EXHIBIT 2.1
ACQUISITION AGREEMENT
by and among
WORLD KITCHEN (GHC), LLC
WKI HOLDING COMPANY, INC.,
WORLD KITCHEN, INC.
▇▇▇▇▇ OF ▇▇▇▇ LIMITED (Barbados)
and
▇▇▇▇▇ OF ▇▇▇▇ LIMITED (Bermuda)
April 29, 2004
TABLE OF CONTENTS
(not part of Agreement)
Page
----
ARTICLE I PURCHASE AND SALE
Section 1.1 Purchase and Sale .............................................. 6
Section 1.2 Excluded Assets ................................................ 9
Section 1.3 Assumed Liabilities ............................................ 10
Section 1.4 Prorations ..................................................... 11
Section 1.5 Purchase Price ................................................. 11
Section 1.6 Closing ........................................................ 12
Section 1.7 Allocation of Purchase Price ................................... 13
Section 1.8 Assignment of Contracts and Rights ............................. 14
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER
Section 2.1 Organization ................................................... 15
Section 2.2 Authorization; Validity of Agreement ........................... 15
Section 2.3 Consents and Approvals; No Violations .......................... 16
Section 2.4 Income Statement ............................................... 17
Section 2.5 No Undisclosed Liabilities ..................................... 18
Section 2.6 Absence of Certain Changes ..................................... 18
Section 2.7 Litigation ..................................................... 18
Section 2.8 No Default; Compliance with Applicable Laws; Permits ........... 19
Section 2.9 Taxes .......................................................... 19
Section 2.10 ERISA ......................................................... 20
Section 2.11 Intellectual Property ......................................... 22
Section 2.12 Contracts ..................................................... 23
Section 2.13 Title to Assets ............................................... 23
Section 2.14 Legal Compliance .............................................. 24
Section 2.15 Real Property ................................................. 24
Section 2.16 Affiliate Transactions ........................................ 25
2
Page
----
Section 2.17 Inventory ..................................................... 25
Section 2.18 Sufficiency of Assets ......................................... 25
Section 2.19 Brokers or Finders ............................................ 25
Section 2.20 No Other Representations or Warranties ........................ 25
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 3.1 Organization ................................................... 26
Section 3.2 Authorization; Validity of Agreement ........................... 26
Section 3.3 Consents and Approvals; No Violations .......................... 27
Section 3.4 Sufficient Funds; Solvency ..................................... 27
Section 3.5 Brokers or Finders ............................................. 28
Section 3.6 Investigation by Purchaser ..................................... 28
ARTICLE IV COVENANTS
Section 4.1 Interim Operations ............................................. 29
Section 4.2 Access to Information; Books and Records ....................... 31
Section 4.3 Publicity ...................................................... 32
Section 4.4 Approvals and Consents; Cooperation; Notification .............. 33
Section 4.5 Further Assurances ............................................. 34
Section 4.6 Supplements to the Disclosure Schedule ......................... 34
Section 4.7 Insurance Coverage ............................................. 34
Section 4.8 Seller's Names ................................................. 34
Section 4.9 [Intentionally Omitted] ........................................ 35
Section 4.10 Employees ..................................................... 35
Section 4.11 Release of Liens .............................................. 37
Section 4.12 Financing ..................................................... 37
Section 4.13 Non-Competition; No Solicitation .............................. 38
Section 4.14 Financial Statements .......................................... 40
ARTICLE V CONDITIONS
Section 5.1 Conditions to Each Party's Obligation to Effect the Closing .... 41
3
Page
----
Section 5.2 Conditions to the Obligations of Purchaser ..................... 42
Section 5.3 Conditions to the Obligations of Seller ........................ 43
ARTICLE VI INDEMNIFICATION
Section 6.1 Indemnification ................................................ 44
Section 6.2 Adjustment to Purchase Price ................................... 47
Section 6.3 Exclusive Remedies ............................................. 47
ARTICLE VII TERMINATION
Section 7.1 Termination .................................................... 48
Section 7.2 Procedure and Effect of Termination ............................ 49
ARTICLE VIII MISCELLANEOUS
Section 8.1 Amendment and Modification ..................................... 50
Section 8.2 Transfer Taxes ................................................. 50
Section 8.3 Notices ........................................................ 50
Section 8.4 Interpretation ................................................. 51
Section 8.5 Counterparts ................................................... 52
Section 8.6 Entire Agreement; Third Party Beneficiaries .................... 52
Section 8.7 Severability ................................................... 53
Section 8.8 Governing Law .................................................. 53
Section 8.9 Jurisdiction ................................................... 53
Section 8.10 Assignment .................................................... 54
Section 8.11 Expenses ...................................................... 54
Section 8.12 Headings ...................................................... 54
Section 8.13 Waivers ....................................................... 54
Section 8.14 Schedules ..................................................... 54
Section 8.15 Representations and Warranties Joint and Several .............. 55
Section 8.16 Guarantee ..................................................... 55
Section 8.17 Bulk Sales Act ................................................ 55
4
EXHIBITS
Exhibit A Transitional Services Agreement
Exhibit B Supply Agreement Term Sheet
SCHEDULES
Schedule 1.1(a)(iv) Contracts
Schedule 1.1(a)(v) Real Property Lease
Schedule 1.1(a)(vii) Transferred Intellectual Property
Schedule 1.3(w) Product Liability Suits
Schedule 2.4(a) OXO Income Statement
Schedule 2.4(b) OXO Interim Income Statement
Schedule 2.4(c) WKI Financial Statements
Schedule 2.4(d) WKI Interim Financial Statements
Schedule 2.5 Undisclosed Liabilities
Schedule 2.6 Absence of Certain Changes
Schedule 2.7 Litigation
Schedule 2.9 Taxes
Schedule 2.10 ERISA
Schedule 2.12 Contracts
Schedule 2.13 Title to Assets
Schedule 2.16 Affiliate Transactions
Schedule 2.18 Sufficiency of Assets
Schedule 4.1(j) Permitted Hires
Schedule 4.8 Seller's Names
Schedule 4.10 Affected Employees
5
ACQUISITION AGREEMENT
ACQUISITION AGREEMENT, dated as of April 29, 2004 (this
"Agreement"), by and among World Kitchen (GHC), LLC, a
Delaware limited
liability company, WKI Holding Company, Inc., a
Delaware corporation, World
Kitchen, Inc., a
Delaware corporation (collectively, "Seller"), ▇▇▇▇▇ of ▇▇▇▇
Limited, a Barbados company ("Purchaser") and ▇▇▇▇▇ of ▇▇▇▇ Limited, a Bermuda
company ("Guarantor").
WHEREAS, Seller owns OXO International (the "Business"), a
division of Seller that is a provider of tools and gadgets, including food
preparation, cleaning, storage & organization and garden products;
WHEREAS, on the terms and subject to the conditions of this
Agreement, Purchaser desires to purchase and acquire, and Seller desires to sell
and transfer, or cause to be sold and transferred, the Purchased Assets (as
defined herein); and
WHEREAS, on the terms and subject to the conditions of this
Agreement, Purchaser is willing to assume, and Seller desires to assign to
Purchaser, the Assumed Liabilities (as defined herein).
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound hereby, agree as
follows:
ARTICLE I
PURCHASE AND SALE
Section 1.1 Purchase and Sale. Upon the terms and subject to
the conditions set forth in this Agreement, at the Closing (as defined below),
Seller shall sell, assign, transfer, convey and deliver to Purchaser, and
Purchaser shall purchase, assume and accept all right, title and interest of
Seller in only the following rights, properties and assets (collectively, the
"Purchased Assets"):
(i) all inventories, including work-in-process,
re-work and items in transit, used in the operation of the Business,
but
6
excluding any inventories that are excluded in Section 1.2 below or
have been transferred, consumed or disposed of prior to the Closing in
the ordinary course of business (the "Inventory");
(ii) goods that are subject to an open purchase order
in the ordinary course of business but not yet received;
(iii) all molds and tooling used in the manufacturing
of products for sale by the Business (to the extent owned by Seller);
(iv) all rights and incidents of interest as of the
Closing in and to all leases, agreements, contracts and commitments
(other than the Transferred Intellectual Property (as defined below) or
the Real Property Lease (as defined below)) for use in the Business
that are listed on Schedule 1.1(a)(iv) or that arise for use in the
Business after the date hereof in the ordinary course of business but
excluding all Plans (as defined below) and all of such contracts that
have terminated, expired or been fully performed prior to the Closing
(the "Contracts");
(v) all rights and incidents of interest to the real
property leases listed on Schedule 1.1(a)(v) (the "Real Property
Lease");
(vi) all rights and interests of Seller in and to any
owned property used exclusively in the Business, including finished
goods that are not inventory;
(vii) to the extent transferable, all of Seller's
right, title and interest in and to (a) to the extent used in the
Business, all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all
patents, patent applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions,
extensions and reexaminations thereof, (b) to the extent used primarily
in the Business, all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations,
adaptations, derivations, and combinations thereof and including all
goodwill associated therewith and all applications, registrations and
7
renewals in connection therewith, (c) to the extent used primarily in
the Business, all copyrights, and all applications, registrations and
renewals in connection therewith, (d) to the extent used exclusively in
the Business, all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information and business and marketing
plans and proposals), (e) to the extent used exclusively in the
Business, all computer software (including data and related
documentation), (f) to the extent used exclusively in the Business, all
other proprietary rights and (g) all copies and tangible embodiments
thereof (in whatever form or medium), any goodwill associated
therewith, licenses and sublicenses granted and obtained with respect
thereto and rights thereunder, remedies against infringements thereof
and rights to protection of interests therein under the laws of all
jurisdictions (collectively, the "Intellectual Property Rights")
including those listed or described on Schedule 1.1(a)(vii)
(collectively, the "Transferred Intellectual Property"), as well as any
Intellectual Property Rights that arise for use in the Business after
the date hereof, but excluding all of such Intellectual Property Rights
that have terminated, expired or been fully performed prior to the
Closing;
(viii) originals or copies of all books and records
of Seller exclusively relating to the operation of the Business (the
"Business Books and Records");
(ix) to the extent transferable, franchises,
approvals, permits, licenses, orders, registrations, certificates,
variances and similar rights obtained from a Governmental Entity
relating to the operation of the Business;
(x) all deposits (including security deposits)
deposited by or on behalf of any Seller as lessee or sublessee under
the Real Property Lease or with respect to any Contract;
(xi) all prepaid expenses of the business; and
(xii) the goodwill of the Business.
8
Section 1.2 Excluded Assets. Seller shall not sell, assign,
transfer, convey or deliver to Purchaser, and Purchaser shall not purchase, and
the Purchased Assets shall not include, any right, title or interest in any
property, asset (tangible or intangible), claim, contract, lease, license, right
or power of Seller which is not specifically included in the Purchased Assets,
including the following (collectively, the "Excluded Assets"):
(i) all accounts receivable and notes receivable of
the Business as of the Closing (whether or not arising under Contracts
included in the Purchased Assets);
(ii) all cash, cash equivalents and marketable
securities of Seller;
(iii) all inventories that are located in or are in
transit to the retail stores of Seller or its affiliates, including the
CorningWare Corelle Revere Factory Stores;
(iv) any of Seller's right, title and interest in any
monies due Seller under any supplier, retail, distributor or license
agreements related to the Business, including any clawbacks,
allowances, rebates, royalties and commissions under such agreements,
to the extent such items are related to sales of products occurring
prior to the Closing;
(v) any of Seller's right, title and interest in any
of the litigation or contested matters (i) referred to in Section
1.3(w) and (ii) referred to in Schedule 2.7;
(vi) any rights of Seller under this Agreement, the
▇▇▇▇ of Sale (as defined below) (or any other instrument of transfer)
or the Assumption Agreement (as defined below) or any other agreement
entered into by and among Seller and Purchaser or their respective
affiliates in connection with this Agreement and the transactions
contemplated hereby (collectively, the "Ancillary Agreements");
(vii) any of Seller's right, title and interest in
any insurance policy or coverage;
9
(viii) any Plans (as defined below) and any pension,
profit sharing or deferred plans or arrangements and trusts and assets
thereof and any other employee pension and benefit plan or arrangement
and the assets thereof, if any, maintained by Seller; and
(ix) any right Seller has with respect to Tax
credits, Tax refunds, Tax attributes or any other Tax benefits.
Section 1.3 Assumed Liabilities. Purchaser shall assume and
thereafter pay, perform or otherwise discharge, as and when the same shall
become due and payable, and shall hold Seller and its affiliates harmless from,
any liabilities, obligations or expenses relating to, arising out of, or in
connection with (a) all obligations arising under the Contracts and the Real
Property Lease which relate to facts, occurrences or circumstances occurring
from and after the Closing Date, and (b) the liabilities recorded in accordance
with GAAP in a manner consistent with the presentation on Schedule 2.5 for the
following balance sheet accounts for the Business: (i) accrued incentive, (ii)
accrued wages, (iii) accrued legal fees, (iv) accrued commissions, (v) customer
allowances - 2003, (vi) customer allowances - 2004 and (vii) accrued royalty
payments (clause (i) through (vii) collectively, the "Closing Date Accruals")
(clause (a) and (b) collectively, the "Assumed Liabilities"). Notwithstanding
anything to the contrary contained in this Section 1.3, the Assumed Liabilities
shall not include (s) accounts payable; (t) any obligation or liability
whatsoever arising under or relating to any Plan (except to the extent included
in the Closing Date Accruals or otherwise provided in Section 4.10), including
but not limited to, the WKI Holding Company, Inc. Long Term Incentive Plan, WKI
and OXO Guidelines; (u) amounts payable to Dresdner Kleinwort ▇▇▇▇▇▇▇▇▇▇▇ under
Section 2.19; (v) any claims or suits relating to product liability with respect
to the Business arising out of facts or circumstances occurring prior to the
Closing Date, (w) any obligations of Seller under this Agreement or any of the
Ancillary Agreements, (x) any liabilities or obligations of Seller for Taxes
arising out of the operation of the Business or the ownership of the Purchased
Assets for any period (or portion thereof) ending on or before the close of
business on the Closing Date, (y) any liabilities or obligations relating
primarily to the Excluded Assets or (z) Closing Date Accruals in excess of $5
million on the Closing Date (collectively, the "Excluded Liabilities"). Except
for the Assumed Liabilities or as otherwise expressly provided herein, Purchaser
shall not assume by virtue of this Agreement, and shall have no liability for,
any liabilities of any Seller (including, without limitation, those related to
the Business) of any kind, character or description to the
10
extent arising out of facts, occurrences or circumstances occurring prior to the
Closing Date.
Section 1.4 Prorations. All real property taxes, personal
property taxes and similar ad valorem obligations levied with respect to the
Purchased Assets for a taxable period which includes (but does not end on) the
Closing Date shall be apportioned between Seller and Purchaser as of the Closing
Date, and Seller and Purchaser shall each be responsible for their respective
proportionate shares of such taxes or similar ad valorem obligations (which
proportionate shares shall be determined based on the number of days in such
taxable period at the close of business on the Closing Date, on the one hand,
and the remaining number of days in such taxable period, on the other hand).
Seller shall be liable for the proportionate amount of such taxes or similar ad
valorem obligations that is attributable to the portion of the taxable period
ending at the close of business on the Closing Date, and Purchaser shall be
liable for the proportionate amount of such taxes or obligations that is
attributable to the portion of the taxable period beginning after the Closing
Date. In the case of any Taxes (other than any real property taxes, personal
property taxes and similar ad valorem obligations) that are payable for a
taxable period that includes (but does not end on) the Closing Date, the amount
of such Taxes attributable to the portion of the taxable period that ends on the
Closing Date shall be deemed equal to the amount which would be payable if the
relevant taxable period ended on the Closing Date.
Section 1.5 Purchase Price. The aggregate purchase price for
the Purchased Assets shall be (i) $275,000,000 in cash (the "Cash Purchase
Price") plus (ii) the Assumed Liabilities, as adjusted below, plus (iii) the
amount, if any, by which the Closing Date Accruals are less than $4,000,000. On
the Closing Date, Seller shall deliver to Purchaser a statement of the Inventory
of the Business (the "Closing Inventory Statement") as of one (1) business day
prior to the Closing Date. The Closing Inventory Statement shall be prepared in
accordance with generally accepted accounting principles in a manner consistent
with that used in determining the Interim Inventory Amount (as defined herein).
The quantities of Inventory used to determine the Inventory amount to be
included in the Closing Inventory Statement will be based on the results of a
physical inventory of the Business to be taken one (1) business day prior to the
Closing Date in accordance with generally accepted accounting principles
consistently applied. The physical inventory will be taken by Seller and/or
Seller's representatives and may be observed by Purchaser and/or Purchaser's
representatives. If the Inventory amount on the Closing Inventory Statement (the
"Closing Inventory Amount") is greater than $17,555,000 (the
11
"Interim Inventory Amount"), then the Cash Purchase Price will be increased by
the amount the Closing Inventory Amount exceeds the Interim Inventory Amount. If
the Closing Inventory Amount is less than the Interim Inventory Amount, then the
Cash Purchase Price will be decreased by the amount the Interim Inventory Amount
exceeds the Closing Inventory Amount. For the avoidance of doubt, the Interim
Inventory Amount does not, and the Closing Inventory Amount will not, include
any Excluded Assets. From and after completion of the physical inventory
referred to above and prior to the Closing, Seller will not ship any Inventory
unless appropriate adjustments are made to the Closing Inventory Amount.
Section 1.6 Closing.
(a) The sale and purchase of the Purchased Assets and
the consummation of the other transactions contemplated by this Agreement shall
take place at a closing (the "Closing") to be held at the offices of Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, 4 Times Square, New York, New York, at 10:00
a.m. New York time on the second business day following the satisfaction or
waiver of all conditions to the obligations of the parties set forth in Article
V hereof or at such other place, time or date as Seller and Purchaser may
mutually agree upon in writing (the day on which the Closing takes place being
the "Closing Date"). Seller and Purchaser shall use their commercially
reasonable efforts to consummate the transactions contemplated hereby on or
before June 1, 2004.
(b) At the Closing, Seller shall deliver or cause to
be delivered to Purchaser:
(i) a ▇▇▇▇ of sale and assignment documents
for the Transferred Intellectual Property, in forms reasonably
acceptable to Purchaser and Seller (the "▇▇▇▇ of Sale"), and such other
instruments as may be reasonably requested by Purchaser to transfer or
assign the Purchased Assets to Purchaser;
(ii) the Transitional Services Agreement
(the "Transitional Services Agreement"), substantially in the form of
Exhibit A attached hereto;
(iii) the Real Property Lease Assignment and
Assumption Agreement, in a form reasonably acceptable to Purchaser
12
and Seller (the "Real Property Lease Assignment and Assumption
Agreement');
(iv) a supply agreement, having the terms
set forth in the term sheet attached as Exhibit B attached hereto and
otherwise in form and substance reasonably acceptable to the parties
(the "Supply Agreement"); and
(v) a certificate of non-foreign status (as
provided by Treasury Regulations section 1.1445-2(b)(2)) for each of
WKI Holding Company, Inc. and World Kitchen, Inc.
(c) At the Closing, Purchaser shall deliver or cause
to be delivered to Seller:
(i) the Cash Purchase Price by wire transfer
in immediately available funds to an account or accounts designated by
Seller;
(ii) an assumption agreement, in a form
reasonably acceptable to Purchaser and Seller (the "Assumption
Agreement");
(iii) the Transitional Services Agreement;
(iv) the Real Property Lease Assignment and
Assumption Agreement; and
(v) the Supply Agreement.
Section 1.7 Allocation of Purchase Price. The parties agree
that, for all tax and other reporting purposes, Purchaser shall provide Seller
with a proposed allocation of the Cash Purchase Price and the Assumed
Liabilities among the Purchased Assets within 90 days after the Closing Date in
accordance with Section 1060 of the Internal Revenue Code of 1986, as amended.
In the event that Seller and Purchaser cannot agree on an allocation, Seller and
Purchaser shall jointly select a national independent accounting firm (the
"Accountant") to resolve the differences. The Accountant will be requested to
resolve the dispute and determine the correct allocation in accord with Section
1060 of the Code, and issue its report within 30
13
days of engagement, in writing to Seller and Purchaser. One-half of the fees of
the Accountant shall be borne by Purchaser, and one-half of such fees shall be
borne by Seller. Seller and Purchaser shall cooperate in determining the final
allocation of the Cash Purchase Price and the Assumed Liabilities among the
Purchased Assets. Seller and Purchaser shall be bound by such allocation (and if
necessary, any adjusted allocation), and shall file, or cause to be filed, a
Form 8594 and all applicable federal, state, local and foreign income, franchise
and excise Tax Returns (as defined below) in a manner that is consistent with
such allocation. If the allocation is disputed by any Taxing Authority (as
defined below), the party receiving notice of such dispute shall promptly notify
the other party hereto concerning the existence of such dispute and the parties
shall consult with each other with respect to all issues related to the
allocation in connection with such dispute.
Section 1.8 Assignment of Contracts and Rights. Anything in
this Agreement to the contrary notwithstanding, this Agreement shall not
constitute an agreement to assign any Contract or any claim or right or any
benefit arising thereunder or resulting therefrom if an attempted assignment
thereof, without the consent of a third party, would constitute a breach or
other contravention thereof or in any way adversely affect the rights of Seller
thereunder. Each party hereto will use its commercially reasonable efforts (but
without any payment of money) to cooperate in obtaining the consent of the other
parties to any such Contract or any claim or right or any benefit arising
thereunder or resulting therefrom for the assignment thereof to Purchaser as
Purchaser may request. If such consent is not obtained on or before the Closing,
or if an attempted assignment thereof would be ineffective or would adversely
affect the rights of Seller thereunder so that Purchaser would not in fact
receive all such rights, Seller and Purchaser will cooperate in a mutually
agreeable arrangement under which Purchaser would obtain the benefits and assume
the obligations thereunder in accordance with this Agreement. Seller will
promptly pay to Purchaser when received all monies received by Seller (less the
actual costs to Seller of cooperating in such arrangements) under any Contract
or any claim or right or any benefit arising thereunder, except to the extent
the same represents an Excluded Asset.
14
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as disclosed in the written statement identified as the
disclosure schedule to this Agreement and delivered by Seller to Purchaser at or
prior to the execution of this Agreement (the "Disclosure Schedule"), Seller
represents and warrants to Purchaser as follows:
Section 2.1 Organization. Seller is duly organized, validly
existing and in good standing (or its equivalent) under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to be so existing and in
good standing or to have such power and authority would not have a Business
Material Adverse Effect (as defined below). Seller has heretofore made available
to Purchaser a complete and correct copy of the articles of incorporation and
by-laws of Seller, as currently in effect. As used in this Agreement, "Business
Material Adverse Effect" means any material adverse effect on, the business,
financial condition or results of operations of the Business, taken as a whole;
provided, however, that the effects of changes that (i) affect industries and
markets in which the Business operates or the United States economy and which do
not disproportionately affect the Business or (ii) result from changes in GAAP
(as defined below) or interpretations thereof shall, in each case, be excluded
from the determination of Business Material Adverse Effect; and provided,
further, that any adverse change in or effect on the Business, taken as a whole,
resulting from the execution of this Agreement, the announcement of this
Agreement and the transactions contemplated by this Agreement or the compliance
by the parties with the terms of this Agreement shall also be excluded from the
determination of Business Material Adverse Effect. Seller is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where
the failure to be so duly qualified or licensed and in good standing would not
have a Business Material Adverse Effect.
Section 2.2 Authorization; Validity of Agreement. Seller has
full corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
Seller of this Agreement and the Ancillary Agreements to which it is a party,
and the consummation of the transactions contemplated hereby and thereby, have
been duly authorized and no other corporate proceedings on the part of Seller
are necessary to authorize the execution and delivery by Seller of this
Agreement or the Ancillary
15
Agreements and the consummation of the transactions contemplated hereby and
thereby. This Agreement has been, and upon execution thereof, each Ancillary
Agreement executed by it will be, duly executed and delivered by Seller and
(assuming due and valid authorization, execution and delivery hereof and thereof
by Purchaser) is a valid and binding obligation of Seller enforceable against
Seller in accordance with its terms, except that (a) such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws, now or hereafter in effect, affecting creditors' rights
generally and (b) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
Section 2.3 Consents and Approvals; No Violations. Except for
consents that will have been received prior to the Closing and those set forth
on Schedule 2.12 and filings pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), neither the execution,
delivery or performance of this Agreement or the Ancillary Agreements by Seller
nor the consummation by Seller of the transactions contemplated hereby or
thereby will (a) violate any provision of the articles of incorporation or
by-laws of Seller; (b) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice or consent under
any agreement, contract, lease, license, instrument, or other arrangement to
which any of the Purchased Assets is subject; (c) result in the creation of any
liens, charges, mortgages, security interest or other encumbrance (other than
encumbrances arising out of this Agreement or restrictions imposed by federal or
state securities or other Law) (collectively, "Encumbrances") upon any of the
Purchased Assets, under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Seller is a party or by which any of them or
any of their properties or assets may be bound; (d) violate any order, writ,
judgment, injunction, decree, law, statute, rule or regulation (collectively,
"Law") applicable to Seller or any of the properties or assets of the Business
or (e) require on the part of Seller any filing or registration with,
notification to, or authorization, consent or approval of, any federal, state,
local or foreign court, legislative, executive or regulatory authority or agency
(each of the foregoing, a "Governmental Entity"); except in the case of clauses
(b), (c), (d) or (e) for such violations, breaches or defaults that, or filings,
registrations, notifications, authorizations, consents or approvals the failure
of which to obtain, would not have a Business Material Adverse Effect.
16
Section 2.4 Income Statement.
(a) Presented in Schedule 2.4(a) is an income
statement for the Business for the year ended December 31, 2003 (the "OXO Income
Statement"), which has been derived from the audited, consolidated statement of
operations of WKI Holding Company, Inc. prepared in accordance with accounting
standards generally accepted in the United States of America ("GAAP") and filed
in the Annual Report on Form 10-K with the Securities and Exchange Commission on
March 30, 2004. The OXO Income Statement is unaudited and gives effect to
certain pro forma adjustments as described in Schedule 2.4(a). The OXO Income
Statement does not purport to be indicative of the results of operations which
would actually have occurred if the Business operated on a stand-alone basis or
which may be obtained in the future.
(b) Presented in Schedule 2.4(b) is an income
statement for the Business for the quarterly period ending March 28, 2004 (the
"OXO Interim Income Statement"), which has been derived from the unaudited,
consolidated statement of operations of WKI Holding Company, Inc. as of March
28, 2004 prepared in accordance with GAAP. The OXO Interim Income Statement is
unaudited and gives effect to certain pro forma adjustments as described in
Schedule 2.4(b). The OXO Interim Income Statement does not purport to be
indicative of the results of operations which would actually have occurred if
the Business operated on a stand-alone basis or which may be obtained in the
future.
(c) Presented in Schedule 2.4(c) are the audited
consolidated balance sheet of WKI Holding Company, Inc. and its consolidated
subsidiaries as of December 31, 2003 and the audited consolidated statements of
operation and cash flow of WKI Holding Company, Inc. and its consolidated
subsidiaries for the twelve month period ended December 31, 2003 (collectively,
with the notes thereto, the "WKI Financial Statements") filed in the Annual
Report on Form 10-K with the Securities and Exchange Commission on March 30,
2004. The WKI Financial Statements present fairly, in all material respects, the
financial position, cash flows and results of operations of WKI Holding Company,
Inc. and its consolidated subsidiaries as of and for the period set forth
therein and have been prepared, in all material respects, in accordance with
GAAP applied on a basis consistent with past practice, except as otherwise noted
therein.
(d) Presented in Schedule 2.4(d) are the unaudited
consolidated balance sheet of WKI Holding Company, Inc. and its consolidated
17
subsidiaries as of March 28, 2004 and the unaudited consolidated statements of
operation and cash flow of WKI Holding Company, Inc. and its consolidated
subsidiaries for the quarterly period ended March 28, 2004 (the "WKI Interim
Financial Statements"). Except for any notes to the WKI Interim Financial
Statements, the WKI Interim Financial Statements present fairly, in all material
respects, the financial position, cash flows and results of operations of WKI
Holding Company, Inc. and its consolidated subsidiaries as of and for the period
set forth therein and has been prepared, in all material respects, in accordance
with GAAP applied on a basis consistent with past practice, except as otherwise
noted therein, and subject to normal, recurring year-end adjustments.
Section 2.5 No Undisclosed Liabilities. The liabilities and
obligations set forth on Schedule 2.5 are the accrued liabilities, as of March
28, 2004, that would be reflected or reserved against in a balance sheet of the
Business prepared in accordance with GAAP, consistently applied, as of such
date. Except for liabilities (a) incurred in the ordinary course of business
after March 28, 2004; (b) disclosed, reflected or reserved for on Schedule 2.5
or disclosed in any other section of the Disclosure Schedule; (c) incurred as a
result of or in connection with the transactions contemplated hereby or (d) that
represent executory obligations under any Contract, as of the date hereof, the
Assumed Liabilities do not, and as of the Closing Date will not, include, any
liabilities or obligations that would be required to be reflected or reserved
against in a balance sheet of the Business prepared in accordance with GAAP.
Section 2.6 Absence of Certain Changes. Except as (a)
disclosed or reflected on Schedule 2.6 or (b) contemplated by the transactions
pursuant to this Agreement, from March 28, 2004 to the date hereof, (i) there
has been no Business Material Adverse Effect and (ii) Seller has not, with
respect to the Business, except with respect to any of the Excluded Assets or
Excluded Liabilities, taken any action, which, if taken after the date hereof,
would violate the provisions of Section 4.1.
Section 2.7 Litigation. Except as disclosed or reflected on
Schedule 2.7, as of the date hereof, there is no action, suit, hearing or
proceeding pending or, to the knowledge of Seller, threatened, or, to the
knowledge of Seller, no investigation pending, to which Seller is a party and
relating to the Business, by or
18
before any Governmental Entity that would have a Business Material Adverse
Effect.
Section 2.8 No Default; Compliance with Applicable Laws;
Permits.
(a) Seller is not, with respect to the Business, in
default or violation of any term, condition or provision of any applicable Law
or Permit (as defined below), except for defaults or violations that would not
have a Business Material Adverse Effect.
(b) Except as would not have a Business Material
Adverse Effect, Seller currently holds, with respect to the Business, all
permits, licenses, authorizations, certificates, exemptions and approvals of
Governmental Entities (collectively, "Permits") necessary for the current use,
occupancy and operation of its assets and the conduct of its business, and all
such Permits are in full force and effect. Except as would not have a Business
Material Adverse Effect, as of the date hereof, Seller has not received, with
respect to the Business, any written notice from any Governmental Entity
revoking, modifying or refusing to renew any Permit or providing notice of
violations under any Permit.
Section 2.9 Taxes. Except as disclosed on Schedule 2.9:
(a) Seller, with respect to the Business, (i) has
timely filed, or there have been timely filed on its behalf, all Tax Returns
required to be filed by it and all such Tax Returns were true, correct and
complete in all material respects when filed and (ii) has timely paid or accrued
(in accordance with GAAP) all Taxes shown to be due on such Tax Returns other
than such Taxes as are being contested in good faith and listed on Schedule 2.9.
(b) There are no pending federal, state, local or
foreign audits or examinations of any Tax Return of Seller, with respect to the
Business and Seller has not received any written notice of such an audit or
examination and no deficiencies for any Taxes have been proposed, threatened or
assessed in writing against Seller with respect to the Business.
19
(c) There are no liens for Taxes upon the Purchased
Assets, except for (i) liens for Taxes not yet due and payable and (ii) liens
for Taxes that are being contested in good faith and listed on Schedule 2.9.
(d) Seller has timely paid all Taxes payable by it
which arise from or with respect to the Purchased Assets or the Business and are
incurred in or attributable to the taxable period (or portion thereof) ending on
or before the close of business on the Closing Date which will have been
required to have been paid on or prior to the Closing Date, the non-payment of
which could result in the imposition of a lien on any Purchased Asset, could
otherwise adversely affect the Purchased Assets or the Business or could result
in Purchaser becoming liable or responsible therefor.
(e) No written claim has been received by Seller from
any Taxing Authority in a jurisdiction where Seller does not file tax returns
that it is subject to taxation in such jurisdiction with respect to the
Business.
(f) "Tax" or "Taxes" shall mean any and all taxes,
fees, levies or other assessments, including, without limitation, federal,
state, local, or foreign income, gross receipts, excise, real or personal
property, sales, withholding, social security, occupation, use, service, value
added, license, net worth, payroll, franchise or similar taxes, imposed by any
Taxing Authority together with any interest, penalties or additions to tax and
additional amounts imposed with respect thereto. "Taxing Authority" shall mean
any governmental entity responsible for the imposition or collection of any
Taxes. "Tax Return" shall mean any report, return, document, declaration or
other information or filing required to be supplied to any Taxing Authority or
jurisdiction (foreign or domestic) with respect to Taxes.
(g) The representations and warranties set forth in
this Section 2.9 shall constitute Seller's only representations with respect to
Taxes.
Section 2.10 ERISA.
(a) Each "employee benefit plan" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended, ("ERISA"), and each agreement, plan, program, fund, policy, contract or
arrangement (whether written or unwritten) providing compensation, benefits,
pension, retirement, profit sharing, stock bonus, stock option, stock purchase,
phantom or stock equivalent, bonus, incentive, deferred compensation,
hospitalization, medical, dental, vision, vacation, life insurance, death
benefit, sick
20
pay, disability, termination indemnity or severance, educational assistance,
holiday pay, housing assistance, moving expense reimbursement, fringe benefit or
similar employee benefits covering any employee or former employee of the
Business, or the beneficiaries and dependents of any employee or former employee
of the Business (individually, a "Plan" and collectively, the "Plans"), has been
listed on Schedule 2.10.
(b) Seller has made available to Purchaser copies of
each of the Plans or summaries thereof, including all amendments thereto to
date. Except as required by applicable law or as disclosed on Schedule 2.10,
since December 31, 2003, there have been no amendments or other changes in such
Plans which would increase coverage or benefits thereunder in any material
respect. Neither Seller nor any person that is treated as a single employer with
Seller under Section 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended (the "Code") (an "ERISA Affiliate") (i) is, or has,
participated in any multiemployer plan within the meaning of Section 4001(a)(3)
of ERISA (a "Multiemployer Plan") or (ii) has incurred any liability to a
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan.
(c) There does not now exist, nor do any
circumstances exist that would reasonably be expected to result in, any
liability under (i) Title IV of ERISA, (ii) Section 302 of ERISA or (iii)
Sections 412 and 4971 of the Code that would be a liability of the Business or
Purchaser following the Closing. Further, Seller and the ERISA Affiliates have
complied with the provisions of ERISA Section 601 et seq. and Code Section 4980B
("COBRA"), the provisions of Section 701 et seq. of ERISA and Subtitle K of the
Code, Sections 1171 through 1179 of the Social Security Act (relating generally
to privacy, security and electronic transfer of health information) and the
Health Insurance Portability and Accountability Act of 1996, except where such
non-compliance would not give rise to a Business Material Adverse Effect.
(d) No work stoppage or labor strike against the
Business or Seller, with respect to the Business, is pending, threatened or
reasonably anticipated. There is no collective bargaining agreement or union
contract which Seller or the Business is presently a party to, or bound by (or
which is currently being negotiated) with respect to employees who exclusively
work for the Business.
(e) The representations and warranties set forth in
this Section 2.10 shall constitute Seller's only representations with respect to
the Plans and employee benefits matters.
21
Section 2.11 Intellectual Property.
(a) Except as set forth on Schedule 1.1(a)(vii) and
Schedule 2.13, Seller owns and possesses all right, title and interest in, free
and clear of all Encumbrances, or has a license or other right to use, all of
the Transferred Intellectual Property. Schedule 1(a)(vii) sets forth a list of
(i) all patented and registered Transferred Intellectual Property; (ii) all
pending patent applications and applications for the registration of other
Transferred Intellectual Property; (iii) all material trade and corporate names
owned or used, in each case, exclusively, by the Business and included in the
Transferred Intellectual Property; and (iv) all computer software (other than
mass-marketed software subject to "click-through" or "shrinkwrap" licenses or
having a license fee of less than $50,000) owned or used, in each case,
exclusively, by the Business and included in the Transferred Intellectual
Property. Except as set forth on Schedule 1.1(a)(vii) and Schedule 2.13, there
is not pending, or to Seller's knowledge, threatened against Seller and
affecting the Business any claim by any third party contesting the validity,
enforceability, use or ownership of any Transferred Intellectual Property.
Except as set forth on Schedule 1.1(a)(vii) and Schedule 2.13, Seller has not
received any written notice, within the two (2) years prior to the date hereof,
from any third party of any infringement or misappropriation by any third party
with respect to any of the Transferred Intellectual Property. Except as set
forth on Schedule 1.1(a)(vii) and Schedule 2.13, with respect to the Business,
and to Seller's knowledge, Seller has not materially infringed or
misappropriated any intellectual property rights of any third party, and no
third party is infringing or misappropriating any material Transferred
Intellectual Property. Except as set forth on Schedule 1.1(a)(vii) and Schedule
2.13, with respect to the Business, and to Seller's knowledge, Seller has not
infringed, upon, misappropriated, or violated any material intellectual property
rights of third parties in any material respect, and, within the two (2) years
prior to the date hereof, Seller has not received any written charge, complaint,
claim, demand, or notice alleging any such infringement, misappropriation or
violation (including any written claim that any of Seller must license or
refrain from using any intellectual property rights of any third party). Except
as set forth on Schedule 1.1(a)(vii), to the knowledge of Seller, no third party
has interfered with, infringed upon, misappropriated or violated any of the
Transferred Intellectual Property in any material respect.
(b) To the knowledge of Seller, all patents set forth
in Schedule 1.1(a)(vii) have been duly filed or registered (as applicable) with
the applicable Governmental Entity, and maintained, including the submission of
all
22
necessary filings and fees in accordance with the legal and administrative
requirements of the appropriate Governmental Entity and have not lapsed, expired
or been abandoned.
(c) Except as set forth on Schedule 1.1(a)(vii) and
Schedule 2.13, to the knowledge of Seller, (i) there are no inventorship
challenges to any of the patents set forth in Schedule 1.1(a)(vii), (ii) no
interference has been declared or provoked relating to any such patents and
(iii) all maintenance and annual fees have been fully paid, and all fees paid
during prosecution and after issuance of any such patent have been paid in the
correct entity status amounts, with respect to such patents that have issued.
(d) Seller has taken commercially reasonable and
customary measures and precautions necessary to protect and maintain the
confidentiality of all trade secrets.
(e) All current and former consultants and
independent contractors who are material to the Business who are or were
involved in the creation of or development of any Transferred Intellectual
Property have entered into commercially reasonable agreements relating to the
confidentiality of such matters and that assign the consultant's or independent
contractor's inventions developed for the Business to Seller.
Section 2.12 Contracts. Each of the Contracts is in full force
and effect, except where the failure to be in full force and effect would not
have a Business Material Adverse Effect, and there are no existing defaults by
Seller thereunder, which default would result in a Business Material Adverse
Effect. Except as set forth on Schedule 2.12 or to the extent it would not
result in a Business Material Adverse Effect, the execution of this Agreement
and the consummation of the transactions contemplated hereby will not result in
a violation, or breach of, or constitute (with or without due notice or lapse of
time) a default under any of the terms, conditions or provisions of any
Contract.
Section 2.13 Title to Assets. Seller has good and valid title
to or, in the case of leased properties and assets, valid leasehold interests in
all of its properties and assets (tangible and intangible) included in the
Purchased Assets, in each case free and clear of all Encumbrances, except for
(a) the items listed on Schedule 2.13; (b) zoning laws and other land use
restrictions that do not materially
23
impair the present use or occupancy of the property subject thereto; (c) any
Encumbrances for Taxes, assessments and other governmental charges not yet due
and payable; (d) any mechanics', workmen's, repairmen's, warehousemen's,
carriers' or other similar Encumbrances arising in the ordinary course of
business, consistent with past practice or being contested in good faith; and
(e) any Encumbrances that, individually or in the aggregate, are less than
$50,000 ((a) through (e) collectively, the "Permitted Encumbrances").
Section 2.14 Legal Compliance. With respect to the operations
of the Business, Seller has complied with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof), and no action, suit, proceeding, hearing, investigation
charge, complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply, except where the failure to
comply would not have a Business Material Adverse Effect.
Section 2.15 Real Property.
(a) Seller owns no real property that is used
exclusively in connection with the Business.
(b) The real property leased under the Real Property
Lease is the only real property that is leased by Seller and such leased
premises are used exclusively by the Business. With respect to the Real Property
Lease:
(i) the lease is valid, binding, in full
force and effect in all material respects and enforceable in accordance
with its terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in
effect, affecting creditors' rights generally;
(ii) to Seller's knowledge, (i) no party to
the Real Property Lease is in material breach or default thereunder and
(ii) no event has occurred which, with notice or lapse of time, would
constitute a material breach or default thereunder; and
24
(iii) Seller has not assigned, transferred,
conveyed or mortgaged any of its interest in the Real Property Lease.
Section 2.16 Affiliate Transactions. Except as disclosed in
Schedule 2.16 and 2.18, (a) neither Seller nor any of its subsidiaries
(excluding the Business) provides or causes to be provided any material assets,
goods, services or facilities used or held for use in connection with the
Business, and (b) the Business does not provide or cause to be provided any
material assets, goods, services or facilities to Seller or any of its
subsidiaries (excluding the Business).
Section 2.17 Inventory. The value of the Inventory as of March
28, 2004, computed in accordance with GAAP, consistently applied, was
$17,555,000.
Section 2.18 Sufficiency of Assets. Other than the assets,
properties and services identified on Schedule 2.18, the Purchased Assets
include all of the assets and properties that are presently used by Seller in
the conduct of the Business, subject to obtaining the required consents listed
on Schedule 2.12.
Section 2.19 Brokers or Finders. No agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement, except Dresdner
Kleinwort ▇▇▇▇▇▇▇▇▇▇▇, whose fees and expenses will be paid by Seller in
accordance with the agreement with such firm.
Section 2.20 No Other Representations or Warranties. EXCEPT AS
SPECIFICALLY AND EXPRESSLY SET FORTH IN THIS ARTICLE II, (A) SELLER MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, RELATING TO
THE PURCHASED ASSETS, THE ASSUMED LIABILITIES OR THE BUSINESS, INCLUDING,
WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY AS TO VALUE, MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE OR
25
FOR ORDINARY PURPOSES, OR ANY OTHER MATTER, (B) SELLER MAKES NO, AND HEREBY
DISCLAIMS ANY, OTHER REPRESENTATION OR WARRANTY REGARDING THE PURCHASED ASSETS,
THE ASSUMED LIABILITIES OR THE BUSINESS AND (C) THE PURCHASED ASSETS, THE
ASSUMED LIABILITIES AND THE BUSINESS BEING TRANSFERRED TO PURCHASER ARE CONVEYED
ON AN "AS IS, WHERE IS" BASIS AS OF THE CLOSING, AND PURCHASER SHALL RELY UPON
ITS OWN EXAMINATION THEREOF.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
Section 3.1 Organization. Each of Purchaser and Guarantor is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to be so existing and in
good standing or to have such power and authority would not reasonably be
expected to hinder, impair or delay Purchaser's ability to consummate the
transactions or Guarantor's obligations contemplated by this Agreement. Each of
Purchaser and Guarantor is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not reasonably be expected to
hinder, impair or delay Purchaser's ability to consummate the transactions or
Guarantor's obligations contemplated by this Agreement.
Section 3.2 Authorization; Validity of Agreement. Each of
Purchaser and Guarantor has full corporate power and authority to execute and
deliver this Agreement and, to the extent applicable, the Ancillary Agreements
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance by each of Purchaser and Guarantor of this
Agreement and, to the extent applicable, the Ancillary Agreements, and the
consummation of the transactions contemplated hereby and thereby, have been duly
authorized and no
26
other corporate proceedings on the part of Purchaser and Guarantor are necessary
to authorize the execution and delivery by Purchaser and Guarantor of this
Agreement or, to the extent applicable, the Ancillary Agreements and the
consummation by it of the transactions contemplated hereby and thereby. This
Agreement has been, and upon execution thereof, to the extent applicable, each
Ancillary Agreement will be, duly executed and delivered by each of Purchaser
and Guarantor and (assuming due and valid authorization, execution and delivery
hereof and thereof by Seller), to the extent applicable, is a valid and binding
obligation of each of Purchaser and Guarantor enforceable against it in
accordance with its terms, except that (a) such enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws, now or hereafter in effect, affecting creditors' rights generally and (b)
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
Section 3.3 Consents and Approvals; No Violations. Except for
filings pursuant to the HSR Act, neither the execution, delivery or performance
of this Agreement or, to the extent applicable, the Ancillary Agreements by
Purchaser and Guarantor nor the consummation by Purchaser and Guarantor of the
transactions contemplated hereby or thereby will (a) violate any provision of
the articles of incorporation or by-laws of Purchaser or Guarantor; (b) result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Purchaser or Guarantor is a party or by
which it or any of its properties or assets may be bound; (c) violate any Law
applicable to Purchaser or Guarantor or any of their properties or assets or (d)
require on the part of Purchaser or Guarantor any filing or registration with,
notification to, or authorization, consent or approval of, any Governmental
Entity; except in the case of clauses (b), (c) or (d) for such violations,
breaches or defaults that, or filings, registrations, notifications,
authorizations, consents or approvals, the failure of which to obtain would not
reasonably be expected to hinder, impair or delay Purchaser's ability to
consummate the transactions or Guarantor's obligations contemplated by this
Agreement.
Section 3.4 Sufficient Funds; Solvency. Purchaser has
available to it funds, which together with the amount of the financing
contemplated by the
27
commitment letter of Bank of America, N.A,. and Banc of America Securities LLC,
dated the date hereof, a copy of which has been provided to Seller (together
with the related fee letter, the "Commitment Letter") are sufficient (assuming
such financing arrangements are funded in full) to enable Purchaser to
consummate the transactions contemplated hereby. Prior to the execution of this
Agreement, Purchaser has delivered to Seller a true and complete copy of the
Commitment Letter which has been fully executed by the parties and which is in
full force and effect as of the date hereof. Upon the consummation of the
transactions contemplated hereby, (i) Purchaser will not be insolvent as defined
in Section 101 of Title 11 of the United States Code, (ii) Purchaser will not be
left with unreasonably small capital, (iii) Purchaser will not have incurred
debts beyond its ability to pay such debts as they mature and (iv) the capital
of Purchaser will not be impaired. The Purchase Price is a reasonably equivalent
value in exchange for the Purchased Assets.
Section 3.5 Brokers or Finders. No agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finders' fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement, except Banc of
America Securities LLC, whose fees and expenses will be paid by Purchaser in
accordance with the agreement with such firm.
Section 3.6 Investigation by Purchaser. In entering into this
Agreement, Purchaser:
(a) acknowledges that, except as otherwise expressly
provided herein, neither Seller nor any of its directors, officers, employees,
affiliates, agents, advisors or representatives make or shall be deemed to have
made any representation or warranty, either express or implied, as to the
accuracy or completeness of any of the information (including, without
limitation, any estimates, projections, forecasts or other forward-looking
information) provided or made available to Purchaser or its agents or
representatives (including, without limitation, in any management presentations,
information, offering or descriptive memorandum, supplemental information or
other materials or information with respect to any of the above);
(b) agrees, to the fullest extent permitted by Law,
that neither Seller nor any of its directors, officers, employees, shareholders,
affiliates,
28
agents, advisors or representatives shall have any liability or responsibility
whatsoever to Purchaser on any basis (including, without limitation, in contract
or tort, under federal or state securities laws or otherwise) based upon any
information provided or made available, or statements made, to Purchaser, except
that the foregoing limitations shall not apply to Seller to the extent Seller
makes the specific representations and warranties set forth in Article II of
this Agreement, but always subject to the limitations and restrictions contained
herein; and
(c) acknowledges that it has had the opportunity to
visit Seller and meet with its officers and other representatives to discuss the
Business and the assets, liabilities, financial condition, cash flow and
operations of the Business; and that all materials and information provided to
Purchaser to date have been provided to Purchaser's reasonable satisfaction.
ARTICLE IV
COVENANTS
Section 4.1 Interim Operations. Seller covenants and agrees
that, except (i) as contemplated by this Agreement; (ii) as required by Law;
(iii) as disclosed in the Disclosure Schedule; or (iv) with the prior written
consent of Purchaser, such consent not to be unreasonably withheld, after the
date hereof and prior to the Closing Date:
(a) Seller shall use reasonable efforts consistent
with Seller's past practices to preserve the Business intact in all material
respects and generally conduct the Business in the ordinary course of the
Business consistent with past practice;
(b) Seller shall not sell, lease or dispose of any
assets or properties included in the Purchased Assets (other than Inventory in
the ordinary course of business consistent with past practices);
(c) Seller shall not, with respect to the Business,
do any act or omit to do any act whereby any Transferred Intellectual Property
may lapse, become abandoned, dedicated to the public, or unenforceable, or enter
into any material commitment, transaction, contract or agreement concerning the
Transferred Intellectual Property;
29
(d) Seller shall not grant any bonus, salary
increase, severance or termination pay to, or otherwise increase the
compensation or benefits of, any employees of the Business, except obligations
pursuant to any existing Plans;
(e) Seller shall not, with respect to the Business,
change in any material respect any of the accounting principles, methods or
practices used by it (except as required by GAAP);
(f) Seller shall not, with respect to the Business,
modify, amend or terminate, or waive, release or assign any material rights or
claims with respect to, any Contract;
(g) Seller shall not permit any of the Purchased
Assets to become subjected to any Encumbrance other than the Permitted
Encumbrances;
(h) Seller shall not, with respect to the Business,
enter into any lease or sublease of real property (whether as a lessor,
sublessor, lessee or sublessee) other than the Real Property Lease or modify,
amend, terminate or fail to exercise any right to renew the Real Property Lease;
(i) Seller shall not, with respect to the Business,
commit to make as of a date subsequent to the Closing any capital expenditure
which individually is in excess of $100,000, except capital expenditures
reasonably required in the event of exigent circumstances or which are funded by
insurance or other third parties;
(j) Except for the persons listed on Schedule 4.1(j),
with respect to the Business, Seller shall not hire any new employee with an
annual base salary in excess of $75,000, promote any employee except in order to
fill a position vacated after the date of this Agreement, or engage any
consultant or independent contractor pursuant to a binding commitment that is
non-terminable without the payment of fees in excess of a minimum of $75,000;
(k) Seller shall not, with respect to the Business,
adopt, enter into, or amend any Plan, except (i) as required pursuant to
contractual arrangements in effect as of the date hereof or as required or
permitted under this Agreement, (ii) as required by applicable law or (iii) as
may apply to any employee other than employees or former employees of the
Business;
30
(l) Seller shall not, with respect to the Business,
change in any material respect any of its co-op advertising policies, product
return policies, product maintenance policies, service policies, product
modification or upgrade policies, or personnel policies;
(m) Seller shall not, with respect to the Business,
authorize or enter into an agreement to do any of the foregoing.
Notwithstanding the provisions of this Section 4.1, nothing in
this Agreement shall prevent Seller from engaging in any activity with respect
to any of its businesses other than the Business.
Section 4.2 Access to Information; Books and Records.
(a) Seller shall afford Purchaser's officers,
employees, accountants and counsel reasonable access during normal business
hours throughout the period prior to the Closing Date or the date of termination
of this Agreement, to the properties, contracts, commitments, books and records
related exclusively to the Business (other than tax and accounting records) and
to use its reasonable efforts to cause its representatives to furnish promptly
to Purchaser such additional financial and operating data and other information
exclusively related to the Business and the Purchased Assets as Purchaser or its
duly authorized representatives may from time to time reasonably request;
provided, however, that nothing herein shall require Seller to disclose any
information to Purchaser if such disclosure (i) would cause significant
competitive harm to Seller or its affiliates if the transactions contemplated by
this Agreement are not consummated, (ii) would contravene any Law, fiduciary
duty or agreement entered into prior to the date of this Agreement or the
provisions of any confidentiality agreement to which Seller is or becomes a
party, or (iii) jeopardize any attorney-client or other similar privilege. All
requests for such access shall be made to such representatives of Seller as
Seller shall designate in writing to Purchaser. It is further understood and
agreed that neither Purchaser nor its representatives shall contact any of the
employees, customers or suppliers of the Business in connection with the
transactions contemplated hereby without the prior authorization of Seller;
provided, however, that with respect to a request by Purchaser to Seller
regarding contacting employees of the Business, such authorization shall not be
unreasonably withheld.
(b) Purchaser will hold any such information in
accordance with the provisions of the Confidentiality Agreement between WKI
Holding
31
Company, Inc. and Purchaser, dated as of February 5, 2004 (the "Confidentiality
Agreement"), without regard to the time limit set forth in paragraph (11)
thereof; provided, Seller acknowledges that Purchaser shall be permitted to file
a copy of the Agreement with the Securities and Exchange Commission.
(c) Both parties agree that they shall preserve and
keep all the Business books and records (together with the other books and
records of the Business, the "Books and Records") in their possession for a
period of at least five years from the Closing Date. Both parties agree that
they will, to the extent permitted by Law and existing agreements, cooperate
with and make available to the other party, during normal business hours, all
Books and Records, information and employees (without substantial disruption of
employment) after the Closing Date which are necessary or useful in connection
with the preparation of any financial statements and the audit or review by
Purchaser's or Seller's independent auditors, any Tax inquiry, audit,
investigation or dispute or any claim, litigation or investigation (including
any claim or litigation between Purchaser and Seller) or any other matter
requiring any such Books and Records, information or employees for any
reasonable business purpose. The party reviewing such Books and Records shall
bear all of the out-of-pocket costs and expenses (excluding reimbursement for
salaries and employee benefits) reasonably incurred in connection with providing
such Books and Records, information or employees. Seller may require certain
financial information relating to the Business for periods prior to the Closing
Date for the purpose of filing federal, state, local and foreign Tax Returns and
other governmental reports, and Purchaser agrees to furnish such information to
Seller at Seller's request and expense. Purchaser and Seller shall cooperate
with each other in the conduct of any audit or other proceeding relating to
Taxes involving the Business or the Purchased Assets for any taxable period (or
portion thereof) prior to the Closing Date.
Section 4.3 Publicity. Prior to the Closing, neither Purchaser
nor Seller nor any of their respective affiliates, representatives or financial
advisors shall issue or cause the publication of any press release with respect
to the transactions contemplated hereby or this Agreement without the prior
agreement of the other party, except as may be required by Law. The initial
press releases with respect to the execution of this Agreement shall be
reasonably acceptable to Purchaser and Seller.
32
Section 4.4 Approvals and Consents; Cooperation; Notification.
(a) The parties hereto shall use their respective
commercially reasonable efforts, and cooperate with each other, to obtain as
promptly as practicable all governmental and third party authorizations,
approvals, consents or waivers required in order to consummate the transactions
contemplated by this Agreement. Each party further agrees to use its reasonable
best efforts to ensure that the conditions set forth in Article V are satisfied
insofar as such matters are within the control of such party.
(b) Seller and Purchaser shall take all actions
necessary to file as soon as practicable, but in no event more than ten (10)
days after the signing of this Agreement, all notifications, filings and other
documents required to obtain all governmental authorizations, approvals,
consents or waivers, including, without limitation, with the Federal Trade
Commission, the Antitrust Division of the Department of Justice and any other
Governmental Entity and under the HSR Act and to respond as promptly as
practicable to all inquiries and requests received from any State Attorney
General or other Governmental Entity in connection therewith. Notwithstanding
anything to the contrary contained in this Agreement, Purchaser shall not have
any obligation under this Agreement: (i) to dispose, transfer or hold separate,
or cause any of its affiliates to dispose, transfer or hold separate any
material assets or material operations, or to commit to dispose of any material
Purchased Assets; (ii) to discontinue or cause any of its affiliates to
discontinue offering any material product or material service, or to commit to
cause the Business to discontinue offering any material product or material
service; or (iii) to make any commitment (to any Governmental authority or
otherwise) to limit in any material respect, or place any material conditions
on, the ownership or operation by Purchaser or any of its affiliates of any
portion of the Business or any product of the Business.
(c) Seller shall give prompt notice to Purchaser of
the occurrence of any Business Material Adverse Effect, and Purchaser shall give
prompt notice to Seller of any circumstances that would reasonably be expected
to hinder, impair or delay Purchaser's ability to consummate the transactions
contemplated by this Agreement. Each of Seller and Purchaser shall give prompt
notice to the other of the occurrence or failure to occur of an event that
would, or, with the lapse of time would, cause any condition to the consummation
of the transactions contemplated hereby not to be satisfied.
33
Section 4.5 Further Assurances. Each of the parties hereto
agrees to use its commercially reasonable efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws to consummate and make effective the
transactions contemplated by this Agreement; provided, however, that with
respect to Intellectual Property transferred and owned by Seller, Seller's
obligation shall be limited to execution of an assignment or assignments
relating thereto, and, for the avoidance of doubt, shall not include the
transfer of any registrations. All remittances, mail and other communications
relating to the Excluded Assets or Excluded Liabilities received by Purchaser or
the officers and directors of Purchaser, at any time after the Closing Date
shall be immediately turned over to Seller. All remittances, mail and other
communications relating to the Purchased Assets or Assumed Liabilities received
by Seller or the officers and directors of Seller, at any time after the Closing
Date shall be immediately turned over to Purchaser.
Section 4.6 Supplements to the Disclosure Schedule. From time
to time prior to the Closing, Seller will promptly supplement or amend the
sections of the Disclosure Schedule with respect to any matter, condition or
occurrence hereafter arising which, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described therein. Except
with respect to a supplement or amendment objected to in writing by Purchaser
within five (5) business days thereof in its sole and absolute discretion, such
supplement or amendment shall be deemed to qualify or amend any representation
or warranty or cure any breach of any representation or warranty made in this
Agreement.
Section 4.7 Insurance Coverage. Effective as of the Closing,
the Purchased Assets shall cease to be insured by Seller's insurance policies,
and Purchaser and its affiliates shall have no rights or obligations with
respect to any such policies.
Section 4.8 Seller's Names. Notwithstanding any other
provision of this Agreement to the contrary, no interest in or right to use the
name "World Kitchen" or "World Kitchen (GHC), LLC", "General Housewares Corp.",
or any other corporate name of Seller or its affiliates (other than those listed
on Schedule 4.8), or any logo, trademark, service ▇▇▇▇, domain name or trade
name or any derivation thereof of Seller or its affiliates with respect to, or
associated with, the
34
foregoing or any not included in the Transferred Intellectual Property
(collectively, the "Retained Names and Marks") is being transferred to Purchaser
pursuant to the transactions contemplated hereby, and, except as expressly
provided below, the use of any Retained Names and Marks in connection with the
Business shall cease as of the Closing Date. Purchaser will, and will cause its
affiliates to as promptly as reasonably practicable following the Closing Date,
but in any event within twelve (12) months thereafter, remove or obliterate all
the Retained Names and Marks from its labels and packaging. For a period of
twelve (12) months after the Closing Date, Purchaser may use any labels or
packaging existing on the Closing Date that bear any Retained Name or ▇▇▇▇ or
any name, ▇▇▇▇ or logo similar thereto, including, labels on any inventory or
packaging on hand as of the Closing Date or ordered within a reasonable period
following the Closing Date. Purchaser will, and will cause its affiliates to as
promptly as reasonably practicable following the Closing Date, but in any event
within 60 days thereafter, remove or obliterate all the Retained Names and Marks
from its signs, purchase orders, invoices, sales orders, letterheads, shipping
documents and other items and materials of the Business and otherwise.
Notwithstanding the foregoing, for a period of sixty (60) days after the Closing
Date, Purchaser may use any purchase orders, invoices, sales orders, letterheads
or shipping documents existing on the Closing Date that bear any Retained Name
or ▇▇▇▇ or any name, ▇▇▇▇ or logo similar thereto; provided, however, that such
items shall be stickered or otherwise marked to clearly indicate that none of
Seller or any of its affiliates are party to such documents. Notwithstanding the
foregoing, Purchaser agrees that Seller shall have no responsibility for claims
by third parties arising out of, or relating to, the use by Purchaser or any
affiliate thereof of any Retained Name or ▇▇▇▇ after the Closing Date, and
Purchaser agrees to indemnify and hold harmless Seller from any and all Losses
(as defined herein) that may arise out of the use thereof by Purchaser or any
affiliate thereof. For the avoidance of doubt, any use of the Retained Names and
Marks in connection with the Transitional Services Agreement shall not be deemed
to be a violation of this provision.
Section 4.9 [Intentionally Omitted].
Section 4.10 Employees.
(a) No later than five (5) days prior to the Closing
Date, Purchaser shall offer employment, in writing, to each of the employees of
the
35
Business listed on Schedule 4.10 (the "Affected Employees") on substantially
similar terms and conditions as the terms and conditions of similarly situated
employees of Purchaser. Affected Employees who accept the foregoing offer of
employment with Purchaser and are employed by Purchaser immediately after the
Closing shall be referred to as "Transferred Employees". Notwithstanding
anything in this Agreement to the contrary, Purchaser shall be responsible for
payment of any severance costs or payments arising in connection with the
termination of employment of any Affected or Transferred Employee who does not
accept Purchaser's offer of employment or is terminated by Seller on the Closing
Date or by Purchaser on or after the Closing Date pursuant to the Seller's
severance plan described on Schedule 4.10.
(b) Effective as of the Closing Date, Purchaser shall
provide the Transferred Employees with employee benefits which are substantially
similar to those provided to similarly situated employees of Purchaser. Such
benefits shall be provided either under new or existing employee benefit plans
and arrangements established by Purchaser or any Affiliate of Purchaser for the
Transferred Employees (individually, a "Purchaser's Plan and collectively, the
"Purchaser's Plans"). Each Transferred Employee shall be given service credit
under the Purchaser's Plans for all service prior to the Closing Date with
Seller or its subsidiaries for purposes of: (i) determining eligibility and
vesting but not for purposes of benefit accrual under the Purchaser's Plans that
are intended to meet the requirements of Code Section 401(a); (ii) satisfying
any waiting periods under the Purchaser's Plans that provide health care
benefits, group term life insurance or disability insurance; (iii) determining
severance pay benefits and, subject to Section 4.10(g) below with respect to
calendar year 2004, available vacation days under the respective Purchaser's
Plan that provides such benefits.
(c) Purchaser will provide each Transferred Employee
with credit for any co-payments and deductibles paid under the Seller's Plans
that contain health care benefits for purposes of satisfying any applicable
deductible or out-of-pocket requirements under the Purchaser's Plans that
contain health care benefits for the Purchaser's Plan year that includes the
Closing Date; provided, such co-payments and deductibles were paid during the
Seller's Plan year that includes the Closing Date and were paid prior to the
Closing Date.
(d) Immediately prior to the Closing, Seller shall
cause the account balances and accrued benefits of the Transferred Employees in
each Plan that is intended to meet the requirements of Code Section 401(a) to be
fully vested.
36
(e) Purchaser shall only be responsible for providing
the notices and making available the health care continuation coverage required
by COBRA for Transferred Employees and their respective covered dependents,
whose qualifying events (as defined in Code Section 4980B) occur on or after the
Closing Date.
(f) As soon as practicable after the Closing, Seller
will provide Purchaser with such employee information and census data as is
reasonably necessary for Purchaser to comply with its obligations under this
Agreement and the Purchaser's Plans.
(g) For calendar year 2004, Purchaser shall credit
each Transferred Employee with a number of vacation days equal to the number of
vacation days such Transferred Employee had earned under the vacation pay policy
of Seller for calendar year 2004 which remain unused and unpaid as of the
Closing Date. The vacation days so credited may be used by Transferred Employees
during calendar year 2004 under Purchaser's general vacation policies, subject
to applicable law. From and after December 31, 2004, Transferred Employees will
be granted vacation days in accordance with Purchaser's general vacation policy
applicable to similarly situated employees of Purchaser.
Section 4.11 Release of Liens. Concurrently with the Closing,
Seller shall at its sole cost and expense use its reasonable best efforts to
obtain a full and unconditional release of any Encumbrances on the Purchased
Assets under Seller's current credit agreements and facilities identified on
Schedule 2.13 from the lenders and trustees under such credit agreements. Seller
shall use its reasonable best efforts to obtain and file prior to or
concurrently with Closing UCC-3 financing statements or similar filings in
non-US jurisdictions and provide such other documents, and take such further
action, as may be reasonably required in order to release the Encumbrances
created under such credit agreement.
Section 4.12 Financing.
(a) Seller shall, and shall cause its officers and
directors to, reasonably cooperate in connection with Purchaser obtaining the
financing necessary to consummate the transactions contemplated hereby (the
"Financing"), including by (i) providing direct contact between prospective
lenders and certain of the officers and directors of Seller, (ii) providing
reasonable assistance in preparation of confidential information, memoranda and
other materials to be used in connection with obtaining the Financing and (iii)
providing assistance in the preparation for, and
37
participating in, meetings, due diligence sessions, and similar presentations to
and with, among others, prospective lenders.
(b) Purchaser shall use its reasonable best efforts
to obtain, as promptly as possible and on or before June 1, 2004, and have
available at the Closing, the Financing, on the terms set out in the Commitment
Letter (including any adjustments contemplated by the fee letter with respect
thereto) or on terms no less favorable to Purchaser than those set forth in the
Commitment Letter, or substantially equivalent financing, so as to have
available at the Closing all funds necessary to consummate the transactions
contemplated by this Agreement. Subject to the terms and conditions of this
Agreement, Purchaser covenants that it will use the Financing and its own funds
as contemplated by the Commitment Letter to consummate the transactions
contemplated by this Agreement. Purchaser will not, and will cause its
affiliates not to, waive or amend any of its or its affiliates' material rights
under the Commitment Letter if such waiver or amendment would adversely impact
or delay in any material respect the satisfaction of the condition set forth in
Section 5.2.
(c) Purchaser will from time to time provide such
information as Seller may reasonably request regarding the status of the
Financing and related negotiations.
Section 4.13 Non-Competition; No Solicitation.
(a) For a period of two (2) years after the Closing
Date, Seller will not, and will not permit any of its direct or indirect
subsidiaries to, engage, directly or indirectly, in the manufacture and sale of
products which are substantially comparable as to design, quality, function and
anticipated retail selling price (which in no event shall be deemed to be less
than the current normal retail selling price of such products) to those products
bearing the OXO GoodGrips trademark presently sold or marketed by the Business
(the "Restricted Activities") in any geographic area in which the Business
presently sells OXO GoodGrips products, as of the date hereof (the "Restricted
Territory"). Notwithstanding anything in this Section 4.13 to the contrary, none
of the following shall be deemed Restricted Activities or shall otherwise
violate the provisions of this Section 4.13:
(i) ownership of securities having no more
than five percent (5%) of the outstanding voting power of any company
listed on any national securities exchange or traded actively in the
national over-the-counter market;
38
(ii) ownership and/or operation of any
business, less than 25% of the revenues of which are comprised of
business activities that could constitute Restricted Activities and the
aggregate revenues from the Restricted Activities do not exceed
$5,000,000 in any 12 month period; provided that Seller or its
affiliates may make an acquisition of any business, the revenues of
which are comprised of 25% or more of business activities which are
competitive with the Restricted Activities (a "Relevant Acquisition"),
so long as within six(6) months of the consummation of such Relevant
Acquisition, Seller or its affiliates have disposed of (or ceased
operating) the entity or portion thereof whose business constituted the
Restricted Activities; or
(iii) the sale of any products by Seller's
retail stores which are in the inventory of such stores or in transit
thereto as of the Closing Date or which are sold to Seller by Purchaser
(or its affiliates) or any transferee of the Business from and after
the Closing Date.
Notwithstanding anything in this Agreement to the contrary, this Section 4.13(a)
shall not be binding on any person or entity who acquires all or a substantial
part of the assets or capital stock of the Seller by means of a merger, purchase
of assets, purchase of stock or otherwise in respect of the businesses owned by
such Person and its affiliates as of the date of such acquisition.
(b) For a period of two (2) years after the Closing
Date, Seller will not, and will not permit any of its affiliates to, employ,
hire or retain as a consultant or independent contractor any of the Transferred
Employees; provided that (x) this Section 4.13(b) shall not apply to any
employee if such employee's employment has been terminated for a period of at
least twelve (12) months, and (y) non-directed newspaper or internet help wanted
advertisements shall not be considered solicitations under this Section 4.13(b).
(c) For a period of two (2) years after the Closing
Date, the Purchaser will not, and will not permit any of its affiliates to,
employ, hire or retain as a consultant or independent contractor any employee of
Seller; provided that (x) this Section 4.13(b) shall not apply to any employee
if such employee's employment has been terminated for a period of at least
twelve (12) months, and (y) non-directed
39
newspaper or internet help wanted advertisements shall not be considered
solicitations under this Section 4.13(b).
(d) If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 4.13 is invalid
or unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
Section 4.14 Financial Statements.
(a) Seller shall commence, promptly following the
execution of this Agreement, and Seller will use its reasonable efforts to
provide to Purchaser within sixty (60) days after the Closing Date, financial
statements of the Business and related documents that meet the requirements of
Item 7(a) of Securities and Exchange Commission Form 8-K, as may be limited as
set forth below, including the following documents:
(i) Financial statements of the Business for
the periods specified in Rule 3-05(b) of Regulation S-X promulgated by
the Securities and Exchange Commission, which shall be prepared
pursuant to Regulation S-X, except that supporting schedules need not
be prepared (the "Business Financial Statements");
(ii) a manually signed accountants' report
from Deloitte & Touche LLP meeting the requirements of Section 2-02 of
Regulation S-X; and
(iii) a manually signed consent of Deloitte
& Touche LLP to the inclusion of all financial statements pursuant to
Section 4.14(a)(i) and Deloitte & Touche LLP's report thereon referred
to in Section 4.14(a)(ii).
Purchaser shall use its reasonable efforts to take any actions Seller may
reasonably request to reduce the scope and content of the Business Financial
40
Statements and other information required to be provided by Purchaser to the
Securities and Exchange Commission in connection with the transactions
contemplated by this Agreement.
(b) Seller shall cooperate with, and provide all
information and documents reasonably requested by, Purchaser regarding the
Business in order to assist Purchaser in the preparation of the pro forma
financial information required by Item 7(b) of Securities and Exchange
Commission Form 8-K.
(c) Purchaser agrees to reimburse Seller for all
third party fees, costs and expenses incurred in connection with this Section
4.14, including, but not limited to, the fees and expenses of Deloitte & Touche
LLP.
Section 4.15 Transitional Services. Seller agrees to provide
transitional services pursuant to the form of Transitional Services Agreement in
the form attached as Exhibit A. Purchaser and Seller shall negotiate in good
faith prior to the Closing Annex A to the Transitional Services Agreement which
services shall be, except as set forth on Exhibit A, consistent with the nature
and type of services provided by Seller for the Business prior to the date
hereof, including, but not limited to, the services described on Schedule 4.15.
ARTICLE V
CONDITIONS
Section 5.1 Conditions to Each Party's Obligation to Effect
the Closing. The obligations of Seller, on the one hand, and Purchaser, on the
other hand, to consummate the Closing are subject to the satisfaction (or, if
permissible, waiver by the party for whose benefit such conditions exist) of the
following conditions:
(a) no Governmental Entity shall have issued any
order, decree or ruling, and there shall not be any statute, rule or regulation,
restraining, enjoining or prohibiting the consummation of the material
transactions contemplated by this Agreement; and
41
(b) any waiting period applicable to the transactions
contemplated hereby under the HSR Act shall have expired or been terminated.
Section 5.2 Conditions to the Obligations of Purchaser. The
obligations of Purchaser to consummate the transactions contemplated hereby are
subject to the satisfaction (or waiver by Purchaser) of the following further
conditions:
(a) the representations and warranties of Seller
shall be true and accurate as of the Closing Date as if made at and as of such
time (other than those representations and warranties that address matters only
as of a particular date or only with respect to a specific period of time, which
need only be true and accurate as of such date or with respect to such period),
except where the failure of such representations and warranties to be so true
and accurate would not have a Business Material Adverse Effect (it being
understood that, for purposes of determining the accuracy of representations and
warranties, (i) for purpose of this Section 5.2(a) all "Business Material
Adverse Effect" qualifications and other materiality qualifications contained in
such representations and warranties shall be disregarded and (ii) any update of
or modification to the Disclosure Schedule made or purported to have been made
after the date of this Agreement and which is objected to by Purchaser pursuant
to Section 4.6 shall be disregarded);
(b) Seller shall have performed in all material
respects its obligations hereunder required to be performed by it at or prior to
the Closing Date;
(c) Purchaser shall have received a certificate
signed by an officer of each Seller, dated as of the Closing Date, to the effect
that the conditions set forth in Section 5.2(a) and Section 5.2(b) have been
satisfied;
(d) Purchaser shall have received the proceeds of the
financing arrangements contemplated by the Commitment Letter (taking into
account any adjustments contemplated by the fee letter with respect thereto) or
other financing on terms and conditions no less favorable in any material
respect to Purchaser than those contained in the Commitment Letter (taking into
account any adjustments contained in the fee letter with respect thereto);
(e) Seller shall have executed and delivered the ▇▇▇▇
of Sale;
42
(f) Seller shall have executed and delivered the
Transitional Services Agreement;
(g) Seller shall have executed and delivered the Real
Property Lease Assignment and Assumption Agreement;
(h) Seller shall have executed and delivered the
Supply Agreement; and
(i) Seller shall have executed and delivered a
certificate of non-foreign status for each of WKI Holding Company, Inc. and
World Kitchen, Inc.
Section 5.3 Conditions to the Obligations of Seller. The
obligations of Seller to consummate the transactions contemplated hereby are
subject to the satisfaction (or waiver by Seller) of the following further
conditions:
(a) the representations and warranties of Purchaser
shall be true and accurate as of the Closing Date as if made at and as of such
time (other than those representations and warranties that address matters only
as of a particular date or only with respect to a specific period of time, which
need only be true and accurate as of such date or with respect to such period),
except where the failure of such representations and warranties to be so true
and accurate would not hinder, impair or delay Purchaser's ability to consummate
the transactions contemplated by this Agreement;
(b) Purchaser shall have performed in all material
respects all of the obligations hereunder required to be performed by Purchaser
at or prior to the Closing Date;
(c) Seller shall have received a certificate signed
by an officer of Purchaser, dated as of the Closing Date, to the effect that the
conditions set forth in Section 5.3(a) and Section 5.3(b) have been satisfied;
(d) Purchaser shall have executed and delivered the
Supply Agreement;
(e) Purchaser shall have executed and delivered the
Assumption Agreement; and
43
(f) The amendments to the Credit Agreement, dated as
of January 31, 2003, among WKI Holding Company, Inc., the Lenders party thereto
and JPMorgan Chase Bank, as Administrative Agent and Collateral Agent and the
Revolving Credit Agreement, dated as of January 31, 2003, among WKI Holding
Company, Inc., the Lenders party thereto and JPMorgan Chase Bank, as
Administrative Agent and Collateral Agent, providing for the release of the
Purchased Assets and certain related matters shall be effective.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnification.
(a) Indemnification by Seller. Subject to the limits
set forth in this Section 6.1, Seller agrees to indemnify, defend and hold
Purchaser, its officers, directors and affiliates, harmless from and in respect
of any and all losses, damages, costs and reasonable expenses, including
reasonable expenses of investigation and reasonable fees and disbursements of
counsel, but excluding special damages, consequential damages, lost profits or
punitive or similar damages (collectively, "Losses"), that they may incur
arising out of or due to (i) any inaccuracy in any representation or the breach
of any warranty, covenant, undertaking or other agreement of Seller contained in
this Agreement; provided, however, that Seller shall have no liability as a
result of the breach of or inaccuracy in any representation or warranty to the
extent that Purchaser had actual knowledge that such representation or warranty
was untrue or incorrect prior to the Closing Date, or (ii) the Excluded
Liabilities.
(b) Indemnification by Purchaser. Subject to the
limits set forth in this Section 6.1, Purchaser agrees to indemnify, defend and
hold Seller, its officers, directors and affiliates, harmless from and in
respect of any and all Losses that they may incur arising out of or due to (i)
any inaccuracy of any representation or the breach of any warranty, covenant,
undertaking or other agreement of Purchaser contained in this Agreement;
provided, however, that Purchaser shall have no liability as a result of the
breach of or inaccuracy in any representation or warranty to the extent that
Seller had actual knowledge that such representation or warranty was untrue or
incorrect prior to the Closing Date, (ii) the Assumed
44
Liabilities or (iii) the ownership or operation of the Purchased Assets or the
Business after the Closing Date.
(c) Representations and Warranties; Limits on
Indemnification. The several representations and warranties of the parties
contained in this Agreement or in any instrument delivered pursuant hereto will
survive the Closing Date and will remain in full force and effect thereafter for
a period of one year from the Closing Date; provided that the representations
and warranties set forth in Section 2.13 shall survive indefinitely, and the
representations and warranties set forth in Section 2.9 and Section 2.10 shall
survive for the applicable statute of limitations. Anything to the contrary
contained herein notwithstanding, (i) (A) none of Purchaser or its officers,
directors or affiliates shall be entitled to recover from Seller for breaches of
or inaccuracies in representations or warranties unless and until the total of
all such persons' Losses with respect to such inaccuracies or breaches exceeds
$2,000,000 and then only for the amount by which the total of all such Losses
exceeds $2,000,000 and (B) none of Purchaser or its officers, directors, agents
or affiliates shall be entitled to recover from Seller for breaches of or
inaccuracies in representations or warranties, and Seller shall have no
liability to such persons for any such inaccuracies or breaches for, more than
$34,000,000 provided the limitations in Section 6.1(c)(i) shall not apply to the
indemnification for Losses in respect of matters described in Section 6.1(a)(ii)
or the representation and warranty contained in Section 2.13 and (ii) (A) none
of Seller or its officers, directors or affiliates shall be entitled to recover
from Purchaser for breaches of or inaccuracies in representations or warranties
unless and until the total of all such persons' Losses with respect to such
inaccuracies or breaches exceeds $2,000,000 and then only for the amount by
which the total of all such Losses exceeds $2,000,000 and (B) none of Seller or
its officers, directors, agents or affiliates shall be entitled to recover from
Purchaser for breaches of or inaccuracies in representations or warranties, and
Purchaser shall have no liability to such persons for such inaccuracies or
breaches for, more than $34,000,000 except with respect to the representation
made in Section 3.4, for which there shall be no such limitation on the
indemnification provided hereunder.
(d) Notice and Opportunity to Defend. If there occurs
an event that a party (an "Indemnified Party") asserts is an indemnifiable event
pursuant to Section 6.1(a) or 6.1(b), the Indemnified Party shall notify the
other party obligated to provide indemnification (an "Indemnifying Party")
within 45 days of such occurrence, with such written notice to (i) state the
amount of the Loss, if known, and the method of computation thereof, and (ii)
contain a reference to the
45
specific section or sections of this Agreement in respect of which such right to
indemnification is asserted; provided, however, that if such event involves any
claim or the commencement of any action or proceeding by a third person, the
Indemnified Party will give such Indemnifying Party written notice of such claim
or the commencement of such action or proceeding within 30 days of receiving
notice of such claim or the commencement of such action or proceeding. Such
notice shall be a condition precedent to any liability of the Indemnifying Party
hereunder; provided, however, that the failure to provide notice as provided
herein will relieve the Indemnifying Party of its obligations hereunder only to
the extent that such failure prejudices the Indemnifying Party hereunder. In
case any such action shall be brought against any Indemnified Party and it shall
notify the Indemnifying Party of the commencement thereof, the Indemnifying
Party shall be entitled to participate therein and, to the extent that it shall
wish, to assume the defense thereof, with counsel reasonably satisfactory to the
Indemnified Party and, after notice from the Indemnifying Party to the
Indemnified Party of such election so to assume the defense thereof, the
Indemnifying Party shall not be liable to the Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred by such
party in connection with the defense thereof. The Indemnified Party agrees to
cooperate fully with the Indemnifying Party and its counsel in the defense
against any such asserted liability. The Indemnified Party shall have the right
to participate at its own expense in the defense of such asserted liability. No
Indemnifying Party shall consent to the entry of any judgment or enter into any
settlement without the consent of the Indemnified Party if such judgment or
settlement does not include as an unconditional term thereof the giving by each
claimant or plaintiff to each Indemnified Party of a release from all liability
in respect to such claim.
(e) Adjustment for Insurance and Taxes. The amount
that an Indemnifying Party is required to pay to, for or on behalf of any
Indemnified Party pursuant to this Section 6.1 shall be adjusted (including,
without limitation, retroactively) (i) by any insurance proceeds, or indemnity,
contribution or similar payment, payable to any Indemnified Party in reduction
of the related indemnifiable loss (the "Indemnifiable Loss") and (ii) to take
account of any tax benefit available as a result of any Indemnifiable Loss.
Amounts required to be paid, as so reduced, are hereinafter sometimes called an
"Indemnity Payment." If an Indemnified Party shall have received or shall have
had paid on its behalf an Indemnity Payment in respect of an Indemnifiable Loss
and shall subsequently become eligible for insurance proceeds, or indemnity,
contribution or similar payment, in respect of such Indemnifiable Loss, or
become eligible for any tax benefit as a result of such Indemnifiable Loss, then
the
46
Indemnified Party shall pay to the Indemnifying Party the amount of such
insurance proceeds or tax benefit or, if lesser, the amount of the Indemnity
Payment.
(f) No Right of Set-Off. Neither Purchaser nor Seller
shall have any right to set-off any payment due under this Agreement against any
other payments to be made pursuant this Agreement or otherwise (including
against indemnification payments).
(g) Mitigation. Each Indemnified Party shall consult
and cooperate with the Indemnifying Party and shall take all other actions as
may be reasonably required or necessary to mitigate, to the extent practicable,
Losses in connection with claims for which an Indemnified Party seeks
indemnification under this Section 6.1.
(h) Subrogation. After any Indemnity Payment is made
to any Indemnified Party pursuant to this Section 6.1, the Indemnifying Party
shall, to the extent of such Indemnity Payment, be subrogated to all rights (if
any) of the Indemnified Party against any third party in connection with the
Losses to which such Indemnity Payment relates. Without limiting the generality
of the preceding sentence, any Indemnified Party receiving an Indemnity Payment
pursuant to Section 6.1 shall execute, upon the written request of the
Indemnifying Party, any instrument reasonably necessary to evidence such
subrogation rights.
Section 6.2 Adjustment to Purchase Price. Seller and Purchaser
agree that any Indemnity Payment hereunder shall be treated as an adjustment to
the Purchase Price.
Section 6.3 Exclusive Remedies. Purchaser and Seller
acknowledge and agree that (i) following the Closing, the indemnification
provisions of this Article VI shall be the sole and exclusive remedies of
Purchaser and Seller for any breach of or inaccuracy in any representation or
warranty or any breach, nonfulfillment or default in the performance of any of
the covenants or agreements contained in this Agreement or any Losses arising
out of, or relating to, or arising from the transactions contemplated by this
Agreement (provided, however, that such indemnification shall not be the sole
and exclusive remedy, and shall in no way limit the rights of the parties, with
respect to the Supply Agreement or the Transitional Services Agreement), and
(ii) anything herein to the contrary notwithstanding, no breach of any
representation, warranty, covenant, undertaking or other agreement
47
arising out of or related to this Agreement shall give rise to any right on the
part of Purchaser or Seller, after the consummation of the transactions
contemplated by this Agreement, to rescind this Agreement or any of the
transactions contemplated hereby or to any further indemnification rights or
claims of any nature whatsoever in respect thereof (whether by contract, common
law, statute, law, regulation or otherwise), all of which the parties hereby
waive; provided, however, that nothing herein is intended to waive any claims
for intentional fraud.
ARTICLE VII
TERMINATION
Section 7.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated herein may be abandoned at any time prior to the Closing Date:
(a) by the mutual consent of Seller and Purchaser;
(b) by either Seller or Purchaser:
(i) if the Closing shall not have occurred
on or prior to October 29, 2004; provided, however, that the right to
terminate this Agreement under this Section 7.1(b)(i) shall not be
available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of
the Closing to occur on or prior to such date; or
(ii) if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action in each
case permanently restraining, enjoining or otherwise prohibiting the
material transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and
non-appealable.
(c) by Purchaser, by giving written notice to Seller
in the event Seller is in breach of any representation or warranty contained in
this Agreement, and such breach, individually or in combination with any other
such breach, (i) would cause the conditions set forth in clause (a) of Section
5.2 not to be
48
satisfied (assuming, for purposes of such determination that the date of any
such breach is the Closing Date) and (ii) is not cured within thirty (30) days
following delivery by Purchaser to Seller of written notice of such breach
(except in the case of a breach that is not curable or efforts to cure such
breach have ceased); or
(d) by Seller, by giving written notice to Purchaser
in the event Purchaser is in breach of any representation or warranty contained
in this Agreement, and such breach, individually or in combination with any
other such breach, (i) would cause the conditions set forth in clause (a) of
Section 5.3 not to be satisfied (assuming, for purposes of such determination
that the date of any such breach is the Closing Date) and (ii) is not cured
within thirty (30) days following delivery by Seller to Purchaser of written
notice of such breach (except in the case of a breach that is not curable or
efforts to cure such breach have ceased).
Section 7.2 Procedure and Effect of Termination. In the event
of the termination and abandonment of this Agreement by Seller or Purchaser
pursuant to Section 7.1 hereof, written notice thereof shall forthwith be given
to the other party. If the transactions contemplated by this Agreement are
terminated as provided herein:
(a) each party will redeliver all documents, work
papers and other material of any other party relating to the transactions
contemplated hereby, whether so obtained before or after the execution hereof,
to the party furnishing the same;
(b) all information received by any party hereto with
respect to the business of any other party or its subsidiaries or affiliates
shall be treated in accordance with the provisions of the Confidentiality
Agreement, which shall survive the termination of this Agreement; and
(c) no party to this Agreement will have any
liability under this Agreement to the other except (i) as stated in
subparagraphs (a) and (b) of this Section 7.2; (ii) for any breach of any
provision of this Agreement and (iii) as provided in the Confidentiality
Agreement.
49
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendment and Modification. This Agreement may be
amended, modified and supplemented in any and all respects by written agreement
of the parties hereto at any time with respect to any of the terms contained
herein.
Section 8.2 Transfer Taxes. Purchaser and Seller shall each be
responsible for the payment of one-half of all sales (including, without
limitation, bulk sales), use, value added, documentary, stamp, gross receipts,
registration, transfer, conveyance, excise, recording, license and other similar
taxes and fees ("Transfer Taxes"), arising out of or in connection with or
attributable to the sale, conveyance, assignments, transfers and deliveries to
be made to Purchaser as contemplated by this Agreement. Purchaser shall prepare
and in a timely manner file all Tax Returns in respect of Transfer Taxes;
provided, however, that Purchaser shall submit any such Tax Returns to Seller
for Seller's approval (which approval shall not be unreasonably withheld or
delayed) no later than 14 days prior to the date such Tax Returns are due.
Seller and Purchaser shall cooperate with each other to the extent reasonably
requested and legally permitted to minimize any Transfer Taxes required to be
paid in connection with the transactions contemplated by this Agreement,
including, without limitation, timely signing and delivering such certificates
or forms as may be necessary or appropriate to establish an exemption from (or
otherwise reduce) any such Transfer Taxes.
Section 8.3 Notices. All notices, consents and other
communications hereunder shall be in writing and shall be deemed to have been
duly given (a) when delivered by hand or by Federal Express or a similar
overnight courier to; (b) when successfully transmitted by telecopier (with a
confirming copy of such communication to be sent as provided in clause (a)
above) to, the party for whom intended, at the address or telecopier number for
such party set forth below (or at such other address or telecopier number for a
party as shall be specified by like notice; provided, however, that any notice
of change of address or telecopier number shall be effective only upon receipt):
(a) if to Purchaser or Guarantor, to:
▇▇▇▇▇ of ▇▇▇▇ Limited
▇/▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇.▇.
▇▇
▇▇▇ ▇▇▇▇▇ of ▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(b) if to Seller, to:
World Kitchen (GHC), LLC
WKI Holding Company, Inc.
World Kitchen, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Section 8.4 Interpretation. The words "hereof," "herein" and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless
51
otherwise specified. Whenever the words "include," "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation." The words describing the singular number shall include the plural
and vice versa, and words denoting any gender shall include all genders and
words denoting natural persons shall include corporations and partnerships and
vice versa. The phrase "to the knowledge of Seller" or any similar phrase shall
mean such facts and other information which as of the date of determination are
actually known to the Chief Executive Officer, the Chief Financial Officer,
General Counsel and Deputy General Counsel of Seller after having made due
inquiry of the senior executives of the Business and, in respect of matters
described in Section 2.11, outside legal counsel responsible for legal matters
relating to the Transferred Intellectual Property. The phrase "made available"
in this Agreement shall mean that the information referred to has been made
available if requested by the party to whom such information is to be made
available. As used in this Agreement, the term "affiliate(s)" shall have the
meaning set forth in Rule l2b-2 of the Securities Exchange Act of 1934, as
amended. As used in this Agreement, the term "business day" means a day, other
than a Saturday or a Sunday, on which banking institutions in the City of New
York are required to be open. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
Section 8.5 Counterparts. This Agreement may be executed in
multiple counterparts, all of which shall together be considered one and the
same agreement.
Section 8.6 Entire Agreement; Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to herein), the
Confidentiality Agreement, the Supply Agreement[, the Transitional Services
Agreement] and the Disclosure Schedule (a) constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, and (b) except as
provided herein, are not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
52
Section 8.7 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 8.8 Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of
Delaware applicable to
contracts to be made and performed entirely therein without giving effect to the
principles of conflicts of law thereof or of any other jurisdiction.
Section 8.9 Jurisdiction. Each of the parties hereto hereby
expressly and irrevocably consents and submits to the exclusive personal
jurisdiction of the Courts of the State of
Delaware, consents to service of
process in the State of
Delaware and further agrees that venue shall be proper
in Wilmington,
Delaware; provided, however, that each party hereto expressly
preserves all of his, her, or its rights of action in or removal to the United
States District Court for the District of
Delaware (collectively, federal and
state, trial and appellate, law and chancery, the "
Delaware Courts") under 28
U.S.C. Section 1441 or any other applicable statute, in connection with any and
all disputes arising out of, or in any way related to this Agreement or the
transactions contemplated hereby. Each of the parties hereto further agrees not
to commence any litigation relating to this Agreement except in the
Delaware
Courts, and hereby irrevocably waives his, her, or its right to seek recourse to
the courts or arbitral forums of any other jurisdiction or venue for any
litigation, arbitration, or dispute resolution process arising out of, related
to, or in connection with this Agreement or the transactions contemplated hereby
to which any party or their privies is or may be entitled by reason of his, her,
or its present or future domicile. Notwithstanding the foregoing, each of the
parties hereto agrees that in aid of a judgment entered by a Delaware Court in
connection with this Agreement, a prevailing party or his, her, or its privies
shall have the right to bring in any other court of competent jurisdiction any
action or proceeding necessary or advisable to enforce that judgment. Each of
the parties hereto further agrees that this forum selection provision was
separately bargained for, and is a material term of this Agreement.
53
Section 8.10 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties; provided, Purchaser can assign any of its
rights or obligations under this Agreement at any time to any affiliate of ▇▇▇▇▇
of ▇▇▇▇ Limited, a Bermuda corporation, which assignment shall not relieve
Purchaser or Guarantor of any of their obligations under this Agreement and
provided further that any such assignment does not hinder, impair or delay
Purchaser's ability to consummate the transactions contemplated by this
Agreement. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective permitted successors and assigns.
Section 8.11 Expenses. Except as otherwise provided herein,
all costs and expenses incurred in connection with the transactions contemplated
hereby, this Agreement and the consummation of the transactions contemplated
hereby shall be paid by the party incurring such costs and expenses, whether or
not the transactions contemplated hereby are consummated.
Section 8.12 Headings. Headings of the Articles and Sections
of this Agreement, the Disclosure Schedule and the Table of Contents are for
convenience of the parties only, and shall be given no substantive or
interpretative effect whatsoever.
Section 8.13 Waivers. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party or parties
entitled to the benefits thereof only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
Section 8.14 Schedules. The Disclosure Schedule shall be
construed with and as an integral part of this Agreement to the same extent as
if the same had been set forth verbatim herein. Any matter disclosed pursuant to
the Disclosure Schedule shall be deemed to be disclosed for all purposes under
this
54
Agreement but such disclosure shall not be deemed to be an admission or
representation as to the materiality of the item so disclosed.
Section 8.15 Representations and Warranties Joint and Several.
All of the representations, warranties, covenants and obligations of World
Kitchen (GHC), LLC, WKI Holding Company, Inc. and World Kitchen, Inc. shall be
joint and several.
Section 8.16 Guarantee. Guarantor irrevocably guarantees each
and every representation, warranty, covenant, agreement and obligation of
Purchaser and the full and timely performance of its obligations under the
provisions of this Agreement. This is a guarantee of payment and performance,
and not of collection, and Guarantor acknowledges and agrees that this guarantee
is full and unconditional, and no release or extinguishments of Purchaser's
obligations or liabilities (other than in accordance with the terms of this
Agreement), whether by decree in any bankruptcy proceeding or otherwise, shall
affect the continuing validity and enforceability of this guarantee. Purchaser
hereby waives, for the benefit of Seller, (i) any right to require any Seller or
Company as a condition of payment or performance of Guarantor to proceed against
Purchaser or pursue any other remedies whatsoever and (ii) to the fullest extent
permitted by law, any defenses or benefits that may be derived from or afforded
by law that limit the liability of or exonerate guarantors or sureties, except
to the extent that any such defense is available to Purchaser. Guarantor
understands that Seller is relying on this guarantee in entering into this
Agreement.
Section 8.17 Bulk Sales Act. Each party hereto waives
compliance with any bulk sales, bulk transfer or similar laws of any applicable
jurisdiction in respect of the transactions contemplated by this Agreement.
Seller agrees to indemnify Purchaser for any Taxes for which Purchaser becomes
liable as a result of any failure to comply with any such bulk sales, bulk
transfer or similar laws.
55
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers as of the date first written above.
WORLD KITCHEN (GHC), LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
WKI HOLDING COMPANY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
WORLD KITCHEN, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇ OF ▇▇▇▇ LIMITED (Barbados)
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
▇▇▇▇▇ OF ▇▇▇▇ LIMITED (Bermuda)
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
EXHIBIT A
TRANSITIONAL SERVICES AGREEMENT (this "Agreement") dated as of
[*], 2004, between WKI HOLDING COMPANY, INC., a Delaware corporation, and World
Kitchen, Inc., a Delaware corporation (together, "Seller"), and ▇▇▇▇▇ OF ▇▇▇▇
L.P, a Texas limited partnership ("Purchaser") and ▇▇▇▇▇ of ▇▇▇▇ Limited
(Bermuda) (the "Guarantor").
WHEREAS, pursuant to an
Acquisition Agreement dated as of [-],
2004 (the "
Acquisition Agreement"), among WKI Holding Company, Inc., World
Kitchen (GHC), LLC, World Kitchen, Inc., and ▇▇▇▇▇ of ▇▇▇▇ L.P., Seller has
agreed to sell, transfer, assign and deliver to Purchaser, and Purchaser has
agreed to purchase, acquire and accept from Seller, all of Seller's right, title
and interest in, to and under the Purchased Assets, in each case as provided in
the
Acquisition Agreement;
WHEREAS, Guarantor has guaranteed the obligations of Purchaser
under the Purchase Agreement; and
WHEREAS, Purchaser desires to purchase from Seller, and Seller
is willing to provide to Purchaser, transitional services on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt of which the parties hereby
acknowledge, Seller and Purchaser agree as follows:
SECTION 1. Definitions. Terms that are not otherwise defined
in this Agreement shall have the meanings ascribed to them in the
Acquisition
Agreement.
SECTION 2. Transitional Services. (a) During the term of this
Agreement as set forth in Section 6, Seller shall provide to Purchaser the
services set forth on Annex A hereto (the "Services"), in the manner, to the
extent and at a level of service generally consistent with that provided by
Seller or its affiliates to the Business in the applicable jurisdiction
immediately preceding the date of this Agreement, and Purchaser shall use the
Services for substantially the same purposes and in substantially the same
manner as the Business had used the Services prior to the date of this
Agreement. Seller shall be required to provide the Services only to Purchaser in
connection with the conduct of the Business. Purchaser shall not resell any of
the Services to any person whatsoever or permit the use of the Services by any
person other than in connection with the conduct of the Business in the ordinary
course consistent with past practice.
(a) Purchaser acknowledges that Seller may be providing
similar services, and/or services that involve the same resources as those used
to provide the Services, to its internal organizations, affiliates and to third
parties. Seller reserves the right to modify the Services in connection with
changes to its internal organization in the
2
ordinary course of business; provided, however, that no such modifications
materially diminish the Services.
(c) In addition, Seller shall not be obligated to pay any
amounts to Purchaser, the Business or any of their respective employees in
respect of payroll, benefits or similar obligations.
SECTION 3. [Intentionally Omitted]
SECTION 4. Payment. (a) For the Services rendered under this
Agreement, Purchaser will pay Seller, in accordance with this Section 4, the
fees (the "Fees") set forth in Annex B hereto.
(b) No later than the tenth day after each month end closing
date, Purchaser shall send Seller a reconciliation showing Sales for such prior
month and all fees due and payable to Seller (the "Reconciliation Statement").
Any amounts set forth on the Reconciliation Statement as owed shall be paid by
the Purchaser at delivery of such Reconciliation Statement (the date such
payments are due, a "Payment Date"). All payments required to be paid under this
Section shall be paid by wire transfer in immediately available funds to one or
more accounts designated in writing by Seller. Any Fees not paid within five
days of a Payment Date shall be subject to late charges for each day such Fees
are overdue, calculated at a rate of 12% per annum from the Payment Date to the
date of payment.
[Change Order/Dispute Mechanism to be resolved]
SECTION 5. Taxes. Any taxes assessed on the provision of the
Services hereunder shall be paid by Purchaser.
SECTION 6. Term of Agreement. The term of this Agreement shall
commence on the Closing Date and shall continue for a period ending on the date
that is March 31 after the Closing Date provided, however, that Purchaser may
terminate any Service prior to the expiration of the time period for such
Service set forth in Annex A, pursuant to Section 7(a). Notwithstanding the
above, Purchaser may extend the term of this Agreement with respect to the
provision of Services outside the United States for an additional 90 days;
provided, however, that Purchaser advises Seller in writing of such extension at
least 30 days prior to the expiration of the term, and; provided further that
Purchaser will to the extent reasonably practicable make a good faith effort to
cease using such Services prior to the end of the 90 day extension period.
SECTION 7. Partial Termination; Termination. (a) Services
provided by Seller under this Agreement are terminable by Purchaser on 30
calendar days' prior written notice to Seller except with respect to warehouse
services which are terminable on not less than 120 calendar days prior written
notice. Purchaser may terminate less than all of the Services provided hereunder
with Seller's prior consent which will not be unreasonably withheld Once
Purchaser has terminated any of the Services, Purchaser
3
shall not be permitted to request such Services be resumed pursuant hereto.
(b) This Agreement may be terminated prior to the expiration
of its stated term, upon written notice as set forth below:
(i) by Seller, if Purchaser fails to pay any amount
when due hereunder and such failure continues for a period of ten (10)
days following written notice thereof;
(ii) by Seller, on the one hand, or Purchaser, on the
other hand, if the other party commits a material breach of any
provision of this Agreement and such breach continues for a period of
thirty days following a written request to cure such breach; or
(iii) by Seller, on the one hand, or Purchaser, on
the other hand, if the other party files, or has filed against it, a
petition for voluntary or involuntary bankruptcy or pursuant to any
other insolvency law or makes or seeks to make a general assignment for
the benefit of its creditors or applies for or consents to the
appointment of a trustee, receiver or custodian for it or a substantial
part of its property.
SECTION 8. Consequential and Other Damages. (a) Seller shall
not be liable, whether in contract, in tort (including negligence and strict
liability), or otherwise, for any special, indirect, incidental or consequential
damages whatsoever, which in any way arise out of, relate to, or are a
consequence of, its performance or nonperformance hereunder, or the provision of
or failure to provide any of the Services hereunder, including but not limited
to loss of profits, business interruptions and claims of customers or employees
of Purchaser.
(b) Notwithstanding anything to the contrary contained herein,
the liability of Seller with respect to this Agreement or anything done in
connection herewith, including but not limited to the performance or breach
hereof, or from the sale, delivery, provision or use of any of the Services
provided under or pursuant to this Agreement, whether in contract, in tort
(including negligence and strict liability) or otherwise, shall not exceed the
Fees previously paid to Seller by Purchaser in respect of the Service from which
such liability flows.
SECTION 9. Indemnification. (a) Purchaser hereby releases
Seller and each of its affiliates and each of their respective officers,
directors, employees, stockholders, agents and representatives (the "Seller
Indemnitees") and agrees to indemnify and hold harmless the Seller Indemnitees
from and against any and all claims, losses, damages, liabilities, deficiencies,
obligations or out-of-pocket costs or expenses, including without limitation
reasonable attorney's fees and expenses and costs and expenses of investigation
(collectively, "Losses"), arising out of or resulting from Seller's performance
of the Services hereunder or otherwise, except to the extent such Losses are due
to gross negligence or willful misconduct in performing the Services hereunder.
4
(a) If a Seller Indemnitee (the "Indemnified Party") receives
written notice of the commencement of any action or proceeding, the assertion of
any claim by a third party or the imposition of any penalty or assessment for
which indemnity may be sought under this Section 9 (a "Third Party Claim") and
the Indemnified Party intends to seek indemnity pursuant to this Section 9, the
Indemnified Party shall promptly provide Purchaser with written notice of such
Third Party Claim. Purchaser shall be entitled to participate in or, at its
option, assume the defense, appeal or settlement of such Third Party Claim. If
Purchaser assumes the defense, appeal or settlement of such Third Party Claim,
such defense, appeal or settlement shall be conducted through counsel selected
by Purchaser and the Indemnified Party shall fully cooperate with Purchaser in
connection therewith.
SECTION 10. Assignment. Neither this Agreement nor any of the
rights and obligations of the parties hereunder may be assigned by any of the
parties hereto without the prior written consent of the other party hereto,
except that (a) Purchaser may assign its rights under this Agreement to any of
Guarantor or any of its direct or indirect wholly owned subsidiaries without the
prior written consent of Seller and (b) Seller may without the prior written
consent of Purchaser assign any rights and obligations hereunder to any third
parties to the extent such third parties are capable of providing such Services
to affiliates and/or businesses of Seller (and Seller is utilizing such third
party for comparable services for its own business) or to any acquirer of all or
a substantial portion of the assets of either WKI Holding Company, Inc. or World
Kitchen, Inc.. Notwithstanding the foregoing, each of Seller and Purchaser shall
remain liable for all of their respective obligations under this Agreement.
Subject to the first sentence of this Section 10, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns and no other person shall have any right, obligation or
benefit hereunder. Any attempted assignment or transfer in violation of this
Section 10 shall be void.
SECTION 11. No Third Party Beneficiaries. Except as provided
in Section 9, this Agreement is for the sole benefit of the parties hereto and
their permitted assigns and nothing herein expressed or implied shall give or be
construed to give to any person, other than the parties hereto and such assigns,
any legal or equitable rights hereunder.
SECTION 12. Notices. All notices, requests, permissions,
waivers and other communications hereunder shall be in writing and shall be
deemed to have been duly given (a) five business days following sending by
registered or certified mail, postage prepaid, (b) when sent, if sent by
facsimile; provided that the facsimile transmission is promptly confirmed by
telephone, (c) when delivered, if delivered personally to the intended recipient
and (d) one business day following sending by overnight delivery via a national
courier service and, in each case, addressed to a party at the following address
for such party:
(i) if to Seller, to:
WKI Holding Company, Inc.
5
World Kitchen, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No. __________
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
(ii) if to Purchaser, to:
▇▇▇▇▇ of ▇▇▇▇ L.P.
▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chairman of the Board, CEO & President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
SECTION 13. Headings. The descriptive headings of the several
Sections of this Agreement and the Annex to this Agreement are inserted for
convenience only, do not constitute a part of this Agreement and shall not
affect in any way the meaning or interpretation of this Agreement. All
references herein to "Sections" shall be deemed to be references to Sections
hereof or the Annex hereto unless otherwise indicated.
SECTION 14. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each of the parties hereto and delivered, in person or by facsimile,
receipt acknowledged, to the other party hereto.
SECTION 15. Integrated Contract; Annex. This Agreement,
including the Annex hereto, any written amendments to the foregoing satisfying
the requirements
6
of Section 21, the
Acquisition Agreement, and the other agreements entered into
in connection therewith, including the schedules and exhibits thereto,
constitute the entire agreement among the parties with respect to the subject
matter hereof and thereof and supersede any previous agreements and
understandings between the parties with respect to such matters. The Annex is
hereby incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in the Annex but not otherwise defined
therein shall be defined as set forth in this Agreement or the
Acquisition
Agreement, as the case may be. There are no restrictions, promises,
representations, warranties, agreements or undertakings of any party hereto with
respect to the transactions contemplated by this Agreement, the
Acquisition
Agreement, and the other agreements entered into in connection therewith, other
than those set forth herein or therein or in any other document required to be
executed and delivered hereunder or thereunder. In the event of any conflict
between the provisions of this Agreement (including the Annex hereto), on the
one hand, and the provisions of the Acquisition Agreement (including the
schedules and exhibits thereto), on the other hand, the provisions of the
Acquisition Agreement shall control.
SECTION 16. Severability; Enforcement. The invalidity of any
portion hereof shall not affect the validity, force or effect of the remaining
portions hereof. If it is ever held that any restriction hereunder is too broad
to permit enforcement of such restriction to its fullest extent, each party
agrees that a court of competent jurisdiction may enforce such restriction to
the maximum extent permitted by law, and each party hereby consents and agrees
that such scope may be judicially modified accordingly in any proceeding brought
to enforce such restriction.
SECTION 17. Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of Delaware applicable to
contracts to be made and performed entirely therein without giving effect to the
principles of conflicts of law thereof or of any other jurisdiction.
SECTION 18. Jurisdiction. Each of the parties hereto hereby
expressly and irrevocably consents and submits to the exclusive personal
jurisdiction of the Courts of the State of Delaware, consents to service of
process in the State of Delaware and further agrees that venue shall be proper
in Wilmington, Delaware; provided, however, that each party hereto expressly
preserves all of his, her, or its rights of action in or removal to the United
States District Court for the District of Delaware (collectively, federal and
state, trial and appellate, law and chancery, the "Delaware Courts") under 28
U.S.C. Section 1441 or any other applicable statute, in connection with any and
all disputes arising out of, or in any way related to this Agreement or the
transactions contemplated hereby. Each of the parties hereto further agrees not
to commence any litigation relating to this Agreement except in the Delaware
Courts, and hereby irrevocably waives his, her, or its right to seek recourse to
the courts or arbitral forums of any other jurisdiction or venue for any
litigation, arbitration, or dispute resolution process arising out of, related
to, or in connection with this Agreement or the transactions contemplated hereby
to which any party or their privies is or may be entitled by reason of his, her,
or its present or future domicile. Notwithstanding the foregoing, each of the
parties hereto agrees that in aid of a judgment entered by a Delaware Court in
connection
7
with this Agreement, a prevailing party or his, her, or its privies shall have
the right to bring in any other court of competent jurisdiction any action or
proceeding necessary or advisable to enforce that judgment. Each of the parties
hereto further agrees that this forum selection provision was separately
bargained for, and is a material term of this Agreement.
SECTION 19. Waiver of Jury Trial. Each party hereby waives to
the fullest extent permitted by Applicable Law, any right it may have to a trial
by jury in respect of any litigation directly or indirectly arising out of,
under or in connection with this Agreement or the transactions contemplated
hereby or disputes relating hereto. Each party (a) certifies that no
representative, agent or attorney of any other party has represented, expressly
or otherwise, that such other party would not, in the event of litigation, seek
to enforce the foregoing waiver and (b) acknowledges that it and the other party
hereto have been induced to enter into this Agreement by, among other things,
the mutual waivers and certifications in this Section 19.
SECTION 20. Amendments. This Agreement may be amended,
modified, superseded or canceled and any of the terms, covenants or conditions
hereof may be waived only by an instrument in writing signed by each of the
parties hereto or, in the case of a waiver, by or on behalf of the party waiving
compliance.
SECTION 21. Independent Contractor. At all times during the
term of this Agreement, Seller shall be an independent contractor in providing
the Services hereunder with the sole right to supervise, manage, operate,
control and direct the performance of the Services and the sole obligation to
employ, compensate and manage its employees and business affairs. Nothing
contained in this Agreement shall be deemed or construed to create a partnership
or joint venture, to create the relationships of employee/employer or
principal/agent, or otherwise create any liability whatsoever of any party with
respect to the indebtedness, liabilities, obligations or actions of the other
party or any of its respective officers, directors, employees, stockholders,
agents or representatives, or any other person or entity.
SECTION 22. Survival. The provisions of Sections 4, 5, 7(c),
7(d), 8 & 9, as well as the related provisions of Sections 10 through 26 shall
survive the expiration or earlier termination of this Agreement for any reason
whatsoever.
SECTION 23. Force Majeure. Seller shall not be in default
hereunder by reason of any failure or delay in the performance of its
obligations hereunder where such failure or delay is due to any cause beyond its
reasonable control, including, but not limited to, strikes, labor disputes,
civil disturbances, riot, rebellion, invasion, epidemic, hostilities, war, acts
of terrorism, embargo, natural disaster, acts of God, flood, fire, sabotage,
accident, delay in transportation, loss and destruction of property,
intervention by governmental entities, change in laws, regulations or orders,
other events or any other circumstances or causes beyond Seller's reasonable
control.
SECTION 24. Guarantee. Guarantor irrevocably guarantees each
and every covenant, agreement and obligation of Purchaser and the full and
timely
8
performance of its obligations under the provisions of this Agreement. This is a
guarantee of payment and performance, and not of collection, and Guarantor
acknowledges and agrees that this guarantee is full and unconditional, and no
release or extinguishments of Purchaser's obligations or liabilities (other than
in accordance with the terms of this Agreement), whether by decree in any
bankruptcy proceeding or otherwise, shall affect the continuing validity and
enforceability of this guarantee. Purchaser hereby waives, for the benefit of
Seller, (i) any right to require any Seller or Company as a condition of payment
or performance of Guarantor to proceed against Purchaser or pursue any other
remedies whatsoever and (ii) to the fullest extent permitted by law, any
defenses or benefits that may be derived from or afforded by law that limit the
liability of or exonerate guarantors or sureties, except to the extent that any
such defense is available to Purchaser. Guarantor understands that Seller is
relying on this guarantee in entering into this Agreement.
SECTION 25. Warranties. Seller has not made any express or
implied warranty with respect to the Services.
9
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the date first set forth above.
WKI HOLDING COMPANY, INC.
By
-----------------------
Name:
Title:
WORLD KITCHEN, INC.
By
-----------------------
Name:
Title:
▇▇▇▇▇ OF ▇▇▇▇ L.P.
By
-----------------------
Name:
Title:
▇▇▇▇▇ OF ▇▇▇▇ LIMITED
By
-----------------------
Name:
Title:
SUMMARY OF TERMS
FOR ANNEX A OF
THE TRANSITIONAL SERVICES AGREEMENT
Services provided by WKI shall include, but not be limited to (subject to
agreement), assistance in the following areas as currently provided:
Production and Demand Planning
o Scope to be determined based on outcome of decision on Elmira Demand
Planning employees
Sales
o Transition Plan for WKI shared customers, including Kmart and Grocery
Account
o Transition Plan for International businesses in Japan and Australia
o Support services including sales commissions and deductions
Warehouse/Distribution
Customer Service including order processing
Consumer Support
Information Systems and Reporting
o Will include reasonably appropriate system access for HOTUS personnel
Credit and Collections
Accounts Payable
Accounting Services (but not Closing of books)
Services Not Included (i.e., Services to be performed by Purchaser) will include
the following:
Legal services
Tax services
Monthly closing of the financials and discretionary accounting services
Human resources services, including payroll and benefits
Cash Management Services - receipts and disbursements to be managed through a
Purchaser account
SUMMARY OF TERMS
FOR ANNEX B OF
THE TRANSITIONAL SERVICES AGREEMENT
1 WAREHOUSE SERVICES
4.5% of gross revenues for the Business (as defined in the
Purchase Agreement)
2 ADMINISTRATIVE SERVICES
Monthly amount to be determined based on services used.
SERVICE FTE COST/FTE ANNUAL COST MONTHLY COST
------- --- -------- ----------- ------------
1 Customer Service 4 $ 40.0 $ 160.0 13.3
2 Consumer Support Services 3 $ 40.0 $ 120.0 10.0
3 IT 2 $ 125.0 $ 250.0 20.8
4 Credit and Collections 2 $ 40.0 $ 80.0 6.7
5 Accounts Payable 1 $ 40.0 $ 40.0 3.3
6 Finance 2 $ 100.0 $ 200.0 16.7
-- ------- ------- -----
TOTAL 14 $ 385.0 $ 850.0 70.8
3 OTHER THIRD PARTY CHARGES PAID ON BEHALF OF PURCHASER AND GUARANTOR, TO BE
PREPAID AND REIMBURSED BY PURCHASER AS AGREED
To include but not be limited to VAT, Custom Duties, Taxes,
Freight and similar items
4 OTHER SERVICES NOT INCLUDED IN SECTIONS 1, 2, AND 3
Hourly cost basis to be mutually agreed upon between Purchaser
and Seller
EXHIBIT B
SUPPLY AGREEMENT
SUMMARY OF TERMS
PARTIES: World Kitchen, Inc., a Delaware corporation, World
Kitchen Canada, Inc., a Canadian corporation and
World Kitchen (Australia) Pty. Ltd., an Australian
corporation (collectively, "WKI") and [o], a [o]
company ("Supplier").
SUPPLY: Supplier shall supply WKI with OXO products
consistent with products (the "Products") offered
to comparable customers of the Business (as
defined in the Acquisition Agreement, for sale in
WKI's retail stores (the "Stores"). WKI will place
firm orders for Products in minimum order amounts
of $500 per order. Supplier's obligation to supply
products shall be limited to WKI's 90 U.S. Stores
and Australian Stores.
PURCHASE PRICE: The price Supplier may charge WKI for each Product
will not exceed a price equal to ten percent (10%)
less than the list price set forth on the price
list for Products, as updated by the Supplier from
time to time (the "Price List"). Supplier shall
notify WKI of any such updates to the Price List
and such updates will be applicable for all
comparable customers.
OBSOLETE INVENTORY: Supplier shall notify WKI of the existence of any
inventory that Supplier has designated obsolete
(the "Obsolete Inventory") at least once each
calendar month. Each such notice shall include a
description of the product and the selling price.
Each such notice shall constitute an offer from
Supplier to WKI to buy none, some or all of the
subject Obsolete Inventory. Each such notice shall
be provided to WKI at least three (3) Business
Days before Supplier notifies any third party of
the existence of the Obsolete Inventory. All such
Obsolete Inventory shall be offered at pricing at
least 20% less than the list price listed on the
Price List.
SHIPMENTS: Supplier will ship all Products pursuant to the
Agreement to the Stores. Supplier will pay all
freight and other costs associated with shipment
of the Products to U.S. stores FOB to a
distribution center in the continental U.S.
DEFECTIVE/DAMAGED WKI shall have the same rights with respect to
PRODUCTS: defective/damaged goods as other comparable
customers of Supplier.
TERM: The Agreement shall be effective as of the date of
the Agreement and shall continue thru December 31,
2007. Notwithstanding the foregoing, Supplier
shall have no obligation to supply Products to WKI
for delivery or sale in Stores located in Canada
after six months from the date of the Agreement.
TERMINATION: Either party may terminate by written notice to
the other party upon any material breach or
default of the other party of any provision or
obligation of the Agreement, provided that a
defaulting party shall have fifteen (15) days to
cure any curable default after receipt of notice
of such default from the non-defaulting party; and
provided, further that Supplier may not terminate
the Agreement for WKI's failure to pay any amount
with respect to any disputed payment obligation.
WKI may terminate the Agreement, upon thirty (30)
days prior written notice, if it ceases to own the
Stores by way of liquidation, merger or any other
change of control transaction.
INDEMNIFICATION: Supplier agrees to indemnify, defend and hold WKI,
and its officers, directors, employees, agents and
customers harmless from and against any and all
liability, damages (including consequential
damage), costs or expenses, including reasonable
attorneys' fees, resulting from, or relating to
(i) Supplier's breach of its warranties or other
breach of the Agreement; (ii) the Products,
Product warranties, Product liability, Product
recalls, Product failures, Product defects or any
other claim relating to the Products; and (iii)
Supplier's negligence or intentional acts.
WKI agrees to indemnify, defend and hold Supplier
and its officers, directors, employees and agents
harmless from and against any and all liability,
damage, cost or expense, including reasonable
attorneys' fees resulting from WKI's breach of the
Agreement, or WKI's negligence or intentional
acts.
2
CONFIDENTIALITY: All information, including, but not limited to,
know-how, processes, customer lists, marketing
information and strategies, financial information,
drawings, materials, goods, equipment or apparatus
("Confidential Information") disclosed or
delivered to Supplier by WKI or arising from the
performance of the Agreement shall be treated by
Supplier as confidential, proprietary information
of WKI and shall not be used for itself or others
for any commercial or other purpose, including,
without limitation, the sale of products by
Supplier to its customers, or disclosed or shown
to others by Supplier without prior written
permission of WKI and only after Supplier obtains
an agreement (acceptable to WKI) from such third
party providing for the confidential treatment of
such information. This obligation of Supplier
shall not apply to WKI knowledge or information or
any other part thereof disclosed to Supplier which
is now public knowledge or literature or which
becomes public knowledge through no violation of
the Agreement, or which is lawfully disclosed to
Supplier by a third party not under a
non-disclosure obligation to WKI.
ASSIGNMENT: The Agreement shall not be assigned by either
party without the prior written consent of the
other party, which consent shall not be
unreasonably withheld; provided, however that WKI
may assign the Agreement to any successor entity
by way of merger or any other change of control
transaction or to any entity that acquires all or
a substantial part of the Stores.
CHOICE OF LAW: The Agreement shall be governed and construed in
accordance with the laws of the State of New York
applicable to contracts to be made and performed
entirely therein without giving effect to the
principles of conflicts of law thereof or of any
other jurisdiction.
3
INSURANCE: Upon request, Supplier shall provide to WKI
certificates evidencing that the insurance
coverage required by the Agreement is in full
force and effect. In the event that WKI suffers a
loss for which coverage is available to Supplier
under such insurance policy, Supplier shall take
such actions as are reasonably requested by WKI as
may be necessary or advisable to pursue available
proceeds under such policy, including the
institution of litigation.
Supplier shall carry and maintain Commercial
General Liability insurance with limits of
coverage of not less than $3,000,000 combined
single limit for bodily injury and property damage
liability, including products completed-
operations insurance. The policy shall name WKI as
an additional insured, and shall contain a clause
that the insurer will not cancel or materially
change the insurance without thirty (30) days
prior written notice to WKI. It is agreed that
Supplier's insurance is primary. Any insurance
maintained by WKI is in excess and noncontributory
to Supplier's policy, provided the loss is caused
by Supplier.
All policies of insurance required shall be
written by a carrier approved by WKI, which
approval shall not be unreasonably withheld.
GENERAL PROVISIONS: The Supply Agreement will also include customary
general provisions, including those with the
following headings: Entire Agreement, Force
Majeure, Amendment, Successors and Assigns,
Independent Contractors, Counterparts,
Severability, Waiver and Notice
4