Exhibit 10.16
EXECUTION COPY
SHARE PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 1, 1998
BETWEEN
NORCROSS SAFETY PRODUCTS L.L.C.
ON ONE HAND
AND
▇▇▇▇▇ PLC,
▇▇▇▇▇ INTERNATIONAL LIMITED,
DEUTSCHE ▇▇▇▇▇ GMBH,
AND
▇▇▇▇▇ INC.
ON THE OTHER HAND
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TABLE OF CONTENTS
PAGE
PREAMBLE............................................................................ 1
RECITALS............................................................................ 1
TERMS AND CONDITIONS................................................................ 2
ARTICLE 1 - GENERAL PROVISIONS................................................ 2
1.1 Definitions...................................................... 2
1.2 Meaning of the ▇▇▇▇▇ ▇▇▇▇▇▇▇' Knowledge.......................... 2
1.3 Other Definitions and Meanings;
Interpretation................................................... 3
ARTICLE 2 - PURCHASE AND SALE................................................. 3
2.1 Transaction...................................................... 3
2.2 Purchase Price................................................... 4
2.3 Adjustment....................................................... 4
(A) Conduct of Closing Audit................................... 4
(B) Delivery of Auditors' Report............................... 5
(C) Review by Norcross......................................... 5
(1) Acceptance by Norcross................................ 5
(2) Dispute by Norcross................................... 5
(D) Informal Negotiations...................................... 5
(E) Dispute Resolution Proceedings............................. 6
(F) Accounting Principles...................................... 6
(G) Base-Line Net Worth........................................ 6
(H) Determination of Closing Net Worth......................... 6
(I) Amount of Adjustment....................................... 7
2.4 Payment of Purchase Price........................................ 7
(A) Cash Payment at Closing.................................... 7
(B) Delivery of the Deferred Note.............................. 7
(C) Payment of the Adjustment.................................. 8
2.5 Refund of the Adjustment......................................... 8
2.6 Method of Payment................................................ 8
(A) Directed Payment........................................... 8
(B) Other Payments............................................. 8
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES............................ ....... 8
3.1 The ▇▇▇▇▇ ▇▇▇▇▇▇▇' General
Representations and Warranties................................... 8
(A) Organization and Existence................................. 9
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(B) Power and Authority........................................ 9
(C) Authorization.............................................. 9
(D) Binding Effect............................................. 9
(E) No Default................................................. 9
(F) North Safety Shares........................................ 9
(G) Ownership of North Safety Shares........................... 9
(H) Finders.................................................... 10
3.2 The ▇▇▇▇▇ ▇▇▇▇▇▇▇' Representations and Warranties
Concerning the North Safety Disclosure Package................... 10
(A) North Safety Business Generally............................ 10
(B) Financial Statements....................................... 10
(C) Real Property.............................................. 11
(D) Tangible Personal Property................................. 11
(E) Intellectual Property...................................... 11
(F) Liabilities................................................ 12
(G) Litigation................................................. 12
(H) Contracts.................................................. 12
(I) Employees and Employee Benefits............................ 13
(J) Environmental Matters...................................... 13
(K) Compliance with Other Laws................................. 14
(L) Taxes...................................................... 14
(M) Material Events............................................ 14
(N) Assets..................................................... 14
(O) Affiliated Transactions.................................... 15
(P) No Acceleration of Rights or Benefits...................... 15
3.3 Norcross' Representations and Warranties......................... 15
(A) Organization and Existence................................. 15
(B) Power and Authority........................................ 15
(C) Authorization.............................................. 15
(D) Binding Effect............................................. 15
(E) No Default................................................. 15
(F) Norcross' Financing Plan................................... 16
(G) Investment Intent.......................................... 16
(H) Finders.................................................... 16
3.4 Disclaimer....................................................... 16
ARTICLE 4 - ACTIONS BEFORE CLOSING............................................ 17
4.1 Access to Records................................................ 17
4.2 Interim Conduct of the Business.................................. 17
4.3 Norcross' Approval of Certain Transactions....................... 17
4.4 Norcross' Financing.............................................. 19
4.5 Consents to Assignment........................................... 20
4.6 Coordination of Public Announcements............................. 20
4.7 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Notification................................... 20
4.8 Other Regulatory Approvals....................................... 20
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4.9 No Shopping...................................................... 21
4.10 Delivery of GAAP Financials...................................... 21
4.11 Other Agreements................................................. 21
4.12 Corporate Actions................................................ 22
4.13 Notification of Material Adverse Changes......................... 22
ARTICLE 5 - CONDITIONS........................................................ 22
5.1 Conditions to Norcross' Obligations.............................. 22
5.2 Conditions to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' Obligations..................... 24
5.3 Parties Best Efforts............................................. 24
ARTICLE 6 - CLOSING........................................................... 25
6.1 The Closing...................................................... 25
6.2 Time, Date, and Place of Closing................................. 25
6.3 Norcross' Obligations............................................ 25
6.4 The ▇▇▇▇▇ ▇▇▇▇▇▇▇' Obligations................................... 25
6.5 Local Formalities................................................ 26
ARTICLE 7 - ACTIONS AFTER CLOSING............................................. 26
7.1 Further Conveyances.............................................. 26
7.2 Further Consents to Assignments.................................. 26
7.3 Access to Former Business Records................................ 26
7.4 Access to Employees.............................................. 27
7.5 Change of Corporate Names........................................ 27
7.6 Release of Guarantees............................................ 28
7.7 Respiratory Product Liability Matters............................ 28
(A) Norcross' Sole Responsibilities............................ 28
(B) The ▇▇▇▇▇ ▇▇▇▇▇▇▇' Sole Responsibilities................... 28
7.8 Tax Matters...................................................... 29
(A) Norcross' Sole Responsibilities............................ 29
(B) Shared Responsibilities.................................... 28
(C) The ▇▇▇▇▇ ▇▇▇▇▇▇▇' Sole Responsibilities................... 29
(D) Tax Returns................................................ 29
7.9 Noncompetition................................................... 30
7.10 Confidentiality.................................................. 30
7.11 Financial Statements............................................. 31
7.12 Dispute Resolution............................................... 31
(A) Dispute Notice............................................. 31
(B) Informal Negotiations...................................... 31
(C) Dispute Resolution Proceedings............................. 31
(1) Designation of Representatives........................ 31
(2) Selection of Neutral.................................. 32
(3) Procedures and Process................................ 32
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(4) Decision.............................................. 32
(D) Equitable Relief........................................... 32
(E) Tolling of Limitation Periods.............................. 33
(F) Binding Effect............................................. 33
ARTICLE 8 - INDEMNIFICATION................................................... 33
8.1 Indemnification of the ▇▇▇▇▇ ▇▇▇▇▇▇▇............................. 33
8.2 Indemnification of Norcross...................................... 33
8.3 Claims........................................................... 35
(A) Notice..................................................... 35
(B) Responsibility for Defense................................. 36
(C) Right to Participate....................................... 36
(D) Settlement................................................. 36
8.4 Disputed Responsibility.......................................... 37
8.5 Dollar Limitation on Indemnification............................. 38
8.6 Time Limitation on Indemnification............................... 38
8.7 Actual Amount to Be Indemnified.................................. 38
8.8 Exclusive Remedies............................................... 40
8.9 Purchase Price Adjustment........................................ 40
ARTICLE 9 - AMENDMENT, WAIVER, TERMINATION, AND CANCELLATION.................. 40
9.1 Amendment........................................................ 40
9.2 Waiver........................................................... 40
9.3 Termination...................................................... 40
9.4 The ▇▇▇▇▇ ▇▇▇▇▇▇▇' Unilateral Right of Cancellation.............. 40
9.5 The ▇▇▇▇▇ ▇▇▇▇▇▇▇' Unilateral Right of Partial Termination....... 41
ARTICLE 10 - MISCELLANEOUS.................................................... 41
10.1 Cooperation...................................................... 41
10.2 Severability..................................................... 41
10.3 Costs and Expenses............................................... 41
10.4 Notices.......................................................... 42
10.5 Assignment....................................................... 43
10.6 No Third Parties................................................. 44
10.7 Incorporation by Reference....................................... 44
10.8 Governing Law.................................................... 44
10.9 Counterparts..................................................... 44
10.10 Complete Agreement............................................... 44
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APPENDICES
Appendix A - Certain Definitions
Appendix B - Due Diligence Review and Certifications
Appendix C - Deferred Note
Appendix D - Accounting Principles
Appendix E - Contents of the North Safety Disclosure Package
Appendix F - Documents to Be Delivered by the ▇▇▇▇▇ ▇▇▇▇▇▇▇ at the Closing
Appendix G - Documents to Be Delivered by Norcross at the Closing
Appendix H - Real Estate
Appendix I - Employee Benefits
Appendix J - KPMG Letter
Appendix K - Trademark License
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SHARE PURCHASE AGREEMENT
This
SHARE PURCHASE AGREEMENT (this "Purchase Agreement") is dated as of
September 1, 1998, and is among
NORCROSS SAFETY PRODUCTS L.L.C. ("Norcross"), a Delaware
limited liability company, on one hand,
and
▇▇▇▇▇ PLC ("▇▇▇▇▇"), a British public limited company, ▇▇▇▇▇
INTERNATIONAL LIMITED ("▇▇▇▇▇ International"), a British private
limited company, DEUTSCHE ▇▇▇▇▇ GMBH ("Deutsche ▇▇▇▇▇"), a German
private company limited by shares (GESELLSCHAFT MIT BESCHRANKTER
HAFTUNG), and ▇▇▇▇▇ INC. ("▇▇▇▇▇ US"), a Delaware corporation, on
the other hand.
(▇▇▇▇▇, ▇▇▇▇▇ International, Deutsche ▇▇▇▇▇, and ▇▇▇▇▇ Inc. are referred to
collectively below as the "▇▇▇▇▇ ▇▇▇▇▇▇▇".)
RECITALS
A. North Safety Products Ltd. ("North Safety Products") is a British
private limited company with authorized capital consisting solely of 10,000,000
ordinary shares, nominal value L 1.00 per share, of which only 7,492,364 shares
(the "North Safety Products Shares") are issued and allotted.
B. North Safety Products (Africa) Pty. Ltd. ("▇▇▇▇▇ ▇▇▇▇▇ (Africa)") is a
South African private limited company with authorized capital consisting solely
of 400,000 ordinary shares, par value shares of R2.00 each, of which all 400,000
shares (the "▇▇▇▇▇ ▇▇▇▇▇ (Africa) Shares") are issued and allotted.
C. Industrie-▇▇▇▇▇-Produkte GmbH ("ISP") is a German private company
limited by shares (GESELLSCHAFT MIT BESCHRANKTER HAFTUNG) with its seat at
Luneburg, Germany, registered in the Commercial Register (HANDELSREGISTER) of
Luneburg (HR B 801) which has a total registered capital (STAMMKAPITAL)
consisting solely of DM 2,000,000 shares (the "ISP Shares").
▇. ▇▇▇▇▇ North Holdings Corp. ("▇▇▇▇▇ North") is a Delaware corporation
with authorized capital consisting solely of 1,000 common shares, par value
$1.00 per share, of which all 1,000 common shares (the "▇▇▇▇▇ North Shares") are
issued and outstanding.
E. North Safety Products, ▇▇▇▇▇ ▇▇▇▇▇ (Africa), ISP, ▇▇▇▇▇ North, and
their respective subsidiaries are engaged in the business (the "North Safety
Business") of
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designing, manufacturing, and marketing a wide array of personal protection and
safety equipment products (the "Products") primarily intended for use in the
workplace, including respiratory equipment, hand protection, hearing protection,
eye, head and face protection, industrial first aid, fall protection,
high-voltage lineman equipment, eye wash, and dermatological and single-use
applicators for surgical preparation.
▇. ▇▇▇▇▇ owns all of the North Safety Products Shares, ▇▇▇▇▇
International owns all of the ▇▇▇▇▇ ▇▇▇▇▇ (Africa) Shares, Deutsche ▇▇▇▇▇ owns
all of the ISP Shares, and ▇▇▇▇▇ US owns all of the ▇▇▇▇▇ North Shares. (The
North Safety Products Shares, the ▇▇▇▇▇ ▇▇▇▇▇ (Africa) Shares, the ISP Shares,
and the ▇▇▇▇▇ North Shares are referred to collectively below as the "North
Safety Shares" and North Safety Products, ▇▇▇▇▇ ▇▇▇▇▇ (Africa), ISP, and ▇▇▇▇▇
North, together with any direct or indirect subsidiaries of any such company,
are referred to collectively below as the "North Safety Companies".)
▇. ▇▇▇▇▇▇▇▇ desires to purchase from the ▇▇▇▇▇ ▇▇▇▇▇▇▇, and the ▇▇▇▇▇
▇▇▇▇▇▇▇ desire to sell to Norcross, all of the North Safety Shares on and
subject to the terms and conditions contained in this Purchase Agreement.
TERMS AND CONDITIONS
In consideration of the matters recited above and of other good and
valuable consideration, and intending to be legally bound by this Purchase
Agreement, Norcross and the ▇▇▇▇▇ ▇▇▇▇▇▇▇ hereby agree as follows:
ARTICLE 1
GENERAL PROVISIONS
1.1 DEFINITIONS. Appendix A sets forth the definitions of certain terms
used in this Purchase Agreement. Those terms shall have the meanings set forth
on Appendix A where used in this Purchase Agreement and identified with initial
capital letters.
1.2 MEANING OF THE ▇▇▇▇▇ ▇▇▇▇▇▇▇' KNOWLEDGE. Where a statement contained
in this Purchase Agreement is said to be to the "▇▇▇▇▇ ▇▇▇▇▇▇▇' knowledge" (or
words of similar import) such expression means that, after having conducted a
due diligence review and in reliance on due diligence certifications, both as
described in Appendix B, the management of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ believes the
statement to be true, accurate, and complete in all material respects, but that
the ▇▇▇▇▇ ▇▇▇▇▇▇▇ make no further representation, or warranty concerning
material facts that might have come to their attention had they conducted a
broader or more thorough investigation of the North Safety Business. The ▇▇▇▇▇
▇▇▇▇▇▇▇' receipt of the due diligence certificates shall not, directly or
indirectly, limit or have the effect of limiting Norcross' or the North Safety
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[ILLEGIBLE] rights to indemnification from the ▇▇▇▇▇ ▇▇▇▇▇▇▇ pursuant to the
terms of Sections 7 and 8 of this Purchase Agreement.
1.3 OTHER DEFINITIONS AND MEANINGS; INTERPRETATION. For purposes of this
Purchase Agreement, except where the context otherwise requires --
(A) The term "parties" means Norcross and the ▇▇▇▇▇ ▇▇▇▇▇▇▇;
(B) The term "person" includes any natural person, firm, association,
partnership, corporation, limited liability company or partnership,
governmental agency, or other entity other than the parties;
(C) The term "today" means September 1, 1998;
(D) All dollar amounts are United States Dollars and other currency
amounts will translate into dollar amounts at the following rates: $1.00 =
L 0.61 (British Pounds Sterling), $1.00 = DM 1.75 (German Deutschemarks)
and $1.00 = R 6.27 (South African Rand);
(E) When introducing a series of items, the term "including" is not
intended to limit the more general description of the items listed; and
(F) The Table of Contents and the headings of the Articles and
Sections are included for convenience of reference only and are not
intended to affect the meaning of the operative provisions to which they
relate.
ARTICLE 2
PURCHASE AND SALE
2.1 TRANSACTION. On and subject to the terms and conditions of this
Purchase Agreement --
(A) At the Closing, Norcross will purchase from the ▇▇▇▇▇ ▇▇▇▇▇▇▇,
and the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will sell, transfer, and assign to Norcross, all of
the North Safety Shares as follows:
(1) Norcross will purchase the North Safety Products Shares from
▇▇▇▇▇;
(2) Norcross will purchase the ▇▇▇▇▇ ▇▇▇▇▇ (Africa) Shares from
▇▇▇▇▇ International;
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(3) Norcross will purchase the ISP Shares from Deutsche ▇▇▇▇▇;
and
(4) Norcross will purchase the ▇▇▇▇▇ North Shares from ▇▇▇▇▇ US;
and
(B) Norcross will pay the ▇▇▇▇▇ ▇▇▇▇▇▇▇ the Purchase Price as
provided in Section 2.4.
2.2 PURCHASE PRICE. For purposes of this Purchase Agreement, the term
"Purchase Price" means $230,000,000 PLUS or MINUS the amount of the Adjustment.
2.3 ADJUSTMENT. The amount of the Adjustment will be determined as
follows:
(A) CONDUCT OF THE CLOSING AUDIT. Promptly after the Closing, the
▇▇▇▇▇ ▇▇▇▇▇▇▇ will cause KPMG Peat Marwick L.L.P. (the "Auditors"),
independent certified public accountants, to conduct an audit of the
financial and business record of the North Safety Companies as of the
Closing in accordance with the U.S. generally accepted accounting
principles used by the North Safety Companies as reported upon by the
Auditors in preparation of the April 4, 1998 audited financials,
consistently applied, treating the Closing Date as a year end, but which
shall exclude the assets and liabilities which the North Safety Companies
shall not possess or for which the North Safety Companies will not be
liable after the Closing and shall exclude assets transferred to or
liabilities assumed by the North Safety Companies to the extent such
transfers are outside the ordinary course of business and not included in
the computation of the Base-Line Net Worth. The ▇▇▇▇▇ ▇▇▇▇▇▇▇ and the North
Safety Companies will cooperate fully with the Auditors and Norcross'
accountants and representatives in the conduct of such audit and will make
available to the Auditors and Norcross' accountants and representatives
such books and records relating to the North Safety Business or otherwise
relevant to the audit as the Auditors and Norcross' accountants and
representatives may reasonably request.
The ▇▇▇▇▇ ▇▇▇▇▇▇▇ will cause the Auditors to make available to Norcross and
its accountants and representatives books, records, work papers (including
all memoranda, summaries, conclusions, file notes, and analyses supporting,
explaining, or forming the basis thereof) and personnel. In conducting the
audit and during the period of the review process contemplated by this
Section 2.3, the Auditors will provide Norcross' independent accountants
status updates with respect to such audit, and upon completion of the audit
and subject to the last sentence of this Section 2.3(A), provide Norcross
and its independent accountants full access to the information referred to
above. Without limiting the foregoing, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Auditors
will provide Norcross and its independent accountants, a schedule of the
timing of fieldwork and permit Norcross
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and their independent accountants, at their discretion, to be present
during fieldwork and observe any tests, measurements, interviews, or other
investigatory events, as determined necessary by the ▇▇▇▇▇ ▇▇▇▇▇▇▇ or their
independent accountants, conducted in the course of preparing the Auditors'
Report. If so requested, each party's independent accountants will enter
into customary agreements with such other party's independent accountants
concerning access to and confidentiality of such other party's independent
accountant's work papers and similar matters.
(B) DELIVERY OF THE AUDITORS' REPORT. Within 60 days after the
Closing or as soon thereafter as reasonably possible, the Auditors will
deliver to Norcross and the ▇▇▇▇▇ ▇▇▇▇▇▇▇ a report (the "Auditors' Report")
based on the audit stating the aggregate book value of the North Safety
Companies' assets and the aggregate book amount of the North Safety
Companies' liabilities, as the same were (or should have been) reflected on
the books of the North Safety Companies as of the Closing in accordance
with the Accounting Principles and without giving effect to any of the
North Safety Companies' rights hereunder, but after giving effect to the
other changes in the assets and liabilities resulting from the transactions
contemplated hereby (excluding any post-Closing purchase accounting
adjustments made by Norcross or the North Safety Companies).
(C) REVIEW BY NORCROSS. Following receipt of the Auditors' Report,
Norcross and its independent accountants will be afforded a period of 45
days to review the Auditors' Report. At or before the end of the 45-day
period, Norcross will either --
(1) ACCEPTANCE BY NORCROSS. Accept the Auditors' Report in its
entirety, in which case the aggregate book value of the North Safety
Companies' assets and aggregate book amount of the North Safety
Companies' liabilities will be deemed to be as set forth on the
Auditors' Report, or
(2) DISPUTE BY NORCROSS. Deliver to the ▇▇▇▇▇ ▇▇▇▇▇▇▇ and the
Auditors written notice and a written explanation of those items in
the Auditors' Report which Norcross disputes, in which case the
aggregate book value of the North Safety Companies' assets and the
aggregate book amount of the North Safety Companies' liabilities not
affected by the disputed items will be deemed to be as set forth on
the Auditors' Report and the items identified by Norcross shall be
deemed to be in dispute.
(D) INFORMAL NEGOTIATIONS. If Norcross delivers a notice under
Section 2.3(C)(2), then during the 45-day period following the delivery of
such notice, the parties will cause their representatives and/or
independent accountants to meet and seek to resolve the disputed items
cordially through informal negotiations.
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(E) DISPUTE RESOLUTION PROCEEDINGS. If representatives of the parties
are unable to resolve disputed items through the informal negotiations
described in Section 2.3(D), then at the end of the 45-day period described
in Section 2.3(D) the parties will refer the unresolved disputed items for
final binding resolution to a third internationally-recognized firm of
certified public accountants mutually acceptable to the ▇▇▇▇▇ ▇▇▇▇▇▇▇ and
Norcross. The aggregate book value of the North Safety Companies assets and
aggregate book amount of the North Safety Companies' liabilities affected
by such unresolved disputed items (if any) will be deemed to be as
determined by such third firm in accordance with the Accounting Principles
without giving effect to the North Safety Companies' rights hereunder, but
after giving effect to the other changes in the assets and liabilities
resulting from the transactions contemplated hereby (excluding any
post-Closing purchase accounting adjustments made by Norcross or the North
Safety Companies) within 45 days of such reference. The decision of such
third firm will be binding on and neither appealable nor contestable by the
▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ and will not be subject to collateral attack for
any reason.
(F) ACCOUNTING PRINCIPLES. The aggregate book value of the North
Safety Companies' assets and the aggregate book amount of the North Safety
Companies' liabilities will be determined in accordance with the accounting
practices and principles, applied consistently with the accounting
practices and principles used by the ▇▇▇▇▇ ▇▇▇▇▇▇▇ in the preparation of
the audited financial statements dated April 4, 1998, which practices and
principles are summarized on Appendix D, unless such accounting principles
and practices are determined not to have been in accordance with U.S.
generally accepted accounting principles (collectively, the "Accounting
Principles").
(G) BASE-LINE NET WORTH. The "Base-Line Net Worth" will be an amount
equal to $89,336,000, which amount represents the difference between
aggregate book value of the North Safety Companies' assets MINUS the
aggregate book amount of the North Safety Companies' liabilities as set
forth in the North Safety Products combined Net Assets Statement-U.S. GAAP,
as of July 4, 1998 (the "Base-Line Balance Sheet"), which excludes the
liabilities and/or assets that the North Safety Companies shall not be
subject to or possess after the Closing.
(H) DETERMINATION OF CLOSING NET WORTH. The Closing Net Worth will be
an amount equal to the aggregate book value of the North Safety Companies'
assets MINUS the aggregate book amount of the North Safety Companies'
liabilities as of the Closing, both as determined under Sections 2.3(A),
(B), (C), (D), (E), and (F), and without giving effect to any of the North
Safety Companies' rights under this Agreement, but after giving effect to
the other changes in the assets and liabilities resulting from the
transactions contemplated hereby
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(excluding any post-Closing purchase accounting adjustments made by
Norcross or the North Safety Companies).
(I) AMOUNT OF THE ADJUSTMENT. If the Closing Net Worth is neither
$1,000,000 greater than nor $580,000 less than the Base-Line Net Worth,
then the Adjustment will equal zero. If the Closing Net Worth is greater
than the Base-Line Net Worth by an amount in excess of $1,000,000, then the
Adjustment will be a positive amount equal to the amount by which the
Closing Net Worth is more than the Base-Line Net Worth. If the Closing Net
Worth is less than the Base-Line Net Worth by an amount in excess of
$580,000, then the Adjustment will be a negative amount equal to the amount
by which the Closing Net Worth is less than the Base-Line Net Worth.
Subject to the terms of Section 8.9 hereof, the Purchase Price will finally
be determined on the date the amount of the Adjustment is finally
determined. The parties hereto agree and acknowledge, however, that the
Adjustment under this Section 2.3 does not prejudice or limit in any
respect whatsoever Norcross' or the North Safety Companies' rights to
indemnification under any other provision of this Agreement.
2.4 PAYMENT OF PURCHASE PRICE. Norcross will pay the Purchase Price as
follows:
(A) CASH PAYMENT AT CLOSING. At the Closing, Norcross will pay the
▇▇▇▇▇ ▇▇▇▇▇▇▇ $225,000,000 in cash as follows:
(1) Norcross will pay ▇▇▇▇▇ $28,900,000 for the North Safety
Products Shares;
(2) Norcross will pay ▇▇▇▇▇ International $12,100,000 for the
▇▇▇▇▇ ▇▇▇▇▇ (Africa) Shares;
(3) Norcross will pay Deutsche ▇▇▇▇▇ $3,000,000;
(4) Norcross will pay ▇▇▇▇▇ $165,200,000 for the ▇▇▇▇▇ North
Shares;
(5) Norcross will pay ▇▇▇▇▇ $15,000,000 in consideration of the
covenant contained in Section 7.9; and
(6) Norcross will pay ▇▇▇▇▇ $800,000 in consideration of the
Trademark License Agreement.
(B) DELIVERY OF DEFERRED NOTE. At the Closing, Norcross or its parent
will deliver to ▇▇▇▇▇ the Deferred Note in the principal amount of
$5,000,000 and with the terms set forth in Appendix C as additional payment
for the North Safety Products Shares.
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(C) PAYMENT OF THE ADJUSTMENT. If the Adjustment is a positive
amount, then Norcross will pay ▇▇▇▇▇ US (on behalf of all the ▇▇▇▇▇
▇▇▇▇▇▇▇) the amount of the Adjustment, together with interest thereon at
the Prime Rate for the period from the Closing Date through and including
the date on which the Adjustment is paid, within ten business days after
the final determination of the Purchase Price pursuant to Section 2.3(I).
2.5 REFUND OF THE ADJUSTMENT. If the Adjustment is a negative amount, then
▇▇▇▇▇ US (on behalf of all the ▇▇▇▇▇ ▇▇▇▇▇▇▇) will refund to Norcross the amount
of the Adjustment, together with interest thereon at the Prime Rate for the
period from the Closing Date through and including the date on which the
Adjustment is paid, within ten business days after the final determination of
the Purchase Price pursuant to Section 2.3(I).
2.6 METHOD OF PAYMENT. All payments under this Purchase Agreement shall
be made by delivery to the payee as follows:
(A) DIRECTED PAYMENTS. If a party which is entitled to a payment
under this Purchase Agreement provides the other party five-days' advance
written designation of a bank and account number into which the payee
wishes payment to be made, then the payer will make such payment by wire
transfer (in immediately available funds) to the designated account of the
payee.
(B) OTHER PAYMENTS. In all other cases, the party obligated to make a
payment under this Purchase Agreement will do so by delivering to the payee
a bank cashier's check (in immediately available funds) payable to the
order of the payee.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 THE ▇▇▇▇▇ ▇▇▇▇▇▇▇' GENERAL REPRESENTATIONS AND WARRANTIES. The ▇▇▇▇▇
▇▇▇▇▇▇▇ hereby jointly and severally represent and warrant to Norcross the
following:
(A) ORGANIZATION AND EXISTENCE. ▇▇▇▇▇ is a public limited company
duly organized and existing under the laws of England and Wales. ▇▇▇▇▇
International is a private limited company duly organized and existing
under the laws of England and Wales. Deutsche ▇▇▇▇▇ is a German private
company limited by shares (GESELLSCHAFT MIT BESCHRANKTER HAFTUNG) organized
under the laws of Germany with its seat at Luneburg registered in the
Commercial Register (HANDELSREGISTER) of Luneburg (HR B 801). ▇▇▇▇▇ US is a
corporation duly organized and existing under the laws of the State of
Delaware.
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(B) POWER AND AUTHORITY. Each of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ has full power and
authority under its constitutive documents and the laws of the jurisdiction
of its formation to execute, deliver, and perform this Purchase Agreement.
(C) AUTHORIZATION. The execution, delivery, and performance of this
Purchase Agreement by each of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ has been duly authorized by
all requisite corporate action on the part of each such ▇▇▇▇▇ Seller.
(D) BINDING EFFECT. This Purchase Agreement is a valid, binding, and
legal obligation of each the ▇▇▇▇▇ ▇▇▇▇▇▇▇.
(E) NO DEFAULT. Neither the execution and delivery of this Purchase
Agreement nor the ▇▇▇▇▇ ▇▇▇▇▇▇▇' full performance of their respective and
joint obligations under this Purchase Agreement will violate or breach, or
otherwise constitute or give rise to a Default under, or require any
consent, authorization, or approval pursuant to, the terms or provisions of
the ▇▇▇▇▇ ▇▇▇▇▇▇▇' constitutive documents or of any material contract,
commitment, statute, rule, regulation, judgment, order, decree, or other
restriction of any government, governmental agency, or court (other than
the regulatory approvals described in Sections 4.7 and 4.8), or other
obligation to which any of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ is a party.
(F) NORTH SAFETY SHARES. North Safety Products' authorized capital
consists solely of 10,000,000 ordinary shares, nominal value L 1.00 per
share, of which the 7,492,364 North Safety Products Shares are the only
shares issued and allotted. ▇▇▇▇▇ ▇▇▇▇▇ (Africa)'s authorized capital
consists solely of 400,000 ordinary shares, par value R2.00 per share, of
which the 400,000 ▇▇▇▇▇ ▇▇▇▇▇ (Africa) Shares are the only shares issued
and allotted. ISP's authorized capital consists solely of the DM 2,000,000
ISP Shares. ▇▇▇▇▇ North's authorized capital consists solely of 1,000
common shares, par value $1.00 per share, of which the 1,000 ▇▇▇▇▇ North
Shares are the only shares issued and outstanding. All of the North Safety
Shares have been validly issued, are fully paid, and are nonassessable.
(G) OWNERSHIP OF NORTH SAFETY SHARES. ▇▇▇▇▇ Owns all of the North
Safety Products Shares, ▇▇▇▇▇ International Owns all of the ▇▇▇▇▇ ▇▇▇▇▇
(Africa) Shares, Deutsche ▇▇▇▇▇ Owns all of the ISP Shares, and ▇▇▇▇▇ US
Owns all of the ▇▇▇▇▇ North Shares. The ▇▇▇▇▇ ▇▇▇▇▇▇▇ will continue to Own
such North Safety Shares until immediately before the Closing. There are no
restrictions of any kind on the ▇▇▇▇▇ ▇▇▇▇▇▇▇' right, power, or authority
to sell, transfer, and assign all of the North Safety Companies' Shares to
Norcross as provided in this Purchase Agreement and no such restrictions
will exist before the Closing. Neither any of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ nor any of
the North Safety Companies has granted to, and there are not outstanding in
favor of, any person any option, warrant, or other right of any kind to
acquire any North Safety Shares or any other
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equity securities of the North Safety Companies and no such rights will be
granted to or outstanding in favor of any person before the Closing.
(H) FINDERS. With the sole exception of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ &
Co., none of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ has engaged or is directly or indirectly
obligated to any person acting as a broker, finder, or similar capacity in
connection with the transactions contemplated by this Purchase Agreement.
3.2 THE ▇▇▇▇▇ ▇▇▇▇▇▇▇' REPRESENTATIONS AND WARRANTIES CONCERNING THE NORTH
SAFETY DISCLOSURE PACKAGE. Simultaneously with the execution and delivery of
this Purchase Agreement, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ are delivering to Norcross a set
bound volumes of disclosure materials (the "North Safety Disclosure Package")
entitled "The North Safety Disclosure Package" and consisting of 13 Parts,
consecutively lettered A-M, inclusive. The ▇▇▇▇▇ ▇▇▇▇▇▇▇ hereby represent and
warrant jointly and severally to Norcross that the North Safety Disclosure
Package contains the information described on Appendix E, it being understood
that the North Safety Disclosure Package is for the purpose of disclosing
information and is not intended to supersede the terms of this Purchase
Agreement. In addition, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ represent and warrant jointly and
severally to Norcross as follows:
(A) THE NORTH SAFETY COMPANIES GENERALLY. Except as otherwise
disclosed on Part A. (1) each North Safety Company and each subsidiary of a
North Safety Company is a limited liability company or corporation with
full corporate power and authority and all material licenses, permits, and
authorizations necessary to own its properties and conduct the North Safety
Business as the same has been and is being conducted; (2) each North Safety
Company and each subsidiary of a North Safety Company is in good standing
in each jurisdiction in which the nature of its activities and/or ownership
of property requires it to be in good standing. Neither any of the North
Safety Companies nor any of their subsidiaries has granted to, and there
are not outstanding in favor of, any person any option, warrant,
convertible or exchangeable security or other right of any kind to acquire
any of the equity capital of such subsidiaries and no such rights will be
granted to or outstanding in favor of any person before the Closing; and
(3) all of the equity interests of the North Safety Companies and their
subsidiaries are wholly-owned directly or indirectly by the North Safety
Companies and there are no agreements or arrangements with minority
stockholders.
(B) FINANCIAL STATEMENTS. Except as otherwise disclosed on Part B,
(1) unaudited financial statements contained in Part B fairly present, in
accordance with the North Safety Companies' standard financial accounting
principles and practices (applied on a consistent basis except as described
in any footnotes thereto), the financial position and results of operations
of the North Safety Companies as of the dates and for the periods therein
set forth, subject only to normal year-end adjustments in the case of those
statements which relate to interim periods which are not material and such
other adjustments as may be de-
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scribed therein; (2) when delivered to Norcross, the GAAP Financials will
have been prepared in accordance with generally accepted accounting
principles in the United States (consistently applied except as otherwise
noted therein) and will fairly present the financial condition, results of
operations, statement of shareholder equity and cash flows of the North
Safety Companies at the dates and for the periods covered thereby; and (3)
the unaudited balance sheet of the North Safety Companies at July 4, 1998,
that the ▇▇▇▇▇ ▇▇▇▇▇▇▇ have delivered to Norcross simultaneously with the
execution and delivery of this Purchase Agreement has been prepared in
accordance with U.S. generally accepted accounting principles applied
consistently with the GAAP Financials and fairly presents the financial
condition of the North Safety Companies at July 4, 1998, subject only to
normal year-end adjustments which are not material and except for such
other adjustments described therein, including the deletion of those assets
the North Safety Companies will not possess and liabilities for which the
North Safety Companies will not be liable from and after the Closing. (The
financial statements referred to in this Section 3.2(B) are collectively
defined as the "Financial Statements"; and the balance sheet referred to in
Section 3.2(B)(3) is defined as the "Base-Line Balance Sheet.")
(C) REAL PROPERTY. Except as otherwise disclosed on Part C, (1) the
North Safety Companies Own all of the real properties listed as "OWNED" on
Part C-1; (2) the leases under which the real property listed as "LEASED"
on Part C-2 are leased are valid, legal, binding and subsisting; and (3)
neither the North Safety Companies nor, to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' knowledge,
any other person is in Default under any such lease of real properties in
any manner materially adverse to the North Safety Business Condition.
(D) TANGIBLE PERSONAL PROPERTY. Except as otherwise disclosed on Part
D, (1) the North Safety Companies Own all tangible personal property listed
as "OWNED" on Part D; (2) the leases under which the tangible personal
property listed as "LEASED" on Part D are leased are valid, legal, binding
and subsisting; and (3) neither the North Safety Companies nor, to the
▇▇▇▇▇ ▇▇▇▇▇▇▇' knowledge, any other person is in Default under any such
lease of tangible personal properties in any manner materially adverse to
the North Safety Business Condition.
(E) INTELLECTUAL PROPERTY. Except as otherwise disclosed on Part E,
(1) the North Safety Companies Own all of the Intellectual Property listed
as "OWNED" on Parts E-1 and E-2, inclusive; (2) the license, technology, or
similar agreements to employ the Intellectual Property listed as "LICENSED
TO" on Part E-3 are valid, legal, binding and subsisting agreements; (3)
neither the North Safety Companies nor, to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' knowledge,
any other person is in Default under any such license of Intellectual
Property in any manner materially adverse to the North Safety Business
Condition; (4) none of the North Safety Companies has granted any rights or
interest to any person in connection with any of the
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Intellectual Property described in Part E other than those listed as
"LICENSED BY" the North Safety Companies on Part E-4; (5) to the ▇▇▇▇▇
▇▇▇▇▇▇▇' knowledge, in their conduct of the North Safety Business, none of
the North Safety Companies infringe or have infringed the intellectual
property rights of any other person; and (6) to the ▇▇▇▇▇ ▇▇▇▇▇▇▇'
knowledge, and no other person is infringing on any intellectual property
rights of any of the North Safety Companies.
(F) LIABILITIES. Except as otherwise disclosed on Part F, none of the
North Safety Companies is in Default in any manner materially adverse to
the North Safety Business Condition under any note, bond, debenture,
mortgage, indenture, security agreement, guaranty, or other instrument of
indebtedness. Except as disclosed in the Disclosure Package, the North
Safety Companies have no liabilities (contingent or matured) which are
material to the North Safety Companies other than liabilities reflected in
the Financial Statements, other liabilities incurred in the ordinary course
of business (none of which is a liability arising from breach of contract,
breach of warranty, tort, infringement, misappropriation, claim, or suit),
and liabilities to be reflected in the statement of Closing Net Worth.
(G) LITIGATION. Except as otherwise disclosed on Part G, (1) there
exists no litigation, proceedings, actions, claims, or investigations at
law or in equity pending or, to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' knowledge, threatened
against the North Safety Companies that is likely to be materially adverse
to the North Safety Business Condition; and (2) the North Safety Companies
are not in Default under any writ, injunction, order, or decree of any
court, agency, or other governmental authority materially affecting the
North Safety Business.
(H) CONTRACTS. Except as otherwise disclosed on Part H, (1) each of
the contracts, commitments, and other obligations listed on the Disclosure
Package is a valid, legal, subsisting, and binding obligation of one or
more of the North Safety Companies and, to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' knowledge,
the other person or persons who are party thereto; (2) neither the North
Safety Companies nor, to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' knowledge, any other person who
is party thereto has terminated, canceled, or substantially modified any
contract, commitment, or other obligation identified in the Disclosure
Package or intends to do any of the foregoing in any manner materially
adverse to the North Safety Business Condition; (3) neither the North
Safety Companies nor, to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' knowledge, any other person who
is party thereto is in Default under any contract, commitment, or other
obligation identified in the Disclosure Package in any manner materially
adverse to the North Safety Business Condition; and (4) none of the North
Safety Companies is party to a contract requiring such North Safety Company
to purchase goods or services or lease property materially above or below
(as the case may be) prevailing market rates and prices or to sell goods or
services materially below the cost of such goods and services to that North
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Safety Company, in either case in a manner likely to have a material
adverse effect on the North Safety Business Condition.
(I) EMPLOYEES AND EMPLOYEE BENEFITS. Except as otherwise disclosed on
Part I, (1) none of the North Safety Companies maintains or contributes to
any material pension, retirement, profit-sharing, deferred compensation,
employee stock option or stock purchase, bonus, or incentive compensation
plans, (2) ▇▇▇▇▇ North does not maintain or contribute to any such written
plans (or to the knowledge of the ▇▇▇▇▇ ▇▇▇▇▇▇▇, any such oral plans)
whether or not material; (3) none of the North Safety Companies maintains
or contributes to any employee health, dental, vision, life insurance,
long-term or short-term disability, vacation, tuition reimbursement, or
severance plans or, to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' knowledge, other fringe benefit
plans, programs, or arrangements, relating and applicable to the North
Safety Business or its employees material to the North Safety Business (the
items under clauses (1), (2) and (3) above, collectively referred to as the
"Employee Benefit Plans"); (4) each of the Employee Benefit Plans has been
maintained and administered in all material respects with the requirements
of applicable law, except where such instances of noncompliance would not
be material to the North Safety Business; (5) each Employee Benefit Plan
which is intended to be qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), has received a favorable
determination letter that it is so qualified and this its corresponding
trust is exempt from taxation under Section 501(a) of the Code, and the
▇▇▇▇▇ ▇▇▇▇▇▇▇ are not aware of any reason why any such favorable
determination letter would be revoked; (6) with respect to each Employee
Benefit Plan, to the knowledge of the ▇▇▇▇▇ ▇▇▇▇▇▇▇, there have been no
prohibited transactions (as defined in Section 406 of ERISA or Section 4975
of the Code) and no fiduciary has any liability for breach of fiduciary
duty; (7) with respect to the Employee Benefit Plans, as of the date hereof
there are no actions, investigations, suits or material claims pending, or
to the knowledge of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ threatened, which is likely to be
materially adverse to the North Safety Business; (8) with respect to each
Employee Benefit Plan, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ have made available to Norcross
copies of the Employee Benefit Plan documents, summary plan descriptions,
the most recent actuarial valuation, IRS Form 5500, and the most recent IRS
favorable determination letter, which to the knowledge of the ▇▇▇▇▇
▇▇▇▇▇▇▇, are accurate and complete; (9) to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' knowledge, no
key executive and no group of employees of the North Safety Companies has
as of the date hereof any plan to terminate his, her, their, or its
employment with the North Safety Companies; and (10) none of the North
Safety Companies is a party to or bound by any collective bargaining
agreement, nor experienced any strikes, grievances, unfair labor practices
claims, or other material employee or labor dispute during the past 12
months.
(J) ENVIRONMENTAL MATTERS. Except as otherwise disclosed on Part J,
and insofar as is material to the North Safety Business Condition, (1) the
North Safety Companies have been and are in compliance with all
Environmental Laws
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applicable to the North Safety Business, including Laws (a) relating to
emissions, discharges, and releases of Hazardous Materials into land, soil,
ambient air, water, and atmosphere; and (b) with respect to the generation,
treatment, storage, transportation, and disposal of Hazardous Materials;
and (2) there has been no use, disposal or release of materials, with
respect to the past or current operations or facilities of the North Safety
Companies or any predecessor (including any onsite or offsite disposal and
release of, or contamination by, Hazardous Materials) which will give rise
to any liability (including corrective or remedial action) under any
Environmental Laws.
(K) COMPLIANCE WITH OTHER LAWS. Except as otherwise disclosed on Part
K, and insofar as is material to the North Safety Business Condition, the
North Safety Companies are in compliance with all statutes, ordinances,
regulations, and other governmental requirements (other than Environmental
Laws) applicable to the conduct of the North Safety Business.
(L) TAXES. Except as otherwise disclosed in Part L, (1) the North
Safety Companies have filed all tax returns that the North Safety Companies
are obligated to file by law, (2) the North Safety Companies have paid or
have reserved for all taxes that are shown to be due and payable on such
returns, (3) no properties or assets of the North Safety Companies are
encumbered by any liens for unpaid taxes in any manner materially adverse
to the North Safety Business Condition; (4) each North Safety Company has
withheld and paid over to the appropriate taxing authority all material
taxes which it is required to withhold from amounts paid or owing to any
employee, equity holder, creditor or other person, and (5) no North Safety
Company will be required to include any material income for any taxable
period (or portion thereof) ending after the Closing Date as a result of
(a) Section 481 of the US Internal Revenue Code (or any corresponding
provision of state, local, or foreign income tax law), (b) the installment
method of accounting, or (c) any "closing agreement," as described in
Section 7121 of the US Internal Revenue Code (or any corresponding
provision of state, local, or foreign income tax law).
(M) NO MATERIAL EVENTS. Except as otherwise disclosed in Part M, (1)
insofar as is material to the North Safety Business Condition, the North
Safety Business has been conducted only in the ordinary and usual course
since April 4, 1998; (2) since July 4, 1998, no North Safety Company has
taken any action (without the consent of Norcross) which is inconsistent
with or prohibited by Section 4.2 or Section 4.3 of this Purchase Agreement
(it being understood that the ▇▇▇▇▇ ▇▇▇▇▇▇▇ had no obligation to seek
Norcross' consent for any transactions undertaken before the execution and
delivery of this Purchase Agreement) and (3) no Material Events have
occurred since April 4, 1998.
(N) ASSETS. The assets (whether real, personal or mixed property,
tangible or intangible) owned, leased, or licensed by the North Safety
Compa-
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▇▇▇▇ include or will at the Closing include all buildings, machinery,
equipment, and other assets of the North Safety Companies being used by the
North Safety Companies in their conduct of the North Safety Business as the
same is currently being conducted.
(O) AFFILIATED TRANSACTIONS. No executive officer, director, or
shareholder (other than a shareholder of ▇▇▇▇▇) of any of the North Safety
Companies or any affiliate of the North Safety Companies or a person
related by blood or marriage to any such person or in which any such person
owns any controlling interest is a party to any agreement, contract,
commitment, transaction, or arrangement with any of the North Safety
Companies other than arms'-length transactions in the ordinary course
which account for less than 1% of any North Safety Company's revenues
during any 12-month period or has any beneficial ownership interest in any
material property, real or personal or mixed, tangible or intangible,
necessary for the conduct of the North Safety Business.
(P) NO ACCELERATION OF RIGHTS OR BENEFITS. Except for the severance
benefits for nine named employees described in paragraph 5G(3) of Appendix
I, (1) none of the North Safety Companies is obligated to make any payment
to any person as a consequence of the transactions contemplated by this
Purchase Agreement and (2) no rights or benefits of any person have been
(or will be) accelerated or increased as a result of the consummation of
the transactions contemplated by this Purchase Agreement except as
contemplated in this Purchase Agreement.
3.3 NORCROSS' REPRESENTATIONS AND WARRANTIES. Norcross hereby represents
and warrants to the ▇▇▇▇▇ ▇▇▇▇▇▇▇ the following:
(A) ORGANIZATION AND EXISTENCE. Norcross is a limited liability
company duly organized, validly existing, and in good standing under the
laws of the State of Delaware.
(B) POWER AND AUTHORITY. Norcross has full corporate power and
authority under its limited liability company agreement and under the laws
of the State of Delaware to execute, deliver, and perform this Purchase
Agreement.
(C) AUTHORIZATION. The execution, delivery, and performance of this
Purchase Agreement have been duly authorized by all requisite corporate
actions on the part of Norcross.
(D) BINDING EFFECT. This Purchase Agreement is a valid, binding, and
legal obligation of Norcross.
(E) NO DEFAULT. Neither the execution and delivery of this Purchase
Agreement nor Norcross' full performance of its obligations under this
Purchase
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Agreement will violate or breach, or otherwise constitute or give rise to a
Default under, or require any consent, authorization, or approval pursuant
to, the terms or provisions of Norcross' its limited liability company
agreement or of any material contract, commitment, statute, rule,
regulation, judgment, order, decree, or other restriction of any
government, governmental agency, or court (other than the regulatory
approvals described in Sections 4.7 and 4.8), or other obligation to which
Norcross is a party.
(F) NORCROSS' FINANCING PLAN. Norcross has delivered to the ▇▇▇▇▇
▇▇▇▇▇▇▇ true, accurate, and complete copies of the equity and debt
commitment letters dated September 1, 1998 (the "Commitment Letters")
("Norcross' Financing Plan") as in effect on the date hereof by which
Norcross intends to raise funds necessary to pay the Purchase Price as and
when contemplated in this Purchase Agreement.
(G) INVESTMENT INTENT. Norcross is acquiring the North Safety Shares
for its own account for investment purposes and not with an intent or view
toward public distribution and Norcross will not sell or transfer any of
the North Safety Shares except in accordance with applicable law, including
the Securities Act of 1933, as amended, and the rules and regulations
thereunder.
(I) FINDERS. With the sole exception of its lenders and equity
members, Norcross has not engaged and is not directly or indirectly
obligated to any person acting as a broker, finder, or other similar
capacity in connection with the transactions contemplated by this Purchase
Agreement.
3.4 DISCLAIMER. The warranties stated in this Article 3 together with the
Appendices hereto are the only representations and warranties either party has
given the other party in connection with the transactions contemplated by this
Purchase Agreement. Except as set forth in this Article 3 together with the
Appendices hereto, neither party has made, and each party hereby expressly
disclaims, any other or additional representation or warranty, either express or
implied, concerning the subject matter of this Purchase Agreement. THE
WARRANTIES GIVEN IN THIS ARTICLE 3, TOGETHER WITH THE APPENDICES HERETO, ARE IN
LIEU OF ALL OTHER WARRANTIES EITHER PARTY MIGHT HAVE GIVEN THE OTHER PARTY,
INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND IMPLIED WARRANTIES OF
FITNESS FOR INTENDED USE. All other warranties either party or anyone purporting
to represent either party gave or might have given, or which might be provided
or implied by law or commercial practice, ARE HEREBY EXCLUDED
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ARTICLE 4
ACTIONS BEFORE CLOSING
4.1 ACCESS TO RECORDS. The ▇▇▇▇▇ ▇▇▇▇▇▇▇ covenant to Norcross that they
will cause the North Safety Companies and their representatives (including their
independent accountants) to afford duly authorized representatives of Norcross
and its financing sources free and full access during normal business hours to
all of the assets, properties, books, and non-privileged records, personnel,
customers, and suppliers of the North Safety Companies and of the North Safety
Business and will permit such representatives to make abstracts from, or take
copies of, such books, records, or other documentation, or to obtain temporary
possession of any thereof as may be reasonably required by Norcross and the
▇▇▇▇▇ ▇▇▇▇▇▇▇ will furnish to Norcross such information concerning the North
Safety Companies and its assets, liabilities, and condition as Norcross may
reasonably request.
4.2 INTERIM CONDUCT OF THE NORTH SAFETY BUSINESS. The ▇▇▇▇▇ ▇▇▇▇▇▇▇
covenant to Norcross that, from today until the Closing, the North Safety
Companies will conduct the North Safety Business only in the ordinary and usual
course, subject to Norcross' approval of certain transactions pursuant to
Section 4.3. Without limiting the generality of the foregoing (and whether or
not in the ordinary course of business consistent with past practice), the ▇▇▇▇▇
▇▇▇▇▇▇▇ covenant to Norcross that the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will cause the North Safety
Companies to use their reasonable best efforts to:
(A) Preserve intact the North Safety Business' relationships with
suppliers, customers, employees, creditors, and others having business
dealings with the North Safety Companies;
(B) Maintain in full force and effect its policies of insurance which
materially affect the North Safety Companies and/or the North Safety
Business;
(C) Maintain all Intellectual Property of the North Safety Companies
in substantially the same standing as exist today and continue the
prosecution of all applications therefor;
(D) Continue performance in the ordinary course of the North Safety
Companies' obligations under contracts, commitments, or other obligations;
and
In addition, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will cause the value of working capital (i.e.,
current assets over current liabilities) as of Closing to be not less than such
value as set forth in the Base-Line Balance Sheet.
4.3 NORCROSS' APPROVAL OF CERTAIN TRANSACTIONS. The ▇▇▇▇▇ ▇▇▇▇▇▇▇ covenant
to Norcross that, except as may otherwise be required under this Purchase
Agreement, from today until the Closing, the North Safety Companies will not and
will
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not commit to do any of the following without the prior approval with written
confirmation of Norcross, which approval shall not be unreasonably withheld:
(A) Suffer to exist any debt for borrowed money or (except as set
forth in Appendix H) for existing capital leases at Closing or, other than
continuation of cash management practices consistent with past practice, or
incur any other obligation or other liability, except (in the case of such
other obligation or liability) in the ordinary course of business;
(B) Purchase or dispose of any real property or real property
interest;
(C) Enter into any lease of real or personal property or any renewals
thereof involving a term of more than one year or rental obligation
exceeding $150,000 per annum in any single case;
(D) Voluntarily permit to be incurred any Encumbrances on any of the
assets or properties of the North Safety Companies except Permitted
Encumbrances;
(E) Except for normal merit or cost-of-living increases in accordance
with the North Safety Companies' past practices, increase the rate of
compensation for any of the employees of the North Safety Companies or of
the North Safety Business or otherwise enter into, terminate or alter any
material employment, consulting, or managerial services agreement;
(F) Commence, enter into, or alter any pension, retirement,
profit-sharing, employee stock option or stock purchase, bonus, deferred
compensation, incentive compensation, life insurance, health insurance,
fringe benefit, severance, or other employee benefit plan or arrangement
affecting employees of the North Safety Companies or the North Safety
Business except as may be required to effect transactions contemplated by
this Purchase Agreement and the Employee Benefits Agreement;
(G) Make any single new commitment or increase any single previous
commitment for capital expenditures in an amount of $500,000 or more;
(H) Accelerate or delay the sale of Products except as may be
necessary in the ordinary course of business;
(I) Sell, assign, transfer, license, or convey any of the
Intellectual Property;
(J) Terminate, modify, or otherwise impair any contract, program, or
arrangement designed primarily to make one or more of the North Safety
Companies Year 2000 Compliant;
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(K) Issue, sell, transfer, contribute, distribute, or otherwise
dispose of any securities of the North Safety Companies or any material
asset of the North Safety Companies, other than sales of inventory or
obsolete equipment in the ordinary course of business;
(L) Hire or fire any members of the North Safety Companies' senior
management;
(M) Grant any performance guarantees to its customers other than in
the ordinary course of business;
(N) Acquire any other business or entity (or significant portion or
division of such business or entity) whether by merger, consolidation, or
reorganization or by purchase of its assets or stock;
(O) Institute or permit any material change in the conduct of the
North Safety Business or its methods of purchase, sale, lease, management,
marketing, or operation of the North Safety Business;
(P) Enter into, terminate, modify, or amend the terms of any contract
to which any of the North Safety Companies is a party other than in the
ordinary course of business; or
(Q) Intentionally take any action or intentionally fail to take any
action that the ▇▇▇▇▇ ▇▇▇▇▇▇▇ believe are likely to cause any
representation or warranty contained in Section 3.2 to become untrue,
inaccurate, or incomplete when made if such action or omission was taken
immediately prior to the date such representation or warranty was given.
4.4 NORCROSS' FINANCING. Norcross covenants to the ▇▇▇▇▇ ▇▇▇▇▇▇▇ that from
today until the Closing Norcross will use its prompt good faith reasonable best
efforts to implement the Norcross' Financing Plan with a view toward enabling
Norcross to pay the Purchase Price as and when contemplated in this Purchase
Agreement. Without limiting the generality of the foregoing, Norcross covenants
to the ▇▇▇▇▇ ▇▇▇▇▇▇▇ that from today until the Closing it will promptly --
(A) upon request, provide the ▇▇▇▇▇ ▇▇▇▇▇▇▇ with updates as to
Norcross' progress toward implementing the Norcross' Financing Plan as the
▇▇▇▇▇ ▇▇▇▇▇▇▇ may from time to time reasonably request; and
(B) notify the ▇▇▇▇▇ ▇▇▇▇▇▇▇ when and if Norcross has a reasonable
belief that it is unlikely that, subject to the terms and conditions
contained in such plan, the funding parties to the Commitment Letters will
be prepared to provide Norcross in the aggregate with the funds needed to
consummate the transac-
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tions herein contemplated on the Closing Date after satisfaction of all the
terms and conditions contained in this Purchase Agreement. Neither Norcross
nor any of its affiliates or financing sources will have any liability
under this Section 4.4 except to the extent Norcross acted in bad faith or
committed fraud in discharging its obligations under this Section 4.4.
4.5 CONSENTS TO ASSIGNMENT. The ▇▇▇▇▇ ▇▇▇▇▇▇▇ covenant to Norcross that,
from today until the Closing, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will use their reasonable best
efforts to cause the North Safety Companies to obtain the consents or approvals
(or effective waivers thereof) of all other persons whose consents or approvals
are required for the continuation of the North Safety Companies' rights or to
prevent Default (without giving effect to grace periods) under other material
contracts, leases, licenses, permits, approvals, and other similar items upon
sale of the North Safety Shares or change of control of the North Safety
Companies. In carrying out their obligations under this Section 4.5, however,
the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will not be obliged to pay any amounts, make any additional
commitments, or incur any further obligations or liabilities in order to obtain
such consents.
4.6 COORDINATION OF PUBLIC ANNOUNCEMENTS. From today until the Closing,
the parties will cooperate in the planning, preparation, and publication of any
and all public announcements concerning this Purchase Agreement and the
transactions contemplated by this Purchase Agreement.
4.7 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ NOTIFICATION. The ▇▇▇▇▇ ▇▇▇▇▇▇▇ covenant to
Norcross, and Norcross covenants to the ▇▇▇▇▇ ▇▇▇▇▇▇▇, that immediately after
the execution and delivery of this Purchase Agreement the parties will promptly
proceed with the preparation and filing of any required notification under Title
II of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act and the rules of the
Federal Trade Commission thereunder; and that such filings will be duly made on
or before September 1, 1998.
4.8 OTHER REGULATORY APPROVALS. The ▇▇▇▇▇ ▇▇▇▇▇▇▇ covenant to Norcross,
and Norcross covenants to the ▇▇▇▇▇ ▇▇▇▇▇▇▇, that immediately after the
execution and delivery of this Purchase Agreement the parties will promptly
proceed with the preparation and filing of any required filings necessary in
order to obtain the approval or authorization of those governmental agencies or
instrumentalities whose approval or authorization is necessary or desirable in
order to consummate the transactions contemplated by this Purchase Agreement.
4.9 NO SHOPPING. From today until the Closing or termination (pursuant to
Section 9.3), cancellation (pursuant to Section 9.4), or partial termination
(pursuant to Section 9.5) of this Purchase Agreement, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will not
negotiate or participate in any discussions with or provide any information to,
any person other than Norcross and its representatives and lenders concerning
the sale of all or any part of the North Safety Shares or all or any part of the
business assets (other than inventory in the ordinary course of business and
obsolete inventory) of any of the North Safety
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Companies without the prior written consent of Norcross. The ▇▇▇▇▇ ▇▇▇▇▇▇▇ will
inform Norcross if the ▇▇▇▇▇ ▇▇▇▇▇▇▇ or the North Safety Companies receive any
offers or expressions of interest for any of the North Safety Companies, any
securities or substantial portion of the assets of any of the North Safety
Companies, or the North Safety Business or any portion thereof, but the ▇▇▇▇▇
▇▇▇▇▇▇▇ will not be obligated to disclose the identity of the person making such
offer or expression.
4.10 DELIVERY OF GAAP FINANCIALS. The ▇▇▇▇▇ ▇▇▇▇▇▇▇ covenant to Norcross
that on or before September 4, 1998, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will deliver to Norcross
consolidated financial statements for the North Safety Companies for the fiscal
years ended April 6, 1996, April 5, 1997, and April 4, 1998, in each case
audited without qualification by KPMG Peat Marwick L.L.P., in accordance with
U.S. generally accepted accounting principles consistently applied (the "GAAP
Financials").
4.11 OTHER AGREEMENTS. The ▇▇▇▇▇ ▇▇▇▇▇▇▇ covenant to Norcross, and Norcross
covenants to the ▇▇▇▇▇ ▇▇▇▇▇▇▇, that from today until the Closing or the
termination or cancellation of this Purchase Agreement as provided in Article 9,
the parties will negotiate in good faith the following other agreements and such
other agreements as they may deem necessary or appropriate for the orderly
transition of ownership of the North Safety Companies from the ▇▇▇▇▇ ▇▇▇▇▇▇▇ to
▇▇▇▇▇▇▇▇ (collectively, the "Other Agreements"):
(A) One or more agreements (collectively, the "Transition Services
Agreement") containing agreements pursuant to which the ▇▇▇▇▇ ▇▇▇▇▇▇▇
and/or their affiliates will provide services on a transitional basis to
the North Safety Companies after the Closing;
(B) One or more agreements (collectively, the "Real Estate
Agreement") containing terms and conditions consistent with those set forth
on Appendix H relating to the North Safety Companies' lease or sublease of
certain properties in which or at which the North Safety Business is
conducted;
(C) One or more agreements (collectively, the "Employee Benefits
Agreement") containing terms and conditions consistent with those set forth
on Appendix I relating to the effect of the transactions contemplated by
this Purchase Agreement on benefits of employees of the North Safety
Companies; and
(D) An agreement (the "Trademark License Agreement") containing terms
and conditions consistent with those set forth on Appendix J providing the
North Safety Companies the right to use the trade name "SiebeGorman" and
the stylized logo incorporating the words "SiebeGorman" in connection with
the sale of self-contained breathing apparatuses for firefighting
applications worldwide (except in the United States) for a period of three
years after the Closing.
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4.12 CORPORATE ACTIONS. Between today and the Closing, the ▇▇▇▇▇ ▇▇▇▇▇▇▇
will cause the North Safety Companies to take the following corporate actions:
(A) North Safety Products will distribute to ▇▇▇▇▇ by dividend all of
the shares of equity capital of ▇▇▇▇▇ ▇▇▇▇▇ Textiles Ltd. which will have
no effect on the GAAP Financials, Base-Line Net Worth, or the Closing
Balance Sheet;
(B) ▇▇▇▇▇ North and ▇▇▇▇▇ US will terminate the tax sharing agreement
between them; and
(C) Assignment to a ▇▇▇▇▇ entity other than the North Safety
Companies of the Rockford Lease without any continuing liability or
obligation to the North Safety Companies.
4.13 NOTIFICATION OF MATERIAL ADVERSE CHANGE. The ▇▇▇▇▇ ▇▇▇▇▇▇▇ covenant to
Norcross that from today until the Closing the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will notify
Norcross promptly -
(A) If and when there is a material adverse change in the North
Safety Business Condition; or
(B) Upon becoming aware that any representation or warranty made by
the ▇▇▇▇▇ ▇▇▇▇▇▇▇ contained in this Purchase Agreement becomes untrue or
inaccurate (as if remade on each such date) in any material respect.
ARTICLE 5
CONDITIONS
5.1 CONDITIONS TO NORCROSS' OBLIGATIONS. The obligation of Norcross to
consummate the transactions contemplated by this Purchase Agreement is subject
to the satisfaction of the following conditions at or before the Closing:
(A) The representations and warranties of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ contained
in Section 3.1 of this Purchase Agreement shall be true, accurate, and
complete in all material respects as of today and as of the Closing (except
with respect to the effect of transactions permitted by this Purchase
Agreement, but without giving effect to any disclosures after today);
(B) The representations and warranties of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ contained
in Section 3.2 of this Purchase Agreement shall be true, accurate, and
complete in all material respects as of today and (except for
representations and warranties made as of a specific date) as of the
Closing (except with respect to the effect of transactions permitted by
this Purchase Agreement, but without giving effect to any disclosures after
today);
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(C) None of the financial statements included in the GAAP Financials
will, when compared with the corresponding statement included in the North
Safety Management Presentation dated July/August, 1998, and after giving
effect to any adjustments indicated thereon, reflect any material
diminution in the value of the North Safety Companies or its results of
operations, financial condition, cash flows, net assets, net liabilities,
or net worth and KPMG has executed a letter in the form of Appendix J and
none of the following lines items included in the GAAP Financials will,
when compared with the corresponding statement included in the North Safety
Management Presentation dated July/August 1998, deviate meaningfully from
the corresponding line items in the financial statements contained in such
Management Presentation: Net Sales, EBIT, EBITDA, Operating Income, and Net
Income.
(D) There does not exist any Material Event at the Closing;
(E) The ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have performed and complied with all
agreements and conditions required by this Purchase Agreement to be
performed or satisfied by the ▇▇▇▇▇ ▇▇▇▇▇▇▇, and the ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall
have delivered to Norcross the Other Agreements and any other documents,
certificates, and instruments required to be delivered by the ▇▇▇▇▇ ▇▇▇▇▇▇▇
under the terms of this Purchase Agreement, including the documents
referred to on Appendix F;
(F) The ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have taken all corporate and other
proceedings to be taken by them in connection with the transactions
contemplated by this Purchase Agreement and all documents incidental
thereto shall be reasonably satisfactory in form and substance to Norcross;
(G) All requisite governmental filings, approvals and authorizations
necessary for consummation of the transactions contemplated by this
Purchase Agreement shall have been duly made, issued or granted and
received by the parties, and the waiting period prescribed by Title II of
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act and the rules of the
Federal Trade Commission thereunder or under other applicable law shall
have expired; and all requisite third party approvals and consents required
to be obtained (including to prevent or help prevent a Default) which are
material to the conduct of the business of the North Safety Companies shall
have been obtained.
(H) There shall not have been issued and in effect any injunction or
similar legal order prohibiting or restraining consummation of any of the
transactions contemplated in this Purchase Agreement and no legal action or
governmental investigation which might reasonably be expected to result in
any such injunction or order shall be pending; and
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(I) Norcross lenders shall have funded Norcross' purchase of the
North Safety Shares in accordance with the Commitment Letters.
5.2 CONDITIONS TO THE ▇▇▇▇▇ ▇▇▇▇▇▇▇' OBLIGATIONS. The obligation of the
▇▇▇▇▇ ▇▇▇▇▇▇▇ to consummate the transactions contemplated by this Purchase
Agreement is subject to the satisfaction of the following conditions at or
before the Closing:
(A) The representations and warranties of Norcross contained in
Section 3.3 shall be true, accurate, and complete in all material respects
as of today and as of the Closing (except with respect to the effect of
transactions permitted by this Purchase Agreement);
(B) Norcross shall have performed and complied with all agreements
and conditions required by this Purchase Agreement to be performed or
satisfied by Norcross, and Norcross shall have delivered the Other
Agreements and any other documents, certificates, and instruments required
to be delivered by Norcross under the terms of this Purchase Agreement,
including the documents referred to on Appendix G;
(C) Norcross shall have taken all corporate and other proceedings to
be taken by it in connection with the transactions contemplated by this
Purchase Agreement and all documents incidental thereto shall be reasonably
satisfactory in form and substance to the ▇▇▇▇▇ ▇▇▇▇▇▇▇;
(D) All requisite governmental filings, approvals and authorizations
necessary for consummation of the transactions contemplated by this
Purchase Agreement (or to prevent a Default) shall have been duly made,
issued or granted and received by the parties, and the waiting period
prescribed by Title II of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
and the rules of the Federal Trade Commission thereunder or other
applicable law shall have expired; and
(E) There shall not have been issued and in effect any injunction or
similar legal order prohibiting or restraining consummation of any of the
transactions contemplated in this Purchase Agreement and no legal action or
governmental investigation which might reasonably be expected to result in
any such injunction or order shall be pending.
5.3 PARTIES' BEST EFFORTS. The ▇▇▇▇▇ ▇▇▇▇▇▇▇ covenant to Norcross, and
Norcross covenants to the ▇▇▇▇▇ Seller, that they will use their reasonable good
faith best efforts to cause the conditions precedent to their respective
obligations under this Purchase Agreement to be satisfied at the earliest
practicable date so that the Closing may occur as provided in this Purchase
Agreement. In particular, Norcross and the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will use commercially
reasonable efforts to resolve any objections which any governmental authority
may assert with respect to the transactions contemplated
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by this Purchase Agreement under any antitrust, competition, trade regulation,
or other similar laws or regulations.
ARTICLE 6
CLOSING
6.1 THE CLOSING. For purposes of this Purchase Agreement, the term
"Closing" means the time at which the transactions contemplated by this Purchase
Agreement will be consummated after satisfaction or waiver of the conditions set
forth in Article 5 of this Purchase Agreement.
6.2 TIME, DATE, AND PLACE OF CLOSING. The Closing will occur at 10:00 a.m.
(Eastern Time) on Friday, October 2, 1998, or such other date as the parties may
agree in writing (the "Closing Date"). The Closing will take place at the
offices of Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, One New York Plaza, New
York, New York, or at such other place as the parties may agree in writing. The
Closing will be deemed to have occurred as of 11:59 p.m. on the Closing Date
(the "Closing Time").
6.3 NORCROSS' OBLIGATIONS. At the Closing, Norcross will deliver to the
▇▇▇▇▇ ▇▇▇▇▇▇▇ the following:
(A) The documents, certificates, and other items referred to in
Section 5.2(B);
(B) The amounts specified in Section 2.4(A);
(C) The Deferred Note; and
(D) Copies of each of the Other Agreements executed by Norcross.
6.4 THE ▇▇▇▇▇ ▇▇▇▇▇▇▇' OBLIGATIONS. At the Closing, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will
deliver to Norcross the following:
(A) The documents, certificates, opinions (as provided in
Appendix F), and other items referred to in Section 5.1(E);
(B) Ownership of the North Safety Shares;
(C) Copies of each of the Other Agreements executed by the
appropriate ▇▇▇▇▇ Seller or ▇▇▇▇▇ ▇▇▇▇▇▇▇; and
(D) Books and records of the North Safety Companies in the possession
of the ▇▇▇▇▇ ▇▇▇▇▇▇▇.
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6.5 LOCAL FORMALITIES. If local law or custom in the United Kingdom, South
Africa, Germany, or the United States require additional formalities (such as
notarization), filings or consents to effect the transactions contemplated by
this Purchase Agreement, then the parties will cooperate to carry out such
formalities simultaneously with or prior to the Closing.
ARTICLE 7
ACTIONS AFTER CLOSING
7.1 FURTHER CONVEYANCES. After the Closing, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will,
without further cost or expense to Norcross, execute and deliver to Norcross (or
cause to be executed and delivered to Norcross), such additional instruments of
conveyance, and the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will take such other and further actions as
Norcross may reasonably request and which are ordinarily provided by a seller,
more completely to sell, transfer, and assign to Norcross and vest in Norcross
Ownership of the North Safety Shares. At the request of Norcross, the ▇▇▇▇▇
▇▇▇▇▇▇▇ shall cause their affiliates to terminate any intercompany agreements
entered into with any North Safety Company or its subsidiaries before the
Closing, it being understood that the terms of this Purchase Agreement shall
control the terms of any intercompany agreement.
7.2 FURTHER CONSENTS TO ASSIGNMENT. As and to the extent the ▇▇▇▇▇ ▇▇▇▇▇▇▇
shall have failed to obtain before Closing the consent or approval (or an
effective waiver thereof) of any person or persons with respect to any item
described in Section 4.5, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will at or after the Closing
cooperate with Norcross in any reasonable arrangement satisfactory to the
parties designed to provide Norcross with the benefit of the North Safety
Companies' rights under such item, including enforcement (at Norcross' expense)
of any and all rights of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ against such person as Norcross may
reasonably request.
7.3 ACCESS TO FORMER BUSINESS RECORDS. For a period of five years (ten
years in the case of tax records and, with respect to the ▇▇▇▇▇ ▇▇▇▇▇▇▇'
indemnification obligations hereunder, indefinitely in the case of Product
engineering and sales records) after the Closing, Norcross will afford duly
authorized representatives of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ free and full access during
normal business hours to pre-Closing books and records of the North Safety
Companies and will permit such representatives, at ▇▇▇▇▇ Seller's expense, to
make abstracts from, or to take copies of any of such records, or to obtain
temporary possession of any thereof as may be reasonably required by the ▇▇▇▇▇
▇▇▇▇▇▇▇. During such period, Norcross will cooperate with the ▇▇▇▇▇ ▇▇▇▇▇▇▇, and
cause employees of the North Safety Companies to cooperate with the ▇▇▇▇▇
▇▇▇▇▇▇▇, in furnishing information, evidence, testimony, and other assistance in
connection with any action, proceeding, or investigation relating to the North
Safety Companies' conduct of the North Safety Business before the Closing. Items
or information
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may be requested pursuant to this Section 7.3 only for legitimate business
purposes (including satisfaction of reporting obligations) and may not be used
for competitive purposes.
7.4 ACCESS TO EMPLOYEES. After the Closing, to the extent necessary and
not materially disruptive to its business -
(A) Norcross will make available to the ▇▇▇▇▇ ▇▇▇▇▇▇▇ employees of
the North Safety Companies whom the ▇▇▇▇▇ ▇▇▇▇▇▇▇ may reasonably need in
order to defend or prosecute any legal or administrative action to which
the ▇▇▇▇▇ ▇▇▇▇▇▇▇ is a party and which relates to the conduct of North
Safety Business before the Closing; and
(B) The ▇▇▇▇▇ ▇▇▇▇▇▇▇ will make available to Norcross the employees
of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ whom ▇▇▇▇▇▇▇▇ may reasonably need in order to defend
or prosecute any legal or administrative action to which the North Safety
Companies is a party and which relates to the conduct of North Safety
Business before the Closing.
The ▇▇▇▇▇ ▇▇▇▇▇▇▇ will pay or reimburse the North Safety Companies, and Norcross
will reimburse the ▇▇▇▇▇ ▇▇▇▇▇▇▇, for all, reasonable expenses which may be
incurred by such employees in connection therewith, including all travel,
lodging, and meal expenses, and the ▇▇▇▇▇ ▇▇▇▇▇▇▇ or Norcross, as the case may
be, will compensate the North Safety Companies or the ▇▇▇▇▇ ▇▇▇▇▇▇▇, as the case
may be, for the number of business days (or portions thereof) spent by each such
employee in providing such services at the rate of 130% of the average daily
gross pay per business day (excluding the value of employee benefits) of such
employee during the calendar month in which such services are performed.
7.5 CHANGE OF CORPORATE NAMES. Within 30 days after the Closing, Norcross
will (except as permitted by the Trademark License Agreement) use its reasonable
best efforts to cause the corporate names of each of the North Safety Companies
(and their subsidiaries) to be changed to exclude any reference to the word
"▇▇▇▇▇" or any word likely to be confused with the word "▇▇▇▇▇." Norcross will
take all necessary steps to assure that as promptly as practicable after the
Closing none of the North Safety Companies hold themselves out or transact
business as members of the ▇▇▇▇▇ group of companies. Notwithstanding the
foregoing, the North Safety Companies will have the right to (i) use any and all
of the inventories in stock at Closing PROVIDED THAT within 30 days after the
Closing the North Safety Companies institute a procedure whereby reasonable
commercial efforts are used to affix a stamp or other indelible identifying ▇▇▇▇
to any such items which bear the ▇▇▇▇▇ name, trademark, or logo in order to
indicate that the North Safety Companies, and not a member of the ▇▇▇▇▇ group,
is the producer, provider, or manufacturer of such item (it being agreed that
after six months from the Closing the North Safety Companies must affix such a
stamp or other indelible identifying ▇▇▇▇ on all such items which bear the ▇▇▇▇▇
name, trade-
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▇▇▇▇, or logo) and (ii) continue to use the ▇▇▇▇▇ ▇▇▇▇▇▇ name pursuant to
Trademark License Agreement.
7.6 RELEASE OF GUARANTEES. Norcross covenants to the ▇▇▇▇▇ ▇▇▇▇▇▇▇ that
▇▇▇▇▇▇▇▇ will use its reasonable best efforts to cause Norcross to be
substituted in all respects for the ▇▇▇▇▇ ▇▇▇▇▇▇▇ and their affiliates, and will
use its reasonable best efforts to cause the ▇▇▇▇▇ ▇▇▇▇▇▇▇ and their affiliates
to be released and fully discharged from, any responsibility or liability in
respect of any obligation of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ or any of their affiliates under
guarantees, letters of credit, bonds, or similar items that the ▇▇▇▇▇ ▇▇▇▇▇▇▇ or
any of their affiliates have entered into or given for the benefit of any of the
North Safety Companies before Closing to the extent Norcross is not entitled to
indemnification with respect to such matter and to the extent Norcross is
actually made aware of such guaranty; PROVIDED, HOWEVER, that in carrying out
its obligations under this Section 7.6 Norcross will not be obliged to pay any
amounts, make any additional commitments, or incur any further obligations or
liabilities in order to obtain such releases. Whether or not Norcross is able to
effect any such a substitution, release, or discharge, from and after the
Closing, Norcross, and not the ▇▇▇▇▇ ▇▇▇▇▇▇▇ or their affiliates, will be solely
responsible for (and will indemnify the ▇▇▇▇▇ ▇▇▇▇▇▇▇ from and against any and
all liability with respect to) performance and payment of all obligations of the
▇▇▇▇▇ ▇▇▇▇▇▇▇ and their affiliates in respect of such items to the extent
Norcross is not entitled to indemnification with respect to such matter.
7.7 RESPIRATORY PRODUCT LIABILITY MATTERS. The parties' respective
obligations with respect to product liability and other claims (the "Respiratory
Product Liability Matters") with respect to, related to or otherwise arising out
of respiratory Products (whether as a result of its use or otherwise and,
including with respect to any components thereof) will be as follows:
(A) NORCROSS' SOLE RESPONSIBILITIES. Norcross will be solely
responsible for, and will indemnify the ▇▇▇▇▇ ▇▇▇▇▇▇▇ against, all
liabilities, damages, claims, losses, costs, and expenses (including
attorneys' fees) relating to any Respiratory Product Liability Matters
involving respiratory Products manufactured and sold by the North Safety
Companies after the Closing and/or conduct of Norcross or the North Safety
Companies after the Closing.
(B) THE ▇▇▇▇▇ ▇▇▇▇▇▇▇' SOLE RESPONSIBILITIES. The ▇▇▇▇▇ ▇▇▇▇▇▇▇ will
be solely responsible, jointly and severally, for, and will indemnify the
Norcross Parties against, all liabilities, damages, claims, losses, costs,
and expenses (including attorneys' fees) relating to any Respiratory
Product Liability Matters involving respiratory Products manufactured or
sold by the North Safety Companies or the North Safety Companies'
predecessors before the Closing and/or conduct of the ▇▇▇▇▇ ▇▇▇▇▇▇▇, the
North Safety Companies, or the North Safety Companies' predecessors
(including Norton and Textron) on or before the Closing.
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7.8 TAX MATTERS. The parties' respective obligations with respect to taxes
payable by the North Safety Companies will be as follows:
(A) NORCROSS' SOLE RESPONSIBILITIES. Norcross will be solely
responsible for and will indemnify the ▇▇▇▇▇ ▇▇▇▇▇▇▇ against, taxes payable
by the North Safety Companies with respect to tax periods starting after
the Closing.
(B) SHARED RESPONSIBILITIES. Norcross and the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will
share responsibility for taxes payable by the North Safety Companies with
respect to taxes due for tax periods beginning before but ending after the
Closing as follows: The ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall be responsible for taxes
imposed on the North Safety Companies with respect to any portion of a
taxable period beginning before and ending after the Closing Date (a
"Straddle Period") which is deemed to end on the Closing Date; for this
purpose, the taxes imposed on the North Safety Companies with respect to
the portion of a Straddle Period which is deemed to end on the Closing Date
shall be calculated as if the Straddle Periods if the Straddle Period ended
on the Closing Date; PROVIDED THAT in the case of taxes, other than income
taxes, for which such interim closing of the books is not practicable, such
as real property taxes, the portion of such taxes that shall be treated as
imposed with respect to the portion of the Straddle Period deemed to end on
the Closing Date shall be the amount of such tax for the entire Straddle
Period multiplied by a fraction the numerator of which is the number of
days in the portion of the Straddle Period ending on the Closing Date and
the denominator of which is the number of days in the entire Straddle
Period.
(C) THE ▇▇▇▇▇ ▇▇▇▇▇▇▇' SOLE RESPONSIBILITIES. The ▇▇▇▇▇ ▇▇▇▇▇▇▇ will
be solely responsible for, and will indemnify the Norcross Parties against,
taxes payable by or in respect of the North Safety Companies with respect
to tax periods ending on or before the Closing Date.
(D) TAX RETURNS. The ▇▇▇▇▇ ▇▇▇▇▇▇▇ will be responsible for the
preparation and of all tax returns for periods ending before the Closing
Date and for all returns for which more than one-half of the days in a tax
period occur prior to the Closing and Norcross will be responsible for the
preparation and filing of all tax returns for periods beginning after the
Closing Date and for all returns for which one-half or more of the days in
a tax period occur after the Closing, but, in either case, the parties will
consult and cooperate with each other in the preparation and filing of such
returns. Neither Norcross nor any of the North Safety Companies shall file
any amended tax return for any of the North Safety Companies with respect
to a taxable period (or portion of a taxable period) ending on or prior to
the Closing Date without first obtaining ▇▇▇▇▇'▇ written consent thereto,
nor shall Norcross or any of the North Safety Companies file any tax return
for any of the North Safety Companies with respect to a taxable period
ending after the Closing Date in a manner inconsistent with past practice
which will increase the tax liabilities of the North Safety Companies for
any period ending on or prior to
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the Closing Date. The ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall not file any amended tax return
for any of the North Safety Companies with respect to a taxable period (or
portion of a taxable period) ending on or prior to the Closing Date without
first obtaining Norcross' written consent thereto if the effect of such
amended filing would be to increase the tax liabilities of North Safety
Companies for any post-closing taxable period (or portion thereof).
7.9 NONCOMPETITION. In order to protect the goodwill of the North Safety
Companies, following the Closing Date for a period of five years the ▇▇▇▇▇
▇▇▇▇▇▇▇ covenant to Norcross that neither the ▇▇▇▇▇ ▇▇▇▇▇▇▇ nor any company
owned or controlled by any of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will, directly or indirectly,
anywhere in the world engage in, or have an ownership interest in or act as
agent, advisor or consultant of or to any person, firm, partnership, corporation
or other entity that is engaged in, the manufacture or sale of products that
compete with the Products manufactured or sold by the North Safety Companies as
of the Closing Date (the "Current Business"). Nothing in this Section 7.9,
however, shall be deemed to prohibit or restrict the ▇▇▇▇▇ ▇▇▇▇▇▇▇ or any
company owned or controlled by the ▇▇▇▇▇ ▇▇▇▇▇▇▇ -
(A) From continuing to conduct any business in which any of such
companies are currently engaged, none of which businesses currently
manufacture or sell Products or any products that compete with Products;
(B) From acquiring or owning less than 5% equity interest in any
publicly-traded company (whether or not such company is engaged in a
business that competes with the Current Business); or
(C) From acquiring ownership or control of any business, or a
majority of the voting securities of any company or other entity that is
engaged in a business, that competes with the Current Business if the
annual sales from such entity's competing business or entity do not exceed
15% of such business' or entity's total revenues in the 12-month period
immediately preceding such acquisition and if the ▇▇▇▇▇ ▇▇▇▇▇▇▇ make a good
faith effort to dispose of any such competing business within one year of
its acquisition and will, if requested by Norcross, sell such business to
Norcross for fair market value (based upon the implied valuation of the
total business acquired) in cash at the date of sale and on mutually
acceptable terms and conditions.
7.10 CONFIDENTIALITY. The ▇▇▇▇▇ ▇▇▇▇▇▇▇ covenant to Norcross that after the
Closing the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will treat as confidential any nonpublic information
concerning the North Safety Companies or the North Safety Business which the
▇▇▇▇▇ ▇▇▇▇▇▇▇ may then possess or control and will not use any such information
for any purpose to the competitive disadvantage of the North Safety Companies.
7.11 FINANCIAL STATEMENTS. The ▇▇▇▇▇ ▇▇▇▇▇▇▇ understand that any of the
North Safety Companies, Norcross, or an affiliate of the North Safety Companies
or
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Norcross may in the future file registration statements under the Securities Act
of 1933, as amended, become a reporting company under the Securities Exchange
Act of 1934, and that, in connection therewith, any of such companies may be
required to file with the Securities and Exchange Commission financial
statements of the North Safety Companies prepared in accordance with Regulation
S-X of the Securities Act of 1933, as amended ("S-X Financials"). Accordingly,
the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will use their reasonable best efforts (at Norcross' sole
expense) to furnish promptly to such company any additional information or
documents requested by such company necessary for the completion of, the S-X
Financials that is within the ▇▇▇▇▇ ▇▇▇▇▇▇▇' possession or control, and each
▇▇▇▇▇ Seller agrees (to the extent the same are true and correct) to execute or
cause its affiliates to execute, any customary management representation letters
which are required to permit such company's independent accountants to issue
unqualified reports with respect to audited financial statements of the North
Safety Companies relating to periods prior to the Closing that are required to
be filed pursuant to applicable legal requirements.
7.12 DISPUTE RESOLUTION. If the parties ever have a dispute involving their
respective rights and obligations under this Purchase Agreement or any of the
Other Agreements (other than with respect to the final determination of the
amount of the Adjustment), then the parties will resolve such dispute as
follows:
(A) DISPUTE NOTICE. Either Norcross or the ▇▇▇▇▇ ▇▇▇▇▇▇▇ may at any
time deliver to the other a written dispute notice setting forth a brief
description of the issues for which such notice initiates the dispute
resolution mechanism set forth in this Section 7.12. Such dispute notice
shall also specify the provision or provisions of this Purchase Agreement
and the facts or circumstances that are the subject matter of the dispute.
(B) INFORMAL NEGOTIATIONS. During the 30-day period following
delivery of a dispute notice described in Section 7.12(B), the parties will
cause their representatives to meet and seek to resolve the disputed items
cordially through informal negotiations.
(C) DISPUTE RESOLUTION PROCEEDINGS. If representatives of the parties
are unable to resolve disputed items through the informal negotiations
described in Section 7.12(B), then within 30 days after the informal
negotiation period the parties will refer the disputed issues to a dispute
resolution panel for final resolution as follows:
(1) DESIGNATION OF REPRESENTATIVES. Within seven days after such
informal negotiation period, Norcross and the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will each
designate one representative to serve on the dispute resolution panel.
(If either party fails or refuses to designate a representative, then
the other party will be entitled to have a representative appointed
for such party by the CPR Institute for Dispute Resolution, New York,
New York.)
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(2) SELECTION OF NEUTRAL. Promptly after they have been
designated, the designated representatives will meet and select a
neutral person (the "Neutral") to serve as the third member of the
dispute resolution panel. If the designated representatives of parties
cannot agree on a Neutral, then either representative may request the
CPR Institute for Dispute Resolution to select the Neutral.
(3) PROCEDURES AND PROCESS. At the time the matter is referred
to the dispute resolution panel, Norcross and the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will
jointly establish the procedures to be followed with respect to the
presentation of the parties' respective positions and the process by
which the dispute resolution panel will reach and render its decision
on the disputed issues. Such procedures and processes will assure that
-
(a) Each party will have the right to submit evidence to the
dispute resolution panel,
(b) Each party will have the right to present a written
statement concerning that party's position with respect to the
disputed item, and
(c) Before reaching a decision concerning the disputed item,
the dispute resolution panel will convene a hearing in Chicago,
Illinois at which both parties may be represented.
If Norcross and the ▇▇▇▇▇ ▇▇▇▇▇▇▇ cannot agree on such procedures and
processes, then the Neutral will establish such procedures and process
which will, in all events, be consistent with the foregoing.
(4) DECISION. The dispute resolution panel will act by majority
vote. The dispute resolution panel will base its decision on
applicable provisions of this Purchase Agreement or, if the provisions
of this Purchase Agreement do not resolve the matter, on general
principles of substantive
Illinois law. (The dispute resolution panel
may, if it so desires, seek the opinion of an attorney licensed to
practice law in
Illinois on any matter of substantive
Illinois law on
which the panel desires clarification.)
(D) EQUITABLE RELIEF. Notwithstanding any other provision of this
Section 7.12, either party may seek from a court of competent jurisdiction
interim injunctive relief in order to maintain the status quo or protect
such party's rights under this Purchase Agreement pending resolution of a
dispute pursuant to this Section 7.12.
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(E) TOLLING OF LIMITATIONS PERIODS. All applicable statutes of
limitations and defenses based on the passage of time will be tolled
throughout the period during which the dispute resolution proceedings
described in this Section 7.12 are pending.
(F) BINDING EFFECT. The decisions of the dispute resolution panel
under this Section 7.12 will be binding on both the ▇▇▇▇▇ ▇▇▇▇▇▇▇ and
Norcross and will be neither appealable, contestable, or subject to
collateral attack by the ▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION OF THE ▇▇▇▇▇ ▇▇▇▇▇▇▇. Notwithstanding any
investigation or knowledge by the ▇▇▇▇▇ ▇▇▇▇▇▇▇, and subject to the limitations
set forth in Section 8.6, Norcross will indemnify and defend (in the case of
third party claims) the ▇▇▇▇▇ ▇▇▇▇▇▇▇ and each of their affiliates and their
respective officers, directors, employees, and successors, and hold the ▇▇▇▇▇
▇▇▇▇▇▇▇ and each of their affiliates and their respective officers, directors,
employees, and successors harmless, from and against the Actual Amount (as
defined in Section 8.7) of any and all liabilities, damages, claims, losses,
costs, and expenses (including attorneys' fees) arising out of or resulting from
--
(A) Any misrepresentation or breach of warranty by Norcross or
misrepresentation or breach that would have occurred if all the
representations and warranties contained therein were made as of today and
as of the Closing, without giving effect to any materiality, material
adverse effect, knowledge, or other similar qualifiers contained therein
for the benefit of Norcross, for which notice is given by the ▇▇▇▇▇ ▇▇▇▇▇▇▇
within the period specified in Section 8.6; or
(B) Nonperformance by Norcross of any obligations to be performed on
the part of Norcross under this Purchase Agreement or otherwise arising out
of obligations Norcross has that are unrelated to this Purchase Agreement.
8.2 INDEMNIFICATION OF NORCROSS. Notwithstanding any investigation or
knowledge by any of the Norcross Parties or the delivery of a certificate
pursuant to Section 1.2 hereof, and subject to the limitations set forth in
Section 8.5 and 8.6, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will jointly and severally indemnify and
defend (in the case of third party claims) Norcross and each of its affiliates
(including the North Safety Companies) and its and their respective officers,
directors, employees, and successors (collectively the "Norcross Parties"), and
hold Norcross and each of its affiliates and its and their respective officers,
directors, employees, and successors harmless, from and against the Actual
Amount (as defined in Section 8.7) of any and all liabilities, damages, losses,
claims, costs, and expenses (including attorneys' fees) arising out of or
resulting from --
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(A) Any misrepresentation or breach of warranty by the ▇▇▇▇▇ ▇▇▇▇▇▇▇
under Section 3.2 or misrepresentation or breach that would have occurred
(irrespective of whether a breach actually occurred) if all the
representations and warranties contained therein were made as of today and
as of the Closing, without giving effect to any materiality, material
adverse effect, knowledge, or other similar qualifiers contained therein
for the benefit of the ▇▇▇▇▇ ▇▇▇▇▇▇▇, for which notice is given by Norcross
within the period specified in Section 8.6, it being understood that, for
purposes of indemnification, the representations and warranties in Section
3.2 will be read without taking into account such qualifications.
(B) Any misrepresentation or breach of warranty by the ▇▇▇▇▇ ▇▇▇▇▇▇▇
under Section 3.1 or misrepresentation or breach that would have occurred
if all the representations and warranties contained therein were made as of
today and as of the Closing, without giving effect to any materiality,
material adverse effect, knowledge, or other similar qualifiers contained
therein for the benefit of the ▇▇▇▇▇ ▇▇▇▇▇▇▇, for which notice is given by
the ▇▇▇▇▇ ▇▇▇▇▇▇▇ within the period specified in Section 8.6;
(C) (1) Nonperformance by the ▇▇▇▇▇ ▇▇▇▇▇▇▇ of any obligation to be
performed on the part of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ under this Purchase Agreement or
otherwise arising out of obligations the ▇▇▇▇▇ ▇▇▇▇▇▇▇ or any of their
affiliates has that are unrelated to this Purchase Agreement or (2) claims
made against any individuals under the certificates delivered pursuant to
Section 1.2;
(D) Any liabilities or obligations (whether disclosed in the
Disclosure Package, otherwise disclosed or undisclosed, accrued, absolute,
contingent, un-liquidated, known or unknown, due or if known and mature
would have been due as of the Closing Date and regardless of when
asserted), including any arising pursuant to Environmental Laws (to the
extent such matter constitutes as of the Closing Date a violation of
Environmental Laws or gives rise to investigations or remedial or
corrective actions which are required to be taken or gives rise to
third-party claims under Environmental Laws), arising out of, related to,
or caused by events, circumstances, conditions, or occurrences existing on
or prior to the Closing Date, or any other state of facts existing on or
prior to the Closing Date other than -
(1) liabilities and obligations to the extent reflected on the
Closing Balance Sheet (excluding liabilities disclosed in the notes
thereto, but not otherwise reflected therein) and similar current
liabilities and obligations incurred in the ordinary course of
business to the extent such liabilities are reflected in the
computation of the Closing Net Worth;
(2) liabilities and obligations entered into in the ordinary
course of business (such as contracts for the order of Products) which
are not
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required to be reflected in the Closing Balance Sheet and which are
not in Default (with notice or the passage or time or otherwise) as of
the Closing and which in no way relate to or arise from a breach of
contract, breach of warranty, tort, infringement, misappropriation,
claim, lawsuit, or environmental matters;
(3) liabilities and obligations (such as with respect to certain
Employee Benefit matters to the extent set forth in Appendix I with
regard to prospective obligations) which Norcross or the North Safety
Companies has agreed to assume or for which Norcross has agreed to be
responsible for under the express terms of this Purchase Agreement (it
being understood that the ▇▇▇▇▇ ▇▇▇▇▇▇▇ are assuming and shall
indemnify Norcross and its affiliates against all pre-Closing
liabilities and obligations, whenever arising not specifically assumed
under the terms of this Purchase Agreement); and
(4) liabilities and obligations to the extent first accruing by
reason of the operations of the North Safety Companies or Norcross (or
affiliates of Norcross) after the Closing.
(E) Any liabilities or obligations (whether disclosed in the
Disclosure Package, otherwise disclosed or undisclosed, accrued, absolute,
contingent, unliquidated, known or unknown, due or to become due, and
regardless of when asserted), arising out of, related to, or caused by the
condition of, or activities conducted at, or interest in, the Hyde
facility, the Rockford facility and the Clover facility.
8.3 CLAIMS. If either party desires to make a claim against the other
hereunder which does not involve a claim by any person other than the parties,
then such party shall make such claim by promptly delivering written notice to
the other. If either Norcross or the ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "Claimant") desires to
make a claim against the other (the "Indemnitor") under Section 8.1 or 8.2 which
involves a claim by a person other than the parties, then such claim will be
made in the following manner and be subject to the following terms and
conditions:
(A) NOTICE. The Claimant will give prompt notice to the Indemnitor of
any demand, claim, or threat of litigation or the actual institution of any
action, suit, or proceeding (collectively, a "Claim") at any time served on
or instituted against the Claimant with respect to which the Claimant
believes it would have a right of indemnification under Section 8.1 or 8.2
PROVIDED THAT failure to serve such notice shall have no effect except to
the extent the other party is prejudiced thereby, In providing such notice,
the Claimant shall only state the existence of such Claim and shall not
admit or deny the validity of the facts or circumstances out of which such
Claim arose. Solely for purposes of determining whether the Claimant is
entitled to indemnification under Section 8.1 or 8.2, the alleged facts
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or circumstances on which such Claim is based shall be treated as if they
were true pending final resolution of the facts and circumstances out of
which such Claim arose.
(B) RESPONSIBILITY FOR DEFENSE. Within 30 days after receipt of any
such notice, but not less than five working days before the time the
Claimant is required to respond to a Claim, the Indemnitor will, by giving
written notice to the Claimant, have the right to assume responsibility for
the defense of the Claim with counsel reasonably satisfactory to the
Claimant in the name of the Claimant or otherwise as the Indemnitor may
elect; PROVIDED THAT the Indemnitor also agrees in writing reasonably
satisfactory to the Claimant that it does have responsibility to indemnify
the Claimant with respect to such Claim (with no reservation of rights
(including the right to dispute pursuant to Section 8.4) with respect to
the indemnified party) for all liabilities and obligations relating to such
Claim (whether or not otherwise required under this Purchase Agreement, but
subject to the dollar limitation in place with respect to such Claim in
Section 8.5) to the Claimant with respect to such Claim. Otherwise, the
Claimant will have responsibility for the defense of such Claim. If the
Claimant retains the control of the defense for a matter for which it
intends to seek indemnification hereunder, then such Claimant will act
reasonably and seek to mitigate its costs and expenses to the same extent
it would if it were defending a matter for which it would not be seeking
indemnification hereunder. If the Claim relates to a matter for which it is
expected the Indemnitor will not be responsible reason of Section 8.5, the
Claimant will retain the right to control the defense of such matter until
it becomes likely that the Claim will exceed the thresholds referred to in
Section 8.5. Subject to the provisions of subsections 8.3(C) and (D) below,
the party having responsibility for defense of a Claim (the "Defending
Party") will have the full authority to defend, cure, adjust, compromise,
or settle such Claim or appeal any judgment or ruling of a court or other
tribunal in connection with such Claim in its own name and/or in the name
of the other party.
(C) RIGHT TO PARTICIPATE. Notwithstanding a Defending Party's
responsibility for the defense of a Claim, the other party shall have the
right to participate, at its own expense and with its own counsel, in the
defense of a Claim and the Defending Party will consult with the other
party from time to time on matters relating to the defense of such Claim.
The Defending Party will (at the Defending Party's sole cost and expense)
provide the other party with copies of all pleadings and material
correspondence relating to such Claim.
(D) SETTLEMENT. A Defending Party will provide the other party with
timely written notice of any proposed adjustment, compromise, or other
settlement, including equitable or injunctive relief, of a Claim which the
Defending Party intends to propose or accept for the other party's
approval, which approval will not be withheld unreasonably. If the other
party fails to provide the Defending Party with seasonable written notice
of objection to such settlement, then the
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Defending Party shall have the authority to propose or accept such
settlement and enter into any agreement, in its own name and/or in the name
of the other party, giving legal effect to all aspects of such settlement.
If the other party objects to such settlement (and such settlement includes
only money damages), then the Defending Party may, if it so elects, tender
the defense to the other party by paying to such other party the amount of
money proposed to be paid in settlement of the Claim, in which case the
Defending Party shall have no further liability to the other party under
this Purchase Agreement with respect to such Claim and the other party
shall have full authority for the future defense of such Claim and full
responsibility for any and all liabilities, obligations, costs, and
expenses resulting therefrom subject to Section 8.5.
8.4 DISPUTED RESPONSIBILITY. If, after receiving a written indemnification
notice under Section 8.3(A), the party receiving such notice disputes -
(A) The fact that such party in fact made a misrepresentation or
breached a warranty under this Purchase Agreement (it being understood that
the representations and warranties in Sections 3.1 and 3.2 will be read
without regard to any materiality, material adverse effect, knowledge or
similar qualification for purposes of determining whether such
representation or warranty was breached for indemnity purposes hereunder)
giving rise to the claim to which the notice relates or that any such
misrepresentation or breach in fact gave rise to the liabilities, damages,
claims, costs, or expenses for which the other party seeks indemnification
under this Article 8, or
(B) The fact that such party in fact failed to perform any obligation
to be performed on the part of that party under this Purchase Agreement
giving rise to the claim to which the notice relates or that any such
failure in fact gave rise to the liabilities, damages, claims, costs, or
expenses for which the other party seeks indemnification under this
Article 8,
then such party will have the right to initiate the dispute resolution mechanism
set forth in Section 7.12, in which case the dispute will be finally resolved as
provided in Section 7.12. In such case, however, pending final resolution of the
disputed item, the parties will proceed as if the party receiving the
indemnification notice had in fact made a misrepresentation, breached a
warranty, or failed to perform an obligation to be performed on the part of that
party under this Purchase Agreement and as if such act or failure in fact gave
rise to the liabilities, damages, claims, costs, or expenses for which the other
party seeks indemnification under this Article 8. If the disputed item is
resolved in whole or in part in favor of the party receiving the indemnification
notice, then such party will be entitled to an equitable reimbursement from the
other party of any out-of-pocket amounts expended or incurred in carrying out
the receiving party's indemnification obligations under this Article 8.
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8.5 DOLLAR LIMITATION ON INDEMNIFICATION. Notwithstanding the provisions
of Section 8.2(A) and 8.2(D), the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will be obligated to indemnify,
defend, or hold Norcross harmless from or against any liability, damage, claim,
cost, or expense (including attorneys' fees) arising out of a misrepresentation
or breach of warranty by the ▇▇▇▇▇ ▇▇▇▇▇▇▇ pursuant to Section 8.2(A) or claims
pursuant to Section 8.2(D) only if, (A) the Actual Amount of a given claim,
series of related claims, or category of similar claims exceeds $50,000 (in
which event the ▇▇▇▇▇ ▇▇▇▇▇▇▇ are responsible for the full amount of such claim
subject to the provisions of subsection (B) of this Section 8.5) and (B) to the
extent the Actual Amount by which all claims under Section 8.2(A) and Section
8.2(D) exceeds $4,050,000. In no event will the ▇▇▇▇▇ ▇▇▇▇▇▇▇' total obligation
under Section 8.2(A) and Section 8.2(D) and subject to Section 8.5 exceed, in
the aggregate, $30,000,000.
8.6 TIME LIMITATION ON INDEMNIFICATION. Notwithstanding the provisions of
Sections 8.1(A), 8.2(A) and 8.2(D), except as set forth in the final sentence of
this Section 8.6, neither party will have any liability to the other arising out
of a breach of any representation or warranty contained in Article 3 of this
Purchase Agreement, or in respect of Section 8.2(D), and any cause of action
based thereupon shall expire and terminate, unless the party claiming that such
breach occurred or claiming a right to indemnity delivers to the other party
written notice and a full explanation of the alleged breach on or before 5.00
p.m. (Greenwich Mean Time)--
(A) On September, 2003 in the case of the ▇▇▇▇▇ ▇▇▇▇▇▇▇'
representations and warranties concerning compliance with Environmental
Laws set forth in Section 3.2(J) and, with respect to matters arising
pursuant to Environmental Laws only, the indemnification set forth in
Section 8.2(D);
(B) Upon expiration of any statute of limitations applicable thereto
in the case of the ▇▇▇▇▇ ▇▇▇▇▇▇▇' representations and warranties set forth
in Section 3.2(L); and
(C) Otherwise, on March 31, 2000.
Norcross' obligations under Section 8.1(B) and the ▇▇▇▇▇ ▇▇▇▇▇▇▇' obligations
under Sections 8.2(B), (C), and (E) will survive indefinitely.
8.7 ACTUAL AMOUNT TO BE INDEMNIFIED. For purposes of the parties'
respective obligations under Sections 8.1 and 8.2, in computing the "Actual
Amount" of any liability, damage, claim, loss, cost, or expense to be
indemnified, the following principles will apply:
(A) The amount will be reduced to give full effect to any net
insurance recoveries the indemnified party receives as a consequence of the
fact, condition, or circumstance giving rise to the misrepresentation,
breach, or nonperformance in question (it being understood that the ▇▇▇▇▇
▇▇▇▇▇▇▇ shall with re-
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spect to claims relating to conduct of the North Safety Business before the
Closing use their reasonable best efforts to provide to the Norcross
Parties the benefit of any insurance policies held for the benefit of the
North Safety Companies, to the extent that insurance coverages available to
the ▇▇▇▇▇ ▇▇▇▇▇▇▇ are not materially and adversely effected by passing on
such benefit to the Norcross Parties). If providing such benefit causes any
of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ to incur additional cost or expense through an
insurance rate adjustment, then Norcross and/or the North Safety Companies
may either (1) elect to pay the amount of the additional cost or expense
incurred by the ▇▇▇▇▇ ▇▇▇▇▇▇▇ as a result of passing on the benefit of such
insurance coverage for a four year period, in which event the ▇▇▇▇▇ ▇▇▇▇▇▇▇
shall provide the benefit of such insurance coverages or (2) decline to
accept the benefit of such insurance.
(B) The amount will be reduced to give full effect to any net
indemnity, contractual, or noncontractual third-party recoveries the
indemnified party receives as a consequence of the fact, condition, or
circumstance giving rise to the misrepresentation, breach, or
nonperformance in question;
(C) The amount will not include any consequential, incidental,
special, or punitive damages or damages resulting from lost profits or lost
business opportunity of or suffered by any of the parties (or their
affiliates) to this Purchase Agreement (but such amount will include any
consequential, incidental, special, or punitive damages or damages
resulting from lost profits or lost business opportunity with respect to a
person who is not a party hereto or an affiliate of a party hereto); and
(D) If the indemnified party realizes any tax benefit by reason of
the liability, damage, claim, loss, cost, or expense for which it receives
indemnification payments under this Purchase Agreement, then the
indemnified party shall pay to the indemnifying party the amount of any
such tax benefit at such time or times as and to the extent that the
indemnified party (or its affiliates) realizes such benefit through a
refund or an actual reduction in the amount of taxes which the indemnified
party (or its affiliates) would otherwise have had to pay if such
liability, damage, claim, loss, or expense had not been suffered or
incurred. If any such tax benefits is realized with respect to the same
taxable period as the liability, cost, loss, damage or expense for which
indemnification is made, then the Actual Amount will be reduced by the
amount of such benefit. If the indemnified party incurs any tax detriment
by reason of the receipt of the indemnification payment hereunder (other
than through a reduction in such indemnified party's tax basis in stock
acquired under this Purchase Agreement), which detriment is realized
through an actual increase in the amount of taxes which the indemnified
party must pay for the taxable period in which the indemnification payment
is received, then the Actual Amount will be increased by the amount of such
tax detriment.
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8.8 EXCLUSIVE REMEDIES. The remedies provided in this Article 8 will be
the parties' exclusive remedies for claims arising out of or resulting from any
misrepresentation, breach of warranty, breach of covenant, or nonperformance any
obligation to be performed on the part of either party under this Purchase
Agreement; PROVIDED, HOWEVER, that nothing in this Section 8.8 shall preclude
Norcross from seeking equitable relief to enforce the transfer of the North
Safety Shares as provided in Section 2.1(A) or to enforce the ▇▇▇▇▇ ▇▇▇▇▇▇▇'
noncompetition covenant set forth in Section 7.9.
8.9 PURCHASE PRICE ADJUSTMENT. All indemnity payments hereunder shall be
deemed adjustments to the Purchase Price.
ARTICLE 9
AMENDMENT, WAIVER, TERMINATION,
AND CANCELLATION
9.1 AMENDMENT. The parties may amend this Purchase Agreement at any time
before the Closing, but only by written instrument executed by both parties.
9.2 WAIVER. Either party may at any time waive compliance by the other
with any covenants or conditions contained in this Purchase Agreement but only
by written instrument executed by the party waiving such compliance. No such
waiver, however, shall be deemed to constitute the waiver of any such covenant
or condition in any other circumstance or the waiver of any other covenant or
condition.
9.3 TERMINATION. The parties may terminate this Purchase Agreement at any
time before the Closing, but only by written instrument signed by all of the
parties. This Purchase Agreement will terminate automatically, and without
further action by either party, if the Closing has not occurred by October 2,
1998, unless the parties otherwise extend this Purchase Agreement by a written
instrument executed by all of the parties. (Subject to other limitations
contained in this Purchase Agreement, termination of this Purchase Agreement
pursuant to the preceding sentence will be without prejudice to any claim either
party may have at law or in equity against the other party for any
misrepresentation or breach of warranty or covenant by under this Purchase
Agreement which arose at or before the termination under such sentence.)
9.4 THE ▇▇▇▇▇ ▇▇▇▇▇▇▇' UNILATERAL RIGHT OF CANCELLATION. In addition to
their rights under Sections 9.3 and 9.5, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will have the
unilateral right to cancel this Purchase Agreement by delivering written
cancellation notice to Norcross at any time if it becomes unlikely that the
funding parties to the Commitment Letters will be prepared to provide Norcross
in the aggregate with the funds needed to consummate the transactions herein
contemplated on the Closing Date. If the ▇▇▇▇▇ ▇▇▇▇▇▇▇ deliver such written
cancellation notice, this Purchase Agreement will be deemed to be canceled as of
the date of such notice without prejudice to any rights or remedies either
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party may have at law or in equity for any misrepresentation or breach of
warranty, breach of covenant, or breach or nonperformance of other obligations
by the other party under this Purchase Agreement.
9.5 THE ▇▇▇▇▇ ▇▇▇▇▇▇▇' UNILATERAL RIGHT OF PARTIAL TERMINATION. In
addition to their rights under Sections 9.3 and 9.4, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will have
the unilateral right to terminate their obligations under Section 4.9 (without
canceling or terminating this Purchase Agreement) by delivering written partial
termination notice to Norcross if it becomes unlikely that the funding parties
to the Commitment Letters will be prepared to provide Norcross in the aggregate
with the funds needed to consummate the transactions herein contemplated on the
Closing Date. Such partial termination would be without prejudice to any rights
or remedies either party may have at law or in equity for any misrepresentation
or breach of warranty, breach of covenant, or breach or nonperformance of other
obligations by the other party under this Purchase Agreement.
ARTICLE 10
MISCELLANEOUS
10.1 COOPERATION. Each of Norcross and the ▇▇▇▇▇ ▇▇▇▇▇▇▇ will cooperate
with the other party, at the other party's request and expense (unless entitled
to indemnity therefor), in furnishing information, testimony, and other
assistance in connection with any actions, proceedings, arrangements, and
disputes with other persons or governmental inquiries or investigations
involving the ▇▇▇▇▇ ▇▇▇▇▇▇▇' conduct of the North Safety Companies' business or
the transactions contemplated by this Purchase Agreement.
10.2 SEVERABILITY. If any provision of this Purchase Agreement shall
finally be determined to be unlawful, then such provision will be deemed to be
severed from this Purchase Agreement and replaced by a lawful provision which
carries out, as closely as possible, the intention of the parties and preserves
the economic bargain contemplated by this Purchase Agreement and, in such case,
each and every other provision of this Purchase Agreement will remain in full
force and effect.
10.3 COSTS AND EXPENSES. The parties will be responsible for the following
costs and expenses arising out of the transactions contemplated by this Purchase
Agreement as follows:
(A) The ▇▇▇▇▇ ▇▇▇▇▇▇▇ will be solely responsible for the fees and
expenses of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ & Co. whether or not the
transactions are consummated;
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(B) Norcross will be solely responsible for any commitment fees and
any other costs and expenses incurred in connection with Norcross'
Financing Plan whether or not such transactions are consummated;
(C) Norcross, on one hand, and the ▇▇▇▇▇ ▇▇▇▇▇▇▇, on the other hand,
will each be responsible for one-half (1/2) of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
filing fee payable to the Federal Trade Commission with respect to the
notification described in Section 4.7;
(D) Norcross, on one hand, and the ▇▇▇▇▇ ▇▇▇▇▇▇▇, on the other hand,
will each be responsible for one-half (1/2) of any filing fees or costs
that are payable in connection with obtaining the governmental approvals or
authorizations described in Section 4.8; and
(E) If the transactions are consummated, Norcross, on one hand, and
the ▇▇▇▇▇ ▇▇▇▇▇▇▇, on the other hand, will each be responsible for one-half
(1/2) of any transfer taxes or other imposts or duties resulting from or
arising out of the transfer of the North Safety Shares to Norcross.
Otherwise, each party will bear its own expenses, and the pre-Closing and
Closing expenses of its affiliates and its and their officers, directors, and
advisers, incurred in connection with this Purchase Agreement and the
transactions contemplated by this Purchase Agreement, whether or not the
transactions are consummated. Without limiting the foregoing, the ▇▇▇▇▇ ▇▇▇▇▇▇▇
shall be solely responsible for, and shall indemnify the Norcross Parties from,
any and all severance payments payable to any person who ceases to remain an
employee of the North Safety Companies after the Closing, PROVIDED THAT this
Section 10.3 shall not apply to any of the nine named employees described in
paragraph 5G(3) of Appendix I or to employees whose right to severance is by
reason of the general employee benefit programs and policies of the North Safety
Companies disclosed in the North Safety Disclosure Package.
10.4 NOTICES. All notices, requests and other communications under this
Purchase Agreement shall be in writing and shall be deemed to have been duly
given at the time of receipt if delivered by hand or communicated by electronic
transmission (with confirmation by mail or courier), or, if sent by courier, two
days after delivery to an international courier service with guaranteed two-day
delivery, addressed or communicated as follows:
If to Norcross, to: Norcross Safety Products L.L.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇
ATTENTION: Secretary
Telefax: ▇.▇▇▇.▇▇▇.▇▇▇▇
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with a copy to: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
ATTENTION: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telefax: ▇.▇▇▇.▇▇▇.▇▇▇▇
If to the ▇▇▇▇▇ ▇▇▇▇▇▇▇, to: ▇▇▇▇▇ plc
▇▇▇▇▇ International Limited
Deutsche ▇▇▇▇▇ GmbH
▇▇▇▇▇ Inc.
Saxon House
▇-▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
ATTENTION: Secretary
Telefax: 44.1753.622.030
Either party may change its notice address above to a different address by
giving the other party written notice of such change.
10.5 ASSIGNMENT. This Purchase Agreement will be binding upon and inure to
the benefit of the successors of each of the parties hereto, but shall not be
assignable by either party without the prior written consent of the other;
PROVIDED, HOWEVER, that Norcross may, at its sole discretion, assign, in whole
or in part, its rights and obligations pursuant to this Purchase Agreement and
related agreements to one or more of its affiliates, to any of its financing
sources as collateral security, or in connection with the sale of assets or
securities of Norcross or any of the North Safety Companies if, at the time of
such assignment and as a condition precedent to such assignment, Norcross pays
(or causes to be paid) the Deferred Note in full. For purposes hereof, the
acquisition by any person not presently a shareholder of Norcross of
substantially all of its assets or more than 50% of the outstanding voting
securities of Norcross shall be deemed to constitute an assignment for purposes
of this Section 10.5 and require the payment of the Deferred Note.
10.6 NO THIRD PARTIES. Except for the indemnified parties described in
Article 8, neither this Purchase Agreement nor any provisions set forth in this
Purchase Agreement is intended to, or shall, create any rights in or confer any
benefits upon any person other than the parties to this Purchase Agreement.
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10.7 INCORPORATION BY REFERENCE. The Appendices to this Purchase Agreement
and the North Safety Disclosure Package constitute integral parts of this
Purchase Agreement and are hereby incorporated into this Purchase Agreement by
this reference.
10.8 GOVERNING LAW. This Purchase Agreement will be governed by and
construed in accordance with the internal substantive laws of the State of
Illinois, except where the substantive laws of another jurisdiction mandatorily
apply. All parties consent to the jurisdiction of the courts, whether Federal or
state, sitting in the State of
Illinois in connection with the enforcement of
the terms and conditions of this Purchase Agreement and hereby waive any
defenses or immunities such parties might otherwise have to the jurisdiction of
such courts; PROVIDED, HOWEVER, no such waiver shall in any way affect the
parties' respective rights, obligations, or responsibilities with respect to the
dispute resolution procedure set forth in Section 7.12. Each of the ▇▇▇▇▇
▇▇▇▇▇▇▇ hereby appoints ▇▇▇▇▇ US as its agent for service of process with
respect to any proceeding instituted under this Purchase Agreement.
10.9 COUNTERPARTS. More than one counterpart of this Purchase Agreement
may be executed by the parties hereto, and each fully executed counterpart shall
be deemed an original without production of the others.
10.10 COMPLETE AGREEMENT. This Purchase Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter of this
Purchase Agreement and supersedes all prior letters of intent, agreements,
covenants, arrangements, communications, representations, or warranties, whether
oral or written, by any officer, employee, or representative of either party
relating thereto.
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To evidence their agreement as stated above, NORCROSS SAFETY PRODUCTS
L.L.C. and ▇▇▇▇▇ PLC, ▇▇▇▇▇ INTERNATIONAL LIMITED, DEUTSCHE ▇▇▇▇▇ GMBH, and
▇▇▇▇▇ INC. have each caused their respective duly authorized officers and
directors to execute this
SHARE PURCHASE AGREEMENT as of September 1, 1998.
NORCROSS SAFETY PRODUCTS ▇▇▇▇▇ PLC
L.L.C.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------- ---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer Director of Planning
▇▇▇▇▇ INTERNATIONAL LIMITED DEUTSCHE ▇▇▇▇▇ GMBH
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------- ---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Attorney-in-Fact Attorney-in-Fact
▇▇▇▇▇ INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Attorney-in-Fact
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Appendix A
CERTAIN DEFINITIONS
The following terms have the meanings set forth below where used in the
Purchase Agreement and identified with initial capital letters:
TERM DEFINITION
Adjustment As determined under Section 2.3 of the Purchase
Agreement.
Auditors As defined in Section 2.3(A) of the Purchase
Agreement.
Auditors' Report As defined in Section 2.3(B) of the Purchase
Agreement.
Base-Line Balance Sheet As defined in Section 3.2(B) of the Purchase
Agreement.
Base-Line Net Worth As defined in Section 2.3(G) of the Purchase
Agreement.
Claim As defined in Section 8.3(A) of the Purchase
Agreement.
Claimant As defined in Section 8.3 of the Purchase
Agreement.
Closing As defined in Section 6.1 of the Purchase
Agreement.
Closing Date As defined in Section 6.2 of the Purchase
Agreement.
Closing Time As defined in Section 6.2 of the Purchase
Agreement.
Closing Net Worth As determined in accordance with Section 2.3(H)
of the Purchase Agreement.
Commitment Letters As defined in Section 3.3(F) of the Purchase
Agreement.
Default An occurrence which constitutes a breach or
default under a contract, order, or
other commitment, after the expiration of any
grace period provided without cure.
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Appendix A
Defending Party As defined in Section 8.3(B) of the Purchase
Agreement.
Deferred Note As defined in Section 2.4(B) of the Purchase
Agreement.
Deutsche ▇▇▇▇▇ As defined in the Preamble to the Purchase
Agreement.
Employee Benefits Agreement As defined in Section 4.11(C) of the Purchase
Agreement.
Employee Benefit Plans As defined in Section 3.2(1)(3) of the Purchase
Agreement.
Encumbrance Any encumbrance or lien, including, without
limitation, any mortgage, judgment lien,
materialman's lien, mechanic's lien,
security interest, encroachment, easement,
claim, notice of claim, or other restriction
Environmental Laws All laws, regulations, orders, ordinances, codes,
and other governmental mandates and restrictions,
common law, guidelines, and contractual
obligations applicable to the Business relating
to emissions, discharges, and releases of
hazardous materials into land, soil, ambient air,
water, and atmosphere, and/or the generation,
treatment, storage, transportation, and disposal
of hazardous wastes, pollution, and protection of
the environment, including, with respect to the
United States, the following:
(1) The Comprehensive Environmental Response,
Compensation and Liability Act,
42 U.S.C. Sections 9601-9675;
(2) The Resource Recovery and Conservation Act,
42 U.S.C. Sections 6901-6992k;
(3) The Clean Air Act, 42 U.S.C. Sections 7401-7471q;
(4) The Clean Water Act, 33 U.S.C. Sections 1251-1387;
(5) The Hazardous Materials Transportation
Act, 49 U.S.C. Sections 1801-1812;
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Appendix A
(6) The Toxic Substances Control Act, 15
U.S.C. Sections 2601-2692; and
(7) The Emergency Planning & Community
Right-to-Know Act, 42 U.S.C. Sections 11001-11050.
Financial Statements As defined in Section 3.2(B) of the Purchase
Agreement.
GAAP Financials As defined in Section 4.10 of the Purchase
Agreement.
Hazardous Materials Any material, substance, or waste or
condition defined as "hazardous" or as to
which standards of conduct are otherwise
imposed under any Environmental Law,
including, with respect to the United States,
the following:
(1) Asbestos, silica, and petroleum-based
products;
(2) "[H]azardous substances," "pollutants" or
"contaminants" under Sections 101(14) and
101(33) of the Comprehensive Environmental
Response, Compensation and Liability Act;
(3) "[H]azardous air pollutants" under
Section 112(b) of the Clean Air Act;
(4) "[I]mminently hazardous chemical
substances" under Section 7 of the Toxic
Substances Control Act;
(5) "[H]azardous waste" under Section 1004(5) of
the Solid Waste Disposal Act or under
Section 6003(5) of the Resource Recovery and
Conservation Act; and
(6) Any other material or condition defined
as "hazardous," or otherwise regulated, by
Environmental Laws.
Indemnitor As defined in Section 8.3 of the Purchase
Agreement.
Intellectual Property Rights consisting of, conferred by, or otherwise
relating to --
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Appendix A
(1) Patents and patent applications
(including all renewals, extensions, or
modifications thereof);
(2) Trade secrets;
(3) Know-how, including inventions, computerized
data and information, computer programs,
business records, files and data, discoveries,
formulae, production outlines, product
designs, mask works, manufacturing information,
processes and techniques, testing and quality control
processes and techniques, drawings and customer lists;
(4) Trademarks, service marks, and applications
therefor;
(5) Copyrights; and
(6) Trade names and internet domain names (other
than such names as include the word "▇▇▇▇▇").
ISP As defined in Recital C to the Purchase Agreement.
ISP Shares As defined in Recital C to the Purchase Agreement.
▇▇▇▇▇ ▇▇▇▇▇ (Africa) As defined in Recital B to the Purchase Agreement.
▇▇▇▇▇ ▇▇▇▇▇ (Africa) Shares As defined in Recital B to the Purchase Agreement.
Material Event Any event, condition, circumstance, or occurrence
which has had a material and adverse effect on
business, assets, financial condition, operating
results, customer or business relations, or
business prospects (other than such changes
resulting from general economic conditions and
changes in employee relations resulting from the
announcement and contemplated completion of the
Purchase Agreement of the North Safety Business),
including any of the same resulting from any -
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Appendix A
(1) Act of God, flood, windstorm, earthquake,
accident, fire, explosion, casualty,
riot, requisition or taking of property by
governmental authority, war, embargo, or other
event outside the North Safety Companies' control;
(2) Termination, cancellation, or substantial modification
of any contract, commitment, obligation, or business
relationship; or
(3) Default by the North Safety Companies under any contract,
commitment, or other obligation.
Neutral As defined in Section 7.12(C)(2) of the Purchase Agreement.
Norcross As defined in the Preamble to the Purchase Agreement.
North Safety Business As defined in Recital E to the Purchase Agreement.
North Safety Business Condition The condition of the North Safety Business, taken
as a whole.
North Safety Companies As defined in Recital F to the Purchase Agreement.
North Safety As defined in Section 3.2 of the Purchase Agreement.
Disclosure Package
North Safety Products As defined in Recital A to the Purchase Agreement.
North Safety Products Shares As defined in Recital A to the Purchase Agreement.
North Safety Shares As defined in Recital F to the Purchase Agreement.
Other Agreements As defined in Section 4.9 of the Purchase Agreement.
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Appendix A
Owns or Ownership Such ownership as confers upon the party or
person having it good and marketable title to and
control over the thing or right owned, free and
clear of any and all Encumbrances other than
(except in the case of Ownership of the North
Safety Shares) Permitted Encumbrances.
Permitted Encumbrances Tax liens for taxes not yet due and payable or
which are being contested in good faith by
appropriate proceedings and for which appropriate
reserves have been established in accordance with
generally accepted accounting principles,
interests or title of a lessor under any lease,
mechanics and comparable liens for the amounts
due and payable, and recorded easements,
rights-of-way, restrictions, and other similar
encumbrances.
Prime Rate The prime lending rate announced from time to time
by Citibank N.A.
Products As defined in Recital E to the Purchase Agreement.
Purchase Price As defined in Section 2.2 of the Purchase Agreement.
Purchase Agreement As defined in the Preamble to the Purchase Agreement.
Respiratory Product Liability Matter As defined in Section 7.7 of the Purchase Agreement.
▇▇▇▇▇ As defined in the Preamble to the Purchase Agreement.
▇▇▇▇▇ International As defined in the Preamble to the Purchase Agreement.
▇▇▇▇▇ North As defined in Recital D to the Purchase Agreement.
▇▇▇▇▇ North Shares As defined in Recital D to the Purchase Agreement.
▇▇▇▇▇ ▇▇▇▇▇▇▇ As defined in the Preamble to the Purchase Agreement.
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Appendix A
▇▇▇▇▇ US As defined in the Preamble to the Purchase Agreement.
Trademark License Agreement As defined in Section 4.11(D) of the Purchase Agreement.
Transition Services Agreement As defined in Section 4.11(A) of the Purchase Agreement.
Unconditional Guarantee As defined in Recital H to the Purchase Agreement.
Year 2000 Compliance For any item, if such item will not malfunction,
cease to function, generate incorrect data, and
produce incorrect results when processing,
providing, or receiving (i) date-related data
after December 31, 1999, and date-related data in
connection with any valid date after December 31,
1999.
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Appendix B
DUE DILIGENCE REVIEW
AND CERTIFICATIONS
Set forth below is a description of the due diligence review conducted by
the ▇▇▇▇▇ ▇▇▇▇▇▇▇ in connection with the transactions contemplated by the
Purchase Agreement:
1. The information contained in the North Safety Disclosure Package was
collected and assembled by employees of the North Safety Companies and
other employees of the North Safety Companies whom the ▇▇▇▇▇ ▇▇▇▇▇▇▇
believed would most likely have knowledge and custody of the Business
records most pertinent to the respective Parts of the North Safety
Disclosure Package.
2. After collection and assembly of such information, due diligence meetings
were held with the Managing Director or President of each North Safety
Company and his direct reports.
3. At such due diligence meeting, the entire contents of the North Safety
Disclosure Package applicable to that particular North Safety Company was
reviewed and each of the ▇▇▇▇▇ ▇▇▇▇▇▇▇' representations and warranties
under Section 3.2 were read and discussed, all under the direction and
guidance of an attorney representing the ▇▇▇▇▇ ▇▇▇▇▇▇▇.
4. At the conclusion of such due diligence meeting, each participant was
requested to sign a certificate in the form set forth on the following
page.
EXECUTION COPY
Appendix B
CERTIFICATE
I, [NAME OF INDIVIDUAL], am the [Title of Individual] of _________________
(the "Company"), a [SPECIFY].
On the date below, I participated in a due diligence review meeting
conducted under the direction and guidance of [Name of Attorney], an attorney
representing [Seller]. At that meeting, a document entitled "North Safety
Disclosure Package" (the "Disclosure Package") was reviewed and representations
and warranties contained in Section 3.2 of the proposed
Share Purchase Agreement
(the "Purchase Agreement") between Norcross Safety Products L.L.C. ("Norcross"),
on one hand, and ▇▇▇▇▇ plc, ▇▇▇▇▇ International Limited, Deutsche ▇▇▇▇▇ GmbH,
and ▇▇▇▇▇ Inc. (the "▇▇▇▇▇ ▇▇▇▇▇▇▇"), on the other hand, were read and
discussed.
As a consequence of such due diligence meeting, I HEREBY CERTIFY that:
1. In my capacity described above, I am familiar in detail with the
contents of the following Parts of the North Safety Disclosure Package
applicable to the Company: [SPECIFY]
2. In my capacity described above, I am also familiar generally with
contents of all other Parts of the North Safety Disclosure Package
applicable to the Company.
3. To my knowledge and after reasonable investigation, I believe the
North Safety Disclosure Package and the representations and warranties
of the ▇▇▇▇▇ ▇▇▇▇▇▇▇ contained in Section 3.2 of the Purchase
Agreement applicable to the Company are true, accurate, and complete
in all material respects.
I understand that the ▇▇▇▇▇ ▇▇▇▇▇▇▇ intend to rely on this Certificate in
connection with the ▇▇▇▇▇ ▇▇▇▇▇▇▇' delivery of the North Safety Disclosure
Package and execution and delivery of the Purchase Agreement.
I have signed this Certificate this ___day of _________, 1998.
--------------------------------
[Name of Individual]
Witnesses:
-------------------------
-------------------------
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Appendix C
DEFERRED NOTE
SUMMARY TERM SHEET - JUNIOR SUBORDINATED NOTES
Issuer: Norcross Safety Products L.L.C. ("NSP")
Issue: Junior Subordinated Notes (the "Junior Subordinated Notes)
Principal Amount: $5,000,000
Holder: ▇▇▇▇▇ plc
Maturity Date: March 2009 (10.5 years)
Mandatory Adjustment: The Junior Subordinated Notes will be manditorily redeemable at par
plus accrued interest upon a change in control of NSP.
Interest Rate: Interest will accrue semi-annually in arrears at an annual rate
of 7.0% payable in additional Junior Subordinated Notes; provided that
no cash interest will be payable prior to maturity or mandatory redemption.
Ranking: The Junior Subordinated Notes will be general unsecured obligations of NSP
and will be subordinated in right of payment to all existing and future
senior and subordinated indebtedness of NSP.
EXECUTION COPY
Appendix D
ACCOUNTING PRINCIPLES
Set forth below are accounting principles that will apply in determining
the Closing Net Worth:
BASIS OF PRESENTATION OF VARIOUS FINANCIAL INFORMATION
North Safety Products ("the Company"), is a group of subsidiaries of ▇▇▇▇▇
plc, a publicly held corporation based in the United Kingdom. The Company is
organized into three business units based on geography: Each business group
carries a full line of personal protection equipment and accessories for the
manufacturing, transportation, mining, utility, construction, consumer, military
and other markets. ▇▇▇▇▇ North Holdings current policy is to maintain its
general ledger in conformity with UK GAAP modified for internal reporting
purposes while the general ledgers relating to the Europe and African companies
are maintained in conformity with local accounting practices and procedures. The
internal financial statements, which are prepared from these records, utilize UK
accounting procedures prescribed by North's ultimate UK parent. These
aforementioned internally prepared financial statements which are utilized to
monitor operational performance are unaudited and do not include all disclosures
and adjustments that may be necessary under UK or US generally accepted
accounting principles. These internal financial statements along with periodic
statutory reporting submissions were then used as a basis to prepare US GAAP
financial information for buyer presentation purposes. In addition to the
treatment of goodwill, the primary differences between US GAAP and UK GAAP
principles applicable to North involved capitalized product development costs,
deferred marketing costs and revaluation of certain fixed assets, which are
expensed or not allowable for US GAAP purposes.
It should also be noted that for buyer presentation purposes, certain
income adjustments were made for restructuring and related charges, certain
property gains and corporate governance charges. Corporate governance charges
primarily relate to management charges, FSC commission and royalties from Group
and Corporate headquarters as well as certain interest expense, which had
previously been charged to profit. Finally, interim financial information only
reflects normal recurring adjustments.
The balance sheets presented have been adjusted to exclude capitalized
development costs and certain other asset and liabilities not part of the safety
business and not part of the sale. Finally, no liability or income statement
charge has been recorded in respect of the bonus payable by reason of the sale
of the Company to certain key employees. Net shareholders' investment as
presented for buyer presentation purposes represents total shareholders equity
less group loans.
EXECUTION COPY
Appendix D
The following accounting policies and principles are also applicable to the
preparation of the US GAAP audited financial statements and are to be utilized
in connection with determining the adjustment to the ultimate purchase price, if
any.
Summary of Significant Accounting Policies
BASIS OF PRESENTATION
The combined financial statements for fiscal year ended April 4, 1998
include the accounts of the following companies in the North Safety
Products Division. Significant intercompany balances and transactions have
been eliminated.
Percentage
Company Ownership
------- ----------
▇▇▇▇▇ North Holding Corp. and subsidiaries ("SNI") 100%
North Safety Products Ltd. ("JNS") 100%
Industrie ▇▇▇▇▇▇ Produkte GmbH ("ISP") 100%
North Safety Products (Africa) PTY Ltd. and subsidiaries ("Africa") 100%
(Includes ▇▇▇▇▇ ▇▇▇▇▇ (Zimbabwe)(Private) Ltd. 66.6%)
The combined financial statements have been retroactively restated to
exclude a non-related safety product line of JNS sold to affiliate in June
1998. The combined financial statements are prepared in accordance with
United States generally accepted accounting principles. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. The most
significant estimates included in these financial statements are allowance
for uncollectible accounts, inventory reserves, estimated lives on
long-lived assets and other contingencies such as product warranty and
claims as well as environmental exposures.
REVENUE RECOGNITION
Sales and related cost of sales are recognized upon shipment of products to
customers. Although eliminated in the combining statements, intercompany
sales between geographic areas are at cost plus approximately 5% ▇▇▇▇-up.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade receivables. The
Company provides credit
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Appendix D
to customers in the normal course of business. Collateral is not required
for trade receivables, but ongoing credit evaluations of customers'
financial condition are performed. Additionally, the Company maintains
reserves for potential credit losses based on a number of factors including
management's judgment. As of April 4, 1998, April 5, 1997, and April 6,
1996 the Company had no significant receivable write-offs.
The Company entered into an agreement to sell on a periodic basis and
without recourse, trade accounts receivable to an independent third party
for proceeds up to the net amount of receivables less any charges. The
Company is responsible for servicing the receivables. Under SFAS No. 125,
the sale of the receivables is reflected as a reduction of trade accounts
receivable. There was no material effect on net income as a result of
applying the new standard.
RESEARCH AND DEVELOPMENT
Research and development costs are charged to expense as incurred.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined
using the last-in, first-out (LIFO) method for 88%, 87% and 87% of
inventories as of April 4, 1998, April 5, 1997, and April 6, 1996,
respectively. The first-in, first-out method is used to determine cost for
12%, 13% and 13% of inventories as of April 4, 1998, April 5, 1997, and
April 6, 1996, respectively.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated on the basis of cost. Equipment
under capital leases is stated at the present value of minimum lease
payments at the inception of the lease.
Depreciation is provided using the straight-line method over the estimated
useful lives of depreciable properties as follows: buildings and
improvements, 15 to 40 years; machinery and equipment, 3 to 15 years; and
tooling, 3 to 5 years.
Equipment held under capital leases and lease improvements are amortized
using the straight-line method over the shorter of the lease term or
estimated useful life of the asset.
The Company also leases certain of its manufacturing facilities, sales
offices and equipment under noncancelable operating leases and/or
sale/leaseback arrangements. Some leases include provisions for renewals
and purchases at the Company's option. Lease payments are expensed as
incurred and are partially
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Appendix D
offset by the pro-rata amortization of the deferred gain that occurred at
the time of the sale/leaseback arrangements. The accounts exclude the
Rockford sale/leaseback and related costs since December 1997.
INCOME TAXES
The various companies that make up North Safety Products are included as
part of either U.S. or foreign combined group for Federal and foreign
income tax reporting purposes. The Company's income tax provision is
computed as if it were filing a separate return and the resultant tax
liability or receivable is paid to or received from ▇▇▇▇▇ Inc. or ▇▇▇▇▇
plc.
The Company recognizes deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between the financial
statement bases and the tax bases of the Company's assets and liabilities
using enacted statutory tax rates applicable to future years.
INTANGIBLE ASSETS
The cost of intangible assets is amortized straight line over the estimated
useful lives of the respective assets. Capitalized software included in
this caption reflects costs related to internally developed or purchased
software.
Goodwill, which represents the excess of purchase price over fair value of
assets acquired, is amortized on on a straight-line basis over 40 years.
FOREIGN CURRENCY TRANSLATION
The accounts of foreign operations are measured using local currency as the
functional currency. For those operations, assets and liabilities are
translated into US dollars at the end of period exchange rates and income
and expenses are translated at the average exchange rates. Net exchange
gain or losses resulting from such translation are excluded from net income
and accumulated in a separate component of shareholder's equity.
FOREIGN EXCHANGE INSTRUMENTS
The Company enters into forward currency exchange contracts for the purpose
of reducing its exposure to adverse fluctuations in foreign exchange rates.
While these hedging instruments are subject to fluctuations in value, such
fluctuations are generally offset by the value of the underlying exposures
being hedged. The Company does not hold or issue financial instruments for
speculative purposes.
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EXECUTION COPY
Appendix D
EMPLOYEE BENEFIT PLANS
RETIREMENT PLANS
SNI has various pension plans covering substantially all employees. The
benefits are based on years of service and compensation or stated amounts
for each year of service. The Company's funding policy is to make annual
contributions in amounts that meet minimum funding requirements of the
Employee Retirement Income Security Act of 1974 (ERISA). Pension coverage
for employees of non-US subsidiaries is provided, to the extent deemed
appropriate, through separate arrangements, many of which are governed by
local statutory requirements or government sponsored. The most significant
arrangement is at JNS whose employees are members of the ▇▇▇▇▇ plc defined
benefit pension plan that operates similar to a multi-employer plan
arrangement in the United States. Periodic employer and employee
contributions as prescribed are made to ▇▇▇▇▇ plc and/or the Plan.
POST-RETIREMENT BENEFITS OTHER THAN PENSIONS
Substantially, all of the Company's employees are covered under
post-retirement health and life insurance benefit plans. The expected cost
of these benefits are recognized during the years that employees render
service. Retiree contributions are required depending on the year of
retirement and the number of years of service at the time of retirement.
Many of the Company's retirees outside the U.S. are covered by
government-sponsored and administered programs. The Company funds its plans
on a pay-as-you-go basis.
COMMITMENTS AND CONTINGENCIES
The Company is named as a defendant in ninety-five pending product
liability lawsuits. Three of the cases are class action suits and could
have material effects. All of the aforementioned cases are in the discovery
phase and their outcomes are uncertain. The Company will vigorously defend
each case through trial unless the opportunity to settle on favorable terms
presents itself beforehand.
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BASE-LINE BALANCE SHEET DISCLOSURE
The attached Base-Line Balance Sheet as of July 4, 1998 should be read in
conjunction with Appendix D. Additionally, the following pro forma adjustments
have been made to the Base-Line Balance Sheet in order to conform the
presentation for the contemplated transactions herein.
1. All intercompany activity with ▇▇▇▇▇ and affiliates has been reclassified
to the Base-Line Net Worth section.
2. It is assumed that a net overdraft balance in the UK ($9.7M) will be
liquidated by ▇▇▇▇▇ plc and thus, it has been reclassified to the Base-Line
Net Worth section.
3. The deposits and deferred gains relating to the sale/leasebacks of the
Skokie, Maiden and Cranston facilities have been reclassified to the
Base-Line Net Worth section.
4. An estimate of the excess land cost ($50k) at the Clover facility has been
removed from fixed assets and reclassified to the Base-Line Net Worth
section.
5. For purposes of determining Base-Line Net Worth, current and deferred
income tax liability and/or assets have been reclassified to the Base-Line
Net Worth section.
NORTH SAFETY PRODUCTS
COMBINED NET ASSETS - US GAAP BASIS
AS OF JULY 4, 1998
UNAUDITED
(DOLLARS IN THOUSANDS)
AFTER WORK.
COMP. ADJ.
ASSETS
Current assets:
Cash 757
Accounts receivable 29,196
Inventories at LIFO 36,404
Other current assets 4,364
-----------
Total current assets 70,721
Net property, plant & equipment 35,242
Goodwill, net 4,733
Other intangible assets, net 1,055
Other assets 9,110
-----------
Total assets 120,861
-----------
LIABILITIES
Current liabilities:
Accounts payable 12,165
Accrued expenses 10,815
-----------
Total current liabilities 22,980
Other long-term liabilities 8,545
-----------
Total liabilities 31,525
-----------
Net assets 89,336
===========
BASE-LINE NET WORTH CALCULATION
Total shareholder's equity 38,866
Sales lease back net liability transfered 1,669
Income taxes payable (93)
Deferred income taxes, net 4,751
Deposits (17)
Excess Clover land (50)
Group loans 34,510
(Cash) / UK overdraft 9,700
-----------
BASE-LINE NET WORTH 89,336
===========
NORTH SAFETY PRODUCTS
COMBINED NET ASSETS - US GAAP BASIS
AS OF JULY 4, 1998
UNAUDITED
(DOLLARS IN THOUSANDS)
BEFORE WORK. AFTER WORK.
COMP. ADJ. COMP. ADJ.
ASSETS
Current assets:
Cash $ 757 757 -
Accounts receivable 29,196 29,196 -
Inventories at LIFO 36,404 36,404 -
Other current assets 4,364 4,364 -
---------------------------
Total current assets 70,721 70,721
Net property, plant & equipment 35,242 35,242 -
Goodwill, net 4,733 4,733 -
Other intangible assets, net 1,055 1,055 -
Other assets 9,110 9,110 -
---------------------------
Total assets $ 120,861 120,861
---------------------------
LIABILITIES
Current liabilities:
Accounts payable $ 12,165 12,165 -
Accrued expenses 9,945 10,815 (870)
---------------------------
Total current liabilities 22,110 22,980
Other long-term liabilities 8,545 8,545 -
---------------------------
Total liabilities 30,655 31,525
---------------------------
Net assets $ 90,206 89,336
===========================
BASE-LINE NET WORTH CALCULATION
Total shareholder's equity 39,405 38,866 539
Sales lease back net liability transfered 1,699 1,699 -
Income taxes payable (93) (93) -
Deferred income taxes, net 5,082 4,751 331
Deposits (17) (17) -
Excess Clover land (50) (50) -
Group loans 34,510 34,510 -
(Cash) / UK overdraft 9,700 9,700 -
---------------------------
BASE-LINE NET WORTH $ 90,206 89,336
===========================
EXECUTION COPY
Appendix E
CONTENTS OF THE
NORTH SAFETY DISCLOSURE PACKAGE
Set forth below are the contents of the North Safety Disclosure Package:
PART A - NORTH SAFETY COMPANIES GENERALLY
1. A copy of each North Safety Company's constitutive documents as last
amended and/or restated.
2. A chart showing all companies in which the North Safety Companies have an
equity ownership interest and showing the North Safety Companies' direct
and indirect percentage ownership interest in each such company and an
identification of any minority interests in each such company.
3. The exceptions to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' representations and warranties
contained in Section 3.2(A).
PART B - FINANCIAL STATEMENTS
1. The North Safety Companies' unaudited statements of sales, EBIT and EBITDA
for the three-month period ended June 30, 1998 (restated on a US GAAP
basis).
2. The North Safety Companies' statement of combined net assets at July 4,
1998 (the "Base-Line Balance Sheet") (restated on a combined US GAAP basis)
(see Appendix D).
3. The exceptions to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' representations and warranties
contained in Section 3.2(B).
PART C - REAL ESTATE
1. A list of real properties OWNED by the North Safety Companies.
2. A list of all real properties LEASED to the North Safety Companies by other
persons.
3. A list of all real properties owned or leased by the North Safety Companies
that are leased or subleased to other persons by the North Safety
Companies.
4. The exceptions to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' representations and warranties
contained in Section 3.2(C)
EXECUTION COPY
Appendix E
PART D - TANGIBLE PERSONAL PROPERTY
1. A list as of April 7, 1998, for each facility of the North Safety
Companies, of all fixed assets (grouped by machinery and equipment, office
furniture and equipment, and vehicles) OWNED by the North Safety Companies
including the value of such fixed assets appearing on the books and records
of the North Safety Companies.
2. A list as of August 1, 1998, of all items of tangible personal property
LEASED by the North Safety Companies, including the lease terms and payment
schedules relating to such items.
3. The exceptions to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' representations and warranties
contained in Section 3.2(D).
PART E - INTELLECTUAL PROPERTY
1. A list of all patents and patent applications (domestic and foreign) OWNED
by the North Safety Companies (specifying for each the country of issuance
or filing, expiration or filing date, patent or application number,
inventor, and title).
2. A list of all trademarks and trademark applications (domestic and foreign)
OWNED by the North Safety Companies (specifying for each the country of
registration or application renewal or filing date, registration or
application number, ▇▇▇▇ and goods covered or class).
3. A list of all Intellectual Property owned by other persons which is used in
North Safety Companies' conduct of the North Safety Business under license,
technology, or other similar agreements (LICENSED TO).
4. A list of all Intellectual Property owned by the North Safety Companies
which is licensed to other persons under license, technology, or other
similar agreements (LICENSED BY).
5. The exceptions to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' representations and warranties
contained in Section 3.2(E).
PART F - LIABILITIES
1. The exceptions to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' representations and warranties
contained in Section 3.2(F).
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Appendix E
PART G - LITIGATION
1. A description of all litigation at law or in equity pending against North
Safety Companies and relating to the North Safety Companies' conduct of the
North Safety Business.
2. A description of all writs, injunctions, orders, and decrees of courts,
agencies, and other governmental authorities, domestic or foreign, to which
the North Safety Companies are subject.
3. The exceptions to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' representations and warranties
contained in Section 3.2(G).
PART H - CONTRACTS
1. A list as of August 17, 1998, for each facility of the North Safety
Companies, of each outstanding order, contract, or commitment for the
purchase of capital equipment, tooling, products, supplies, or services,
which orders, contracts, and commitments comprise, in the aggregate, at
least 60% of the aggregate value of all open purchase orders, contracts, or
commitments made by each such facility.
2. A list as of August 17, 1998, of each outstanding customer order, contract,
or commitment for the sale by the North Safety Companies of products or
services, which orders, contracts, or commitments each have a value of
$50,000 or more (with respect to sales of North Safety Company in North
America) or $10,000 or more (with respect to sales of North Safety
Companies in Europe and Africa).
3. A list as of August 17, 1998, of each other contract to which a North
Safety Company is party as to which the aggregate consideration over the
life of the contract is more than $100,000.
4. The exceptions to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' representations and warranties
contained in Section 3.2(H).
PART I - EMPLOYEES AND EMPLOYEE BENEFITS
1. A list of the 50 (10, in the case of non-North American operations) highest
paid employees of each North Safety Company during the fiscal year ended
March 31, 1997, together with the dollar amount paid each such employee
during such year.
2. A list of the 50 (10, in the case of non-North American operations) highest
paid employees of each North Safety Company as of July 4, 1998, together
with the base salary rate of each such employee as of that date.
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Appendix E
3. Copies of the summary plan descriptions of all pension, retirement,
profit-sharing, deferred compensation, employee stock option or stock
purchase, bonus, incentive compensation, and other employee pension plans
or arrangements currently maintained by the North Safety Companies
4. Copies of summary plan descriptions all employee health, dental, vision,
life insurance, long-term and short-term disability, vacation, tuition
reimbursement, and severance plans and other employee welfare plans or
arrangements currently maintained by the North Safety Companies.
5. A list of all collective bargaining agreements to which the North Safety
Companies are party or by which the North Safety Companies are bound.
6. The exceptions to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' representations and warranties
contained in Section 3.2(I).
PART J - COMPLIANCE WITH ENVIRONMENTAL LAWS
1. A list of all material Environmental Law permits, approvals, and
qualifications of any government or governmental unit, agency, board, body,
or instrumentality issued to or applied for by the North Safety Companies
that are known to the ▇▇▇▇▇ ▇▇▇▇▇▇▇.
2. A description of all claims known to the ▇▇▇▇▇ ▇▇▇▇▇▇▇ that North Safety
Companies have received during calendar years 1997 and 1998, from any
government or governmental unit, agency, board, body, or instrumentality
alleging noncompliance by the North Safety Companies with Environmental
Laws.
3. A description of all projects known to the ▇▇▇▇▇ ▇▇▇▇▇▇▇ that are currently
in process for the remediation of conditions constituting actual or alleged
noncompliance by the North Safety Companies with Environmental Laws.
4. The exceptions to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' representations and warranties
contained in Section 3.2(J).
PART K - COMPLIANCE WITH OTHER LAWS
1. A list of all material permits, approvals, qualifications, and the like
(other than those listed in Part J-1) of any government or governmental
unit, agency, board, body, or instrumentality issued to or applied for by
the North Safety Companies and used by the North Safety Companies in its
conduct of its business.
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Appendix E
2. A description of all claims known to the ▇▇▇▇▇ ▇▇▇▇▇▇▇ that North Safety
Companies have received during calendar years 1997 and 1998, from any
government or governmental unit, agency, board, body, or instrumentality
alleging noncompliance by the North Safety Companies with any laws, rules,
regulations, ordinances, orders or decrees (other than Environmental Laws)
in connection with the North Safety Companies' conduct of the North Safety
Business.
3. The exceptions to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' representations and warranties
contained in Section 3.2(K).
PART L - TAXES
1. Copies of all income tax returns filed by the North Safety Companies with
respect to fiscal years ended March 31, 1995, 1996, and 1997.
2. The exceptions to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' representations and warranties
contained in Section 3.2(L).
PART M - MATERIAL EVENTS
1. A list of all Material Events, if any, which have occurred since March 31,
1998, which are not otherwise reflected in the Disclosure Package.
2. The exceptions to the ▇▇▇▇▇ ▇▇▇▇▇▇▇' representations and warranties
contained in Section 3.2(M).
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EXECUTION COPY
Appendix F
DOCUMENTS TO BE DELIVERED
BY THE ▇▇▇▇▇ ▇▇▇▇▇▇▇ AT THE CLOSING
1. A certificate signed by the Secretary or Deputy Secretary of ▇▇▇▇▇
verifying the authorization of the execution, delivery, and performance of
the Purchase Agreement by ▇▇▇▇▇ and the consummation of the transactions
contemplated by the Purchase Agreement.
2. A certificate signed by the Secretary or Deputy Secretary of ▇▇▇▇▇ dated as
of the Closing Date as to the incumbency and signatures of directors of
▇▇▇▇▇ who executed documents on behalf of ▇▇▇▇▇ in connection with the
transactions contemplated by the Purchase Agreement.
3 A certificate signed by the Secretary or Deputy Secretary of ▇▇▇▇▇
International verifying the authorization of the execution, delivery, and
performance of the Purchase Agreement by ▇▇▇▇▇ International and the
consummation of the transactions contemplated by the Purchase Agreement.
4. A certificate signed by the Secretary or Deputy Secretary of ▇▇▇▇▇
International dated as of the Closing Date as to the incumbency and
signatures of directors of ▇▇▇▇▇ International who executed documents on
behalf of ▇▇▇▇▇ International in connection with the transactions
contemplated by the Purchase Agreement.
5. Extracts from the Commercial Register (HANDELSREGISTER) of Luneburg
verifying Deutsche ▇▇▇▇▇'▇ corporate existence and the identity of the
Deutsche ▇▇▇▇▇ managing directors (GESCHAFTSFUHRER).
6. Certificate as to the good standing of ▇▇▇▇▇ US (as of the date not earlier
than ten days prior to the Closing) in the State of Delaware.
7. A certificate signed by the Secretary or Assistant Secretary of ▇▇▇▇▇ US
verifying the authorization of the execution, delivery, and performance of
the Purchase Agreement by ▇▇▇▇▇ US and the consummation of the transactions
contemplated by the Purchase Agreement.
8. A certificate signed by the Secretary or Assistant Secretary of ▇▇▇▇▇ US
dated as of the Closing Date as to the incumbency and signatures of
officers of ▇▇▇▇▇ US.
9. A certificate signed by a Director or authorized officer of each ▇▇▇▇▇
Seller dated as of the Closing Date confirming that -
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Appendix F
A. All of the representations and warranties of the ▇▇▇▇▇ ▇▇▇▇▇▇▇
contained in Sections 3.1 of the Purchase Agreement were true,
accurate, and complete as of the date of the Purchase Agreement and
continue to be true, accurate, and complete in all material respects
as of the Closing (as if such representations and warranties had been
made anew as of the Closing except with respect to the effect of
transactions contemplated or permitted by the Purchase Agreement); and
B. All of the representations and warranties of the ▇▇▇▇▇ ▇▇▇▇▇▇▇
contained in Sections 3.2 of the Purchase Agreement were true,
accurate, and complete as of the date of the Purchase Agreement and
true, accurate, and complete as of the Closing.
10. Signed instruments dated in blank pursuant to which all of the officers and
directors of each of the North Safety Companies resign their respective
positions.
11. The following documents:
A. A copy of the North Safety Companies management accounts at and for
the four-month period ended July 31, 1998;
B. Parts G-1 and G-2 of the North Safety Disclosure Statement updated to
the Closing Date (with respect to matters for which the North Safety
Companies have had actual notice by such date); and
C. Part M-1 of the North Safety Disclosure Package updated to the Closing
Date (with respect to matters for which the North Safety Companies
have had actual notice by such date).
12. Executed copies of the Other Agreements.
13. Surveys, title insurance polices, and other documents or instruments which
Norcross or its special counsel may reasonably request in order more fully
to consummate the transactions contemplated by the Purchase Agreeement.
14. Legal opinions if and to the extent Norcross certifies in good faith that
such opinions are required in order to implement the Financing Plan.
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Appendix G
DOCUMENTS TO BE DELIVERED
BY NORCROSS AT THE CLOSING
1. Certificate as to the good standing of Norcross (as of the date not earlier
than ten days prior to the Closing) in Delaware.
2. A certificate signed by the Secretary or Assistant Secretary of Norcross
verifying the authorization of the execution, delivery, and performance of
the Purchase Agreement by Norcross and the consummation of the transactions
contemplated by the Purchase Agreement.
3. A certificate signed by the Secretary or Assistant Secretary of Norcross
dated as of the Closing Date as to the incumbency and signatures of
officers of Norcross.
4. A certificate signed by the President or Vice President of Norcross dated
as of the Closing Date confirming that all of the representations and
warranties of Norcross contained in Section 3.3 of the Purchase Agreement
were true, accurate, and complete as of the date of the Purchase Agreement
and continue to be true, accurate, and complete in all material respects as
of the Closing (as if such representations and warranties had been made
anew as of the Closing except with respect to the effect of transactions
contemplated or permitted by the Purchase Agreement).
5. Executed copies of the Other Agreements.
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Appendix H
REAL ESTATE
The Real Estate Agreement will provide the following:
1. CLOVER
The landfill property will be deeded to ▇▇▇▇▇ for $1. ▇▇▇▇▇ will retain
(from first $), all environmental liability relating to the Clover
property. NSC will receive necessary easements over the property to operate
its facility.
2. SALE LEASEBACK PROPERTIES (MAIDEN, SKOKIE, CRANSTON)
a. All accounting entries related to the sale leaseback properties (other
than the net impact of rent expense) will be removed from the
opening/closing balance sheet
b. All sale leaseback rents going forward will be net expense appearing
in the revenue statement or market rent, whichever is lower, subject
to the same escalations and operating terms contained in the lease,
i.e., tenant retains all current tenant obligations.
c. MAIDEN
i. NSC retain property on current lease terms for remaining term
of lease
ii. no right to sublease
▇. ▇▇▇▇▇▇▇▇
i. 10 year lease on current lease terms with one 5 year option at
then fmv
ii. Buyer has right to sublet and retain 100% of profit subject to
▇▇▇▇▇ consent, which will not unreasonably be withheld.
e. SKOKIE
i. 2 year lease at current terms
ii. one five year renewal option at then FMV
iii. No right to sublease
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Appendix H
3. DUKINFIELD
a. NSC leases entire facility for 2 years at current terms, with right to
sublease 1/2 of the facility for the term. Profits from any such
sublease are split between ▇▇▇▇▇ and NSC equally
b. Within 6 months prior to second anniversary, either party can
terminate the arrangements in which case NSC will vacate the premises.
After two years, if cancellation option not exercised, facility
partitioned in half and NCS leases the partitioned half for 3 years at
the per square meter rental rate plus 1/2 of other tenant obligations.
c. No right to sublease the partitioned half by NSC
d. Costs of partitioning the property to be shared equally.
4. GERMANY
a. One year lease on current terms with one year option
5. HYDE AND ROCKFORD
a. Out of deal;
▇. ▇▇▇▇▇ indemnifies NSC for all future liabilities related to these
properties.
6. MISCELLANEOUS
a. Foregoing arrangements are subject to landlord and/or other required
third party consents.
b. If consents not obtained, parties will enter into alternative and
mutually satisfactory arrangements to convey substantially the same
economic benefits contemplated by the foregoing.
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Appendix I
EMPLOYEE BENEFITS
The Employee Benefits Agreement will provide the following:
1. GENERALLY
A. Except as provided in paragraph 1.B below, all persons who are
employees of the North Safety Companies immediately before the Closing
(the "Continuing Employees") will continue to be employees of their
respective North Safety Company employers at and immediately after the
Closing, with the effect that no period of unemployment will have
occurred for any of the Continuing Employees as a consequence of the
sale of the North Safety Shares to Norcross.
B. Notwithstanding paragraph 1.A above, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall take such
action as is necessary such that ▇▇. ▇.▇. ▇▇▇▇▇▇, ▇▇. will cease to be
an employee of any of the North Safety Companies immediately prior to
the Closing.
The ▇▇▇▇▇ ▇▇▇▇▇▇▇ will assume and be liable for severance and other
payments payable to ▇▇. ▇.▇. ▇▇▇▇▇▇, ▇▇. solely as a result of his
termination of employment with the North Safety Companies prior to the
Closing and shall indemnify Norcross for any liability relating to
such severance and other payments.
C. Except as expressly provided in this Appendix I, nothing in the
Purchase Agreement will affect or restrict Norcross or its successors
in interest from establishing and changing from time to time the terms
and conditions of employment of North Safety Company employees after
the Closing.
2. CONTINUING EMPLOYEES OF NORTH SAFETY PRODUCTS
The following provisions will apply to Continuing Employees of North Safety
Products, including the former employees of ▇▇▇▇▇ ▇▇▇▇▇▇ & Co. Limited:
[TO BE NEGOTIATED PRIOR TO THE CLOSING]
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Appendix I
3. CONTINUING EMPLOYEES OF ▇▇▇▇▇ ▇▇▇▇▇ (AFRICA)
The following provisions will apply to Continuing Employees of ▇▇▇▇▇ ▇▇▇▇▇
(Africa) and its subsidiary, ▇▇▇▇▇ ▇▇▇▇▇ (Zimbabwe) Pty. Ltd.:
[TO BE NEGOTIATED PRIOR TO THE CLOSING]
4. CONTINUING EMPLOYEES OF ISP
The following provisions will apply to Continuing Employees of ISP:
[TO BE NEGOTIATED PRIOR TO THE CLOSING]
5. CONTINUING EMPLOYEES OF ▇▇▇▇▇ NORTH
The following provisions will apply to Continuing Employees of ▇▇▇▇▇ North:
A. PENSION PLANS
(1) ▇▇▇▇▇ North will remain the sponsor of each of the ▇▇▇▇▇ North,
Inc. Employees' Pension Plan and the ▇. ▇. ▇▇▇▇▇▇▇▇▇ & Company
Employees Pension Plan (collectively, the "▇▇▇▇▇ North Pension
Plans").
(2) The ▇▇▇▇▇ ▇▇▇▇▇▇▇ will cause that portion of the assets held in
the ▇▇▇▇▇ Inc. Master Retirement Trust (the "Master Pension
Trust") and allocable to the ▇▇▇▇▇ North Pension Plans to be
transferred to one or more new (or existing) trusts (the
"Norcross Pension Trust(s)") as follows:
(a) Norcross will establish (or designate) the Norcross Pension
Trust(s) as soon as practicable after the Closing. Norcross
will provide the ▇▇▇▇▇ ▇▇▇▇▇▇▇ with written evidence, in the
form of an IRS determination letter (and, if such trust is
not established after the date hereof, an opinion of counsel
reasonably acceptable to the ▇▇▇▇▇ ▇▇▇▇▇▇▇), no later than
30 days after Closing that the Norcross Pension Trust(s) is
(are) exempt from taxation under Section 501(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
(b) The ▇▇▇▇▇ ▇▇▇▇▇▇▇ will cause the trustee of the Master
Pension Trust to calculate the fair market value, in a
manner
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Appendix I
consistent with the trustee's past practice and fiduciary
duty under the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), that portion of the assets of
the Master Pension Trust that are allocable to the ▇▇▇▇▇
North Pension Plans as of the last calendar day of first
calendar month after the Closing (the "Pension Assets
Valuation Date"). The portion of assets of the Master
Pension Trust, as so valued by the trustee, is called the
"Base Asset Value" below.
(c) As soon as practicable after the trustee of the Master
Pension Trust has completed the valuation described in
paragraph 5(A)(2)(b) above, the trustee of the Master
Pension Trust will transfer to the trustee of the Norcross
Pension Trust(s) an amount (in cash or other property as
Norcross and the ▇▇▇▇▇ ▇▇▇▇▇▇▇ may agree) equal to -
(i) the Base Asset Value, PLUS
(ii) interest on the Base Asset Value from the Pension
Assets Valuation Date to the date of transfer at a
rate of interest (the "Shot-Term Rate") equal to
the actual rate of return realized during such
period on investments held in the Master Pension
Trust allocable to the ▇▇▇▇▇ North Pension Plans,
MINUS
(iii) the amount of benefit payments (the "Interim
Payments") made from the Pension Assets Valuation
Date to the date of transfer to employees or their
beneficiaries made in accordance with the
provisions of the ▇▇▇▇▇ North Pension Plans, MINUS
(iv) interest on the Interim Payments from the date such
payments were made until the date of transfer at the
Short-Term Rate, MINUS
(v) an allocable share of fees and expenses incurred
or paid by the Master Pension Trust in respect of
the period beginning the Closing and ending the
date of transfer.
(3) Norcross will be free to modify, amend, or terminate the ▇▇▇▇▇
North Pension Plans after the Closing as it chooses, but only
if -
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Appendix I
(a) Such modifications or amendments are in accordance with the
terms of the ▇▇▇▇▇ North Pension Plans as in effect from
time to time and in accordance with law, including ERISA;
(b) Such modifications or amendments continue to give Continuing
Employees credit for participation and benefit accrual
purposes for their prior service with ▇▇▇▇▇ North or its
affiliated companies and/or predecessors as provided in the
▇▇▇▇▇ North Pension Plans; and
(c) Norcross indemnifies the ▇▇▇▇▇ ▇▇▇▇▇▇▇ and holds the ▇▇▇▇▇
▇▇▇▇▇▇▇ harmless from and against any and all liabilities,
damages, claims, losses, costs, and expenses (including
attorneys' fees) arising solely out of or resulting from any
such modification, amendment, or termination.
(4) The ▇▇▇▇▇ ▇▇▇▇▇▇▇ will jointly and severally indemnify and defend
(in the case of third party claims) Norcross and each of its
affiliates from and against any and all liabilities, damages,
claims, losses, costs, and expenses (including attorneys' fees)
arising solely out of both (i) any employee benefit plan which is
subject to Title IV of ERISA (other than the ▇▇▇▇▇ North Pension
Plans) and (ii) ▇▇▇▇▇ North having been under "common control"
with ▇▇▇▇▇ US (within the meaning of Section 4001 (a)(14) of
ERISA).
B. INVESTMENT PLAN
(1) ▇▇▇▇▇ North will remain the sponsor of each of the ▇▇▇▇▇ North,
Inc. Employees' Investment Plan and the ▇. ▇. ▇▇▇▇▇▇▇▇▇ & Company
Employees Retirement Plan (collectively, the "▇▇▇▇▇ North 401(k)
Plans").
(2) The ▇▇▇▇▇ ▇▇▇▇▇▇▇ will cause that portion of the assets held in
the ▇▇▇▇▇ Inc. Defined Contribution Plan Master Trust (the
"Master 401(k) Trust") and allocable to the ▇▇▇▇▇ North 401(k)
Plans (and equal to the account balances under the ▇▇▇▇▇ North
401(k) Plans) (i) to become fully vested as of the Closing to the
extent not already vested and (ii) to be transferred to one or
more new (or existing) trusts (the "Norcross 401(k) Trust(s)") as
follows:
(a) Norcross will establish the Norcross 401(k) Trust(s) as soon
as practicable after the Closing. Norcross will provide the
▇▇▇▇▇ ▇▇▇▇▇▇▇ with written evidence, in the form of an IRS
determination letter (and, if such trust is not established
af-
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Appendix I
ter the date hereof, an opinion of counsel reasonably
acceptable to the ▇▇▇▇▇ ▇▇▇▇▇▇▇), no later than 30 days
after Closing that the Norcross 401(k) Trust(s) is exempt
from taxation under Section 501(a) of the Code.
(b) The ▇▇▇▇▇ ▇▇▇▇▇▇▇ will cause the trustee of the Master
401(k) Trust to calculate the fair market value as of the
Closing, in a manner consistent with the trustee's past
practice and fiduciary duty under ERISA, that portion of the
assets of the Master 401(k) Trust that are held on account
for the participants of the ▇▇▇▇▇ North 401(k) Plans.
(c) As soon as practicable after the trustee of the Master
401(k) Trust has completed the valuation described in
paragraph 5(B)(2)(b) above, the trustee of the Master 401(k)
Trust will transfer to the trustee of the Norcross 401(k)
Trust(s) an amount (in cash or other property as Norcross
and the ▇▇▇▇▇ ▇▇▇▇▇▇▇ may agree) equal to the total account
balances held on account for the participants of the ▇▇▇▇▇
North 401(k) Plans, together with earnings attributable to
such accounts between the Closing and the date of transfer.
(3) Norcross will be free to modify, amend, or terminate the ▇▇▇▇▇
North 401(k) Plans after the Closing as it chooses, but only if -
(a) Such modifications or amendments are in accordance with the
terms of the ▇▇▇▇▇ North 401(k) Plans as in effect from time
to time and in accordance with law, including ERISA;
(b) Such modifications or amendments continue to give Continuing
Employees credit for participation and benefit accrual
purposes for their prior service with ▇▇▇▇▇ North or its
affiliated companies and/or predecessors as provided in the
▇▇▇▇▇ North 401(k) Plans; and
(c) Norcross indemnifies the ▇▇▇▇▇ ▇▇▇▇▇▇▇ and holds the ▇▇▇▇▇
▇▇▇▇▇▇▇ harmless from and against any and all liabilities,
damages, claims, losses, costs, and expenses (including
attorneys' fees) arising solely out of or resulting from any
such modification, amendment, or termination.
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Appendix I
C. BENEFITS RESTORATION PLAN
(1) ▇▇▇▇▇ North will remain the sponsor of the ▇▇▇▇▇ North Inc.
Benefit Restoration Plan (the "▇▇▇▇▇ North SERP").
(2) Norcross will be free to modify, amend, or terminate the ▇▇▇▇▇
North SERP after the Closing as it chooses, but only if -
(a) Such modifications or amendments are in accordance with the
terms of the ▇▇▇▇▇ North SERP as in effect from time to time
and in accordance with law, including ERISA;
(b) Such modifications or amendments continue to give Continuing
Employees credit for participation and benefit accrual
purposes for their prior service with ▇▇▇▇▇ North or its
affiliated companies and/or predecessors as provided in the
▇▇▇▇▇ North SERP; and
(c) Norcross indemnifies the ▇▇▇▇▇ ▇▇▇▇▇▇▇ and holds the ▇▇▇▇▇
▇▇▇▇▇▇▇ harmless from and against any and all liabilities,
damages, claims, losses, costs, and expenses (including
attorneys' fees) arising solely out of or resulting from any
such modification, amendment, or termination.
D. DEFERRED COMPENSATION PLAN
(1) The ▇▇▇▇▇ Group of companies in the United States, including
▇▇▇▇▇ North, currently maintain the ▇▇▇▇▇ plc Deferred
Compensation Plan (the "▇▇▇▇▇ Deferred Compensation Plan").
(2) The following Continuing Employees (the "North Safety Deferred
Compensation Participants") participate in the ▇▇▇▇▇ Deferred
Compensation Plan:
▇. ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
(3) From and after the Closing, ▇▇▇▇▇ North will assume, honor and
perform the sponsor/employer obligations to the North Safety
Deferred Compensation Participants under the ▇▇▇▇▇ Deferred
Compensation Plan.
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(4) As soon as practicable after the Closing, Norcross will cause
▇▇▇▇▇ North -
(a) To adopt a deferred compensation plan (the "Norcross
Deferred Compensation Plan") which, by its terms -
(i) Is the successor plan to the ▇▇▇▇▇ Deferred
Compensation Plan with respect to such Continuing
Employees;
(ii) Is substantially similar to the ▇▇▇▇▇ Deferred
Compensation Plan; and
(iii) Permits such North Safety Deferred Compensation
Participants to participate in the Norcross Deferred
Compensation Plan and to continue to defer all
"Deferred Amounts" (as defined in the ▇▇▇▇▇ Deferred
Compensation Plan).
(5) The ▇▇▇▇▇ ▇▇▇▇▇▇▇ will cause a portion of the assets held in the
Trust Under ▇▇▇▇▇ plc Deferred Compensation Plan (the "Master
Deferred Compensation Trust") for the benefit of the North Safety
Deferred Compensation Plan participants to be transferred to a
new trust (the "Norcross Deferred Compensation Trust") as
follows:
(a) Norcross will establish the Norcross Deferred Compensation
Trust as soon as practicable after the Closing.
(b) The ▇▇▇▇▇ ▇▇▇▇▇▇▇ will cause the trustee of the Master
Deferred Compensation Trust to calculate the fair market
value as of the Closing, in a manner consistent with the
trustee's past practice, that portion of the assets of the
Master Deferred Compensation Trust that are held on account
for the Continuing Employees who are participants in the
▇▇▇▇▇ Deferred Compensation Plan.
(c) As soon as practicable after the trustee of the Master
Deferred Compensation Trust has completed the valuation
described in paragraph 5(D)(5)(b) above, the trustee of the
Master Deferred Compensation Trust will transfer to the
trustee of the Norcross Deferred Compensation Trust an
amount (in cash or other property as Norcross and the ▇▇▇▇▇
▇▇▇▇▇▇▇ may agree) equal to the amount held on account for
the Continuing Employees who are participants in
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the ▇▇▇▇▇ Deferred Compensation Plan, together with earnings
attributable to such accounts between the Closing and the
date of transfer.
E. WELFARE PLANS
(1) ▇▇▇▇▇ North currently sponsors the following welfare plans (the
"North Safety Welfare Plans") for the benefit of the Continuing
Employees:
(a) The ▇▇▇▇▇ North, Inc. Benefit Plan (flexible spending
accounts),
(b) The ▇▇▇▇▇ North, Inc. Employees Health Plan (medical, dental
and prescription drugs),
(c) The ▇▇▇▇▇ North, Inc. Plan (which includes life insurance,
long-term disability insurance, and accidental death and
dismemberment insurance),
(d) The ▇▇▇▇▇ North Business Travel Accident Plan (which
includes life insurance and long term disability),
(e) The ▇▇▇▇▇ North, Inc., Disability Leave of Absence Policy,
and
(f) The ▇▇▇▇▇ North, Inc., Salary Continuation Plan for Absence
Due to Sickness or Accident (Exempt Salaried Personnel).
(2) The ▇▇▇▇▇ North Welfare Plans will continue in effect at and
immediately after the Closing and ▇▇▇▇▇ North will continue to be
the sponsor of such plans.
(3) The ▇▇▇▇▇ ▇▇▇▇▇▇▇ currently have no duties or obligations with
respect to the ▇▇▇▇▇ North Welfare Plans and will have no duties
or obligations with respect to the ▇▇▇▇▇ North Welfare Plans
after the Closing.
(4) Norcross will be free to modify, amend, or terminate any or all
of the ▇▇▇▇▇ North Welfare Plans after the Closing as it chooses,
but only if -
(a) Such modifications or amendments are in accordance with the
terms of the ▇▇▇▇▇ North Welfare Plan affected as in effect
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from time to time and in accordance with law, including
ERISA;
(b) Such modifications or amendments continue to give Continuing
Employees credit for participation purposes for their prior
service with ▇▇▇▇▇ North or its affiliated companies and/or
predecessors as provided in the ▇▇▇▇▇ North Welfare Plans;
and
(c) Norcross indemnifies the ▇▇▇▇▇ ▇▇▇▇▇▇▇ and holds the ▇▇▇▇▇
▇▇▇▇▇▇▇ harmless from and against any and all liabilities,
damages, claims, losses, costs, and expenses (including
attorneys' fees) arising solely out of or resulting from any
such modification, amendment, or termination.
F. WELFARE POLICIES
(1) ▇▇▇▇▇ North has adopted the following employee welfare policies
(collectively, the "▇▇▇▇▇ North Welfare Policies") applicable to
the Continuing Employees:
(a) Vacation benefit and holiday policy;
(b) Bereavement leave policy;
(c) Jury-pay make up policy;
(d) Paid sick leave policy; and
(e) ▇▇▇▇▇ North, Inc. Tuition Assistance policy.
(2) The ▇▇▇▇▇ North Welfare Policies will continue in effect at and
immediately after the Closing.
(3) Norcross will be free to modify, amend, or terminate any or all
of the ▇▇▇▇▇ North Welfare Policies after the Closing as it
chooses, but only if -
(a) Such modifications or amendments are in accordance with the
terms, of the affected ▇▇▇▇▇ North Welfare policy as in
effect from time to time and in accordance with law,
including ERISA;
(b) Such modifications or amendments continue to give Con-
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tinuing Employees credit for participation purposes for
their prior service with ▇▇▇▇▇ North or its affiliated
companies and/or predecessors as provided in the affected
▇▇▇▇▇ North Welfare policy; and
(c) Norcross indemnifies the ▇▇▇▇▇ ▇▇▇▇▇▇▇ and holds the ▇▇▇▇▇
▇▇▇▇▇▇▇ harmless from and against any and all liabilities,
damages, claims, losses, costs, and expenses (including
attorneys' fees) arising solely out of or resulting from any
such modification, amendment, or termination.
▇. ▇▇▇▇▇▇▇▇▇ POLICY
(1) ▇▇▇▇▇ North adopted a written severance policy on June 1, 1998,
entitled Separation Pay Policy (the "▇▇▇▇▇ North ▇▇▇▇▇▇▇▇▇
Policy").
(2) The ▇▇▇▇▇ North Severance Policy will continue in effect after
the Closing for a period of at least one year; provided that such
policy shall remain in effect indefinitely with respect to the
Continuing Employees listed in paragraph 5(G)(3) below.
(3) If the employment of any of the following Continuing Employees
with ▇▇▇▇▇ North is terminated involuntarily without cause at any
time after the Closing, then Norcross will cause ▇▇▇▇▇ North to
assure that such terminated employees' severance benefit under
the ▇▇▇▇▇ North ▇▇▇▇▇▇▇▇▇ Policy is equal to no less than the
number of months' pay (at the terminated employees' base salary
pay rate the time of such termination) as indicated below:
Continuing Employee Minimum No. of Months
------------------- --------------------
▇. ▇. ▇▇▇▇▇ Six
▇. ▇▇▇▇▇▇ Six
▇. ▇. ▇▇▇▇▇▇▇▇▇ Six
▇. ▇. ▇▇▇▇ Six
▇. ▇▇▇▇▇▇▇ Six
▇. ▇▇▇▇▇▇▇▇▇▇ Six
▇. ▇▇▇▇▇▇▇ Six
▇. ▇▇▇▇ Six
S. T. Nakagama Six
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In addition, Norcross will cause ▇▇▇▇▇ North to provide such
Continuing Employees with continued medical coverage and (in the
case of Messrs. Smith, Hudson, Stupinski, Reed, and Nakagama) a
vehicle allowance as currently in effect for the duration of the
periods indicated above.
(4) Norcross will be free after the first anniversary of the Closing
to modify, amend, or terminate the ▇▇▇▇▇ North ▇▇▇▇▇▇▇▇▇ Plan as
it chooses, but only if -
(a) Such modifications or amendments are in accordance with the
terms of the ▇▇▇▇▇ North Severance Plan as in effect from
time to time and in accordance with law, including ERISA;
(b) Such modifications or amendments continue to give Continuing
Employees credit for participation and benefit accrual
purposes for their prior service with ▇▇▇▇▇ North or its
affiliated companies and/or predecessors as provided in the
▇▇▇▇▇ North Severance Plan;
(c) Norcross indemnifies the ▇▇▇▇▇ ▇▇▇▇▇▇▇ and holds the ▇▇▇▇▇
▇▇▇▇▇▇▇ harmless from and against any and all liabilities,
damages, claims, losses, costs, and expenses (including
attorneys' fees) arising solely out of or resulting from any
such modification, amendment, or termination; and
(d) Before implementing any such modification, amendment, or
termination, Norcross provides the Continuing Employees
listed in paragraph 5(G)(3) above severance benefits which
are no less favorable than the benefits that would have been
provided such Continuing Employees under such paragraph.
- xi -
EXECUTION COPY
Appendix J
KPMG CONSENT LETTER
See Attached Letter
[KPMG PEAT MARWICK LLP LOGO]
Ono Insignia Financial Plaza Telephone ▇▇▇ ▇▇▇ ▇▇▇▇ Telefax ▇▇▇ ▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
July 1, 1998
PRIVATE
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President - Finance and Administration
North Safety Products
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇▇:
This letter will confirm our understanding of our engagement to provide services
to North Safety Products and the nature and limitations of the services we will
provide. The legal entities included in North Safety Products are ▇▇▇▇▇ North
Inc. and its subsidiaries; ▇▇▇▇▇ ▇▇▇▇▇ and Sons, Ltd.; ▇▇▇▇▇ ▇▇▇▇▇▇; ▇▇▇▇▇
▇▇▇▇▇, South Africa; ▇▇▇▇▇ ▇▇▇▇▇, Zimbabwe; and Industrie-▇▇▇▇▇▇-Produkte GmbH.
AUDIT OF COMBINED FINANCIAL STATEMENTS OF NORTH SAFETY PRODUCTS
We will report upon our audit of the combined balance sheets of North Safety
Products (the Company), as of April 4, 1998, April 5, 1997 and April 6, 1996,
and the related statements of income, shareholders' equity, and cash flows for
each of the years in the three-year period ended April 4, 1998.
We will conduct the audit in accordance with generally accepted auditing
standards with the objective of expressing an opinion as to whether the
presentation of the combined financial statements, taken as a whole, conforms
with U.S. generally accepted accounting principles.
In conducting the audit, we will perform tests of the accounting records and
such other procedures as we consider necessary in the circumstances to provide a
reasonable basis for our opinion on the combined financial statements. We also
will assess the accounting principles used and significant estimates made by
management as well as evaluate the overall financial statement presentation.
The Company agrees that all records, documentation, and information we request
in connection with our audit will be made available to us, that all material
information will be disclosed to us, and that we will have the full cooperation
of the Company's personnel.
[KPMG PEAT MARWICK LLP LOGO]
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President - Finance and Administration
North Safety Products
July 1, 1998
Page 2
As required by generally accepted auditing standards, we will make specific
inquiries of management about the representations embodied in the combined
financial statements and the effectiveness of internal control, and obtain a
representation letter from management about these matters. The responses to our
inquiries, the written representations, and the results of audit tests comprise
the evidential matter will rely upon in forming an opinion on the combined
financial statements.
The management of the Company has responsibility for the combined financial
statements and all representations contained therein. Management also has
responsibility for the adoption of sound accounting policies and the
implementation of record keeping and internal control to maintain the
reliability of the combined financial statements and to provide reasonable
assurance against the possibility of misstatements that are material to the
combined financial statements.
An audit is planned and performed to obtain reasonable assurance about whether
the combined financial statements are free of material misstatement, whether
caused by error or fraud. Absolute assurance is not attainable because of the
nature of audit evidence and the characteristics of fraud. Therefore, there is a
risk that material errors or fraud (including fraud that may be an illegal act)
and other illegal acts may exist and not be detected by an audit performed in
accordance with generally accepted auditing standards. Also, an audit is not
designed to detect matters that are immaterial to the financial statements.
To the extent that they come to our attention, we will inform management about
any material errors, any instances of fraud or illegal acts. Further, to the
extent that they come to our attention, we will inform the Board of Directors
about fraud and illegal acts that involve senior management, fraud that in our
judgment causes a material misstatement of the combined financial statements of
the Company, and illegal acts, unless clearly inconsequential, that have not
otherwise been communicated to the committee.
In planning and performing our audit, we will consider the Company's internal
control in order to determine our auditing procedures for the purpose of
expressing an opinion on the combined financial statements and not to provide
assurances on the internal control. Furthermore, our audit-including the limited
inquiries we will make in connection with Year 2000 issues- is not designed to,
and does not, provide any assurance that Year 2000 issues which may exist will
be identified, on the adequacy of the Company's Year 2000 remediation plans
regarding operational or financial systems, or on whether the Company
[KPMG PEAT MARWICK LLP LOGO]
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President - Finance and Administration
North Safety Products
July 1, 1998
Page 3
remediation plans regarding operational or financial systems, or on whether the
Company is or will become Year 2000 compliant on a timely basis. Year 2000
compliance is the responsibility of management. However, we may communicate
matters that come to our attention relating to the Year 2000 issue which in our
judgment may be of benefit to management.
While we are not being engaged to report on the Company's internal control, we
will communicate reportable conditions to you to the extent they come to our
attention. Reportable conditions are significant deficiencies in the design or
operation of internal control which could adversely affect the organization's
ability to record, process, summarize and report financial data consistant with
the assertions of management in the combined financial statements.
Because of the importance of management's representations to the effective
performance of our services, the Company will release KPMG Peat Marwick LLP and
its personnel from any claims, liabilities, costs and expenses relating to our
services under this letter attributable to any misrepresentations in the
representation letter referred to above.
From our discussion, we understand that these financial statements may be used
in a public filing of a potential acquirer. Subject to KPMG completing to our
satisfaction our normal background check and evaluation of the acquirer (if
necessary) and to satisfactory completion of, (1) a down-to-date review of North
Safety Products' combined financial statements for the three years ended April
4, 1998 prior to the filing date and the effective date of the acquirer's
Registration Statements made under the Securities Act of 1933, (2) a reading of
the Registration Statements, and (3) satisfactory representations from
management that there are no subsequent events which would require modification
or additional disclosure to the audited financial statements, KPMG will consent
to the use of its report if the results of its procedures do not indicate that
the financial statements or the Registration Statement are misleading. This
additional work will be billed at standard rates for work related to the issue
of securities.
FEES
Our fees for the audit of the combined financial statements and issuance of the
required reports is estimated to be $117,000 plus out-of-pocket expenses and
will be billed periodically as the work progresses.
[KPMG PEAT MARWICK LLP LOGO]
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President - Finance and Administration
North Safety Products
July 1, 1998
Page 4
Our audit fees are based on the presumption that your accounting records are
up-to-date and in good order. We will ▇▇▇▇ you separately for any accounting
assistance outside the normal course of our audit. Such fees will be based on
the time required of the individuals performing the services. Circumstances
encountered during the performance of these services that warrant additional
time or expense could cause us to be unable to complete the audit within the
above estimates. We will endeavor to notify you of any such circumstances as
they are assessed.
We shall be pleased to discuss this letter with you at any time. For your
convenience in confirming these arrangements, we enclose a copy of this letter.
Please sign and return it to us at your earliest convenience.
Very truly yours,
KPMG Peat Marwick LLP
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Partner
ACCEPTED
North Safety Products
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President - Finance and Administration
July 15, 1998
---------------------------------------------
Date
cc: ▇▇▇▇ ▇▇▇▇▇▇, Vice President Finance and Administration
▇▇▇▇▇▇▇ ▇. Georgian (KPMG - Providence)
EXECUTION COPY
Appendix K
TRADEMARK LICENSE
To Be Negotiated
