation on the part of Seller ("Material Contracts"). Except as
indicated on Schedule 1.01(c), Seller is not in breach or violation of, or in
default under, any of the Material Contracts; the execution of this Agreement
and the consummation of the trans actions contemplated hereby will not
constitute a default or breach under the Material Contracts; and, except as
specifically indicated in Schedule 1.01(c), the execution of this Agreement and
the consummation of the transactions contemplated hereby will not give rise to
any consent requirement under any of the Material Contracts for which consent
has not already been obtained ("Required
7
Consents"). All of the contracts listed on Schedule 1.01(c) are in full force
and effect and have not been modified or amended in any material respect, except
as set forth on Schedule 1.01(c).
3.07 Licenses, Permits and Authorizations. Seller has all approvals,
authorizations, consents, licenses, franchises, orders, certificates and other
permits of, and has made all filings with, any governmental authority, whether
foreign, Federal, state or local, which are required for the ownership of the
Purchased Assets or the conduct of Seller's business as presently conducted. A
complete list of all such approvals, authorizations, consents, licenses,
franchises, orders, certificates, permits and filings is included in Schedule
3.07 hereto.
3.08 Title to Purchased Assets. Seller has good and marketable legal
title to the Purchased Assets and shall at the Closing deliver to Buyer good and
marketable legal title to the Purchased Assets free and clear of all title
defects, liabilities, obligations, liens, mortgages, security interests,
encumbrances, claims or similar adverse interests of any kind or character
except the title exceptions listed in Schedule 3.08 hereto. All leases pursuant
to which Seller leases any of the Purchased Assets are valid and binding in
accordance with their respective terms.
3.09 Proprietary Rights. Schedule 3.09 hereto sets forth a complete
list of all patents, patent applications, trademarks, trademark applications,
service marks, service ▇▇▇▇ applications, trade secrets, trade names,
copyrights, licenses, inventions, drawings, designs, formulae, processes,
proprietary know-how or commercial or technical information, or other rights
with respect thereto (collectively "Proprietary Rights") which are held, owned,
licensed or used by Seller in connection with the Business; and no other
Proprietary Rights (other than those which will be licensed to Buyer pursuant to
the Technology License) are used or necessary in connection with the Company's
business. Seller is not, by virtue of the conduct of its business, infringing
upon or making an unauthorized use of any patent, trademark, service ▇▇▇▇, trade
name, copyright, trade secret, proprietary right or other intellectual property
right of any third party.
3.10 Litigation and Other Claims. Except as described in Schedule
3.10, there are no actions, suits, arbitration proceedings, claims,
investigations or proceedings (civil, criminal or administrative) related to the
Business or relating to any of the Purchased Assets pending or, to the knowledge
of Seller, threatened before any foreign, Federal, state, municipal or other
court, department, commission, arbitration panel, board, bureau, agency, body or
instrumentality against Seller or affecting any of the Purchased Assets, at law
or in equity. Schedule 3.10 also contains a complete list of all such claims,
actions, proceedings and investigations against Seller relating to the Business
during the five years prior to the date hereof and a description of the
disposition thereof. The settlement with the CPSC referred to in Schedule 3.10
constitutes a full and final resolution of all pending CPSC investigations and
claims concerning Seller's products. Seller is not a party to or subject to the
provisions of any order, writ, injunction, decree or judgment of any court or
foreign, Federal, state, municipal or other governmental or administrative body,
department, commission, board, bureau, any securities exchange or other agency
or instrumentality in connection with the ongoing operations of Seller except as
set forth in Schedule 3.10.
8
3.11 No Material Adverse Change. Except as described in Schedule
3.11 hereto, since the close of business on December 31, 1997, there has been no
material adverse change in the financial condition, results of operations,
business or prospects of Seller.
3.12 Compliance with Laws. Neither the Purchased Assets nor the
operations of the Business, as conducted on or prior to the date hereof, violate
any foreign, Federal, state or local law, ordinance, rule or regulation or any
orders, judgments, decrees or rules of any foreign, Federal, state or local
court or governmental authority or regulatory agency or authority.
3.13 Insurance. All policies of insurance of any kind maintained,
owned or held by Seller are set forth in Schedule 3.13 hereto and such policies
are in full force and effect, all premiums with respect thereto covering all
periods up to and including the Closing Date have been paid, and no notice of
cancellation or termination has been received with respect to any such policy
which has not been replaced on substantially similar terms prior to the date of
such cancellation or termination. The insurance policies to which Seller is a
party are sufficient for compliance with all requirements of applicable laws and
all agreements to which Seller is a party or by which Seller is bound. Except as
disclosed in Schedule 3.13, in the three years preceding the date of this
Agreement, Seller has not been refused any insurance with respect to any of its
assets or operations or had its coverage limited by any insurance carrier to
which it has applied for any such insurance or with which it has carried
insurance.
3.14 Condition of Purchased Assets. Except as reflected in any
reserves for obsolete inventory included in the Closing Balance Sheet, all of
Seller's inventories included in the Closing Balance Sheet are in good and
marketable condition and are first-quality and usable in the present normal
business operations of Seller's business. No products now being made by or for
Seller are adulterated, or misbranded, contaminated, damaged or defective in any
respect, and all such products are in full compliance with all federal, state
and local regulations as to manufacturing, contents, efficacy, labeling and
distribution, and all claims and descriptions for such products, in the manner
now used on such products or in advertising therefor, are lawful and not
materially misleading.
All accounts and notes receivable which are included in the Closing
Balance Sheet are valid and existing obligations payable to Seller in accordance
with their terms and fully collectible in the aggregate recorded amounts
thereof, less the allowance for bad debts, if any, set forth in the Closing
Balance Sheet. Buyer agrees that, if it shall collect from Seller any
indemnification claim hereunder with respect to unpaid accounts or notes
receivable, Buyer shall at the time it satisfies such indemnification claim
(whether by set-off against the Promissory Note or otherwise) assign to Seller
ownership of the accounts or note receivable (or portion thereof) giving rise to
such indemnification claim.
3.15 Full Disclosure. All information furnished to Buyer in
accordance herewith is, and as of the Closing Date shall be, correct and
complete in all respects. No representation or
9
warranty of Seller and no information, schedule, certificate or document
furnished or to be furnished by or on behalf of Seller to Buyer, its affiliates
or its agents pursuant to or in connection with this Agreement contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statement contained herein or
therein not misleading.
ARTICLE IV
REPRESENTATIONS, WARRANTIES
AND COVENANTS OF BUYER
Buyer hereby represents and warrants to, and covenants with, Seller,
Parent and LWG that:
4.01 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as proposed to be conducted.
4.02 Due Authorization. Buyer has full corporate power and authority
to enter into this Agreement, the Related Agreements and any other agreements
and documents to be executed and delivered by it at Closing as contemplated
hereby (collectively, the "Closing Documents"), to consummate the transactions
contemplated hereby and thereby and to perform its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement and the
Closing Documents and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action on the
part of Buyer. This Agreement has been duly executed and delivered by Buyer, and
is a valid and binding obligation of Buyer enforceable in accordance with its
terms and the Related Agreements will, when executed and delivered by Buyer at
Closing, constitute valid and binding obligations of Buyer enforceable in
accordance with their terms. The execution, delivery and performance of this
Agreement and the Closing Documents will not (i) conflict with or result in a
breach or violation of any provision of the Certificate of Incorporation or
By-Laws of Buyer or of any order, writ, injunction, judgment, decree, law,
statute, rule or regulation to which Buyer is a party or by which Buyer may be
bound or affected; or (ii) result in a default (or give rise to any right of
termination, cancellation or acceleration) or result in the creation of any
lien, encumbrance, security agreement, charge, pledge, equity or other claim or
right of any person under the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation to
which Buyer is a party or by which Buyer may be bound. All necessary
authorizations of the transactions contemplated by this Agreement required to be
obtained by Buyer from any Federal, state, local or foreign government or agency
shall have been obtained prior to the Closing, and any filings, notifications or
disclosures required by law or regulation of any such government or agency shall
have been made in such form as is acceptable as filed. Seller shall cooperate
with Buyer with respect
10
to the aforesaid filings, notifications or disclosures to the extent necessary
to obtain said authorizations. Buyer will deliver to Seller at the Closing true
and complete copies of all resolutions of its board of directors by which the
execution, delivery and performance of this Agreement and the Closing Documents
and the consummation of the transactions contemplated hereby and thereby were
authorized, certified by the Secretary or Assistant Secretary of Buyer as of the
Closing Date.
4.03 Satisfaction of Assumed Liabilities. Buyer shall pay and
satisfy in full and in a timely manner all of the Assumed Liabilities in full
compliance with, and without permitting any breach of, all contracts pertaining
to the Assumed Liabilities, so as to protect Seller from any assertions of
breach of contract or claims based upon the Assumed Liabilities.
4.04 Performance of Assumed Contracts. Buyer shall fully and
properly perform, and shall not permit any breach to occur on the part of the
Buyer with respect, to any of the contracts included in the Purchased Assets, so
as to protect Seller from any assertions from breach of contract brought by any
third party.
ARTICLE V
CLOSING CONDITIONS
5.01 Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby. The respective obligations of each party to
effect the transactions contemplated hereby shall be subject to the fulfillment
at or prior to the Closing Date of the following condition:
(a) No Order, Decree or Injunction. Neither Seller nor Buyer shall
be subject to any order, decree or injunction of a court of competent
jurisdiction or governmental agency and no statute, rule or regulation
shall be enacted or issued which (i) prevents or delays any of the
transactions contemplated by this Agreement, or (ii) would impose any
limitation on the ability of Buyer effectively to exercise full rights of
ownership of the Purchased Assets.
5.02 Conditions to the Obligations of Seller, LWG and Parent to
Effect the Transactions Contemplated Hereby. The obligations of Seller, LWG and
Parent to effect the transactions contemplated hereby shall be further subject
to the fulfillment at or prior to the Closing Date of the following conditions,
any one or more of which may be waived by Seller, LWG and Parent:
(a) Covenants Performed; Representations and Warranties True. Buyer
shall have performed and complied in all material respects with the covenants
and agreements contained in this Agreement required to be performed and complied
with by it at or prior to the Closing Date, the representations and warranties
of Buyer set forth in this Agreement shall be true and correct as
11
of the Closing Date, and Seller, LWG and Parent shall have received a
certificate to that effect signed by an authorized officer of Buyer;
(b) Opinion Letter. At the Closing, Seller, LWG and the Parent shall
have received an opinion from ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, General Counsel of Buyer,
dated the Closing Date and satisfactory in form and substance to Seller
and its counsel, to the effect that:
(i) Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as proposed to
be conducted;
(ii) Buyer has full corporate power and authority to enter
into this Agreement, the Related Agreements and any other agreements
and documents to be executed and delivered by it at Closing as
contemplated hereby (collectively, the "Closing Documents"), to
consummate the transactions contemplated hereby and thereby and to
perform its obligations hereunder and thereunder. The execution,
delivery and performance of this Agreement, the Related Agreements
and the Closing Documents and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Buyer. All necessary
authorizations of the transactions contemplated by this Agreement
required to be obtained by Buyer from any Federal, state, local or
foreign government or agency shall have been obtained prior to the
Closing, and any filings, notifications or disclosures required by
law or regulation of any such government or agency shall have been
made in such form as is acceptable as filed.
(iii) This Agreement and the Related Agreements have been duly
and validly executed and delivered by Buyer and, assuming this
Agreement and the Related Agreements are the valid and binding
obligations of Seller, Parent, L.W.G. and/or the other parties
thereto, constitute the valid and binding obligation of Buyer,
enforceable against Buyer in accordance with their terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights generally, and by general principles of equity
(regardless of whether such enforcement is considered in a
proceeding in equity or at law).
As to any matters contained in such opinion which involve the laws
of any jurisdiction other than the Federal laws of the United States of
America, the laws of the State of New York and the General Corporation Law
of the State of Delaware, Buyer's counsel may rely upon opinions of
counsel admitted to practice in such other jurisdictions or may, for
purposes of opinions involving New Jersey law, assume that the laws of the
State of New Jersey are the same as the laws of the State of New York. Any
opinions relied upon by
12
Buyer's counsel as aforesaid shall be in form and substance satisfactory
to Seller and its counsel, and the counsel rendering such opinions shall
be satisfactory to Seller and its counsel. Any such opinions shall be
delivered to Seller together with the opinion of Buyer's counsel. The
opinion of Buyer's counsel may expressly rely as to matters of fact upon
certificates furnished by appropriate officers and directors of Buyer and
public officials.
5.03 Conditions to the Obligations of Buyer to Effect the
Transactions Contemplated Hereby. The obligations of Buyer to effect the
transactions contemplated hereby shall be further subject to the fulfillment at
or prior to the Closing Date of the following conditions, any one or more of
which may be waived by Buyer:
(a) Covenants Performed; Representations and Warranties True.
Seller, LWG and Parent shall have performed and complied in all material
respects with the covenants and agreements contained in this Agreement required
to be performed and complied with by them at or prior to the Closing Date, and
the representations and warranties of Seller, LWG and Parent set forth in this
Agreement shall be true and correct as of the Closing Date, and Buyer shall have
received a certificate to that effect signed by an authorized officer of Seller;
(b) Opinion Letter. At the Closing, Buyer shall have received an
opinion from Schiffman, Berger, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel
for Seller, and an opinion from ▇▇▇▇▇▇ ▇▇▇▇ & Co., counsel to LWG and
Parent (each, respectively, as to their specific clients), dated the
Closing Date and reasonably satisfactory in form and substance to Buyer
and its counsel, to the effect that:
(i) Each of Seller, LWG and Parent is a corporation duly
organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation, and has the corporate power and
authority to own, lease and operate its properties and assets
(including, in the case of Seller, the Purchased Assets) and to
conduct its business as it is now being conducted;
(ii) Each of Seller, LWG and Parent has full corporate power
and authority to enter into this Agreement, the Related Agreements
and any other agreements and documents to be executed and delivered
by them at Closing as contemplated hereby (collectively, the
"Closing Documents"), to consummate the transactions contemplated
hereby and thereby and to perform its obligations hereunder and
thereunder. The execution, delivery and performance of this
Agreement, the Related Agreements and the Closing Documents and the
consummation of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the
part of each of Seller, LWG and Parent. All necessary authorizations
of the transactions contemplated by this Agreement or the Related
Agreements required to be obtained by Seller, Parent or LWG from any
Federal, state, local or foreign government or agency shall have
been
13
obtained prior to the Closing, and any filings, notifications or
disclosures required by law or regulation of any such government or
agency shall have been made in such form as is acceptable as filed;
(iii) This Agreement and the Related Agreements have been duly
and validly executed and delivered by each of Seller, LWG and Parent
(to the extent that such entities are parties to such agreements),
and, assuming this Agreement and the Related Agreements are the
valid and binding obligations of Buyer, constitute the valid and
binding obligations of each of Seller, LWG and Parent, enforceable
against Seller, LWG and Parent in accordance with their terms,
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally, and by general principles of equity
(regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(iv) Except for those approvals and consents which have
already been obtained, neither execution and delivery by Seller, LWG
and Parent of this Agreement and the Related Agreements, the sale by
Seller of the Purchased Assets pursuant to this Agreement, nor the
consummation of the other transactions contemplated by this
Agreement and the Related Agreements, will (A) conflict with or
result in any breach of any provision of the Certificate of
Incorporation or ByLaws or the Memorandum and Articles of
Association of Seller, LWG and Parent, (B) require any consent,
approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority other than those which
have been made or obtained; (C) to the best of such counsel's
knowledge after reasonable inquiry of management, result in the
creation of any encumbrance, mortgage, security interest, lien,
equity or right of others upon any of the Purchased Assets under any
of the terms, conditions or provisions of any agreement, instrument
or obligation known to such counsel to which Seller or any of its
assets may be bound or affected; or (D) violate any order, writ,
injunction, judgment or decree known to such counsel, to which
Seller, LWG or Parent is a party, or by which any of their assets
are bound or any law, statute, rule or regulation applicable to
Seller, LWG or Parent or any of their assets.
As to any matters contained in such opinion which involve the laws
of any jurisdiction other than the federal laws of the United States of
America and the laws of the State of New Jersey as to counsel for Seller
or the laws of England as to counsel for LWG and Parent, the respective
counsel may rely upon opinions of counsel admitted in such other
jurisdictions. Any opinions relied upon by Seller's counsel as aforesaid
shall be in form and substance satisfactory to Buyer and its counsel, and
the counsel rendering such opinions shall be satisfactory to Buyer and its
counsel. Any such opinions shall be delivered to Buyer together with the
opinion of Seller's counsel and counsel to LWG and Parent. The opinion
14
of both such counsel may expressly rely as to matters of fact upon
certificates furnished by appropriate officers and directors of Seller and
public officials.
(c) Consents Obtained. Seller shall have received and delivered to
Buyer all Required Consents.
(d) CPSC Settlement Concluded. Seller shall have reached a final
settlement with the CPSC staff, which is awaiting approval by the Commission (a
true and complete copy of which is attached as Schedule 5.03(d) hereto) with
regard to the pending CPSC investigation and claims concerning Seller's
products, Seller shall have paid in full any liability or fine resulting from
such settlement which is, by the terms of such settlement, due to be paid on or
prior to the Closing Date (and shall have provided Buyer with evidence
reasonably satisfactory to Buyer of such settlement and payments).
(e) No Material Adverse Change. There shall not have been, since the
date of the Recent Financial Statements, any material adverse change in the
business, results of operations, financial condition or prospects of Seller
except as set forth in Schedule 3.11 hereto.
ARTICLE VI
THE CLOSING
6.01 Time and Place of Closing. Upon the terms and conditions of
this Agreement, the Closing of the transactions contemplated hereby (the
"Closing") shall take place, effective as of the close of business on the date
hereof, at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other time and place as the parties hereto may
agree in writing. The effective time of the Closing is herein referred to as the
"Closing Date".
6.02 Instruments of Transfer, Etc. At the Closing, Seller will
deliver to Buyer such deeds, bills of sale, instruments of assignment and other
good and sufficient instruments of transfer, executed by Seller and in a form
reasonably satisfactory to Buyer, as Buyer may reasonably require to vest in
Buyer all right, title and interest of Seller in and to the Purchased Assets,
and Buyer shall pay to Seller in immediately available Federal Funds $405,000
representing the Purchase Price, plus $502,583 (representing the amount by which
the Intercompany Payable (as hereinafter defined) exceeds $500,000), and shall
also deliver to Seller the other documents and instruments required of it at the
Closing.
Without limiting the foregoing, the documents to be delivered by the
parties at the Closing shall include the following:
15
(a) Seller. Seller shall execute and deliver (i) this Agreement,
(ii) the Noncompetition Agreement, (iii) the Trademark Assignment, (iv)
the ▇▇▇▇ of Sale, (v) all necessary third party consents to the assignment
of Contracts as contemplated by Section 1.09 hereof, (vi) the Secretary's
Certificate contemplated by Section 3.02 hereof and the Officer's
Certificate contemplated by Section 5.03(a) hereof; (vii) the opinion
letters contemplated by Section 5.03(b) hereof; and (viii) such other
instruments and documents as may reasonably be required of it at the
Closing pursuant to the terms of this Agreement.
.
(b) Buyer. Buyer shall execute and deliver (i) this Agreement, (ii)
the Non competition Agreement, (iii) the Trademark Assignment, (iv) the
Technology License, (v) the Manufacturing Agreement, (vi) the Promissory
Note, (vii) the Secretary's Certificate con templated by Section 4.02
hereof and the Officer's Certificate contemplated by Section 5.02(a)
hereof; (viii) the opinion letter contemplated by Section 5.02(b) hereof;
and (ix) such other instruments and documents as may reasonably be
required of it at the Closing pursuant to the terms of this Agreement.
(c) Parent. Parent shall execute and deliver (i) this Agreement,
(ii) the Noncompetition Agreement, (iii) the Secretary's Certificate
contemplated by Section 3.02 hereof, and (iv) such other instruments and
documents as may reasonably be required of it at the Closing pursuant to
the terms of this Agreement.
(d) LWG. LWG shall execute and deliver (i) this Agreement, (ii) the
Noncompetition Agreement, (iii) the Technology License; (iv) the
Manufacturing Agreement, (v) Secretary's Certificate contemplated by
Section 3.02 hereto, and (vi) such other instruments and documents as may
reasonably be required of it at the Closing pursuant to the terms of this
Agreement.
Seller shall deliver to Buyer within thirty (30) days after the
Closing possession of the Purchased Assets being sold pursuant to this Agreement
(and access thereto prior to removal thereof as contemplated by Section 7.13
hereof) and the entire right, title and interest of Seller in and to such
Purchased Assets shall pass to Buyer at the Closing. All physical assets
comprising the Purchased Assets shall be removed from their current locations by
Buyer pursuant to the provisions of Section 7.13 hereof.
ARTICLE VII
POST-CLOSING COVENANTS
7.01 Expenses. Except as otherwise provided herein, Seller and Buyer
shall each bear their own costs and expenses incurred in connection with this
Agreement, the Related Agreements and the transactions contemplated hereby and
thereby. Buyer shall be responsible for fees, commissions, expenses and
reimbursements incurred by or required to be paid to its
16
professional advisors and Seller shall be responsible for the fees, commissions,
expenses and reimbursements incurred by or required to be paid to its
professional advisors. Buyer and Seller will each pay one-half of any fees
charged by the Accountants referred to in Section 1.06 hereof.
7.02 Further Assurances. Subject to the terms and conditions of this
Agreement, each of the parties hereto will use their best efforts to take, or
cause to be taken, all 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 sale of the Purchased Assets and the other
transactions contemplated by this Agreement and the Related Agreements. From
time to time after the date hereof (including after the Closing Date if
requested), Seller and its affiliates will, at their own expense and without
further consideration, execute and deliver such documents to Buyer as Buyer may
reasonably request in order more effectively to vest in Buyer good title to the
Purchased Assets and to more effectively consummate the transactions
contemplated by this Agreement and the Related Agreements.
7.03 Commissions and Fees. Seller represents and warrants to Buyer
that no broker, finder, financial adviser or other person is entitled to any
brokerage fees, commissions or finder's fees in connection with the transactions
contemplated hereby by reason of any action taken by Seller. Buyer is obligated
to (and agrees that it shall) pay a finders fee in connection with the
transactions contemplated hereby. Seller and Buyer will pay to the other or
otherwise discharge, and will indemnify and hold the other harmless from and
against, any and all claims or liabilities for all brokerage fees, commissions
and finder's fees incurred by reason of any action taken by such party.
7.04 Sales, Transfer and Use Taxes. All sales, transfer and use
taxes incurred in connection with this Agreement and the Related Agreements and
the transactions contemplated hereby and thereby (if any) will be borne by
Seller, and Seller will, at its own expense, file all necessary Tax Returns and
other documentation with respect to all such sales, transfer and use taxes, and,
if required by applicable law, Buyer will join in the execution of any such Tax
Returns or other documentation.
7.05 Nondisclosure. Seller, LWG and Parent agree not to use or
disclose at any time after consummation of the transactions contemplated hereby,
except with the prior written consent of an officer authorized to act in the
matter by the Board of Directors of Buyer, any trade secrets, proprietary
information, or other information that Buyer considers confidential (or which
Seller has previously treated as or claimed to be confidential) relating to
operations, marketing, bidding information, cost and pricing data, master files
or customer lists utilized by Seller in connection with the Business prior to
the Closing or by Buyer or any of its affiliates (the "Buyer Group"), or the
skills, abilities and compensation of the Buyer Group's employees, and all other
similar information material to the conduct of the Buyer Group's business, which
is not presently generally known to the public; provided, however, that this
provision shall not preclude Seller, LWG or Parent from (i) the use or
disclosure of such information which presently is known generally to the public
or which subsequently comes into the public domain, other than by way of
disclosure in
17
violation of this Agreement or in any other unauthorized fashion, or (ii)
disclosure of such information required by law or court order, provided that
prior to such disclosure required by law or court order the undersigned will
give Buyer three business days' written notice (or, if disclosure is required to
be made in less than three business days, then such notice shall be given as
promptly as practicable after determination that disclosure may be required) of
the nature of the law or order requiring disclosure and the disclosure to be
made in accordance therewith.
7.06 Indemnification.
(a) By Seller and Parent. Seller and Parent jointly and severally
agree to save, defend and indemnify Buyer and its affiliates against and hold
them harmless from any and all claims, liabilities, losses, damages,
deficiencies, costs and expenses, of every kind, nature and description, fixed
or contingent (including, without limitation, interest, penalties and counsel's
fees and expenses) ("Losses"), asserted against, resulting to, imposed upon or
incurred by Buyer or any of Buyer's affiliates, officers, directors or agents,
directly or indirectly, arising out of (i) any breach of any representation,
warranty, covenant or agreement made by Seller or Parent under this Agreement or
the Related Agreements, or (ii) any Retained Liability, or (iii) any
Environmental Claim (as hereinafter defined).
(b) By Buyer. Buyer agrees to save, defend and indemnify Seller, LWG
and Parent against and hold them harmless from any and all Losses arising out of
(i) any breach of any representation, warranty, covenant or agreement made by
Buyer under this Agreement or the Related Agreements, or (ii) any Assumed
Liability.
(c) Environmental Claim Definition. For the purposes of this
Agreement, "Environmental Claim" shall mean any demand, claim, governmental
notice or threat of litigation or the actual institution of any action, suit or
proceeding at any time by a person or entity which asserts that an Environmental
Condition constitutes a violation of or otherwise may give rise to any liability
or obligation under, any statute, ordinance, regulation, or other governmental
requirement or the common law, including, any such statute, ordinance,
regulation, or other governmental requirement relating to the emission,
discharge, or release of any Hazardous Substance into the environment or the
generation, treatment, storage, transportation, or disposal of any Hazardous Sub
stance. "Environmental Condition" shall mean the presence on the Closing Date,
or the occurrence on or at any time prior to the Closing Date of any storage,
treatment, disposal or Release, or the presence on the Closing Date of any
condition or circumstances which thereafter causes or gives rise to any storage,
treatment, disposal or Release, whether discovered or undiscovered on the
Closing Date, in surface water, ground water, drinking water supply, land
surface, subsurface strata or ambient air or any other location, of any
pollutant, contaminant, industrial solid waste or Hazardous Substance, arising
out of or otherwise related to (i) the operations or other activities of Seller,
or of any predecessor in interest or line of business Seller, conducted or
undertaken prior to the Closing Date or (ii) any property, facility owned,
leased, managed or operated by Seller. "Hazardous Substance" shall mean any
substance defined in the manner set forth in Section 101(14) of the U.S.
18
Comprehensive Environment Response, Compensation and Liability Act of 1980, as
amended, and shall include any additional substances designated under Section
102(a) thereof or any other substance which is or contains asbestos in any form,
urea formaldehyde foam insulation, methane, petroleum, gasoline, diesel fuel or
another petroleum hydrocarbon product, transformers or other equipment which
contain dielectric fluid containing levels of polychlorinated biphenys in excess
of 50 parts per million, or any other chemical material or substance which is
regulated as toxic or hazardous or exposure to which is prohibited, limited, or
regulated by foreign, federal, state, county, regional, local or other
governmental authority or which, even if not so regulated, may or could pose a
hazard to the health or safety of the occupants of any property or facility or
the owners or occupants of any property or facility adjacent thereto.
7.07 Defense of Claims.
(a) Should any claim, action or proceeding by or involving a third
party arise after the Closing Date for which a party hereto (the "Indemnifying
Party") has an indemnification obligation under the terms of this Agreement, the
other party (the "Indemnified Party") shall notify the Indemnifying Party within
a reasonable time after such claim, action or proceeding arises and is known to
the Indemnified Party (provided that the failure to give timely notice shall not
affect the right to indemnification hereunder except to the extent that the
Indemnifying Party is actually damaged or prejudiced by such delay), and if the
Indemnifying Party shall admit in writing its indemnification obligation to the
Indemnified Party in respect thereof, the Indemnified Party shall give the
Indemnifying Party a reasonable opportunity:
(i) to take part in any examination of the books and records of
Indemnified Party;
(ii) to conduct any proceedings or negotiations in connection
therewith and necessary or appropriate to defend the Indemnified Party or
prosecute any claim, action, counterclaim or other proceeding with respect
thereto;
(iii) to take all other required steps or proceedings to settle or
defend any such claim, action or proceeding; and
(iv) to employ counsel to contest any such claim, action or
proceeding in the name of the Indemnified Party or otherwise.
The expenses of all proceedings, contests or lawsuits with respect to such
claims or actions shall be borne by the Indemnifying Party. If the Indemnifying
Party wishes to assume the defense of such claim or action, it shall give
written notice to the Indemnified Party admitting its indemnification obligation
to the Indemnified Party in respect thereof and stating that it intends to
assume such defense within 30 days after notice from the Indemnified Party of
such claim or action (unless the claim or action reasonably requires a response
in less than 30 days after the notice is given to the Indemnifying Party, in
which event it shall notify the Indemnified Party at least five days prior to
19
such reasonably required response date), and the Indemnifying Party shall
thereafter assume the defense of any such claim or liability, through counsel
reasonably satisfactory to the Indemnified Party, provided that the Indemnified
Party may participate in such defense at its own expense. The Indemnified Party
shall afford the Indemnifying Party's counsel designated by it and other
authorized representatives reasonable access during normal business hours to all
books, records, offices and other facilities and properties of the Indemnified
Party, and to the personnel of the Indemnified Party, and shall otherwise use
all reasonable efforts to cooperate with the Indemnifying Party, such counsel
and such other authorized representatives in connection with the exercise of the
rights of the Indemnifying Party pursuant to this Section 7.07.
(b) If the Indemnifying Party shall not assume the defense of, or if
after so assuming it shall fail to actively defend, any such claim or action:
(i) the Indemnified Party, after giving written notice to the Indemnifying
Party, may defend against any such claim or action in such manner as it may deem
appropriate, and (ii) the Indemnified Party may settle such claim or litigation
on such terms as it may deem appropriate (but not sooner than 30 days after
notifying the Indemnifying Party of such proposed settlement and the terms
thereof), and the Indemnifying Party promptly shall reimburse the Indemnified
Party for the amount of such settlement and for all expenses, legal and
otherwise, reasonably and necessarily incurred by the Indemnified Party in
connection with the defense against and settlement of such claim or action. If
no settlement of such claim or litigation is made, the Indemnifying Party shall
satisfy any judgment rendered with respect to such claim or in such action,
before the Indemnified Party is required to do so, and pay all expenses, legal
or otherwise, reasonably and necessarily incurred by the Indemnified Party in
the defense against such claim or litigation.
(c) If a judgment is rendered against an Indemnified Party in any
action covered by the indemnification hereunder, or any lien attaches to any of
the assets of an Indemnified Party, the Indemnifying Party, immediately upon
such entry or attachment, shall pay such judgment in full or discharge such lien
unless, at the Indemnifying Party's expense and direction, an appeal is taken
under which the execution of the judgment or satisfaction of the lien is stayed.
If and when a final judgment is rendered in any such action, the Indemnifying
Party shall forthwith pay such judgment or discharge such lien before the
Indemnified Party is compelled to do so.
7.08 Access to Records. For a period of six years after the Closing
Date, Buyer shall retain the books of account and other financial and accounting
records relating to Seller's conduct of the Business which are transferred to it
on and as of the Closing Date. At least 30 days prior to the end of such period,
or any subsequent retention period, Seller shall notify Buyer in writing whether
it desires the further retention of any such records for any longer period, and,
in the event it desires any of such records to be retained for any longer
period, such records, at the option of Buyer, shall either be retained by Buyer
or promptly be shipped to Seller at Seller's expense. Buyer shall permit Seller,
from time to time, to inspect and copy such books of account and other records
at reasonable times and after providing written notice to Buyer of its desire to
so inspect.
20
7.09 Payment of Intercompany Payable. Buyer and LWG hereby agree
that the intercompany payable to LWG (as reduced by the amount payable by Parent
to Seller on the Closing Date) assumed by Buyer pursuant to Section 1.03(ii) and
(iii) hereof (the "Intercompany Payable") shall be repaid by Buyer to LWG as
follows: (a) $500,000 will be satisfied by payment of or set-off against the
Promissory Note, and (b) the remainder shall be paid by Buyer in cash at
Closing. LWG agrees that Buyer may set-off and retain, from any payment under
the Promissory Note, the amount of any claims of Buyer (including, without
limitation, indemnification claims under Section 7.06 hereof) against Parent,
Seller or LWG under this Agreement or the Related Agreements.
7.10 Surrender of Binky Name. As promptly as practicable after
Closing, Seller agrees to take all necessary actions to change its corporate
name to eliminate the word "Binky". Parent, LWG and Seller agree that they and
their affiliates will not at any time after the Closing use the name "Binky" or
any similar name for any commercial purpose or on any product of any kind or
classification.
7.11 Musical Pacifiers. If any of the Christmas musical pacifiers
(items number 2800, 2800CL, 2800DP and 2851) sold by Seller prior to the Closing
are returned for credit by the customers who purchased such pacifiers, the
amount of any such credit or credits Buyer properly allows to such customers
(the "Credit Amount") with respect to such returns shall constitute an immediate
reduction of the Purchase Price by the Credit Amount and Buyer shall be entitled
to reduce its payment under the Promissory Note by the Credit Amount. Buyer
shall return possession and title to any such returned musical pacifier
inventory to Seller, and Seller shall be entitled to sell such inventory (and
any musical pacifier inventory constituting Retained Assets pursuant to Section
1.02 hereof) wherever it chooses without regard to the Noncompetition Agreement
provided that Seller repackages such inventory to eliminate any use of the
"Binky" name in connection with such inventory or the sale thereof. Buyer agrees
to refer to Seller for resolution any dispute with WalMart as to past sales of
the Christmas musical pacifiers and to advise WalMart that Seller has retained
and is solely responsible for the Christmas musical pacifiers.
7.12 Molds and Designs. As promptly after the Closing as is
reasonably practicable, LWG will deliver to Buyer copies of the plans and
drawings reflecting the designs and specifications for the current versions of
the Transferred Styles and copies of the plans and drawings reflecting the
design and specifications of the molds and tooling used to manufacture the
Transferred Styles of pacifiers. If adequate plans and drawings of the type
contemplated hereby do not exist for any Transferred Style or related molds or
tooling, LWG agrees to cause its personnel to use their best efforts to create
and deliver the same to Buyer as soon as is reasonably practicable.
7.13 Removal of Purchased Assets and Transition Services. As
promptly as reasonably practicable after the Closing, Buyer shall cause the
Purchased Assets to be removed at Buyer's cost from Seller's premises and from
any warehouses in which Seller stores such Purchased Assets. Buyer shall be
responsible for and shall indemnify Seller with respect to any property damage
to Seller's premises or to such warehouses caused by Buyer's employees or agents
in
21
connection with such removal and Buyer shall bear the risk of loss of such
Purchased Assets during such removal and in transit to Buyer's premises or
warehouses. During the period between the date hereof and February 27, 1998,
Seller will provide to Buyer the substantially full-time services of Seller's
seven employees (or such lesser number of such employees as Buyer shall from
time to time designate during such period) to assist Buyer with transition of
the Business and removal of the Purchased Assets. In consideration of such
services, Buyer agrees to reimburse Seller's direct payroll costs for salary and
benefits (consistent with the amounts paid to such employees prior to the date
hereof) for such employees during such period ending February 27, 1998.
ARTICLE VIII
MISCELLANEOUS
8.01 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
8.02 Assignment. This Agreement may not be assigned by either party
hereto without the prior written consent of the other party, provided, however,
that Buyer may assign its rights hereunder, in whole or in part, to any
corporation or other entity controlled by, controlling, or under common control
with Buyer, and Buyer or its assignee may assign their rights hereunder, in
whole or in part, to any purchaser of substantially all of the assets or
business of Seller. Any attempted or purported assignment by either party other
than in accordance with this Section 8.02 shall be null and void.
Notwithstanding any assignment by any party, the assignor shall remain jointly
and severally liable with the assignee for all obligations under the terms of
this Agreement or the Related Agreements.
8.03 Counterparts. This Agreement may be executed in any number of
counterparts, and by any party on separate counterparts, each of which as so
executed and delivered shall be deemed an original but all of which together
shall constitute one and the same instrument, and it shall not be necessary in
making proof of this Agreement as to any party, hereto to produce or account for
more than one such counterpart executed and delivered by such party.
8.04 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal substantive laws of the State of New
Jersey (without regard to conflict of laws principles thereof) as to all
matters, including but not limited to matters of validity, construction, effect,
performance and remedies.
8.05 Arbitration. Any dispute, controversy or claim arising out of
or relating to this Agreement or the Related Agreements or the transactions
contemplated hereby or thereby shall be settled and finally determined by
arbitration in New York, New York, or at such other location as the parties may
agree, by three arbitrators in accordance with the Commercial Arbitration Rules
of the American Arbitration Association in force at the time of such
arbitration. In connection with
22
such arbitration, the arbitrators shall apply New Jersey law and shall have no
power to ignore or modify any provision of this Agreement or the Related
Agreements. Judgment upon any award rendered by such an arbitration may be
rendered in any court having jurisdiction. All fees and charges of the American
Arbitration Association and of the arbitrators and all arbitration-related costs
of the parties shall be borne as the arbitrators shall determine in their award.
8.06 Survival. The representations, warranties, covenants,
indemnities and agreements of the parties to this Agreement contained herein or
in any document delivered pursuant to or in connection herewith shall survive
the Closing and shall survive any investigation by the other party.
8.07 Notices. All notices required to be given under the terms of
this Agreement or which any of the parties desires to give hereunder shall be in
writing and personally delivered or sent by registered or certified mail, return
receipt requested, or sent by telecopier, addressed as follows:
(a) To Buyer. If to Buyer addressed to:
Playtex Products, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
(b) To Seller or Parent. If to Seller, LWG or Parent addressed to:
▇▇▇▇▇ ▇▇▇▇▇ Griptight Limited
▇▇. ▇▇▇▇'▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ on ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Attention: Mr. A. R. ▇▇▇▇▇▇
Telecopier No.: 011-44-1386-556362
with a copy to:
23
Schiffman, Berger, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Three ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Notices personally delivered shall be deemed given upon actual
delivery thereof: notices sent by telecopier shall be deemed given upon
confirmation of receipt; and notices sent by registered or certified mail shall
be deemed given five (5) business days after posting in the United States Mail,
properly addressed, postage pre-paid. Either party may designate a change in
address at any time upon written notice to the other party.
8.08 Amendment and Modification. The Agreement may be amended,
modified or supplemented only by a written instrument executed by the party
against whom such amendment, modification or supplement is sought to be
enforced.
8.09 Waiver of Compliance. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party or parties
entitled to the benefits thereof only by a written instrument signed by the
party or parties granting such waiver, but any such waiver or the failure to
insist upon strict compliance with any obligation, covenant, agreement or
condition herein, shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure or breach.
8.10 Interpretation. The table of contents and the article and
section headings contained in this Agreement are solely for the purpose of
reference, are not part of the agreement of the parties and shall not in any way
affect the meaning or interpretation of this Agreement. As used in this
Agreement, the term "person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization or a governmental entity or any department or agency thereof. As
used in this Agreement, the term "subsidiary", when used in reference to any
other person, shall mean any corporation of which outstanding securities having
ordinary voting power to elect a majority of the Board of Directors of such
corporation are owned directly or indirectly by such other person. As used in
this Agreement, the term "generally accepted accounting principles" means
generally accepted accounting principles as in effect and as applied in the
United States. As used in this Agreement, the term "affiliate" of a person means
any company, person or other entity that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control
with, such person. When used herein, the masculine, feminine or neuter gender
and the singular or plural number shall each be deemed to include the others
whenever the context so indicates or permits.
8.11 Entire Agreement. This Agreement and the Related Agreements,
including the schedules, exhibits, documents, certificates and instruments
referred to herein and therein,
24
embody the entire agreement and understanding of the parties hereto in respect
of any transactions contemplated by this Agreement and the Related Agreements
and supersede all prior agreements and understandings between the parties with
respect thereto.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
PLAYTEX PRODUCTS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
BINKY-GRIPTIGHT, INC.
By: /s/ ▇▇▇▇ Jetta
--------------------------------
Name: ▇▇▇▇ Jetta
Title: CEO
▇▇▇▇▇ ▇▇▇▇▇ GRIPTIGHT LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
L.W.G. HOLDINGS LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
25