EXHIBIT 2(a)(i)
TRANSACTION AGREEMENT
Dated as of May 10, 1998
By and Between
THE BLACK & ▇▇▇▇▇▇ CORPORATION
and
WINDMERE-DURABLE HOLDINGS, INC.
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 Definitions....................................... 1
ARTICLE II
TRANSACTIONS AND CLOSING
Section 2.01 Closing Transactions.............................. 1
Section 2.02 Exchange Consideration............................ 3
Section 2.03 Closing........................................... 4
Section 2.04 Adjustment of Exchange Consideration.............. 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 3.01 Representations and Warranties of Seller.......... 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.01 Representations and Warranties of Buyer........... 6
ARTICLE V
COVENANTS AND AGREEMENTS OF SELLER
Section 5.01 Conduct of Business............................... 7
Section 5.02 Access to Information; Confidentiality............ 8
Section 5.03 Change of Lockbox Accounts........................ 9
Section 5.04 Access to Information; Cooperation After Closing.. 9
Section 5.05 Maintenance of Insurance Policies................. 9
Section 5.06 Noncompetition; Nonsolicitation; etc.............. 10
ARTICLE VI
COVENANTS AND AGREEMENTS OF BUYER
Section 6.01 Confidentiality................................... 12
Section 6.02 Provision and Preservation of and Access to
Certain Information; Cooperation.................. 12
Section 6.03 Insurance; Financial Support Arrangements......... 13
Section 6.04 Use of Intellectual Property...................... 14
Section 6.05 Certain Environmental Investigations.............. 14
Section 6.06 Nonsolicitation of Employees, etc................. 15
ARTICLE VII
COVENANTS AND AGREEMENTS OF THE PARTIES
Section 7.01 Further Assurances................................ 16
Section 7.02 Certain Filings; Consents......................... 16
Section 7.03 Public Announcements.............................. 16
Section 7.04 Intellectual Property............................. 16
Section 7.05 HSR Act........................................... 17
Section 7.06 Certain Environmental Insurance Matters........... 17
Section 7.07 Legal Privileges.................................. 18
ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFIT MATTERS
Section 8.01 Employees and Employee Benefit Matters............ 18
ARTICLE IX
CONDITIONS TO CLOSING
Section 9.01 Conditions to the Obligations of Each Party....... 18
Section 9.02 Conditions to Obligation of Buyer................. 19
Section 9.03 Conditions to Obligation of Seller................ 20
Section 9.04 Effect of Waiver.................................. 20
ARTICLE X
SURVIVAL; INDEMNIFICATION
Section 10.01 Survival.......................................... 20
Section 10.02 Indemnification................................... 22
Section 10.03 Procedures........................................ 23
Section 10.04 Limitations....................................... 25
ARTICLE XI
TERMINATION
Section 11.01 Termination....................................... 26
Section 11.02 Effect of Termination............................. 27
ARTICLE XII
MISCELLANEOUS
Section 12.01 Notices........................................... 27
Section 12.02 Amendments; Waivers............................... 28
Section 12.03 Expenses; Taxes................................... 29
Section 12.04 Successors and Assigns............................ 29
Section 12.05 Disclosure........................................ 29
Section 12.06 Construction...................................... 29
Section 12.07 Entire Agreement.................................. 30
Section 12.08 Governing Law..................................... 30
Section 12.09 Counterparts; Effectiveness....................... 30
Section 12.10 Jurisdiction...................................... 31
Section 12.11 Severability...................................... 31
Section 12.12 Captions.......................................... 31
Section 12.13 Bulk Sales........................................ 31
EXHIBITS
EXHIBIT A Definitions
EXHIBIT B Representations and Warranties of Seller
EXHIBIT C Representations and Warranties of Buyer
EXHIBIT D Employees and Employee Benefit Matters
EXHIBIT E Additional Matters Relating to Product Liability
Issues
ATTACHMENTS
Attachment I Opening Statement
Attachment II Form of ▇▇▇▇ of Sale, Assignment and Assumption
Agreement
Attachment III Form of Assignment of United States Trademarks,
Trademark Registrations and Applications for
Registration
Attachment IV Form of Assignment of Foreign Trademarks, Trademark
Registrations and Applications for Registration
Attachment V Form of Assignment of United States Patents and
Patent Applications
Attachment VI Form of Assignment of Foreign Patents and
Applications for Patents
Attachment VII Form of Trademark License Agreement
Attachment VIII Form of Assignment of U.S. Copyrights
Attachment IX Form of Assignment of Mexican Trademarks, Trademark
Registrations and Applications for Registration
Attachment X Form of Cross License Agreement
Attachment XI Exchange Consideration Allocation Schedule
Attachment XII Certain Intellectual Property Assets
Attachment XIII Consents and Approvals Required Prior to Closing
Attachment XIV HPG Financial Statements
Attachment XV Certain Active Employees
Attachment XVI Form of Distribution Services Agreement (United
States)
Attachment XVII Form of Distribution Services Agreement (Latin
America)
Attachment XVIII Form of Services Agreement (United States and Canada)
Attachment XIX Form of Services Agreement (GPA)
Attachment XX Form of Services Agreement (Mexico)
Attachment XXI Form of Services Agreement (Latin American Group and
CCA)
Attachment XXII Form of Services Agreement (Colombia)
Attachment XXIII Form of Services Agreement (Chile)
Attachment XXIV Form of Services Agreement (Peru)
Attachment XXV Form of Services Agreement (Argentina)
Attachment XXVI Form of Services Agreement (Puerto Rico)
Attachment XXVII Form of Services Agreement (Venezuela)
Attachment XXVIII Asheboro Facility
Attachment XXIX Opinion of Seller's Counsel
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TRANSACTION AGREEMENT
This Transaction Agreement (together with the Exhibits, Schedules and
Attachments hereto, this "Agreement") is made as of the 10th day of May 1998, by
and among The Black & ▇▇▇▇▇▇ Corporation, a Maryland corporation ("Seller"), and
Windmere-Durable Holdings, Inc., a Florida corporation ("Buyer"), on behalf of
itself and its wholly owned Subsidiaries ("Buyer Companies").
W I T N E S S E T H:
WHEREAS, Seller, through certain of its direct and indirect
Subsidiaries, is engaged in the HPG Business;
WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement, Seller desires to transfer or to cause the Affiliated Transferors to
transfer substantially all of the assets held, owned by or used to conduct the
HPG Business, and to assign certain liabilities associated with the HPG
Business, to Buyer or Buyer Companies designated by Buyer, and Buyer desires to
receive or to cause such designated Buyer Companies to receive such assets and
assume such liabilities; and
WHEREAS, in connection with the sale of the HPG Business to Buyer,
Seller and Buyer desire to enter into certain agreements and arrangements
ancillary to such sale;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Capitalized terms used in this Agreement
shall have the meanings specified in this Agreement or in Exhibit A.
ARTICLE II
TRANSACTIONS AND CLOSING
Section 2.01 Closing Transactions. Upon the terms and subject to the
conditions set forth in this Agreement, the parties agree that at the Closing,
among other things:
(i) Seller and the Affiliated Transferors will transfer or
cause to be transferred to Buyer or Buyer Companies designated by Buyer
all Transferred Assets and Buyer or Buyer Companies designated by Buyer
will assume all Assumed Liabilities in accordance with this Agreement;
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(ii) to effect the transfer of certain assets and the
assumption of liabilities contemplated by the foregoing clause (i),
Seller or the Affiliated Transferors, as the case may be, and Buyer or
Buyer Companies shall execute and deliver the Assignment and Assumption
Agreements;
(iii) to effect the transfer by Seller or the Affiliated
Transferors of certain rights in respect of Intellectual Property used
or held for use exclusively in connection with the HPG Business, Seller
or the Affiliated Transferors, as the case may be, shall execute and
deliver the Intellectual Property Assignment Agreements;
(iv) to effect the license of certain rights in respect of
Intellectual Property, Seller or the Affiliated Transferors, as the
case may be, and Buyer or Buyer Companies shall execute (a) the
Trademark License Agreement in the form contemplated by Attachment VII
to this Agreement, and (b) the Cross License Agreement;
(v) Seller or the Affiliated Transferors, as the case may be,
and Buyer or Buyer Companies, as the case may be, shall execute and
deliver the Services Agreements; provided, however that Buyer shall
have the right to decline to enter into any or all of such Services
Agreements by notice given to Seller at any time prior to Closing;
(vi) Seller or the Affiliated Transferors, as the case may be,
and Buyer or Buyer Companies, as the case may be, shall execute and
deliver the Distribution Services Agreement (United States) and the
Distribution Services Agreement (Latin America) in the forms
contemplated by Attachment XVI and Attachment XVII to this Agreement;
(vii) Seller or the Affiliated Transferors, as the case may
be, and Buyer or Buyer Companies, as the case may be, to the extent
requested by Buyer, shall execute and deliver sublease agreements for
the sublease by Buyer or Buyer Companies, as the case may be, relating
to the facilities located in ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, Miami,
Florida, and Bosques de Las Lomas, Mexico and shared by the HPG
Business and Seller's power tools business, on terms and conditions to
be negotiated in good faith prior to the Closing consistent with the
terms and conditions of the applicable lease for such shared facilities
(including rent and expense reimbursement on a pro rata basis taking
into account the space used by the HPG Business and the space used by
Seller's power tools business) and on such other terms and conditions
as may be agreed to by Seller and Buyer. Such subleases shall be on a
month-to-month basis with 30 days advance written notice being required
to terminate the subleases, but in no event shall expire later than the
close of business on February 28, 1999;
(viii) Seller or the Affiliated Transferors, as the case may
be, and Buyer or Buyer Companies shall execute and deliver a supply
agreement relating to the continued supply, at Seller's option, for a
period commencing on the Closing Date and ending on the date on which
the Trademark License Agreement terminates in respect of the Black &
▇▇▇▇▇▇ trademark, of products and related parts, accessories or
attachments manufactured or sold by the HPG Business following the
Closing for sale by Seller Companies at the service centers and outlet
stores of Seller Companies, on terms and conditions to be negotiated
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in good faith prior to the Closing, it being understood and agreed that
the price of such products to Seller Companies shall be equal to
Buyer's standard cost of production calculated on a basis consistent
with current practices plus 15%;
(ix) Seller or the Affiliated Transferors, as the case may be,
and Buyer or Buyer Companies, as the case may be, shall execute and
deliver a lease agreement for the lease of the Kuantan Facility and any
related fixtures and equipment at the Kuantan Facility for a period of
up to six months following the Closing Date at a rental rate equal to
the reasonable out-of-pocket costs to Seller Companies of the continued
operation of the Kuantan Facility during the lease term plus $1.00, and
an agreement providing Buyer with a right of first refusal on the sale
by Seller Companies of any excess manufacturing equipment at the
Kuantan Facility that Seller Companies decide not to use in their
businesses;
(x) Seller or the Affiliated Transferors, as the case may be,
and Buyer or Buyer Companies, as the case may be, shall execute and
deliver a lease agreement for the lease of the Asheboro Property for a
period expiring on September 30, 1999, on terms and conditions
consistent with Attachment XXVIII to this Agreement;
(xi) Buyer Companies shall pay and deliver to Seller, for its
own account and as agent for the Affiliated Transferors, $315,000,000
in immediately available funds by wire transfer to an account or
accounts designated by Seller (which account shall be designated by
Seller by written notice to Buyer at least two Business Days prior to
the Closing Date, or such shorter notice as Buyer shall agree to
accept); and
(xii) At Closing, Seller shall deliver to Buyer: (A) in a form
agreed to by both Buyer and Seller, the instruments of conveyance in
form sufficient under Applicable Law to convey fee simple title to the
Queretaro Property, and (B) a No Lien Certificate issued by the Public
Registry of Property and Commerce in Queretaro, which confirms that fee
simple title to the Queretaro Property is vested in Seller, and that
the Queretaro Property is free and clear of all Liens, other than
Permitted Liens; provided, however, that if it is impractical because
of the legal formalities in Mexico to complete and record the
instruments of conveyance on the Closing Date, the parties hereto agree
that the Closing shall be consummated and such legal formalities will
be completed as soon as practicable after the Closing Date.
Section 2.02 Exchange Consideration.
(a) The consideration to be paid to Seller and the Affiliated
Transferors for the Transferred Assets (the "Exchange Consideration") shall
consist of the following:
(i) subject to adjustment in accordance with Section 2.04,
$315,000,000 in cash (as so adjusted, the "Adjusted Purchase Price");
and
(ii) the assumption by Buyer Companies of the Assumed
Liabilities in accordance with the Transaction Documents.
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(b) The Exchange Consideration shall be allocated to and among the
respective Transferred Assets in the manner contemplated by Attachment XI to
this Agreement. Seller and Buyer agree that the allocation of the Exchange
Consideration contemplated by Attachment XI to this Agreement is consistent with
the value of the Transferred Assets and the principles of Section 1060 of the
Code and the regulations thereunder. Seller and Buyer agree that they shall use
the allocation of the Exchange Consideration determined in accordance with
Attachment XI to this Agreement in any Tax Returns or other reports that deal
with the Contemplated Transactions and are filed with any Tax Authority.
Section 2.03 Closing. The closing (the "Closing") of the Contemplated
Transactions shall take place at the offices of Miles & Stockbridge P.C., ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on the 15th day following the delivery
by Seller to Buyer of the audited financial statements contemplated by Section
9.02(g) (or the next Business Day if the 15th day is not a Business Day),
provided, however, that unless the Buyer agrees otherwise, the Closing shall not
occur prior to June 9, 1998, and, provided further, that if all of the
conditions to Closing set forth in Article IX have not been satisfied (or
waived) as of that date and if closing on that date therefore would be
impractical, the Closing shall take place on the fifth Business Day following
the satisfaction or waiver (by the party entitled to waive the condition) of all
conditions to the Closing set forth in Article IX, or at such other time and
place as the parties to this Agreement may agree. The Closing will occur at 9:00
a.m. on the Closing Date.
Section 2.04 Adjustment of Exchange Consideration.
(a) Promptly following the Closing Date, but in no event later than 60
days after the Closing Date, Seller shall, at its expense, with the assistance
of Buyer, prepare and submit to Buyer a statement of net tangible assets (and,
if applicable, net working capital) setting forth, in reasonable detail,
Seller's calculation of the Net Tangible Assets as of the close of business on
the day prior to the Closing Date (the "Proposed Final Net Tangible Asset
Amount") and in addition, if the Closing Date is any day after June 28, 1998,
Seller's calculation of the amount of the difference (the "Proposed Net Working
Capital Change Amount") between the Net Working Capital as of the close of
business on the day prior to the Closing Date (the "Closing Net Working Capital
Amount") and the Net Working Capital as of the close of business on June 28,
1998 (the "June 28 Net Working Capital Amount"). In the event Buyer disputes the
correctness of the Proposed Final Net Tangible Asset Amount or the Proposed Net
Working Capital Change Amount, Buyer shall notify Seller of its objections
within 45 days after receipt of Seller's calculation of the Proposed Final Net
Tangible Asset Amount and the Proposed Net Working Capital Change Amount and
shall set forth, in writing and reasonable detail, the reasons for Buyer's
objections. If Buyer fails to deliver such notice of objections within such
time, Buyer shall be deemed, for purposes of this Section 2.04, to have accepted
Seller's calculation. To the extent Buyer does not object, in writing and in
reasonable detail as required and within the time period contemplated by this
Section 2.04(a) to a matter in the statement of net tangible assets (including,
but not limited to, matters impacting Net Working Capital) prepared and
submitted by Seller, Buyer shall be deemed to have accepted Seller's calculation
and presentation in respect of the matter and the matter shall not be considered
to be in dispute. Seller and Buyer shall endeavor in good faith to resolve any
matters disputed under this Section 2.04 within 20 days after Seller's receipt
of Buyer's notice of objections. If they are unable to do so, Seller and
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Buyer shall select a nationally known independent accounting firm (other than
Ernst & Young LLP or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP) to resolve the matters in dispute and
only those matters (in a manner consistent with Section 2.04(b) and with any
matters not in dispute), and the determination of such firm in respect of the
correctness of each matter remaining in dispute shall be conclusive and binding
on Seller and Buyer. With respect to each disputed matter, the determination of
such firm as to the appropriate amount shall not exceed the higher amount or be
less than the lower amount asserted by Buyer or Seller for such disputed matter
on or before the date of Seller's receipt of Buyer's notice of objections. The
Net Tangible Assets as of the close of business on the day prior to the Closing
Date, and, if applicable, the amount of the difference between the Closing Net
Working Capital Amount and the June 28 Net Working Capital Amount, as finally
determined pursuant to this Section 2.04(a) (whether by failure of Buyer to
deliver notice of objection, by agreement of Seller and Buyer or by
determination of the independent accountants selected as set forth above), are
referred to herein respectively as the "Final Net Tangible Asset Amount" and the
"Final Net Working Capital Change Amount."
(b) The Proposed Final Net Tangible Asset Amount, the Proposed Net
Working Capital Change Amount, the Final Net Tangible Asset Amount and the Final
Net Working Capital Change Amount shall be determined in accordance with the
accounting principles, policies, practices and methods utilized in the
preparation of the Opening Statement, as disclosed in the notes to the Opening
Statement and, to the extent applicable, the notes to the special-purpose
statement of net assets as of March 29, 1998, which is included in the HPG
Financial Statements, except as otherwise set forth in Note E to the Opening
Statement. Seller shall provide Buyer with notice of the time and location at
which all procedures relating to the determination of inventory will be
undertaken with respect to determination of the Proposed Final Net Tangible
Asset Amount and the Proposed Net Working Capital Change Amount and shall permit
Buyer and its representatives to be present to coordinate and observe the
counting procedure performed and to take such test counts as such
representatives of Buyer consider appropriate in the circumstances.
(c) If the Final Net Tangible Asset Amount is equal to or greater than
$107,500,000, there shall be no adjustment of the Exchange Consideration on
account of the Final Net Tangible Asset Amount. If the Final Net Tangible Asset
Amount is less than $107,500,000, the difference shall be paid to Buyer by
Seller with simple interest thereon from the Closing Date to the date of payment
at a floating rate per annum equal to the per annum interest rate announced from
time to time by Citibank, N.A. as its prime rate in effect. Such payment shall
be made in immediately available funds not later than five Business Days after
the determination of the Final Net Tangible Asset Amount by wire transfer to a
bank account designated in writing by Buyer.
(d) If the Closing Date is any day after June 28, 1998, the Exchange
Consideration shall be subject to adjustment on account of the Final Net Working
Capital Change Amount as provided in this Section 2.04(d). If the Final Net
Working Capital Change Amount is zero or constitutes a decrease of the Closing
Net Working Capital Amount from the June 28 Net Working Capital Amount, there
shall be no adjustment of the Exchange Consideration on account of the Final Net
Working Capital Change Amount. If the Final Net Working Capital Change Amount
constitutes an increase of the Closing Net Working Capital Amount over the June
28 Net Working Capital Amount, Buyer shall pay to Seller an amount equal to the
Net Working Capital
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Adjustment Amount (as hereinafter defined), together with interest thereon as
provided below in this Section 2.04(d). The "Net Working Capital Adjustment
Amount" shall equal the lesser of (i) the Final Net Working Capital Change
Amount or (ii) the amount of the excess of the Final Net Tangible Asset Amount
over $107,500,000. Interest shall accrue on the Net Working Capital Adjustment
Amount from the Closing Date to the date of payment at a floating rate per annum
equal to the per annum interest rate announced from time to time by Citibank,
N.A. as its prime rate in effect. Payment of the Net Working Capital Adjustment
Amount and accrued interest thereon shall be made in immediately available funds
not later than five Business Days after the determination of the Final Net
Working Capital Change Amount by wire transfer to a bank account designated in
writing by Seller.
(e) Seller shall make available and shall cause Ernst & Young LLP to
make available, in accordance with reasonable and customary practices and
professional standards and subject to such reasonable conditions as Ernst &
Young LLP shall impose, the books, records, documents and work papers underlying
the preparation and review of the Opening Statement and the calculation of the
Proposed Final Net Tangible Asset Amount and the Proposed Net Working Capital
Change Amount. Buyer shall make available and shall cause ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP to
make available, in accordance with reasonable and customary practices and
professional standards and subject to such reasonable conditions as ▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP shall impose, the books, records, documents and work papers created
or prepared by or for Buyer in connection with the review of the Proposed Final
Net Tangible Asset Amount, the Proposed Net Working Capital Change Amount and
the other matters contemplated by Section 2.04(a).
(f) The fees and expenses, if any, of the accounting firm selected to
resolve any disputes between Seller and Buyer in accordance with Section 2.04(a)
shall be paid one-half by Seller and one-half by Buyer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 3.01 Representations and Warranties of Seller. Seller
represents and warrants to Buyer as set forth in Exhibit B.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.01 Representations and Warranties of Buyer. Buyer represents
and warrants to Seller as set forth in Exhibit C.
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ARTICLE V
COVENANTS AND AGREEMENTS OF SELLER
Section 5.01 Conduct of Business. Except with the written consent of
Buyer (which consent shall not be unreasonably withheld or delayed), as set
forth in Schedule 5.01, as permitted below or required by Applicable Law, or in
accordance with the terms and conditions of Contracts entered into in the
ordinary course of business and consistent with past practices and in existence
on the date of this Agreement, from the date of this Agreement until the Closing
Date, Seller Companies shall conduct the HPG Business in all material respects
in accordance with the historical and customary operating practices relating to
the conduct of the HPG Business and shall use reasonable commercial efforts to
preserve intact the HPG Business and the relationships of Seller Companies with
third parties in connection with the HPG Business, and Seller Companies shall
not:
(i) except for expenditures contemplated by the 1998 capital
expenditure plan for the HPG Business, make any capital expenditure, or
group of related capital expenditures, relating to the HPG Business in
excess of $500,000 in the aggregate;
(ii) sell or dispose of more than an aggregate of $500,000 of
assets that would constitute Transferred Assets if owned, held or used
by any Seller Companies on the Closing Date (other than the sale of
Inventory in the ordinary course of business consistent with past
practices or obsolete Inventory whether or not in the ordinary course
of business, and the sale of surplus equipment and materials arising
out of or relating to the closing of the Kuantan Facility);
(iii) sell, transfer, license or otherwise dispose of (other
than in the ordinary course of business consistent with past practices
to suppliers, vendors, or other Persons doing work for the HPG Business
as part of such work for the HPG Business) any Intellectual Property
used exclusively in the HPG Business;
(iv) terminate the coverage of any policies of title,
liability, fire, workers' compensation, property and any other form of
insurance covering the operations of the HPG Business, except where
such policies are replaced by policies that are substantially similar
in all material respects to the terminated policies;
(v) settle any lawsuit or claim if such settlement imposes a
material continuing non-monetary obligation on the HPG Business or any
of the Transferred Assets;
(vi) grant any new or modified severance or termination
arrangement or increase or accelerate in any material respect any
amount payable under the severance or termination pay policies in
effect on the date of this Agreement with respect to any Transferred
Employee; or
(vii) except as otherwise may be permitted or required by this
Agreement or Applicable Law, adopt or amend in any material respect any
Employee Plan or Benefit
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Arrangement in respect of any Transferred Employee or, other than
compensation increases in the ordinary course of business, with respect
to any Transferred Employee at a level of Vice President or above,
increase the compensation or fringe benefits of such Transferred
Employee or pay any benefit not required by any Employee Plan or
Benefit Arrangement with respect to such Transferred Employee.
Section 5.02 Access to Information; Confidentiality.
(a) Except as may be necessary to comply with any Applicable Laws, from
the date of this Agreement until the Closing Date, Seller Companies shall (i)
give Buyer and its Representatives reasonable access to the records of Seller
Companies relating to the HPG Business during normal business hours and upon
reasonable prior notice, (ii) give Buyer and its Representatives reasonable
access to any facilities the possession of which will be transferred to Buyer at
Closing during normal business hours and upon reasonable prior notice, (iii)
furnish to Buyer and its Representatives such financial and operating data and
other information relating to the HPG Business as Buyer may reasonably request
and (iv) instruct the employees and Representatives of Seller Companies to
provide reasonable cooperation to Buyer in its investigation of the HPG
Business. Without limiting the generality of the foregoing, subject to the
limitations set forth in the first sentence of this Section 5.02(a), from the
date of this Agreement to the Closing Date Seller shall (i) use reasonable
commercial efforts to enable Buyer and its Representatives to conduct, at
Buyer's expense, business and financial reviews, investigations and studies as
to the operation of the HPG Business, including any tax, operating or other
efficiencies that may be achieved and (ii) give Buyer and its Representatives
access upon reasonable request to information relating to the HPG Business.
(b) For a period commencing on the Closing Date and ending on the date
on which the Trademark License Agreement terminates in respect of the Black &
▇▇▇▇▇▇ trademark, Seller Companies will treat and hold as confidential, any
confidential information relating primarily to the operations or affairs of the
HPG Business. In the event any Seller Companies are requested or required (by
written request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand or similar process or by
Applicable Law) to disclose any such confidential information, then Seller shall
notify Buyer promptly of the request or requirement so that Buyer, at its
expense, may seek an appropriate protective order or waive compliance with this
Section 5.02(b). If, in the absence of a protective order or receipt of a waiver
hereunder, any Seller Companies are, on the advice of counsel, compelled to
disclose such confidential information, Seller Companies may so disclose the
confidential information, provided that Seller Companies shall use their
reasonable efforts to obtain reliable assurance that confidential treatment will
be accorded to such confidential information. The provisions of this Section
5.02(b) shall not be deemed to prohibit the disclosure of confidential
information relating to the operations or affairs of the HPG Business by any
Seller Companies to the extent reasonably required (i) to prepare or complete
any required Tax Returns or financial statements, (ii) in connection with audits
or other proceedings by or on behalf of a Governmental Authority, (iii) in
connection with any insurance claims, (iv) to the extent necessary to comply
with any Applicable Laws or (v) to provide services to any Buyer Companies in
accordance with the terms and conditions of any of the Transaction Documents.
Notwithstanding the foregoing, the provisions of this Section 5.02(b) shall not
apply to information that (i) is or becomes publicly available
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other than as a result of a disclosure by any Seller Company, (ii) is or becomes
available to a Seller Company on a non-confidential basis from a source that, to
Seller's knowledge, is not prohibited from disclosing such information by a
legal, contractual or fiduciary obligation or (iii) is or has been independently
developed by a Seller Company (other than solely for the HPG Business). This
Section 5.02(b) shall not apply to the disclosure of confidential information
concerning the household products businesses of Seller Companies headquartered
in countries other than the Designated Countries or to the use, license or sale
of Intellectual Property not constituting Transferred Assets.
Section 5.03 Change of Lockbox Accounts. Immediately after the Closing,
Seller shall take such steps as Buyer may reasonably request to cause Buyer to
be substituted as the sole party having control over any lockbox or similar bank
account maintained exclusively by the HPG Business to which customers of the HPG
Business directly make payments in respect of the HPG Business or to direct the
bank at which any such lockbox or similar account is maintained to transfer any
payments made thereto to an account established by Buyer.
Section 5.04 Access to Information; Cooperation After Closing.
(a) On and after the Closing Date, Seller shall, and shall cause each
of the other Seller Companies to, at their expense (i) afford Buyer and its
Representatives reasonable access upon reasonable prior notice during normal
business hours, to all employees, offices, properties, agreements, records,
books and affairs of Seller Companies to the extent relating to the conduct of
the HPG Business prior to the Closing and (ii) cooperate fully with Buyer with
respect to matters relating to the conduct of the HPG Business prior to the
Closing, including, without limitation, in the defense or pursuit of any
Transferred Asset or Assumed Liability or any claim or action that relates to
occurrences involving the HPG Business prior to the Closing Date. In addition,
Seller shall cause its independent accountants to make available their work
papers in respect of the HPG Financial Statements and the financial statements
contemplated by Section 9.02(g).
(b) Subject to and consistent with the obligations of senior management
to continue to manage and operate the HPG Business, Seller shall cause the
members of the senior management team of the HPG Business to make themselves
available to assist Buyer and their representatives in the review and
preparation of offering memoranda and related documents to be used by Buyer in
the financing of the Contemplated Transactions, and shall cause its independent
accountants to provide comfort letters in customary form at Buyer's expense in
connection with such financing and in connection therewith shall provide such
representation letters to its independent accountants as are reasonably
required.
Section 5.05 Maintenance of Insurance Policies. Except as otherwise
provided in Exhibit D, on and after the date of this Agreement and until the
Closing Date, Seller shall not take or fail to take any action if such action or
inaction, as the case may be, would adversely affect the applicability of any
insurance (including reinsurance) in effect on the date of this Agreement that
covers all or any part of the assets that would constitute Transferred Assets if
owned, held or used by any Seller Companies on the Closing Date, the HPG
Business or the Transferred Employees. Except as otherwise provided in Exhibit D
or as may otherwise be
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agreed in writing by the parties, Seller shall not have any obligation to
maintain the effectiveness of any such insurance policy after the Closing Date
or to make any monetary payment in connection with any such policy, unless such
monetary payment relates to a period prior to Closing under a policy in effect
prior to Closing.
Section 5.06 Noncompetition; Nonsolicitation; etc.
(a) Seller covenants and agrees, as an inducement to Buyer to enter
into this Agreement and to consummate the Contemplated Transactions, that: (i)
with respect to Additional Products (as defined in the Trademark License
Agreement), for a period commencing on the Closing Date and ending on the date
on which the Trademark License Agreement terminates in respect of the Black &
▇▇▇▇▇▇ trademark ("Period One"), and (ii) with respect to products that are
Designated Products as of the date of this Agreement, for a period commencing on
the Closing Date and ending on the date that is the fifth anniversary of the
date on which the Trademark License Agreement terminates in respect of the Black
& ▇▇▇▇▇▇ trademark (the "Fifth Anniversary Date"), no Seller Company (for so
long but only for so long as it remains a Seller Company) will, directly or
indirectly, carry on or participate in the ownership, management or control of
any Competing Business (as hereinafter defined). "Competing Business" shall mean
(i) during Period One, any business enterprise that sells in any Designated
Countries any of the Additional Products or products that are Designated
Products as of the date of this Agreement, and (ii) during the period commencing
on the day after the date of termination of Period One and ending on the Fifth
Anniversary Date, any business enterprise that sells in any Designated Countries
any products that are Designated Products as of the date of this Agreement.
(b) Nothing contained in this Section 5.06 shall limit or restrict the
right of any Seller Company to hold and make investments in securities of any
Person that has securities listed on a national securities exchange or admitted
to trading privileges thereon or actively traded in a generally recognized
over-the-counter market, provided that the aggregate equity interest therein of
Seller Companies does not exceed five percent of the outstanding shares or
interests in such Person at the time of Seller Companies' investment therein
provided that such Seller Company does not take any active management role.
Notwithstanding any provisions of this Section 5.06 to the contrary, if Seller
or any other Seller Company acquires securities of any Person that is engaged in
a Competing Business, Seller Companies shall not be deemed to be in violation of
this Section 5.06, provided that (A) (i) at the time of acquisition the
Competing Business represents less than 10% of the gross revenues of the
acquired Person for the acquired Person's most recently completed fiscal year
and (ii) Seller Companies use reasonable commercial efforts to divest the
operations of such Competing Business subsequent to such acquisition, or (B) at
the time of acquisition the Competing Business represents less than five percent
of the gross revenues of the acquired Person for the acquired Person's most
recently completed fiscal year.
(c) Nothing contained in this Section 5.06 shall limit or restrict the
right of any Seller Company to engage in any business outside of the Designated
Countries or to sell any Designated Products to Persons outside of the
Designated Countries so long as the Seller Company in connection with the sale
of any such Designated Products to Persons outside of the Designated Countries
takes commercially reasonable steps to ensure that the Designated Products will
not be sold in the Designated Countries by such Persons. Nothing contained in
this Section 5.06 shall
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limit or restrict the right of any Seller Company to sell new products purchased
from Buyer or Buyer Companies on or after the Closing Date, new products in
inventory at or for the Seller Companies' service centers, company stores and
outlet stores or reconditioned products (or any related parts, accessories or
attachments) of the HPG Business through Seller Companies' service center
network (consisting of both owned and authorized service centers) in a manner
consistent with past practices or in accordance with any agreements or
arrangements between a Seller Company and the HPG Business.
(d) Notwithstanding any provisions of this Section 5.06 to the
contrary, Seller Companies shall not be deemed to be in violation of this
Section 5.06 to the extent that, following the Closing, Seller Companies sell
Designated Products (i) that are in the Inventory of Seller Companies at or for
the Seller Companies' service centers, company stores and outlet stores as of
the Closing Date (or result from raw materials or work in process in the
Inventory of Seller Companies at or for the Seller Companies' service centers,
company stores and outlet stores as of the Closing Date) or (ii) to fulfill
contracts, agreements, commitments, sales or purchase orders or other similar
instruments of any kind, whether oral or written, at or for the Seller
Companies' service centers, company stores and outlet stores as in effect on the
Closing Date. Notwithstanding any provisions of this Section 5.06 to the
contrary, Seller Companies shall not be deemed to be in violation of this
Section 5.06 to the extent that, following the Closing, Seller Companies sell
Cleaning and Lighting Products.
(e) From and after the date of this Agreement until the first
anniversary of the Closing Date, Seller Companies shall not, without prior
written approval of Buyer employ any non-exempt (within the meaning of the Fair
Labor Standards Act) Transferred Employee. In addition, from and after the date
of this Agreement until the fifth anniversary of the Closing Date, no Seller
Company shall, without the prior written approval of Buyer, directly or
indirectly solicit any individual who was a non-exempt (within the meaning of
the Fair Labor Standards Act) Transferred Employee to terminate his or her
employment relationship with Buyer or Buyer Companies; provided, however, that
the foregoing shall not apply to individuals hired as a result of the use of an
independent employment agency (so long as the agency was not directed to solicit
a particular individual or a class of individuals that could only be satisfied
by employees of Buyer Companies) or as a result of the use of a general
solicitation (such as an advertisement) not specifically directed to employees
of Buyer Companies. From and after the date of this Agreement until the fifth
anniversary of the Closing Date, no Seller Company will induce or seek to induce
any contractor, supplier, client or customer of Buyer or Buyer Companies to
terminate their relationship with Buyer or Buyer Companies in respect of the HPG
Business.
(f) Seller recognizes and agrees that a breach by Seller Companies of
any of the covenants and agreements in this Section 5.06 could cause irreparable
harm to Buyer, that Buyer's remedies at law in the event of such breach would be
inadequate, and that, accordingly, in the event of such breach a restraining
order or injunction or both may be issued against Seller Companies, in addition
to any other rights and remedies that may be available to Buyer under Applicable
Law. If this Section 5.06 is more restrictive than permitted by the Applicable
Laws of the jurisdiction in which Buyer seeks enforcement hereof, this Section
5.06 shall be limited to the extent required to permit enforcement under such
Applicable Laws.
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ARTICLE VI
COVENANTS AND AGREEMENTS OF BUYER
Section 6.01 Confidentiality. Buyer agrees that all information
provided or otherwise made available in connection with the Contemplated
Transactions, to Buyer or any of its Representatives shall be treated as if
provided under the Confidentiality Agreement (whether or not the Confidentiality
Agreement is in effect or has been terminated). With the exception of the sixth
paragraph of the Confidentiality Agreement, which shall continue to apply in
accordance with the terms of the Confidentiality Agreement following the
Closing, the other terms of the Confidentiality Agreement shall no longer apply
following the Closing. Nothing in this Section 6.01, however, shall limit or
otherwise restrict the applicability of any other confidentiality or similar
provisions included in the Transaction Documents.
Section 6.02 Provision and Preservation of and Access to Certain
Information; Cooperation.
(a) Prior to the Closing Date, Buyer shall provide to Seller promptly
upon its receipt thereof copies of all environmental audit and similar reports
with respect to facilities the possession of which will be transferred to Buyer
at the Closing. Buyer shall provide to Seller a copy of all sampling results,
boring logs, analyses and other data and reports regarding any environmental
review conducted by Buyer immediately upon obtaining them.
(b) On and after the Closing Date, Buyer shall preserve all books and
records of the HPG Business for a period of six years commencing on the Closing
Date (or in the case of books and records relating to Tax, employment and
employee matters, until such time as Seller notifies Buyer in writing that all
statutes of limitations to which such records relate have expired), and
thereafter, not to destroy or dispose of such records without giving notice to
Seller of such pending disposal and offering Seller such records. In the event
Seller has not requested such materials within 90 days following the receipt of
notice from Buyer, Buyer may proceed to destroy or dispose of such materials
without any liability. Notwithstanding the foregoing, Buyer shall be entitled to
destroy or dispose of any books and records of the HPG Business on or after the
tenth anniversary of the Closing Date.
(c) From and after the Closing Date, Buyer shall at its expense (i)
afford Seller and its Representatives reasonable access upon reasonable prior
notice during normal business hours, to all employees, offices, properties,
agreements, records, books and affairs of Buyer relating to the HPG Business and
provide copies of such information concerning the HPG Business as Seller may
reasonably request in connection with the matters contemplated by Section 2.04,
the preparation of any Tax Returns, in connection with any judicial,
quasi-judicial, administrative, Tax, audit or arbitration proceeding, in
connection with the preparation of any financial statements or reports required
in accordance with Applicable Laws and in connection with the defense of any
third party claims or allegations that relate to or may relate to Excluded
Liabilities and (ii) cooperate fully with Seller for any proper purpose,
including, without limitation, the defense of or pursuit of any Excluded
Liability, Excluded Asset or Indemnified Claim, or any
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third party claim or action that relates to an Excluded Liability, Excluded
Asset or Indemnified Claim.
Section 6.03 Insurance; Financial Support Arrangements.
(a) Buyer acknowledges and agrees that as of the Closing Date, neither
Buyer, the HPG Business, any property owned or leased by any of the foregoing
nor any of the directors, officers, employees (including, without limitation,
the Transferred Employees) or agents of any of the foregoing will be insured
under any insurance policies maintained by Seller or any of its Affiliates,
except (i) in the case of certain claims made policies, to the extent that a
claim has been reported as of the Closing Date, (ii) in the case of a policy
that is an occurrence policy, to the extent the accident, event or occurrence
that results in an insurable loss occurs prior to the Closing Date and has been,
is or will be reported or noticed to the respective carrier by Buyer or any
Seller Company in accordance with the requirements of such policies (which
claims Seller shall, at Buyer's cost and expense, pursue diligently on Buyer's
behalf and the net proceeds of which claims (except to the extent they relate to
Excluded Liabilities) shall be remitted promptly to Buyer upon receipt thereof),
and (iii) as otherwise provided in Exhibit D or agreed to in writing by the
parties. Except as otherwise provided in Exhibit D or as otherwise may be agreed
to in writing by the parties, from and after the Closing Date, Seller shall have
no obligation of any kind to maintain any form of insurance covering all or any
part of the Transferred Assets, the HPG Business or the Transferred Employees.
(b) From and after the Closing Date, Buyer agrees to reimburse Seller
within 30 days of receipt of an invoice for any self insurance, retention,
deductible, retrospective premium, cash payment for reserves calculated or
charged on an incurred loss basis and similar items, including but not limited
to associated administrative expenses and allocated loss adjustment or similar
expenses (collectively, "Insurance Liabilities") allocated to the HPG Business
by Seller on a basis consistent with past practices resulting from or arising
under any and all current or former insurance policies maintained by Seller or
any of its Affiliates to the extent that such Insurance Liabilities relate to or
arise out of Assumed Liabilities or any activities of Buyer. Buyer agrees that,
to the extent any of the insurers under the insurance policies, in accordance
with the terms of the insurance policies, requests or requires collateral,
deposits or other security to be provided with respect to claims made against
such insurance policies relating to or arising from Assumed Liabilities, Buyer
shall provide the collateral, deposits or other security or, upon request of
Seller, will replace any collateral, deposits or other security provided by
Seller or any of its Affiliates.
(c) Buyer agrees that, for a period of six years commencing on the
Closing Date, to the extent it maintains product liability or similar insurance
coverage, Buyer will use reasonable efforts (at Seller's cost to the extent of
any additional cost therefor, provided that, in the event there will be such a
cost, Buyer will give Seller a reasonable period of time to determine whether it
desires to incur such cost before Buyer commits to such coverage with respect to
Seller) to include Seller and its Affiliates as an additional insured/loss payee
on any such policies in respect of which Seller or its Affiliates has or may
have an insurable interest with respect to the HPG Business, the Transferred
Assets, any of the Assumed Liabilities or any facilities the possession of which
will be transferred to Buyer at the Closing. Seller agrees, for a period of six
years commencing on the Closing Date, to include Buyer Companies as additional
insured/loss payees
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on any product liability policies or similar insurance coverage of Seller (at
Buyer's cost to the extent of any additional cost therefor, provided that, in
the event there will be such a cost, Seller will give Buyer a reasonable period
of time to determine whether it desires to incur such cost before Seller commits
to such coverage with respect to Buyer) as to all claims or occurrences that
constitute Excluded Liabilities.
(d) Buyer agrees that, not later than December 31, 1998, and in a
manner reasonably satisfactory to Seller, Buyer shall in good faith seek to
release Seller and its Affiliates from all obligations under all Financial
Support Arrangements.
(e) If, at any time after the Closing Date, (i) any amounts are drawn
on or paid under any Financial Support Arrangement where Seller or any of its
Affiliates is obligated to reimburse the Person making such payment or (ii)
Seller or any of its Affiliates pays any amounts under, or any fees, costs or
expenses relating to, such Financial Support Arrangement, Buyer shall pay Seller
such amounts promptly after receipt from Seller of notice thereof accompanied by
written evidence of the underlying payment obligation and payment thereof.
(f) In the event that Buyer fails to ensure that Seller and its
Affiliates are unconditionally released from all obligations under the Financial
Support Arrangements not later than December 31, 1998, Buyer shall either (i)
promptly deposit with Seller cash in an amount equal to the aggregate principal
or stated amount, as may be applicable, of the Financial Support Arrangements
not so released or (ii) provide back-up letters of credit issued by one or more
commercial banks reasonably satisfactory to Seller, payable to Seller in such
aggregate principal or stated amount and otherwise in form and substance
reasonably satisfactory to Seller with respect to such Financial Support
Arrangements. Any cash deposited with Seller in accordance with clause (i) shall
be held by Seller in a segregated interest-bearing account and shall be used by
Seller solely to satisfy its payment obligations in respect of such Financial
Support Arrangements, and the unused portion of any cash (including interest) so
deposited with Seller shall be returned to Buyer promptly following the release
of Seller Companies with respect to, or any other termination of, the Financial
Support Arrangement.
Section 6.04 Use of Intellectual Property. Buyer acknowledges and
agrees that except as otherwise specifically contemplated by the Transaction
Documents, no Buyer Company is obtaining any rights in or to use any
Intellectual Property. Buyer further acknowledges and agrees that
notwithstanding any provision to the contrary in the Transaction Documents,
except as permitted by the Trademark License Agreement or the Cross License
Agreement, Buyer shall not use, and Buyer shall cause its Affiliates not to use,
any trademark, logo or tradename of Seller or any Affiliate of Seller (other
than those listed on Attachment XII as Transferred Assets and transferred to
Buyer under the terms of this Agreement) or any trademarks, logos or trade names
that are confusingly similar thereto or that are a translation or
transliteration thereof into any language or alphabet.
Section 6.05 Certain Environmental Investigations.
(a) Buyer agrees that, if Buyer decides to conduct prior to Closing an
environmental audit or similar review of the HPG Business that involves testing,
drilling or sampling at any
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facility, possession of which is contemplated to be transferred to a Buyer
Company at Closing, Buyer will so advise Seller and will give Seller sufficient
prior written notice to enable Seller's Representatives to be present during any
such testing, drilling or sampling, and to review and comment on any work plans
related to such audit or review. Buyer further agrees to arrange for split
samples to be taken in connection with any such audit or review, with any
additional costs therefor to be paid by Seller. Except with respect to split
samples, Buyer agrees that it will conduct such testing, drilling, or sampling,
including disposal of all materials associated with such activities, such as
drill cuttings, wastewater, and sampling equipment, at Buyer's sole cost and
expense and in accordance with all Applicable Laws, including Environmental
Laws. If the Closing contemplated by the Transaction Documents is not
consummated for any reason, Buyer agrees to restore each facility at which any
such testing, drilling or sampling was conducted to reasonable working
condition.
(b) Except to the extent Buyer is otherwise required to take action
itself in accordance with Applicable Law, all information obtained from Buyer's
environmental review shall be kept confidential and Buyer shall not provide it
to any Person other than its advisors and Seller, and in the event that Buyer's
environmental review discloses conditions at any of Seller's facilities that may
require notice to a Governmental Authority prior to Closing, Seller shall
determine what reporting, if any, is necessary and shall conduct any such
reporting.
Section 6.06 Nonsolicitation of Employees, etc. From and after the date
of this Agreement until the fifth anniversary of the Closing Date, neither Buyer
nor any Buyer Companies shall, without the prior written approval of Seller,
directly or indirectly solicit any individual who is a non-exempt (within the
meaning of the Fair Labor Standards Act) employee of a Seller Company to
terminate his or her employment relationship with Seller Companies; provided,
however, that the foregoing shall not apply to individuals hired as a result of
the use of an independent employment agency (so long as the agency was not
directed to solicit a particular individual or a class of individuals that could
only be satisfied by employees of Seller Companies) or as a result of the use of
a general solicitation (such as an advertisement) not specifically directed to
employees of Seller Companies. Buyer recognizes and agrees that a breach by
Buyer or Buyer Companies of any of the covenants and agreements in this Section
6.06 could cause irreparable harm to Seller, that Seller's remedies at law in
the event of such breach would be inadequate, and that, accordingly, in the
event of such breach a restraining order or injunction or both may be issued
against Buyer or Buyer Companies, in addition to any other rights and remedies
that may be available to Seller under Applicable Law. If this Section 6.06 is
more restrictive than permitted by Applicable Laws of the jurisdiction in which
Seller seeks enforcement hereof, this Section 6.06 shall be limited to the
extent required to permit enforcement under such Applicable Laws.
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ARTICLE VII
COVENANTS AND AGREEMENTS OF THE PARTIES
Section 7.01 Further Assurances. Subject to the terms and conditions of
this Agreement, each party shall use reasonable commercial efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary or desirable under Applicable Laws to consummate the Contemplated
Transactions. Seller and Buyer shall execute and deliver, and shall cause Seller
Companies and Buyer Companies, as appropriate or required and as the case may
be, to execute and deliver such other documents, certificates, agreements and
other writings and to take such other actions as may be necessary or desirable
to consummate or implement the Contemplated Transactions, specifically including
the reading and formalization of a public deed in Spanish, in front of a Notary
Public in Queretaro, Mexico, and the recordation of said public deed in the
applicable governmental office or registry. Except as otherwise expressly set
forth in the Transaction Documents, nothing in this Section 7.01 shall require
any Seller Companies or Buyer Companies to make any payments in order to obtain
any consents or approvals necessary or desirable in connection with the
consummation of the Contemplated Transactions.
Section 7.02 Certain Filings; Consents. Seller and Buyer shall
cooperate with one another (i) in determining whether any action by or in
respect of, or filing with, any Governmental Authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material Contracts, in connection with the consummation of the
Contemplated Transactions and (ii) subject to the terms and conditions of this
Agreement, in taking such actions or making any such filings, furnishing
information required in connection therewith and seeking timely to obtain any
such actions, consents, approvals or waivers.
Section 7.03 Public Announcements. Prior to the Closing, Seller and
Buyer shall consult with each other before issuing any press release or making
any public statement with respect to this Agreement or the Contemplated
Transactions and, except as may be required by Applicable Law or any listing
agreement with any national or international securities exchange, shall not
issue any such press release or make any such public statement prior to such
consultation. Notwithstanding the foregoing, no provision of this Agreement
shall relieve Buyer from any of its obligations under the Confidentiality
Agreement, or terminate any of the restrictions imposed upon Buyer by Section
6.01.
Section 7.04 Intellectual Property.
(a) Buyer acknowledges and agrees that Buyer Companies shall hold all
Intellectual Property constituting part of the Transferred Assets subject to any
licenses thereof granted by Seller Companies prior to the Closing Date and,
other than in the ordinary course of business consistent with past practices to
suppliers, vendors, or other Persons doing work for the HPG Business as part of
such work for the HPG Business, Seller will not take any action to impair,
encumber, impede or invalidate such Intellectual Property prior to the Closing
Date.
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(b) Buyer further acknowledges and agrees that the transfer of
Intellectual Property constituting Transferred Assets to Buyer Companies shall
not affect the right of Seller Companies to use, disclose or otherwise freely
deal with any know-how, trade secrets and other technical information not
constituting Transferred Assets, except to the extent otherwise limited in the
Cross License Agreement and subject to the provisions of Section 5.06.
Section 7.05 HSR Act. Seller and Buyer shall take all actions necessary
or appropriate to cause the prompt expiration or termination of any applicable
waiting periods under the HSR Act and the Mexican Federal Law of Economic
Competition in respect of the Contemplated Transactions, including, without
limitation, complying as promptly as practicable with any requests for
additional information.
Section 7.06 Certain Environmental Insurance Matters. The provisions of
this Section 7.06 shall not have any effect on any insurance policies of Buyer
or Buyer Companies. Notwithstanding any provision to the contrary in this
Agreement, this Section 7.06 shall constitute Seller's and Buyer's agreement
regarding the allocation of insurance proceeds with respect to matters that
arise under or relate to Environmental Laws that are comprised, in whole or in
part, of Environmental Liabilities that constitute Assumed Liabilities (the
"Environmental Insurance Claims"). Buyer acknowledges and agrees that,
notwithstanding any other provisions of the Transaction Documents, Seller shall
control the Environmental Insurance Claims and shall have the right to
compromise or settle any Environmental Insurance Claims; provided, however, that
without the prior written consent of Buyer, Seller shall not have the right to
enter into any compromise or settlement of any Environmental Insurance Claim
that (i) imposes any liability, obligation or responsibility on any Buyer
Company or (ii) imposes any condition, restriction or limitation on the
operation or conduct of the HPG Business. Seller agrees to act in good faith and
with reasonable prudence to maximize recovery (after costs and Taxes) with
respect to the Environmental Insurance Claims and shall allocate any recovery
received with respect to such Environmental Insurance Claims, first, to the
costs incurred to collect such recovery (whether incurred before or after
Closing) and, second, to all net Tax costs related to such recovery. With
respect to any recovery remaining (the "Remaining Recovery"):
(i) if the recovery applies to liabilities that are Assumed
Liabilities and to liabilities that are not Assumed Liabilities, and
the recovery was not designated as arising from specific liabilities
(e.g., a global settlement with an insurance carrier), Seller will pay
Buyer an amount equal to the Remaining Recovery multiplied by X
multiplied by (one minus Y); where X equals the total of the
Environmental Insurance Claims (estimated by Seller as of the date of
recovery) under said insurance policies divided by the total
environmental and other claims by Seller under said insurance policies;
and Y equals Seller's past expenditures on said liabilities divided by
the sum of (A) Seller's past expenditures in respect of said
liabilities and (B) the total estimated expenditures to be made by
Seller or Buyer in respect of said liabilities (estimated by Seller as
of the date of recovery), or
(ii) if the recovery was designated as arising from a specific
liability that is an Assumed Liability, Seller will pay Buyer the
Remaining Recovery multiplied by (one minus Y).
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Any obligations assumed in any such compromise or settlement of the
Environmental Insurance Claims shall be apportioned between Seller and Buyer in
the same proportion as a recovery would be allocated pursuant to this Section
7.06.
Section 7.07 Legal Privileges. Except as to attorney-client work
product and other legal privileges with respect to the negotiation of, and
matters relating to, the Contemplated Transactions, Seller and Buyer acknowledge
and agree that all attorney-client, work product and other legal privileges that
may exist with respect to the Transferred Assets, Excluded Assets, Assumed
Liabilities or Excluded Liabilities shall, from and after the Closing Date, be
deemed common privileges of Seller and Buyer to the extent that Seller and Buyer
have common interests in the matter. Both Seller and Buyer shall use all
commercially reasonable efforts after the Closing Date to preserve all such
privileges and neither Seller nor Buyer shall knowingly waive any such privilege
without the prior written consent of the other party (which consent shall not be
unreasonably withheld or delayed).
ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFIT MATTERS
Section 8.01 Employees and Employee Benefit Matters. The parties agree
as to employee and employee benefit matters as set forth in Exhibit D.
ARTICLE IX
CONDITIONS TO CLOSING
Section 9.01 Conditions to the Obligations of Each Party. The
obligations of Seller and Buyer to consummate the Closing are subject to the
satisfaction (or waiver) of the following conditions:
(a) any applicable waiting period under the HSR Act relating to the
Contemplated Transactions shall have expired or been terminated without any
action being taken by a Governmental Authority that restrains, prevents or
results in a Material Adverse Effect on the HPG Business;
(b) no provision of any Applicable Law and no judgment, injunction,
order or decree shall restrain or prohibit the transactions contemplated hereby
or shall exist which would materially limit or adversely effect Buyer's
ownership or control of the Transferred Assets, and there shall not have been
threatened, nor shall there be pending, any action or proceeding by or before
any court or Governmental Authority challenging any of the Contemplated
Transactions or seeking monetary relief by reason of the consummation of the
Contemplated Transactions that reasonably could be expected to have a Material
Adverse Effect on the HPG Business; and
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(c) all actions by or in respect of or filings with any Governmental
Authority required to permit the Contemplated Transactions shall have been
obtained.
Section 9.02 Conditions to Obligation of Buyer. The obligations of
Buyer to consummate the Closing are subject to the satisfaction (or waiver by
Buyer) of the following further conditions:
(a) (i) Seller shall have performed in all respects all of its
obligations under the Transaction Documents required to be performed by it on or
prior to the Closing Date, (ii) the representations and warranties of Seller
contained in the Transaction Documents shall be true and correct at and as of
the date of this Agreement and as of the Closing Date, as if made at and as of
each such date, except that those representations and warranties which are by
their express terms made as of a specific date shall be true and correct only as
of such date, in each case except for inaccuracies that could not reasonably be
expected to have a Material Adverse Effect on the HPG Business (except with
respect to the representations and warranties contained in Sections B.01 and
B.02, which shall be true and correct subject only to the exceptions set forth
therein), and (iii) Buyer shall have received a certificate signed by an
executive officer of Seller to the foregoing effect;
(b) since March 29, 1998, no event has occurred that has had a Material
Adverse Effect on the HPG Business;
(c) Seller or the applicable Affiliated Transferor shall have executed
and delivered, on or before the Closing Date, the Transaction Documents that are
required to be signed by a Seller Company;
(d) Seller or the applicable Affiliated Transferor, as the case may be,
shall have obtained the consents, approvals or permits contemplated by
Attachment XIII to this Agreement;
(e) Seller or the applicable Affiliated Transferor shall have prepared
and delivered on or before the Closing Date a patent docket and a trademark
docket, each of which shall set forth with particularity and accuracy with
respect to all Intellectual Property that constitute Transferred Assets all
actions known as of the date of preparation that are required to be taken to
maintain such Intellectual Property within the six months following the Closing
Date;
(f) Buyer shall have received an opinion of Miles & Stockbridge P.C. in
the form attached hereto as Attachment XXIX to this Agreement; and
(g) Buyer shall have received audited financial statements of the HPG
Business consisting of the balance sheets as of December 31, 1997 and 1996 and
the related statements of operations, owners' equity and cash flows for each of
the three years in the period ended December 31, 1997, together with the opinion
of Ernst & Young LLP thereon, which opinion shall state that such financial
statements have been prepared in accordance with GAAP and shall be without
qualification, and unaudited financial statements of the HPG Business consisting
of the balance sheet as of March 28, 1998, and statements of operations and cash
flows for the quarter then ended.
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Section 9.03 Conditions to Obligation of Seller. The obligation of
Seller to consummate the Closing is subject to the satisfaction (or waiver by
Seller) of the following further conditions:
(a) (i) Buyer shall have performed in all respects all of its
obligations under the Transaction Documents required to be performed by Buyer at
or prior to the Closing Date, (ii) the representations and warranties of Buyer
contained in the Transaction Documents shall be true and correct at and as of
the date of this Agreement and as of the Closing Date, as if made at and as of
each such date, except that those representations and warranties which are by
their express terms made as of a specific date shall be true and correct only as
of such date, in each case except for inaccuracies that could not reasonably be
expected to have a Material Adverse Effect on the HPG Business (except with
respect to the representations and warranties contained in Sections C.01 and
C.02, which shall be true and correct subject only to the exceptions set forth
therein), and (iii) Seller shall have received a certificate signed by an
executive officer of Buyer to the foregoing effect; and
(b) Buyer or the applicable Buyer Company shall have executed and
delivered, on or before the Closing Date, the Transaction Documents that are
required to be signed by a Buyer Company.
Section 9.04 Effect of Waiver. Any waiver by Buyer of the conditions
specified in clause (ii) of Section 9.02(a), and any waiver by Seller of the
conditions specified in clause (ii) of Section 9.03, if made knowingly, shall
also be deemed a waiver of any claim for Damages as the result of the matters
waived.
ARTICLE X
SURVIVAL; INDEMNIFICATION
Section 10.01 Survival.
(a) None of the representations, warranties, covenants or agreements of
the parties contained in any Transaction Document or in any certificate or other
writing delivered pursuant to any Transaction Document or in connection with any
Transaction Document shall survive the Closing, except for:
(i) the representations and warranties in Sections B.01 and
B.02 shall survive indefinitely;
(ii) the representations and warranties in Section B.13 shall
not survive the Closing Date;
(iii) the representations and warranties in Section B.15
relating to Intellectual Property (other than patents and copyrights)
and the representations and warranties in Sections B.07 and B.15 to the
extent but only to the extent they relate to title to
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Transferred Assets shall survive for a period of six years and six
months from the Closing Date;
(iv) the representations and warranties in Sections B.16 and
B.18 shall survive until 30 days after the expiration of the applicable
statute of limitations (or extensions or waivers thereof);
(v) the representations and warranties in Exhibit B (other
than (A) those Sections of Exhibit B referenced in the preceding
clauses (i), (ii) and (iv), (B) those representations and warranties in
Section B.15 relating to Intellectual Property (other than patents and
copyrights) and (C) those representations and warranties in Sections
B.07 and B.15 to the extent but only to the extent they relate to title
to Transferred Assets) shall survive for a period of one year from the
Closing Date;
(vi) the representations and warranties in Sections C.01 and
C.02 shall survive indefinitely;
(vii) the representations and warranties in Exhibit C (other
than those Sections of Exhibit C referenced in the preceding clause
(v)) shall survive for a period of one year from the Closing Date; and
(viii) those covenants and agreements set forth in the
Transaction Documents that, by their terms, are to have effect after
the Closing Date shall survive for the period contemplated by the
covenants and agreements, or if no period is expressly set forth,
indefinitely.
The representations, warranties, covenants and agreements referenced in the
preceding clauses (i) and (iii) through (viii) are referred to herein as the
"Surviving Representations or Covenants." It is understood and agreed that, (i)
before the Closing the remedies expressly set forth in Article XI are the sole
and exclusive remedies for any breach of any representation, warranty, covenant
or agreement and (ii) following the Closing the sole and exclusive remedy with
respect to any breach of any representation, warranty, covenant or agreement
(other than (1) with respect to a breach of the terms of a covenant or
agreement, as to which Buyer or Seller, as the case may be, shall be entitled to
seek specific performance or other equitable relief and (2) with respect to
claims for fraud) shall be a claim for Damages (whether by contract, in tort or
otherwise, and whether in law, in equity or both) made pursuant to this Article
X.
(b) Except as otherwise provided in this Agreement, Buyer for itself,
its Affiliates and their respective Representatives and successors, effective as
of the Closing, releases and discharges Seller, its Affiliates and their
respective Representatives from any and all Damages (whether by contract, in
tort or both, and whether in law, in equity or both), rights of subrogation and
contribution and remedies of any nature whatsoever, known or unknown, relating
to or arising out of Environmental Liabilities or Environmental Laws, in either
case, arising in connection with or in any way relating to the HPG Business and
constituting an Assumed Liability.
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Section 10.02 Indemnification.
(a) Effective as of the Closing and subject to the limitations set
forth in Section 10.04(a), Buyer hereby indemnifies Seller and its Affiliates
and their respective directors, officers, employees and agents against, and
agrees to hold them harmless from any and all Damages incurred or suffered by
any of them arising out of (i) any misrepresentation, breach or nonfulfillment
of any Surviving Representation or Covenant made or to be performed by Buyer
Companies pursuant to any of the Transaction Documents, (ii) except as otherwise
contemplated by Sections 10.02(b)(iv), 10.04(b)(ii) and D.18, any Assumed
Liabilities (including, without limitation, Buyer's (or any other Buyer
Company's) failure to perform or in due course pay or discharge any Assumed
Liability), (iii) any Financial Support Arrangement, (iv) any matters for which
indemnification is provided under Exhibit D (it being understood that the terms
of such indemnification shall be governed by and subject to the terms of Exhibit
D) or (v) any Environmental Laws to the extent such liabilities arise out of,
relate to, are based on or result from any action taken (or a failure to take
action) or any event occurring on or after the Closing Date. Other than costs
associated with split samples, Buyer hereby indemnifies Seller and its
Affiliates and their respective directors, officers, employees and agents
against, and agrees to hold them harmless from any and all Damages incurred or
suffered by any of them arising out of or related in any way to any actions
taken by Buyer Companies or any of their Representatives in connection with any
environmental audit or similar review of the HPG Business that involves testing,
drilling or sampling at any facility possession of which is contemplated to be
transferred to a Buyer Company at Closing, including, without limitation, (A)
personal injury, wrongful death, economic loss or property damage claims, (B)
claims for natural resource damages, (C) violations of Applicable Law or (D) any
Damages with respect thereto.
(b) Effective as of the Closing and subject to the limitations set
forth in Section 10.04(b), Seller hereby indemnifies Buyer and its Affiliates
and their respective directors, officers, employees and agents against, and
agrees to hold them harmless from any and all Damages incurred or suffered by
any of them arising out of or related in any way to (i) any misrepresentation,
breach or nonfulfillment of any Surviving Representation or Covenant made or to
be performed by the Seller Companies pursuant to any Transaction Document, (ii)
any Excluded Liability or any other liability or obligation of the HPG Business,
other than Assumed Liabilities (provided that nothing herein shall diminish
Seller's obligations pursuant to Section 10.04(b)(ii)), to the extent arising
out of, relating to, based on or resulting from actions taken (or failures to
take action), events occurring or conditions existing prior to the Closing
(including, without limitation, Seller's (or any other Seller Company's) failure
to perform or in due course pay or discharge any Excluded Liability), (iii) any
matters for which indemnification is provided under Exhibit D (it being
understood that the terms of such indemnification shall be governed by and
subject to the terms of Exhibit D) or (iv) Asheboro Closing Costs in an amount
equal to 50% of the first $20,000,000 of Asheboro Closing Costs and 100% of all
Asheboro Closing Costs in excess of $20,000,000.
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Section 10.03 Procedures.
(a) If Seller or any of its Affiliates or any of their directors,
officers, employees and agents, shall seek indemnification pursuant to Section
10.02(a), or if Buyer or any of its Affiliates or any of their directors,
officers, employees and agents, shall seek indemnification pursuant to Section
10.02(b), the Person seeking indemnification (the "Indemnified Party") shall
give written notice to the party from whom such indemnification is sought (the
"Indemnifying Party") promptly (and in any event within 30 days) after the
Indemnified Party (or, if the Indemnified Party is a corporation, any officer or
employee of the Indemnified Party) becomes aware of the facts giving rise to
such claim for indemnification (an "Indemnified Claim") specifying in reasonable
detail the factual basis of the Indemnified Claim, stating the amount of the
Damages, if known, the method of computation thereof, containing a reference to
the provision of the Transaction Documents in respect of which such Indemnified
Claim arises and demanding indemnification therefor. The failure of an
Indemnified Party to provide notice in accordance with this Section 10.03 shall
not constitute a waiver of that party's claims to indemnification pursuant to
Section 10.02, except to the extent that (i) any such failure or delay in giving
notice causes the amounts paid by the Indemnifying Party to be greater than they
otherwise would have been or otherwise results in prejudice to the Indemnifying
Party or (ii) such notice is not delivered to the Indemnifying Party prior to
the expiration of the applicable survival period set forth in Section 10.01. If
the Indemnified Claim arises from the assertion of any claim, or the
commencement of any suit, action, proceeding or Remedial Action brought by a
Person that is not a party hereto (a "Third Party Claim"), any such notice to
the Indemnifying Party shall be accompanied by a copy of any papers theretofore
served on or delivered to the Indemnified Party in connection with such Third
Party Claim. With respect to any Third Party Claim asserted or brought prior to
the Closing Date, notice of such Third Party Claim shall be deemed to have been
delivered on the Closing Date.
(b) (i) Upon receipt of notice of a Third Party Claim from an
Indemnified Party pursuant to Section 10.03(a), the Indemnifying Party
will be entitled to assume the defense and control of such Third Party
Claim subject to the provisions of this Section 10.03, provided that in
the case of matters involving actions or claims that, if not first
paid, discharged or otherwise complied with would result in a material
interruption or cessation of the conduct of the HPG Business, the
Indemnifying Party shall act promptly to avoid, to the extent
practicable, any such effects on the HPG Business. After written notice
by the Indemnifying Party to the Indemnified Party of its election to
assume the defense and control of a Third Party Claim, the Indemnifying
Party shall not be liable to such Indemnified Party for any legal fees
or expenses subsequently incurred by such Indemnified Party in
connection therewith. Notwithstanding anything in this Section 10.3 to
the contrary, if the Indemnifying Party does not assume defense and
control of a Third Party Claim as provided in this Section 10.3, the
Indemnified Party shall have the right to defend such Third Party
Claim, subject to the limitations set forth in this Section 10.03, in
such manner as it may deem appropriate. Whether the Indemnifying Party
or the Indemnified Party is defending and controlling any such Third
Party Claim, it shall select counsel, contractors, experts and
consultants of recognized standing and competence, shall take all steps
necessary in the investigation, defense or settlement thereof, and
shall at all times diligently and promptly pursue the resolution
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thereof. The party conducting the defense thereof shall at all times
act as if all Damages relating to the Third Party Claim were for its
own account and shall act in good faith and with reasonable prudence to
minimize Damages therefrom. The Indemnified Party shall, and shall
cause each of its Affiliates, directors, officers, employees, and
agents to, cooperate fully with the Indemnifying Party in connection
with any Third Party Claim.
(ii) Subject to the provisions of Section 10.03(b)(iii) and
Section 10.03(b)(iv), the Indemnifying Party shall be authorized to
consent to a settlement of, or the entry of any judgment arising from,
any Third Party Claims, and the Indemnified Party shall consent to a
settlement of, or the entry of any judgment arising from, such Third
Party Claims; provided, that the Indemnifying Party shall (1) pay or
cause to be paid all amounts arising out of such settlement or judgment
concurrently with the effectiveness thereof; (2) shall not encumber any
of the assets of any Indemnified Party or agree to any restriction or
condition that would apply to such Indemnified Party or to the conduct
of that party's business; and (3) shall obtain, as a condition of any
settlement or other resolution, a complete release of each Indemnified
Party against any and all damages resulting from, arising out of or
incurred with respect to such settlement or other resolution. Except
for the foregoing, no settlement or entry of judgment in respect of any
Third Party Claim shall be consented to by any Indemnifying Party or
Indemnified Party without the express written consent of the other
party.
(iii) Notwithstanding the provisions of Section 10.03(b)(i),
Buyer shall manage all Remedial Actions conducted with respect to
facilities which constitute Transferred Assets, provided that Seller
and its Representatives shall have the right, consistent with Buyer's
right to manage such Remedial Actions as aforesaid, to participate
fully in all decisions regarding any Remedial Action, including
reasonable access to sites where any Remedial Action is being
conducted, reasonable access to all documents, correspondence, data,
reports or information regarding the Remedial Action, reasonable access
to employees and consultants of Buyer with knowledge of relevant facts
about the Remedial Action and the right to attend all meetings and
participate in any telephone or other conferences with any Government
Authority or other third party regarding the Remedial Action.
(iv) In the case of the indemnification contemplated by
Section 10.02(b)(iii), in the event that the Indemnifying Party desires
to settle the matters referenced therein or consent to the entry of any
judgment arising thereunder and the Indemnified Party does not wish to
consent to such settlement or entry of judgment, the Indemnified Party
shall have no obligation to consent to the settlement or entry of
judgment provided that it agrees in writing to pay and be responsible
for 100% of any Damages; provided that the Indemnified Party shall not
be required to consent to any settlement or agree to be responsible for
the payment of Damages thereafter incurred with respect to any matter
the settlement or entry of judgment of which would require the consent
of such Indemnified Party pursuant to Section 10.03(b)(ii). The
obligation of an Indemnified Party that rejects any proposed settlement
offer or entry of any such judgment to pay and be responsible for 100%
of any Damages in accordance with this Section 10.03(b)(iv) shall be
conditioned upon and subject to the payment by the Indemnifying Party,
within five
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Business Days of the date such Indemnified Party provides the written
agreement contemplated by the preceding sentence, of an amount, in
immediately available funds, equal to the portion of the total
settlement that would have been payable by the Indemnifying Party
according to the percentage sharing arrangement contemplated by Section
10.04(b)(ii). Thereafter, the Indemnified Party shall be solely
responsible for any Damages and for the defense of the matter that is
the subject of the proposed settlement or entry of judgment.
Notwithstanding the foregoing, an Indemnifying Party may, at its option
and expense, participate in the defense of any Indemnified Claim.
(v) In furtherance of and not in limitation of the provisions
of this Section 10.03, with respect to product liability matters and
other matters contemplated by Exhibit E, Seller and Buyer covenant and
agree as set forth in Exhibit E.
(c) If the Indemnifying Party and the Indemnified Party are unable to
agree with respect to a procedural matter arising under Section 10.03(b)(iii),
the Indemnifying Party and the Indemnified Party shall, within 10 days after
notice of disagreement given by either party, agree upon a third-party referee
("Referee"), who shall be an attorney and who shall have the authority to review
and resolve the disputed matter. The parties shall present their differences in
writing (each party simultaneously providing to the other a copy of all
documents submitted) to the Referee and shall cause the Referee promptly to
review any facts, law or arguments either the Indemnifying Party or the
Indemnified Party may present. The Referee shall be retained to resolve specific
differences between the parties within the range of such differences. Either
party may request that all discussions with the Referee by either party be in
each other's presence. The decision of the Referee shall be final and binding
unless both the Indemnifying Party and the Indemnified Party agree. The parties
shall share equally all costs and fees of the Referee.
(d) If an Indemnifying Party makes any payment on an Indemnified Claim,
the Indemnifying Party shall be subrogated, to the extent of such payment, to
all rights and remedies of the Indemnified Party to any insurance benefits or
other claims of the Indemnified Party with respect to such claim.
Section 10.04 Limitations. Notwithstanding anything to the contrary in
this Agreement or in any of the Transaction Documents:
(a) Buyer shall only have liability to Seller or any other Person
hereunder with respect to the representations and warranties described in clause
(i) of Section 10.02(a) if such matters were the subject of a written notice
given by the Indemnified Party pursuant to Section 10.03(a) within the period
following the Closing Date specified for each respective matter in Section
10.01.
(b) Seller shall only have liability to Buyer or any other Person
hereunder:
(i) with respect to the representations and warranties
described in clause (i) of Section 10.02(b), (y) to the extent that the
aggregate Damages of all Indemnified Parties as the result thereof
exceed $3,500,000 but are not greater than an amount equal to
$3,500,000 plus 25% of the Adjusted Purchase Price (it being understood
that Seller's
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maximum liability under Section 10.02(b)(i) with respect to
representations and warranties and this Section 10.04(b)(i) shall be an
amount equal to 25% of the Adjusted Purchase Price), and (z) if such
matters were the subject of a written notice given by the Indemnified
Party pursuant to Section 10.03(a) within the period following the
Closing Date specified for each respective matter in Section 10.01;
provided, however, that such $3,500,000 threshold shall not apply to
any such breach of representation or warranty in respect of the Black &
▇▇▇▇▇▇ Trademarks (as defined in the Trademark License Agreement).
(ii) with respect to Environmental Liabilities constituting
Assumed Liabilities, to the extent of 75% of the first $5,000,000 in
aggregate Damages, and 100% of the aggregate Damages in excess of
$5,000,000, in each case only to the extent incurred and paid within
five years following the Closing Date by all Indemnified Parties as the
result thereof based on the use of the facilities constituting
Transferred Assets as of the Closing Date; and
(iii) with respect to the matters described in clause (ii) of
Section 10.02(b), there shall be no limitation on Seller's liability.
ARTICLE XI
TERMINATION
Section 11.01 Termination. The Transaction Documents may be terminated
at any time prior to the Closing:
(i) by mutual written agreement of Seller and Buyer;
(ii) by Seller or Buyer if the Closing shall not have been
consummated by July 31, 1998; provided, however, that neither Seller
nor Buyer may terminate the Transaction Documents pursuant to this
clause (ii) if the Closing shall not have been consummated by July 31,
1998, by reason of the failure of such party or any of its Affiliates
to perform in all material respects any of its or their respective
covenants or agreements contained in the Transaction Documents;
(iii) by either Seller or Buyer if there shall be any
Applicable Law or regulation that makes consummation of the
Contemplated Transactions illegal or otherwise prohibited or if
consummation of the Contemplated Transactions would violate any
nonappealable final order, decree or judgment of any Governmental
Authority having competent jurisdiction;
(iv) by Buyer if the representations and warranties of Seller
shall not be true and correct as at any date prior to Closing or if
Seller shall have failed to perform all of the covenants and comply
with all of the provisions required by any Transaction Document to be
performed or complied with by it on or before the Closing, unless such
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matters would not rise to the level of a failure of the Closing
condition contemplated by Section 9.02(a) if Seller fails to so
perform, comply or otherwise cure such matter within 15 days of receipt
of notice from Buyer of such matter; and
(v) by Seller if the representations and warranties of Buyer
shall not be true and correct as at any date prior to Closing or if
Buyer shall have failed to perform all of the covenants and comply with
all of the provisions required by any Transaction Document to be
performed or complied with by it on or before the Closing, but only
unless such matters would not rise to the level of a failure of the
Closing condition contemplated by Section 9.03(a) if Buyer fails to so
perform, comply or otherwise cure such matter within 15 days of receipt
of notice from Seller of such matter.
Any party desiring to terminate this Agreement pursuant to this Section 11.01
shall give written notice of such termination to the other parties to this
Agreement.
Section 11.02 Effect of Termination. If this Agreement is terminated as
permitted by Section 11.01, such termination shall be without liability of any
party (or any Affiliate, stockholder, director, officer, employee, agent,
consultant or Representative of such party) to any other party to this
Agreement; provided, however, that if the Contemplated Transactions fail to
close as a result of a breach of the provisions of any Transaction Document by
Seller or Buyer, such party shall be fully liable for any and all Damages
incurred or suffered by the other party as a result of all such breaches if the
other party is ready, willing and able to otherwise satisfy its obligations
under the Transaction Documents. Notwithstanding the foregoing, the provisions
of Sections 6.01 and 12.03, the second sentence of Section 10.02(a), and this
Section 11.02 shall survive any termination hereof pursuant to Section 11.01.
ARTICLE XII
MISCELLANEOUS
Section 12.01 Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
if to Seller:
The Black & ▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President and
Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
The Black & ▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President and
General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
Miles & Stockbridge P.C.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to Buyer:
Windmere-Durable Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ Traurig
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or telecopy number and with such other copies, as such
party may hereafter specify for the purpose by notice to the other parties. Each
such notice, request or other communication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section 12.01 and evidence of receipt is received or (ii) if given by any
other means, upon delivery or refusal of delivery at the address specified in
this Section 12.01.
Section 12.02 Amendments; Waivers.
(a) Any provision of the Transaction Documents may be amended or waived
prior to the Closing Date if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by Seller and Buyer, or in the
case of a waiver, by the party against whom the waiver is to be effective.
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(b) No failure or delay by any party in exercising any right, power or
privilege under any Transaction Document shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 12.03 Expenses; Taxes. Except as otherwise provided in the
Transaction Documents, all costs and expenses incurred in connection with the
Transaction Documents shall be paid by the party incurring such cost or expense.
Notwithstanding the foregoing, (i) all real estate transfer and similar taxes or
governmental charges resulting from or relating to the transfer of the
Transferred Assets to Buyer Companies by Seller or any of the Affiliated
Transferors, shall be borne one-half by Seller and one-half by Buyer, (ii) all
sales, use and similar taxes or governmental charges (other than value added or
similar taxes for which Buyer or Buyer Companies can obtain a credit or refund)
resulting from or relating to the transfer of the Transferred Assets to Buyer
Companies by Seller or any of the Affiliated Transferors, shall be borne
one-half by Seller and one-half by Buyer, and (iii) all value added or similar
taxes for which Buyer or Buyer Companies can obtain a credit or refund shall be
borne solely by Buyer and Buyer Companies. Each of Buyer and Seller shall
reimburse the other for one-half of such fees and taxes and charges paid by the
other promptly upon presentation of a demand therefor consistent with this
Section 12.03. Any property taxes that are assessed on an annual basis and have
been paid by Seller Companies prior to Closing shall be prorated at Closing and
Buyer shall reimburse Seller Companies for amounts attributable to any period or
portion thereof on or after the Closing Date.
Section 12.04 Successors and Assigns. The provisions of the Transaction
Documents shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other party, except that Buyer may assign
its rights and delegate its obligations hereunder to any Buyer Company, provided
that Buyer shall remain responsible for the fulfillment of all such obligations
and shall remain fully liable hereunder for its own actions or omissions and the
actions or omissions of any such assignee as if such rights and obligations had
not been assigned or delegated, and the Buyer may assign its rights hereunder to
NationsBank, N.A., as collateral agent for Buyer's lenders.
Section 12.05 Disclosure. Certain information set forth in the
Disclosure Schedules has been included and disclosed solely for informational
purposes and may not be required to be disclosed pursuant to the terms and
conditions of the Transaction Documents. The disclosure of any such information
shall not be deemed to constitute an acknowledgement or agreement that the
information is required to be disclosed in connection with the representations
and warranties made in the Transaction Documents or that the information is
material, nor shall any information so included and disclosed be deemed to
establish a standard of materiality or otherwise used to determine whether any
other information is material.
Section 12.06 Construction. As used in the Transaction Documents, any
reference to the masculine, feminine or neuter gender shall include all genders,
the plural shall include the singular, and the singular shall include the
plural. With regard to each and every term and
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condition of the Transaction Documents, the parties understand and agree that
the same have or has been mutually negotiated, prepared and drafted, and that if
at any time the parties desire or are required to interpret or construe any such
term or condition or any agreement or instrument subject hereto, no
consideration shall be given to the issue of which party actually prepared,
drafted or requested any term or condition of the Transaction Documents.
Section 12.07 Entire Agreement.
(a) The Transaction Documents and any other agreements contemplated
thereby (including, to the extent contemplated herein, the Confidentiality
Agreement) constitute the entire agreement among the parties with respect to the
subject matter of such documents and supersede all prior agreements,
understandings and negotiations, both written and oral, between the parties with
respect to the subject matter thereof.
(b) The parties hereto acknowledge and agree that no representation,
warranty, promise, inducement, understanding, covenant or agreement has been
made or relied upon by any party hereto other than those expressly set forth in
the Transaction Documents. Without limiting the generality of the disclaimer set
forth in the preceding sentence, (i) neither Seller nor any of its Affiliates
has made or shall be deemed to have made any representations or warranties, in
any presentation or written information relating to the HPG Business given or to
be given in connection with the Contemplated Transactions, in any filing made or
to be made by or on behalf of Seller or any of its Affiliates with any
Governmental Authority, and no statement, made in any such presentation or
written materials, made in any such filing or contained in any such other
information shall be deemed a representation or warranty hereunder or otherwise,
and (ii) Seller, on its own behalf and on behalf of the other Seller Companies,
expressly disclaims any implied warranties, including but not limited to
warranties of fitness for a particular purpose and warranties of
merchantability. Buyer acknowledges that Seller has informed them that no Person
has been authorized by Seller or any of its Affiliates to make any
representation or warranty in respect of the HPG Business or in connection with
the Contemplated Transactions, unless in writing and contained in this Agreement
or in any of the Transaction Documents to which they are a party.
(c) Except as expressly provided herein or in any other Transaction
Document, no Transaction Document or any provision thereof is intended to confer
upon any Person other than the parties hereto any rights or remedies hereunder.
Section 12.08 Governing Law. Except as otherwise provided in any of the
Transaction Documents, this Agreement and the other Transaction Documents shall
be construed in accordance with and governed by the law of the State of New York
(without regard to the choice of law provisions thereof).
Section 12.09 Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by the other party hereto.
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Section 12.10 Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, any of the Transaction Documents or the Contemplated Transactions shall be
brought in the United States District Court for the Southern District of New
York (or, if subject matter jurisdiction is unavailable, in the state courts of
the State of New York), and each of the parties hereby consents to the exclusive
jurisdiction of such court (and of the appropriate appellate court) in any such
suit, action or proceeding and waives any objection to venue laid therein.
Process in any such suit, action or proceeding may be served on any party
anywhere in the world. Without limiting the foregoing, Seller and Buyer agree
that service of process upon such party at the address referred to in Section
12.01, together with written notice of such service to such party, shall be
deemed effective service of process upon such party.
Section 12.11 Severability. Any provision of the Transaction Documents
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of the
Transaction Documents or affecting the validity or enforceability of such
provision in any other jurisdiction. To the extent any provision of the
Transaction Documents is determined to be prohibited or unenforceable in any
jurisdiction Seller and Buyer agree to use reasonable commercial efforts, and
agree to cause the other Seller Companies or Buyer Companies, as the case may
be, to use reasonable commercial efforts, to substitute one or more valid, legal
and enforceable provisions that, insofar as practicable implement the purposes
and intent of the prohibited or unenforceable provision.
Section 12.12 Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
Section 12.13 Bulk Sales. Buyer hereby waives compliance by Seller and
each Affiliated Transferor, in connection with the Contemplated Transactions,
with the provisions of Article 6 of the Uniform Commercial Code as adopted in
the States of Connecticut, Maryland and North Carolina, and as adopted in any
other states or jurisdictions where any of the Transferred Assets are located,
and any other applicable bulk sales laws with respect to or requiring notice to
Seller's (or any Affiliated Transferor's) creditors, as the same may be in
effect on the Closing Date. Seller shall indemnify and hold harmless Buyer
against any and all liabilities (other than liabilities in respect of Assumed
Liabilities) which may be asserted by third parties against Buyer as a result of
noncompliance with any such bulk sales law.
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IN WITNESS WHEREOF, the parties hereto caused this Agreement to be duly
executed by their respective authorized officers on the day and year first above
written.
THE BLACK & ▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President and General
Counsel
WINDMERE-DURABLE HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman, President and Chief
Executive Officer
EXHIBIT A
DEFINITIONS
(a) The following terms have the following meanings:
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with such other
Person. For purposes of determining whether a Person is an Affiliate, the term
"control" shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of securities, contract or otherwise.
"Affiliated Transferors" means any Seller Company that owns any of the
assets that would constitute Transferred Assets if owned, held or used by Seller
or any of its Affiliates on the Closing Date or is liable for any of the Assumed
Liabilities.
"Applicable Law" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, decree or other requirement
of any Governmental Authority (including any Environmental Law) applicable to
such Person or any of their respective properties, assets, officers, directors,
employees, consultants or agents (in connection with such officer's, director's,
employee's, consultant's or agent's activities on behalf of such Person).
"Asheboro Closing Costs" means the following cash closing costs in
respect of the Asheboro Property: (a) employee severance benefits in respect of
employees working at the Asheboro property, (b) dismantle, freight and
installation costs, (c) travel and living expenses in connection with relocation
to the Queretaro Property, (d) contract engineering and recruitment expenses,
(e) any special bonus arrangements for employees working at the Asheboro
Property as of the Closing Date that are agreed to in writing by Seller and
Buyer, and (f) cleanup and maintenance costs after relocation.
"Asheboro Property" means the property located at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Assignment and Assumption Agreements" means the ▇▇▇▇ of Sale,
Assignment and Assumption Agreements to be entered into by Seller and an
Affiliated Transferor and Buyer and a Buyer Company in respect of each of the
countries where Transferred Assets are located as of the Closing Date, in the
form contemplated by Attachment II (with such changes as may be required to
satisfy any requirements of Applicable Law in any country or jurisdiction where
such Transferred Assets are located) and any other similar agreements or further
assurances documents contemplated by this Agreement executed and delivered by
Seller and an Affiliated Transferor and Buyer and a Buyer Company in connection
with the sale, assignment and transfer by Seller or an Affiliated Transferor of
Transferred Assets and the assumption by a Buyer Company of Assumed Liabilities,
as the same may be amended from time to time.
"Assumed Liabilities" means all liabilities and obligations of Seller
Companies, to the extent relating to or arising out of the operation, affairs
and conduct of the HPG Business, the Transferred Assets or the HPG Leases, of
any kind, character or description, whether liquidated or unliquidated, known or
unknown, fixed or contingent, accrued or unaccrued, absolute, determined,
determinable or indeterminable or otherwise, whether or not reflected or
reserved against in the Opening Statement or in the calculation of the Final Net
Tangible Asset Amount and whether presently in existence or arising hereafter,
except for Excluded Liabilities, including but not limited to the following:
(i) all liabilities and obligations relating to the HPG
Business or the Transferred Assets (and, to the extent provided in clauses (a)
or (d) below, in connection with the Cleaning and Lighting Products), whether
accrued, liquidated, contingent, matured or unmatured, at or prior to the
Closing, that (a) are set forth on, reflected or referred to in the Opening
Statement (including those liabilities relating to the Cleaning and Lighting
Products), (b) are disclosed in any of the Disclosure Schedules delivered
hereunder, (c) would be subject to disclosure in any of the Disclosure Schedules
delivered in connection with any of Seller's representations and warranties but
for the materiality standards contained in such representation and warranty
(provided that any such liabilities or obligations covered by this clause (c)
shall not, in the aggregate, exceed an amount that reasonably could be expected
to have a Material Adverse Effect on the HPG Business), (d) are reflected in the
Final Net Tangible Asset Amount as determined in accordance with Section 2.04
herein (including without limitation accounts payable and reserves reflected as
contra-asset accounts) or (e) are otherwise a liability or obligation that Buyer
is expressly assuming pursuant to this Agreement;
(ii) all liabilities and obligations arising under Contracts
entered into in the ordinary course of business consistent with past practices,
whether or not the Contracts have been completed or terminated prior to the
Closing Date, including, without limitation, any such liabilities and
obligations arising from or relating to the performance or non-performance of
such Contracts by the HPG Business, a Buyer Company or any other Person, whether
arising prior to, on or after the Closing Date, except to the extent they
constitute Excluded Liabilities;
(iii) all liabilities and obligations in respect of
Transferred Employees, and beneficiaries of employees and former employees of
the HPG Business, including, without limitation, liabilities and obligations
under or relating to WARN or any similar state or local law to the extent
relating to or arising out of any actions taken by Buyer Companies on or after
the Closing Date, except to the extent otherwise provided in Exhibit D to be
retained by Seller;
(iv) all liabilities and obligations in respect of Transferred
Employees and dependents and beneficiaries of Transferred Employees under
Employee Plans and Benefit Arrangements, except to the extent otherwise provided
in Exhibit D to be retained by Seller;
(v) all liabilities and obligations relating to claims of
manufacturing or design defects with respect to any product manufactured or sold
or service provided by the HPG Business on or after the Closing Date (other than
any product in the finished goods inventory of Seller Companies as of the close
of business on the day preceding the Closing Date), including liabilities and
obligations in respect of investigations regarding product safety, product
recall and related matters, except to the extent they constitute Excluded
Liabilities;
(vi) all liabilities and obligations relating to warranty
obligations or services with respect to any product sold or service provided by
the HPG Business prior to, on or after the Closing Date;
(vii) all Environmental Liabilities, whether arising prior to,
on or after the Closing Date, to the extent relating to or arising out of
conditions at the Queretaro Property;
(viii) all liabilities and obligations relating to the HPG
Leases, whether arising prior to, on or after the Closing Date;
(ix) all liabilities and obligations (except to the extent
they constitute Environmental Liabilities, which shall be governed by the
foregoing clause (vii)) relating to the Occupational Safety and Health Act of
1970, as amended, and any regulations, decisions or orders promulgated
thereunder, together with any state or local law, regulation or ordinance
pertaining to worker, employee or occupational safety or health in effect as the
same may be amended, supplemented or superseded, whether arising prior to, on or
after the Closing Date, as the same relates to the HPG Business;
(x) all liabilities and obligations arising from or relating
to governmental, judicial or adversarial proceedings (public or private),
litigation, suits, arbitration, disputes, claims, causes of action or
investigations (collectively, "Proceedings") to the extent arising from or
relating to the HPG Business or any Transferred Assets, whether or not accrued,
liquidated, contingent, matured, unmatured, or known or unknown to Seller or
Buyer at or prior to the Closing, except for liabilities and obligations of a
type contemplated by the foregoing clause (v), which shall be governed by such
clause;
(xi) all liabilities and obligations relating to the ownership
by Buyer Companies or any of their successors of the Transferred Assets,
directly or indirectly relating to or arising under the Employee Plans and
Benefit Arrangements or relating to the Transferred Employees, the lease of
properties under the HPG Leases or otherwise, or the conduct of the HPG Business
or any other business, in each case, from and after the Closing Date, including,
without limitation, any and all Proceedings in respect thereof; and
(xii) a pro rata portion of all ad valorem real property taxes
for the portion of the taxable year ending on the Closing Date.
"Benefit Arrangements" means all life and health insurance,
hospitalization, retirement, savings, bonus, deferred compensation, incentive
compensation, severance pay, disability and fringe benefit plans, holiday or
vacation pay, profit sharing, seniority, and other policies, practices,
agreements or statements of terms and conditions providing employee or executive
compensation or benefits to Transferred Employees or any of their dependents,
maintained by Seller Companies, other than an Employee Plan.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to close.
"Cleaning and Lighting Products" means hand held vacuums, upright floor
vacuums, battery powered bathroom and outdoor cleaners sold under the
Scumbuster(R) name, flexible flashlights, flexible lanterns, leashlights and
rechargeable lights, together in each case with any related accessories or
attachments.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means the letter agreement dated February
3, 1998, by and between Seller and Buyer, as the same has been or may be amended
from time to time.
"Contemplated Transactions" means the transactions contemplated by the
Transaction Documents.
"Contracts" means all contracts, agreements, leases (including leases
of real property), licenses, commitments, sales and purchase orders, and other
undertakings of any kind, whether written or oral, relating exclusively to the
HPG Business, except to the extent that any of the foregoing constitute any of
the Employee Plans, Benefit Arrangements or funding vehicles associated with any
of the Employee Plans or Benefit Arrangements.
"Cross License Agreement" means the Intellectual Property Cross License
Agreement in the form contemplated by Attachment X.
"Damages" means all demands, claims, actions or causes of action,
assessments, losses, damages, costs, expenses, liabilities, judgments, awards,
fines, sanctions, penalties, charges and amounts paid in settlement, including,
without limitation, reasonable costs, fees and expenses of attorneys, experts,
accountants, appraisers, consultants, witnesses, investigators and any other
agents or representatives of such Person (with such amounts to be determined net
of any resulting Tax benefit actually received or realized and net of any refund
or reimbursement of any portion of such amounts actually received or realized,
including, without limitation, reimbursement by way of insurance or third party
indemnification), but specifically excluding (i) any costs incurred by or
allocated to an Indemnified Party with respect to time spent by employees of the
Indemnified Party or any of its Affiliates, (ii) any lost profits or opportunity
costs (except to the extent assessed in connection with a third-party claim with
respect to which the Person against which such damages are assessed is entitled
to indemnification hereunder), and (iii) the decrease in the value of any
Transferred Asset to the extent that such valuation is based on any use of the
Transferred Asset other than its use as of the Closing Date.
"Designated Countries" means the countries located in the Caribbean and
North, Central and South America, but excluding Brazil, Paraguay and Uruguay.
"Designated Products" means coffeemakers, espresso makers, cappuccino
makers, toasters, toaster ovens, steamers, choppers, can openers, mixers, food
processors, irons, breadmakers, skillets, electric knives, blenders, juicers,
grills, kettles and wafflebakers, together in each case with any related
accessories or attachments, and all products in the foregoing categories under
development in the HPG Business as of the Closing Date or that have been under
development in the HPG Business at any time during the year prior to the Closing
Date, but excluding step stools, Cleaning and Lighting Products, shop,
construction and similar vacuums, and VersaPak(R) rechargeable battery packs and
chargers, together in each case with related accessories or attachments.
"Disclosure Schedules" means the Disclosure Schedules dated the date of
this Agreement relating to this Agreement. Matters disclosed in one Schedule of
the Disclosure Schedules shall be applicable to such Schedule only.
"Employee Plans" means each "employee benefit plan" as defined in
Section 3(3) of ERISA, maintained or contributed to by Seller or any of its
Affiliates which provides benefits to employees of the HPG Business or their
dependents.
"Environmental Claim" means any written or oral notice, claim, demand,
action, suit, complaint, proceeding or other communication by any third Person
alleging liability or potential liability (including without limitation
liability or potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages, property damage, personal
injury, fines or penalties) arising out of, relating to, based on or resulting
from (i) the presence, discharge, emission, release or threatened release of any
Hazardous Substances at any location, (ii) circumstances forming the basis of
any violation or alleged violation of any Environmental Laws, or (iii) otherwise
relating to obligations or liabilities under any Environmental Laws.
"Environmental Laws" means any and all past, present or future federal,
state, local and foreign statutes, laws, regulations, ordinances, judgments,
orders, permits, codes, or injunctions, which (i) imposes liability for or
standards of conduct concerning the manufacture, processing, generation,
distribution, use, treatment, storage, disposal, cleanup, transport or handling
of Hazardous Substances including, The Resource Conservation and Recovery Act of
1976, as amended, The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, The Superfund Amendment and Reauthorization
Act of 1984, as amended, The Toxic Substances Control Act, as amended, the
Occupational Safety and Health Act of 1970, as amended, to the extent it relates
to the handling of and exposure to hazardous or toxic materials or similar
substances, and any other so-called "Superfund" or "Superlien" law or (ii)
otherwise relates to the protection of human health or the environment.
"Environmental Liabilities" means all liabilities to the extent arising
in connection with or in any way relating to the HPG Business or Seller's or any
of its Affiliates' use or ownership thereof, whether vested or unvested,
contingent or fixed, actual or potential, which arise under or relate to
Environmental Laws including, without limitation, (i) Remedial Actions, (ii)
personal injury, wrongful death, economic loss or property damage claims, (iii)
claims for natural resource damages, (iv) violations of Applicable Law or (v)
any Damages with respect thereto. Notwithstanding the foregoing, Environmental
Liabilities shall not include any increased liabilities resulting from or
arising out of a use of a facility constituting a Transferred Asset after the
Closing other than the use of the facility as of the Closing Date.
"ERISA" means the Employee Retirement Income Security act of 1974, as
amended.
"Excluded Assets" means:
(i) all cash and cash equivalents of Seller Companies,
including, without limitation, cash and cash equivalents used as collateral for
letters of credit, deposits with utilities, insurance companies and other
Persons, except to the extent taken into account in the determination of the
Final Net Tangible Asset Amount;
(ii) all original books and records that Seller Companies
shall be required to retain pursuant to any Applicable Law (in which case copies
of such books and records to the extent relating to the HPG Business shall be
provided to Buyer), or that portion of such records that contain information
relating to any business or activity of Seller Companies not forming a part of
the HPG Business, or any employee of a Seller Company that is not a Transferred
Employee;
(iii) all Tax assets of any Seller Companies, other than Tax
assets relating to sales and use taxes, gross receipts taxes, property taxes,
licenses, employee and employer withholding and unemployment taxes and other
non-income related taxes;
(iv) all assets of Seller Companies not held or owned by or
used exclusively in connection with the HPG Business;
(v) all rights and claims of Seller Companies under any of the
Transaction Documents and the agreements and instruments delivered to Seller
Companies by Buyer Companies pursuant to any of the Transaction Documents;
(vi) all accounts receivable, notes receivable or similar
claims or rights (whether or not billed or accrued) of the HPG Business from any
Seller Companies;
(vii) all trade accounts receivable, trade notes receivable or
similar trade claims or rights (whether or not billed or accrued) of the HPG
Business relating to the sale of products by an Affiliated Transferor to a
Person other than a Seller Company for sale outside of the United States
(excluding Puerto Rico) or Canada;
(viii) all capital stock or any other securities of any Seller
Companies or any other Person;
(ix) all GE Intellectual Property and all Intellectual
Property not used or held for use exclusively in the HPG Business, it being
understood and agreed that the only Intellectual Property deemed used or held
for use exclusively in the HPG Business that is registered or as to which an
application for registration is pending is listed as "Transferred Assets" on
Attachment XII;
(x) all assets related to Excluded Liabilities;
(xi) all rights and claims of Seller Companies against
SAI/▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Promotions, or any of its predecessors, successors or
affiliates, in connection with the design, manufacture, purchase or sale of
"Sharpei puppets" sold and/or packaged with irons sold by the HPG Business prior
to the Closing Date;
(xii) all ownership and leasehold interests of Seller
Companies in respect of the facility, real property, fixtures and equipment
located at or constituting the Kuantan Facility, except to the extent
specifically contemplated within the definition of Transferred Assets;
(xiii) all accounts receivable, notes receivable or similar
claims or rights of Seller Companies arising out of or relating to any judgments
entered by a court or arbitrator prior to the Closing Date in favor of Seller
Companies in respect of Designated Products;
(xiv) all rights, claims, credits and assets of Seller
Companies arising out of or relating to media barter contracts, agreements or
arrangements of Seller Companies;
(xv) all Inventory (and any related parts, accessories or
attachments) that is owned by Seller Companies and held for sale, use or
consumption by Seller's national disposition center (i.e., Nashville facility),
service centers, outlet stores and company stores in the United States or
Canada, and all returned goods that are being held for reconditioning or are
being considered for reconditioning by Seller's national disposition center
(i.e., Nashville facility), service centers, outlet stores and company stores in
the United States or Canada;
(xvi) all assets related to Cleaning and Lighting Products,
except for accounts receivable and prepaid expenses;
(xvii) the 28 mold presses identified as relating to the
Cleaning and Lighting Products located at the Asheboro Property and listed on
Schedule A; and
(xviii) all assets (other than Inventory) relating to
operations in the Designated Countries other than the United States (excluding
Puerto Rico) and Canada, and other than the manufacturing operations located at
the Queretaro Property.
"Excluded Liabilities" means the following liabilities and obligations:
(i) all liabilities and obligations of Seller Companies not
arising out of the conduct of the HPG Business, except as otherwise specifically
provided in the Transaction Documents;
(ii) except as otherwise specifically provided in the
Transaction Documents, all liabilities or obligations for any Tax arising from
or with respect to the Transferred Assets or the operations of the HPG Business
prior to the Closing, other than Tax liabilities or obligations relating to
sales and use taxes, gross receipts taxes, property taxes, licenses, employee
and employer withholding and unemployment taxes and other non-income related
taxes;
(iii) all liabilities or obligations, whether presently in
existence or arising after the date of this Agreement, in respect of accounts
payable, notes payable (including intercompany promissory notes and similar
financing arrangements) or similar obligations (whether or not billed or
accrued) to Seller Companies, except for amounts accrued by the HPG Business and
not billed by Seller Companies to the HPG Business as of the Closing Date in
respect of accounts payable, notes payable or similar obligations relating to
specific services provided to and specific expenses paid on behalf of the HPG
Business by Seller Companies;
(iv) all liabilities or obligations, whether presently in
existence or arising after the date of the Agreement, relating to fees,
commissions or expenses owed to any broker, finder, investment banker,
accountant, attorney or other intermediary or advisor employed by Seller
Companies in connection with the Contemplated Transactions;
(v) all liabilities or obligations retained by Seller pursuant
to Exhibit D;
(vi) all liabilities or obligations related to Excluded Assets
and not otherwise included in the Assumed Liabilities by express provision of
this Agreement;
(vii) all liabilities or obligations related to claims of
manufacturer or design defects with respect to any products sold or service
provided by the HPG Business prior to, on or after the Closing Date, including
liabilities and obligations in respect of investigations regarding product
safety, product recall and related matters, to the extent but only to the extent
relating to products manufactured or sold prior to the Closing Date or any
product in the finished goods inventory of Seller Companies as of the close of
business on the day preceding the Closing Date;
(viii) all Environmental Liabilities, whether arising prior
to, on or after the Closing Date, to the extent arising out of actions taken
prior to the Closing Date, (1) relating to the disposal by Seller Companies or
any of their predecessors or respective agents prior to Closing of Hazardous
Substances at any location that at the time of such disposal were not owned or
leased by a Seller Company or any of its predecessors, it being understood and
agreed that the migration of Hazardous Substances in soil or groundwater from a
facility included in the Transferred Assets to surrounding properties shall not
be considered a disposal of Hazardous Substances, or (2) relating to or arising
out of conditions at, or the current or former operations at, any facilities
other than the Queretaro Property;
(ix) all Environmental Liabilities, whether arising prior to,
on or after the Closing Date, relating to the operations at the Asheboro
Property or Kuantan Facility prior to the Closing Date;
(x) all liabilities or obligations, whether presently existing
or arising after the date of this Agreement, relating directly or indirectly to
(i) the home security alarm systems and related products (including, but not
limited to, digital dialers) business previously conducted by Seller Companies,
and (ii) the Agreement of Sale dated August 1, 1991, by and between Black &
▇▇▇▇▇▇ Monitoring Services, Inc., Black & ▇▇▇▇▇▇ (U.S.) Inc. and Monital Signal
Corporation; and
(xi) all liabilities or obligations relating directly or
indirectly to the litigation titled ▇▇▇▇▇▇▇ Electric Co. v. Black & ▇▇▇▇▇▇ Inc.
pending in the United States District Court for the Southern District of New
York.
"Financial Support Arrangements" means the agreements listed in
Schedule B.10 as "Financial Support Arrangements."
"GAAP" means Generally Accepted Accounting Principles as in effect on
the date of the Agreement, consistently applied.
"GE Intellectual Property" means the Intellectual Property identified
as such on Table 2 in Attachment XII.
"Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.
"Hazardous Substances" means (i) substances defined as "hazardous
substances," "hazardous materials" or "hazardous waste" pursuant to The
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or The Resource Conservation and Recovery Act of 1976, as amended, (ii)
substances defined as "hazardous wastes" in the regulations adopted and
publications promulgated pursuant to any of said laws, (iii) substances defined
as "toxic substances" in The Toxic Substances Control Act, as amended, and (iv)
petroleum, its derivatives and petroleum products, and asbestos and asbestos
containing materials.
"HPG Business" means (i) the household products business as presently
conducted by Seller Companies involving the manufacturing, marketing or sale in
the Designated Countries of the Designated Products, (ii) the manufacturing or
sale of Designated Products (or components thereof) at the Kuantan Facility and
(iii) the purchase or sourcing of Designated Products (or components thereof)
for import and sale by Seller Companies into the Designated Countries.
"HPG Financial Statements" means the special-purpose financial
statements attached in Attachment I and Attachment XIV to this Agreement.
"HPG Leases" means the real property leases listed on Schedule B.07(d)
relating to the facilities used exclusively by the HPG Business, and any other
real property leases entered into after the date of this Agreement and on or
prior to the Closing Date with the consent of Buyer, exclusively for the benefit
of the HPG Business, as the same may be amended and supplemented from time to
time, including the interests of Seller Companies in any related fixtures,
improvements and personal property located therein.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Intellectual Property" means all patents, copyrights, technology,
know-how, processes, trade secrets, inventions, proprietary data, formulae,
research and development data and computer software programs; all trademarks,
trade names, service marks and service names; all registrations, applications,
recordings, licenses and common-law rights relating thereto, all rights to ▇▇▇
at law or in equity for any infringement or other impairment thereto, including
the right to receive all proceeds and damages therefrom, and all rights to
obtain renewals, continuations, divisions or other extensions of legal
protections pertaining thereto; and all other United States, state and foreign
intellectual property owned by Seller Companies on the Closing Date.
"Intellectual Property Assignment Agreements" means the Assignment of
United States Trademarks, Trademark Registrations and Applications for
Registration, the Assignment of Foreign Trademarks, Trademark Registrations and
Applications for Registration, the Assignment of United States Patents and
Patent Applications, the Assignment of Foreign Patents and Application for
Patents, the Assignment of U.S. Copyrights, and the Assignment of Mexican
Trademarks, Trademark Registrations and Applications for Registration, in the
forms contemplated by Attachments III, IV, V, VI, VIII and IX to this Agreement,
and such other assignment agreements as Buyer may reasonably request in order to
effect the change of title to the Intellectual Property contemplated by such
Attachments.
"Inventory" means all items of inventory notwithstanding how classified
in the financial records of Seller Companies, including all raw materials,
work-in-process, finished goods, reconditioned products and to be reconditioned
products.
"Kuantan Facility" means the manufacturing facility located at Lot
109A, KWS. Perinbustrain Gebeng, ▇.▇. ▇▇▇ ▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
"Licensed Software" shall mean any software used by and material to the
operation of the HPG Business that constitutes Transferred Assets, which
software constitutes "off-the-shelf" software or is licensed by Seller Companies
pursuant to a Contract.
"Lien" means, with respect to any asset, any mortgage, lien, claim,
pledge, charge, security interest or other encumbrance of any kind in respect of
such asset.
"Material Adverse Effect" means (i) with respect to the HPG Business, a
material adverse effect on the assets, properties, business, financial condition
or results of operations of the HPG Business taken as a whole, or (ii) with
respect to any other Person, a material adverse effect on the assets,
properties, business, financial condition or results of operations of such
Person and its Subsidiaries taken as a whole.
"Net Tangible Assets" means (i) all Transferred Assets, minus (ii) all
Assumed Liabilities, calculated in accordance with the practices and policies
that were employed in the preparation of the Opening Statement, determined, in
each case, consistent with the Opening Statement and the notes thereto, except
as provided in Note E thereto.
"Net Working Capital" means (i) Net Tangible Assets, minus (ii) real
property, equipment and capitalized software, other fixed assets and all other
non-current assets, plus (iii) all non-current liabilities of the HPG Business,
calculated in accordance with the practices and policies that were employed in
the preparation of the Opening Statement, determined, in each case, consistent
with the Opening Statement and the notes thereto, except as provided in Note E
thereto.
"Non US Benefit Arrangements" means Benefit Arrangements in respect of
Non US Transferred Employees.
"Non US Transferred Employees" means Transferred Employees who are not
US Transferred Employees.
"Opening Statement" means the "Base Business" column of the
special-purpose combining statement of net assets of the HPG Business at March
29, 1998, together with the notes thereto, as included in the Other Financial
Information section of Attachment I to this Agreement.
"Owned Software" shall mean software used by and material to the
operation of the HPG Business that constitutes Transferred Assets that has been
designed and developed by Seller Companies separate from any Licensed Software
as set forth and described on Schedule B.19.
"Permitted Liens" means any of the following:
(i) Liens for Taxes that (x) are not yet due or delinquent or
(y) are being contested in good faith by appropriate proceedings;
(ii) statutory Liens or landlords', carriers', warehousemen's,
mechanic's, suppliers', materialmen's or other like Liens arising in the
ordinary course of business with respect to amounts not yet overdue for a period
of 60 days or amounts being contested in good faith by appropriate proceedings;
(iii) easements, rights of way, restrictions and other similar
charges or encumbrances on real property interests, that, individually or in the
aggregate, do not materially interfere with the ordinary course of operation of
the HPG Business or the use of any such real property for its current uses;
(iv) with respect to real property, title defects or
irregularities that do not in the aggregate materially impair the value of or
the use of such real property for its current use;
(v) rights and licenses granted to others in Intellectual
Property that have been disclosed to Buyer prior to Buyer's execution of this
Agreement, that are not material to the HPG Business taken as a whole or that
have no effect upon the Transferred Assets;
(vi) with respect to any of the HPG Leases where any Seller
Company is a lessee, any Lien affecting the interest of the landlord thereunder;
(vii) with respect to the Queretaro Property, the encroachment
of a structure from the neighboring facility across a shared property line,
approximately eight meters into the Queretaro Property;
(viii) a lease of approximately 750 square feet of space at
the Queretaro Property to BanaMex, which operates an automated teller machine
and office for the use of the employees at the Queretaro Property; and
(ix) Encumbrances disclosed in the Disclosure Schedule or
taken into account in the Opening Statement.
"Person" means an individual, a corporation, a general partnership, a
limited partnership, a limited liability company, limited liability partnership,
an association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Queretaro Property" means the property located at Accesco III SIN,
Fracc., Industrial ▇▇▇▇▇▇ ▇▇▇▇▇▇, Queretaro, QRO. 76130, Mexico.
"Remedial Action(s)" means the investigation, clean-up or remediation
of environmental contamination or damage caused by, related to or arising from
the generation, use, handling, treatment, storage, transportation, disposal,
discharge, release, or emission of Hazardous Substances, including, without
limitation, investigations, response, removal and remedial actions under The
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, corrective action under The Resource Conservation and Recovery Act of
1976, as amended, and clean-up requirements under similar state Environmental
Laws.
"Representatives" means (i) with respect to Buyer, any of the
"Representatives" as defined in the Confidentiality Agreement and (ii) with
respect to Seller, each of its respective directors, officers, advisors,
attorneys, accountants, employees or agents.
"Seller Companies" means Seller and its Subsidiaries.
"Services Agreements" means the Services Agreement (United States and
Canada), Services Agreement (GPA), Services Agreement (Mexico), Services
Agreement (Latin American Group and CCA), Services Agreement (Colombia),
Services Agreement (Chile), Services Agreement (Peru), Services Agreement
(Argentina), Services Agreement (Puerto Rico) and Services Agreement
(Venezuela), in the forms contemplated by Attachments XVIII, XIX, XX, XXI, XXII,
XXIII, XXIV, XXV, XXVI and XXVII to this Agreement, as the same may be amended
from time to time.
"Subsidiary" as it relates to any Person, shall mean with respect to
any Person, any corporation, partnership, joint venture or other legal entity of
which such Person, either directly or through or together with any other
Subsidiary of such Person, owns more than 50% of the voting power in the
election of directors or their equivalents, other than as affected by events of
default.
"Tax Authority" shall mean a foreign or United States federal, state or
local Governmental Authority having jurisdiction over the assessment,
determination, collection or imposition of any Tax, as the context requires.
"Tax Returns" means all returns (including information returns),
declarations, reports, estimates and statements regarding Taxes, required to be
filed with any Tax Authority.
"Taxes" means all taxes, charges, fees, levies or other assessments,
including without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, excise, estimated, severance, stamp, occupation, property
or other taxes, customs, duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any Tax Authority.
"Transaction Documents" means this Agreement, the Assignment and
Assumption Agreements, the Services Agreements, the Intellectual Property
Assignment Agreements, the Cross License Agreement, the Trademark License
Agreement, the Distribution Services Agreement (United States), and the
Distribution Services Agreement (Latin America), and any exhibits or attachments
to any of the foregoing, as the same may be amended from time to time.
"Transferred Assets" means, other than Excluded Assets, all of the
assets, properties, rights, licenses, permits, Contracts, causes of action and
business of every kind and description as the same now exist (except to the
extent transferred in the ordinary course consistent with past practices prior
to the Closing Date) or exists on the Closing Date, wherever located, real,
personal or mixed, tangible or intangible, owned by, leased by or in the
possession of Seller or any Affiliated Transferor, whether or not reflected in
the books and records thereof, and held or used exclusively in the conduct of
the HPG Business as the same now exist (except to the extent transferred in the
ordinary course consistent with past practices prior to the Closing Date) or
exists on the Closing Date, and all assets of the HPG Business acquired by any
Seller Company, on or prior to the Closing Date and not disposed of prior to the
Closing Date in accordance with this Agreement, and including, without
limitation, except as otherwise specified herein, all direct or indirect right,
title and interest of Seller or any Affiliated Transferor in, to and under:
(i) the Queretaro Property, together with all buildings,
fixtures, easements, rights of way, and improvements thereon and appurtenances
thereto to the extent relating to the HPG Business;
(ii) the rights and interests of Seller Companies under the
HPG Leases;
(iii) all personal property and interests therein (other than
Intellectual Property and other than that located at the Kuantan Facility),
including machinery, equipment, furniture, office equipment, communications
equipment, vehicles, storage tanks, spare and replacement parts, fuel and other
tangible property (and interests in any of the foregoing) owned by any Seller
Company that are used exclusively in connection with the HPG Business;
(iv) all Inventory that is owned by Seller Companies and held
for sale, use or consumption exclusively in the HPG Business;
(v) all Contracts; provided, however that the license of the
Spacemaker(R) trademark shall be limited to the Designated Countries;
(vi) all accounts, accounts receivable and notes receivable
whether or not billed, accrued or otherwise recognized in the Opening Statement
or taken into account in the determination of the Final Net Tangible Asset
Amount, together with any unpaid interest or fees accrued thereon or other
amounts due with respect thereto of Seller Companies that relate exclusively to
the HPG Business, and any security or collateral for any of the foregoing;
(vii) all expenses that have been prepaid by Seller Companies
relating exclusively to the operation of the HPG Business, including but not
limited to ad valorem Taxes, lease and rental payments;
(viii) all of Seller's or any of Seller Companies' rights,
claims, credits, causes of action or rights of set-off against Persons other
than Seller Companies relating exclusively to the HPG Business or the
Transferred Assets, including, without limitation, unliquidated rights under
manufacturers' and vendors' warranties;
(ix) all Intellectual Property (other than Intellectual
Property constituting an Excluded Asset) used or held for use exclusively in the
HPG Business, including the goodwill of the HPG Business symbolized thereby, it
being understood and agreed that the only Intellectual Property deemed used or
held for use exclusively in the HPG Business that is registered or as to which
an application for registration is pending is listed as "Transferred Assets" on
Attachment XII;
(x) all transferable franchises, licenses, permits or other
governmental authorizations owned by, or granted to, or held or used by, Seller
Companies and exclusively related to the HPG Business;
(xi) except to the extent a Seller Company is required to
retain the originals pursuant to any Applicable Law (in which case copies will
be provided to Buyer), all business books, records, files and papers, whether in
hard copy or computer format, of a Seller Company used exclusively in the HPG
Business, including, without limitation, books of account, invoices, engineering
information, sales and promotional literature, trademark and service ▇▇▇▇ legal
files, other legal files, archival materials comprising historical advertising
and sales information relating to Transferred Assets and Designated Products,
manuals and data, sales and purchase correspondence, lists of present and former
suppliers, lists of present and former customers, personnel and employment
records of present or former employees, documentation developed or used for
accounting, marketing, engineering, manufacturing, or any other purpose relating
to the conduct of the HPG Business at any time prior to the Closing, except to
the extent relating to Excluded Liabilities;
(xii) the right to represent to third parties that Buyer is
the successor to the HPG Business;
(xiii) all insurance proceeds (except to the extent relating
to Excluded Assets or Excluded Liabilities or to the extent relating to or
arising out of Environmental Insurance Claims), net of any retrospective
premiums, deductibles, retention or similar amounts, arising out of or related
to damage, destruction or loss of any property or asset of or used exclusively
in connection with the HPG Business to the extent of any damage or destruction
that remains unrepaired, or to the extent any property or asset remains
unreplaced at the Closing Date;
(xiv) the equipment in the Kuantan Facility listed on Schedule
A, which assets shall be included in the calculation of the Final Net Tangible
Asset Amount; and
(xv) accounts receivable and prepaid expenses relating to
Cleaning and Lighting Products in the United States (except for the operations
located in Miami, Florida) and Canada.
"US Benefit Arrangements" means Benefit Arrangements in respect of US
Transferred Employees.
"US Transferred Employees" means Transferred Employees employed by the
HPG Business in the United States.
"WARN" means the Worker Adjustment Retraining and Notification Act, as
amended.
(b) "To the knowledge," "known by" or "known" (and any similar phrase) means (i)
with respect to Seller, to the knowledge of any of the Chief Financial Officer,
the General Counsel, the Treasurer or the Controller of Seller, or the President
of the HPG Business, and shall be deemed to include a representation that a
reasonable investigation or inquiry of the subject matter thereof has been made
of such individuals, (ii) with respect to Buyer, to the knowledge of the
President, Chief Financial Officer, the General Counsel, the Treasurer or the
Controller of Buyer, and shall be deemed to include a representation that a
reasonable investigation or inquiry of the subject matter thereof has been made
of such individuals.
(c) Each of the following terms is defined in the Section set forth opposite
such term:
Term Section
Active Employee....................................................D.01
Adjusted Purchase Price............................................2.02
Agreement......................................................Preamble
Buyer..........................................................Preamble
Buyer Companies................................................Preamble
Buyer's Mexico Plan................................................D.13
Buyer's Pension Plan...............................................D.07
Closing............................................................2.03
Closing Net Working Capital Amount.................................2.04
Competing Business.................................................5.06
CSA................................................................E.05
Encumbrances....................................................... A
Environmental Insurance Claims.....................................7.06
Exchange Consideration.............................................2.02
Fifth Anniversary Date.............................................5.06
Final Net Tangible Asset Amount....................................2.04
Final Net Working Capital Change Amount............................2.04
Indemnified Claim.................................................10.03
Indemnified Party.................................................10.03
Indemnifying Party................................................10.03
Insurance Liabilities..............................................6.03
June 28 Net Working Capital Amount.................................2.04
Leased Real Property...............................................B.07
Net Working Capital Adjustment Amount..............................2.04
Owned Real Property................................................B.07
PBGC...............................................................B.18
Period One.........................................................5.06
Proceedings....................................................... A
Proposed Final Net Tangible Asset Amount...........................2.04
Proposed Net Working Capital Change Amount.........................2.04
Referee...........................................................10.03
Remaining Recovery.................................................7.06
Seller.........................................................Preamble
Seller's Canada Plan...............................................D.15
Seller's Mexico Plan...............................................D.13
Seller's Pension Plan..............................................D.07
Seller's Puerto Rico Plan..........................................D.14
Seller's Savings Plan..............................................D.08
Successor Canada Plan..............................................D.15
Successor Puerto Rico Plan.........................................D.14
Successor Savings Plan.............................................D.08
Surviving Representations or Covenants............................10.01
Third Party Claim.................................................10.03
Transferred Employees..............................................D.01
UL.................................................................E.05
Year 2000 Compliant................................................B.19
EXHIBIT B
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants prior to Buyer, that:
B.01 Corporate Existence and Power. Each of Seller and each
Affiliated Transferor is a corporation duly incorporated, validly existing and
in good standing under the laws of the state or jurisdiction of its
incorporation and has all corporate powers, and has all governmental licenses,
authorizations, consents and approvals required to carry on the HPG Business as
now conducted, except where the failure to have such licenses, authorizations,
consents and approvals has not had, and could not reasonably be expected to
have, a Material Adverse Effect on the HPG Business. Each of Seller and each
Affiliated Transferor, as the case may be, is duly qualified to do business as a
foreign corporation in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities make such qualification
necessary to carry on the HPG Business as now conducted, except where the
failure to be so qualified has not had, and could not reasonably be expected to
have, a Material Adverse Effect on the HPG Business.
B.02 Corporate Authorization. The execution, delivery and
performance by Seller of each of the Transaction Documents to which it is a
party and the consummation by Seller of the Contemplated Transactions are within
its corporate powers and have been duly authorized by all necessary corporate
action on its part. The execution, delivery and performance by Seller Companies
other than Seller of the Transaction Documents to which a Seller Company other
than Seller is a party and the consummation by such Seller Company of the
Contemplated Transactions are within such Seller Company's corporate powers and
as of Closing will have been duly authorized by all necessary corporate action
on its part. Each of the Transaction Documents to which it is a party
constitutes or will constitute at Closing a legal, valid and binding agreement
of the applicable Seller Company, enforceable against it in accordance with its
terms (i) except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally, including the
effect of statutory and other laws regarding fraudulent conveyances and
preferential transfers and (ii) subject to the limitations imposed by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding at law or in equity).
B.03 Governmental Authorization. The execution, delivery and
performance by each Seller Company of the Transaction Documents to which it is a
party require no action by or in respect of, or consent or approval of, or
filing with, any Governmental Authority other than:
(i) compliance with any applicable requirements of
the HSR Act;
(ii) actions, consents, approvals or filings set
forth in Schedule B.03 or otherwise expressly referred to in this
Agreement; and
(iii) such other consents, approvals, authorizations,
permits and filings the failure to obtain or make would not have, in
the aggregate, a Material Adverse Effect on the HPG Business.
B.04 Non-Contravention. Except as set forth in Schedule B.04, the
execution, delivery and performance by Seller or any Affiliated Transferor of
the Transaction Documents do not and will not (i)(A) contravene or conflict with
the charter or bylaws of Seller or any Affiliated Transferor, (B) assuming
compliance with the matters referred to in Section B.03, contravene or conflict
with or constitute a violation of any provisions of any Applicable Law binding
upon Seller or any Affiliated Transferor that is applicable to the HPG Business;
(C) assuming compliance with the matters referred to in Section B.03, constitute
a default under or give rise to any right of termination, cancellation or
acceleration of, or to a loss of any benefit relating exclusively to the HPG
Business to which Seller or any Affiliated Transferor is entitled under, any
Contract binding upon Seller or any Affiliated Transferor and relating
exclusively to the HPG Business or by which any of the Transferred Assets is or
may be bound or any license, franchise, permit or similar authorization held by
Seller or any Affiliated Transferor relating exclusively to the HPG Business
except, in the case of clauses (B) and (C), for any such contravention,
conflict, violation, default, termination, cancellation, acceleration or loss
that could not reasonably be expected to have a Material Adverse Effect on the
HPG Business or (ii) result in the creation or imposition of any Lien on any
transferred Asset, other than Permitted Liens.
B.05 Financial Statements.
(a) The Opening Statement is presented fairly, in all material
respects, and in conformity with GAAP (except as set forth in the notes thereto)
applied on a basis consistent in all material respects with the manner in which
the HPG Business reported as of December 31, 1997 its financial position for
inclusion in the audited consolidated financial statements of Seller.
(b) The HPG Financial Statements present fairly, in all
material respects, the financial position and results of operations at the dates
and for the periods set forth therein, in conformity with GAAP (except as set
forth in the notes thereto).
B.06 Absence of Certain Changes. Except for matters that would be
permitted in accordance with Section 5.01 if they occurred after the date of
this Agreement or as set forth in Schedule B.06, from March 30, 1998 to the date
of this Agreement, there has not been any material adverse change in the
business, financial condition or results of operations of the HPG Business and
there has not been:
(a) any event or occurrence that has had a Material Adverse
Effect on the HPG Business;
(b) any damage, destruction or other casualty loss affecting
the HPG Business or any assets that would constitute Transferred Assets if
owned, held or used by Seller or any of the Affiliated Transferors on the
Closing Date that has had a Material Adverse Effect on the HPG Business;
(c) any transaction or commitment made, or any Contract
entered into, by Seller or any Affiliated Transferor relating primarily to the
HPG Business or any assets that would constitute Transferred Assets if owned,
held or used by Seller or any of the Affiliated Transferors on the Closing Date
(including the acquisition or disposition of any assets) or any termination or
amendment by Seller or any Affiliated Transferor of any Contract or other right
relating primarily to the HPG Business, in either case, material to the HPG
Business taken as a whole, other than transactions and commitments in the
ordinary course of business consistent with past practices and those
contemplated by this Agreement;
(d) any sale or other disposition of more than an aggregate of
$500,000 of assets (other than the sale of Inventory in the ordinary course of
business consistent with past practices, the sale of obsolete Inventory whether
or not in the ordinary course of business, any sale made in the ordinary course
of business and the sale of surplus equipment and materials arising out of or
relating to the closing of the Kuantan Facility) that would constitute
Transferred Assets if owned, held or used by any Seller Companies on the Closing
Date;
(e) any increase in the compensation of any current employee
of the HPG Business at a level of vice president or above, other than
nondiscretionary increases pursuant to Employee Plans or Benefit Arrangements
disclosed in Schedule B.18 or referenced in Exhibit D; and
(f) any cancellation, compromise, waiver or release by Seller
or any Affiliated Transferor of any claim or right (or a series of related
rights and claims) related to the HPG Business, other than cancellations,
compromises, waivers or releases in the ordinary course of business consistent
with past practices.
B.07 Sufficiency of and Title to the Transferred Assets.
(a) Except as set forth in Schedule B.07, the Transferred
Assets, together with the services to be provided to Buyer Companies pursuant to
the Services Agreements, the Distribution Services Agreement (United States) and
the Distribution Services Agreement (Latin America), and the Intellectual
Property to be licensed to Buyer pursuant to the Trademark License Agreement,
and the Cross License Agreement, and the subleases contemplated by Section 2.01,
constitute, and on the Closing Date will constitute, all of the assets and
services that are necessary or appropriate to permit the operation of the HPG
Business in substantially the same manner as such operations have heretofore
been conducted.
(b) Except as set forth in Schedule B.07, subject to the
receipt of any consents or approvals of any other Person, upon consummation of
the Contemplated Transactions, Buyer will have acquired good and marketable
title in and to, or a valid leasehold interest in, each of the Transferred
Assets (except for the Intellectual Property as to which no representation is
made in this Section B.07), free and clear of all Liens, except for Permitted
Liens. Except as set forth in Schedule B.07, subject to the receipt of any
consents or approvals of any other Person set forth in Schedules B.03 and B.04
or referenced in Section B.03, upon consummation of the Contemplated
Transactions, Buyer will be in a position to operate the HPG Business in
substantially the same manner as operations have heretofore been conducted.
(c) Schedule B.07 includes a true and complete list of all
real property owned by Seller Companies (or real property which Seller Companies
have a right to acquire in connection with the operation of the HPG Business)
which is included in the Transferred Assets (collectively, the "Owned Real
Property"). Schedule B.07 sets forth (i) the address of each parcel of Owned
Real Property and (ii) the owner of such Owned Real Property.
(d) Schedule B.07 includes a true and complete list of all
agreements (together with any amendments thereof) pursuant to which Seller
Companies lease, sublease or otherwise occupy (whether as landlord, tenant,
subtenant or other occupancy arrangement) any real property used in the HPG
Business (collectively, the "Leased Real Property"). Schedule B.07 sets forth
(i) the address of each parcel of Leased Real Property and (ii) the owner of the
leasehold, subleasehold or occupancy interest for each Leased Real Property.
B.08 No Undisclosed Liabilities. There are no liabilities of Seller or
any Affiliated Transferor relating to the HPG Business that constitute Assumed
Liabilities of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, other than:
(a) liabilities disclosed in or provided for in the Opening
Statement and liabilities for matters taken into account in the determination of
the Final Net Tangible Asset Amount;
(b) liabilities (i) disclosed in Schedule B.08, (ii) related
to any contract, agreement, lease, license, commitment, sales or purchase order
or other undertaking or matter disclosed in the Disclosure Schedules or (iii)
related to any Employee Plan or Benefit Arrangements identified in Exhibit D or
disclosed in Schedule B.18; and
(c) liabilities incurred in the ordinary course of business
consistent with past practices since March 29, 1998.
B.09 Litigation. Except as set forth in Schedule B.09, there is no
action, suit, investigation or proceeding pending against, or to the knowledge
of Seller, threatened against or affecting, the HPG Business or any Transferred
Asset before any Governmental Authority that could reasonably be expected to
have a Material Adverse Effect on the HPG Business.
B.10 Material Contracts.
(a) Except as set forth in Schedule B.10 and except for
Contracts that do not constitute Assumed Liabilities, Seller Companies, with
respect to the HPG Business, are not parties to or otherwise bound by or subject
to:
(i) any written employment, severance, consulting or
sales representative Contract which contains an obligation (excluding
commissions) to pay more than $100,000 per year and constitutes an
Assumed Liability;
(ii) any Contract containing any covenant limiting
the freedom of Seller Companies, with respect of the HPG Business or
the operations of the HPG Business, to engage in any line of business
or compete with any Person in any geographic area in any material
respect if such Contract will be binding on Buyer Companies after the
Closing;
(iii) any Contract in effect on the date of this
Agreement relating to the disposition or acquisition of the assets of,
or any interest in, any business enterprise which relates to the HPG
Business other than in the ordinary course of business consistent with
past practices;
(iv) any Financial Support Arrangements;
(v) any indebtedness for borrowed money of the HPG
Business that would constitute an Assumed Liability if in existence on
the Closing Date, with a principal amount in excess of $500,000; or
(vi) any offset agreement entered into in connection
with an international sales transaction and relating to any Contract
that imposes on the HPG Business an obligation to perform that will
continue in effect on or after the Closing Date.
(b) Except as disclosed in Schedule B.10, each Contract
disclosed in Schedule B.10 is a legal, valid and binding obligation of Seller
(or the applicable Affiliated Transferor) enforceable against Seller (or the
applicable Affiliated Transferor) in accordance with its terms (except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally, including the effect of statutory and other laws
regarding fraudulent conveyances and preferential transfers, and subject to the
limitations imposed by general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in equity), and Seller
(or the applicable Affiliated Transferor) is not in default and has not failed
to perform any obligation thereunder, and, to the knowledge of Seller, there
does not exist any event, condition or omission which would constitute a breach
or default (whether by lapse of time or notice or both) by any other Person. As
of the date of this Agreement, Seller has not received any notification from any
other Person party to any of the Contracts disclosed in Schedule B.10 of a claim
of default by Seller.
B.11 Licenses and Permits. To the knowledge of Seller, except as set
forth in Schedule B.11, Seller (or the appropriate Affiliated Transferor) has
all licenses, franchises, permits and other similar authorizations affecting, or
relating in any way to, the HPG Business required by law to be obtained by
Seller (or the appropriate Affiliated Transferor) to permit Seller to conduct
the HPG Business in substantially the same manner as the HPG Business has
heretofore been conducted.
B.12 Finders' Fees. Except for ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., whose fees will be
paid by Seller, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of
Seller who might be entitled to any fee or commission from Seller or Buyer or
any of their Affiliates upon consummation of the Contemplated Transactions.
B.13 Environmental Compliance. Except as disclosed in Schedule B.13 and
except as reserved against or referred to in the Opening Statement, to the
knowledge of Seller the HPG Business is and has been in substantial compliance
with all applicable Environmental Laws, and has obtained all permits, licenses
and other authorizations that are required under applicable Environmental Laws,
except where the failure to be in compliance or to have obtained all material
permits, licenses and other authorizations has not had, and cannot reasonably be
expected to have, a Material Adverse Effect on the HPG Business. Except as set
forth in Schedule B.13 and except as reserved against or referred to in the
Opening Statement, to the knowledge of Seller (i) the HPG Business is and has
been in material compliance with the terms and conditions under which the
permits, licenses and other authorizations referenced in the preceding sentence
were issued or granted, (ii) Seller Companies hold all permits required by
Environmental Laws that are necessary and appropriate to conduct the HPG
Business as presently conducted in all material respects and to operate the
Transferred Assets and the Asheboro Property in all material respects as they
are presently operated; (iii) no suspension, cancellation or termination of any
permit referred to in clause (ii) is pending or threatened; (iv) Seller has not
received written notice of any material Environmental Claim relating to or
affecting the HPG Business or the Transferred Assets, and there is no such
threatened Environmental Claim; (v) Seller, in connection with the HPG Business
or the Transferred Assets, has not entered into, agreed in writing to, or is
subject to any judgment, decree, order or other similar requirement of any
Governmental Authority under any Environmental Laws; and (vi) no event has
occurred and no circumstance exists that is reasonably likely to give rise to or
serve as a basis for any Environmental Liability; except in the case of clauses
(i) through (vi) where such failure, event or other circumstance has not had,
and cannot reasonably be expected to have, a Material Adverse Effect on the HPG
Business.
B.14 Compliance with Laws. Except as set forth in Schedule B.14, for
violations or infringements of Environmental Laws, and for violations or
infringements that have not had, and may not reasonably be expected to have, a
Material Adverse Effect on the HPG Business, to the knowledge of Seller the
operation of the HPG Business and condition of the Transferred Assets have not
violated or infringed, and do not violate or infringe, in any respect any
Applicable Law or any order, writ, injunction or decree of any Governmental
Authority.
B.15 Intellectual Property. With respect to Intellectual Property that
constitute Transferred Assets, except as set forth in Schedule B.15:
(a) Seller (or an Affiliated Transferor) owns, free and clear
of all Liens other than Permitted Liens, and subject to any licenses disclosed
in Schedule B.15 or that in the aggregate are not material to the HPG Business
as a whole granted by Seller Companies prior to the Closing Date, all right,
title and interest in such Intellectual Property;
(b) the use of such Intellectual Property in connection with
the operation of the HPG Business as conducted during the past three years does
not conflict with, infringe upon or violate the intellectual property rights of
any other Persons;
(c) Seller (or an Affiliated Transferor) has the right to use
all such Intellectual Property used by the HPG Business and necessary for the
continued operation of the HPG Business in the same manner as its operations
have been conducted during the past three years and the list of such
Intellectual Property comprising patents, patent applications, trademark and/or
service ▇▇▇▇ registrations and applications that is included in Table 1 of
Attachment XII sets forth a complete and accurate list of all such Intellectual
Property that constitutes Transferred Assets;
(d) Seller (or an Affiliated Transferor) is the owner of
record of the pending patent applications and issued patents and of the
applications or issued registrations for trademarks and service marks comprising
Intellectual Property included in Table 1 of Attachment XII in each country or
state of application or registration, and each trademark or service ▇▇▇▇ and
each issued patent constituting such Intellectual Property is subsisting and in
full force and effect;
(e) Upon the consummation of the Closing hereunder, (i) Buyer
will be vested with all of Seller's (or the Affiliated Transferors') rights,
title and interest in, and Seller's (or the Affiliated Transferors') rights and
authority to use in connection with the HPG Business, all of the Intellectual
Property that constitute Transferred Assets and (ii) such Intellectual Property,
together with the Intellectual Property licensed to Buyer in accordance with the
Cross License Agreement and Trademark License Agreement and any other interests
in Intellectual Property transferred hereunder will collectively constitute such
rights and interests in Intellectual Property which are necessary for the
continued operation of the HPG Business as a whole in the same manner as its
operations have heretofore been conducted during the past three years; and
(f) Notwithstanding the provisions of this Section B.15,
Seller makes no representation or warranty, and no such representation or
warranty shall be implied, that any of such Intellectual Property included in
Table 1 of Attachment XII not constituting a trademark or service ▇▇▇▇ is valid
or enforceable.
B.16 Taxes.
(a) Except as set forth in Schedule B.16, Seller and each
Affiliated Transferor has exercised reasonable care in the preparation of, and
has duly and timely filed, all applicable Tax Returns with respect to all Taxes
required to be filed to the date hereof and, as of the Closing Date will have
exercised reasonable care in the preparation of, and will have timely filed, all
applicable Tax Returns with respect to Taxes required to have been filed to the
Closing Date, except for Taxes relating to periods that close on or before the
Closing Date that under Applicable Law are not obligations of Buyer Companies.
Except as set forth in Schedule B.16, all Taxes shown on the Tax Returns or
pursuant to any declarations or assessments received by Seller and each
Affiliated Transferor (including estimated Taxes) have been duly and timely
paid, except for Taxes relating to periods that close on or before the Closing
Date that under Applicable Law are not obligations of Buyer Companies, and no
such Taxes have created a Lien (other than a Permitted Lien) against or impair
the ability to transfer the Transferred Assets to Buyer Companies free and clear
of any Lien (other than a Permitted Lien) in accordance with the terms of this
Agreement. Except as set forth in Schedule B.16, all such Tax Returns are true,
correct and complete, except for Taxes relating to periods that close on or
before the Closing Date that under Applicable Law are not obligations of Buyer
Companies. Except as set forth in Schedule B.16, there exists no Tax deficiency
or unpaid Tax assessed or proposed by any Governmental Authority against Seller
or any Affiliated Transferor, except for Taxes relating to periods that close on
or before the Closing Date that under Applicable Law are not obligations of
Buyer Companies.
(b) As of the date of this Agreement, Schedule B.16 contains a
list of all states and other jurisdictions where Seller Companies have filed Tax
Returns during the past three years with respect to Transferred Assets.
(c) None of the Assumed Liabilities is or may be an obligation
to make (i) a payment that will not be deductible by Buyer Companies under Code
section 280G; or (ii) a payment under any tax allocation or tax sharing
agreement or in respect of any liability for the Taxes of any Person under
Treasury regulation section 1.1502-6 (or any similar provision of state, local
or foreign law), as a transferee or successor, by contract, or otherwise.
(d) None of the Transferred Assets consists of stock in any
corporation (whether or not it currently holds any assets) that is or has been a
member of any consolidated, combined, unitary or other similar group in respect
of any Taxes.
B.17 Insurance. Schedule B.17 contains a correct and complete list of
all material policies of insurance held by any Seller Companies that are in
effect on the date of this Agreement or in calendar years 1997 or 1996 and that
insure the HPG Business. Schedule B.17 contains an accurate and complete
description of any provision contained in said policies which provides for
retrospective or retroactive premium adjustment. None of the insurance carriers
listed in Schedule B.17 are related to or affiliated with Seller, other than
Shenandoah Insurance, Inc. Seller has not received notice or any other
indication from any insurer or agent (other than Shenandoah Insurance, Inc.) of
any intent to cancel or not to renew any of the insurance policies listed in
Schedule B.17, except for cancellations or failures to renew that will occur as
a result of the Closing. No Seller Company has been refused any insurance, nor
has any Seller Company's coverage been limited by any insurance carrier to which
it has applied for insurance or with which it has carried insurance during the
last five years, except as limited by insurance carrier's internal policy
regarding maximum coverage and limits.
B.18 Employee Benefit Matters.
(a) Schedule B.18 lists each Employee Plan or material Benefit
Arrangement (other than Benefit Arrangements as to which Buyer has no
obligations hereunder) which covers Transferred Employees and each collective
bargaining agreement covering Transferred Employees.
(b) Except as set forth in Schedule B.18, with respect to the
HPG Business:
(i) neither Seller nor any member of its "Controlled
Group" (defined as any organization which is a member of a controlled
group of organizations within the meaning of Code Sections 414(b), (c),
(m) or (o)) has ever contributed to or had any liability to a
multi-employer plan, as defined in Section 3(37) of ERISA, which could
reasonably be expected to have a Material Adverse Effect on the HPG
Business;
(ii) no fiduciary of any funded Employee Plan has
engaged in a nonexempt "prohibited transaction" (as that term is
defined in Section 4975 of the Code and Section 406 of ERISA) which
could subject Buyer to a penalty tax imposed by Section 4975 of the
Code or Section 502(i) of ERISA;
(iii) no Employee Plan that is subject to Section 412
of the Code has incurred an "accumulated funding deficiency" within the
meaning of Section 412 of the Code, whether or not waived;
(iv) each Employee Plan and Benefit Arrangement has
been established and administered in all material respects in
accordance with its terms and in compliance with Applicable Law;
(v) no Employee Plan subject to Title IV of ERISA has
incurred any material liability under such title other than for the
payment of premiums to the Pension Benefit Guaranty Corporation
("PBGC"), all of which to the knowledge of Seller have been paid when
due;
(vi) no defined benefit Employee Plan has been
terminated; nor have there been any "reportable events" (as that term
is defined in Section 4043 of ERISA and the regulations thereunder),
other than reportable events arising directly from the Contemplated
Transactions, which would present a risk that an Employee Plan would be
terminated by the PBGC in a distress termination;
(vii) each Employee Plan intended to qualify under
Section 401 of the Code has received a determination letter that it is
so qualified and no event has occurred with respect to any such
Employee Plan which could cause the loss of such qualification or
exemption;
(viii) with respect to each Employee Plan listed in
Schedule B.18, Seller has made available to Buyer the most recent copy
(where applicable) of (1) the plan document; (2) the most recent
determination letter; (3) any summary plan description; and (4) Form
5500;
(ix) with respect to the Transferred Employees, there
are no post-retirement medical or health plans, dental plans,
hospitalizations, life insurance or other plans or arrangements in
effect;
(x) there are no actions, claims or investigations
pending or, to the knowledge of Seller threatened, against any Employee
Plan, Benefit Arrangement, or any administrator, fiduciary or sponsor
thereof with respect to the HPG Business, other than benefit claims
arising in the normal course of operation of such Employee Plan or
Benefit Arrangement; and
(xi) except as otherwise expressly provided in
Exhibit D, the consummation of the Contemplated Transactions in and of
themselves will not entitle any individual to severance pay that is
payable by Buyer Companies, and will not accelerate the time of payment
or vesting, or increase the amount of any compensation or benefits due
any Transferred Employee to the extent such compensation or benefits
are the responsibility of any Buyer Companies.
B.19 Software Applications.
(a) Software Applications: Year 2000. All of the Owned and
Licensed Software has been considered in Year 2000 remediation plans developed
by the HPG Business. Except as otherwise set forth on Schedule B.19, Seller
represents that to its knowledge the Owned Software will operate without
interruption and/or malfunction due to the recognition and processing of dates
on and beyond January 1, 2000, except to the extent that a failure to do so
could not reasonably be expected to have a Material Adverse Effect on the HPG
Business ("Year 2000 Compliant").
(b) Licensed Software. Seller's interest in Licensed Software
reflected by a Contract listed on Schedule B.19, subject to consents
contemplated by Schedule B.04 or Schedule B.19, is transferrable to Buyer.
(c) No Errors; Non-Conformity. The Owned Software is free from
defects in workmanship and materials, except for defects that could not
reasonably be expected to have a Material Adverse Effect on the HPG Business.
(d) No Bugs or Viruses. Seller has not knowingly altered its
data to create a bug or virus which would cause either the Owned or Licensed
Software to be fully dysfunctional, and there are no such bugs or viruses,
except in either case to the extent that such bugs or viruses could not
reasonably be expected to have a Material Adverse Effect on the HPG Business.
(e) Passthrough Warranties. Seller shall, to the extent
permitted by Applicable Law and the applicable manufacturer and supplier and
provided that it is at no cost to Seller, transfer to Buyer all manufacturers'
and suppliers' warranties for the Licensed Software, and the Seller shall, upon
the Buyer's reasonable request, execute such documentation reasonably acceptable
to Seller that is necessary to effectuate the transfer.
(f) Documentation. Seller has furnished Buyer, or will furnish
upon Buyer's request, copies of all documentation (End-User or otherwise) in its
possession relating to the use, maintenance and operation of the Owned Software.
B.20 Real Property. Except as otherwise set forth in Schedule B.20:
(a) Subject only to the permitted Liens, there are no leases,
tenancies or other occupancy agreements, either oral or written, which affect
the Queretaro Property, and Seller has exclusive possession of the Queretaro
Property;
(b) Seller has no notice or knowledge of: (i) any pending
improvement liens to be made by any Governmental Authority with respect to the
Queretaro Property; (ii) any violations of building codes and/or zoning
ordinances or other governmental regulations with respect to the Queretaro
Property; or (iii) any pending or threatened condemnation proceedings with
respect to the Queretaro Property;
(c) To Seller's knowledge, no fact or condition exists which
would result in the termination or impairment of access to the Queretaro
Property or the discontinuation of necessary sewer, water, electric, gas,
telephone or other utilities or services to the Queretaro Property;
(d) All of the structural elements, mechanical systems,
utility systems and roofs of the Queretaro Property are in good working order,
ordinary wear and tear and routine maintenance excepted;
(e) To Seller's knowledge, without independent investigation,
all improvements on the Queretaro Property were permitted, conforming structures
under applicable zoning and building laws and ordinances in effect when the
improvements were constructed and the present uses thereof are permitted,
conforming uses under applicable zoning and building laws and ordinances;
(f) All water, sewer, gas, electric, telephone, drainage and
other utility equipment and facilities necessary for the operation of the
Queretaro Property are installed and connected pursuant to valid permits, are
adequate to service the Queretaro Property and are in good operating condition;
(g) To Seller's knowledge, all requirements applicable to the
Queretaro Property imposed under zoning and building laws and ordinances adopted
subsequent to the construction of the improvements have been complied with to
the extent required by Applicable Law; and
(h) Seller is vested with good and marketable fee simple title
to the Queretaro Property subject only to the Permitted Liens. Without limiting
the generality of the foregoing, there are no so-called "ejido" rights
encumbering or otherwise affecting the Queretaro Property.
EXHIBIT C
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that:
C.01 Organization and Existence. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Florida and has all corporate powers, and has all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted, except where the failure to have such licenses, authorizations,
consents and approvals has not had and may not reasonably be expected to have, a
Material Adverse Effect on Buyer. As of the Closing Date, Buyer will be duly
qualified to do business as a foreign corporation in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
(after giving effect to the Contemplated Transactions) make such qualification
necessary to carry on its business as now conducted, except for those
jurisdictions where failure to be so qualified has not had, and may not
reasonably be expected to have, a Material Adverse Effect on Buyer.
C.02 Corporate Authorization. The execution, delivery and performance
by Buyer of the Transaction Documents and the consummation by Buyer of the
Contemplated Transactions are within the corporate powers of Buyer and have been
(or, prior to the Closing, will have been) duly authorized by all necessary
corporate action on the part of Buyer. Each of the Transaction Documents
constitutes a legal, valid and binding agreement of Buyer, enforceable against
Buyer in accordance with its terms (i) except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting creditors'
rights generally, including the effect of statutory and other laws regarding
fraudulent conveyances and preferential transfers and (ii) subject to the
limitations imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
C.03 Governmental Authorization. Except as set forth on Schedule C.03,
the execution, delivery and performance by Buyer of the Transaction Documents
require no action by or in respect of, consents or approvals of, or filing with,
any governmental body, agency, official or authority other than compliance with
any applicable requirements of the HSR Act.
C.04 Non-Contravention. The execution, delivery and performance by
Buyer of the Transaction Documents do not and will not (i) contravene or
conflict with the charter or bylaws of Buyer, (ii) assuming compliance with the
matters referred to in Section C.03, contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to Buyer, or (iii) constitute a default
under or give rise to any right of termination, cancellation or acceleration of
any right or obligation of Buyer or to a loss of any benefit to which Buyer is
entitled under any provision of any agreement, contract or other instrument
binding upon Buyer or any license, franchise, permit or other similar
authorization held by Buyer, except, in the case of clauses (ii) and (iii), for
any such contravention, conflict, violation, default, termination, cancellation,
acceleration or loss that could not reasonably be expected to have a Material
Adverse Effect on Buyer Companies taken as a whole.
C.05 Finders' Fees. Except for NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC,
whose fees will be paid by Buyer, there is no investment banker, broker, finder
or other intermediary that has been retained by or is authorized to act on
behalf of Buyer who might be entitled to any fee or commission from Seller or
Buyer (or any of their Affiliates) upon consummation of the Contemplated
Transactions.
C.06 Litigation. There is no action, suit, investigation or proceeding
pending against, or to the knowledge of Buyer, threatened against or affecting,
Buyer before any court or arbitrator or any Governmental Authority that in any
manner challenges or seeks to prevent, enjoin, alter or materially delay the
Contemplated Transactions.
C.07 Inspections. Buyer acknowledges that Seller has made no
representation or warranty as to the prospects, financial or otherwise, of the
HPG Business except as expressly set forth in the Transaction Documents. Buyer
agrees that it shall accept the Transferred Assets and the Assumed Liabilities
as they exist on the Closing Date based on Buyer's inspection, examination,
determination with respect thereto as to all matters, and without reliance upon
any express or implied representations or warranties of any nature, whether in
writing, orally or otherwise, made by or on behalf of or imputed to Seller,
except as expressly set forth in the Transaction Documents.
C.08 Financing. Buyer has available to it cash, marketable securities
or other investments, or presently available sources of credit, to enable it to
consummate the Contemplated Transactions.
EXHIBIT D
EMPLOYEES AND EMPLOYEE BENEFIT MATTERS
I. Employees and Employment.
D.01 General. On the Closing Date, the employment of all Active
Employees of the HPG Business including employees based in the HPG Business'
headquarters in Shelton, Connecticut, employees based in the Asheboro Property,
the Queretaro Property and the Kuantan Facility, and the employees listed on
Attachment XV, shall be transferred to the Buyer Companies such that the
employment of such persons shall be considered continuous employment under
Applicable Law. "Active Employee" shall mean any individual who is actively
employed by any Seller Company in connection with the HPG Business or is on
authorized leave of absence, military service (without restriction) or lay-off
with recall rights (without restriction) with respect to the HPG Business and
where applicable shall include independent contractors. The Active Employees of
the HPG Business who are employed at any time on or after the Closing Date with
any of the Buyer Companies are herein collectively referred to as "Transferred
Employees." Subject to the terms and conditions of this Exhibit D, such
employment shall be at the same workplace and on substantially the same terms
and conditions as those under which such employees are currently employed by
Seller Companies and the employment of each Transferred Employee shall be
continued by the Buyer Companies for the maximum applicable termination notice
period to which the Seller Companies may be subject under Applicable Law as a
result of the Contemplated Transactions. From and after the Closing Date, except
as otherwise provided herein or in the Agreement, each Buyer Company employing a
Transferred Employee shall assume all obligations under any agreements,
contracts or Applicable Law relating to the terms and conditions of employment
of such Transferred Employees, and such Buyer Company shall be responsible for
any liability or obligations arising out of or pertaining to the termination of
employment of, hiring of or failure or refusal to hire any Transferred Employee.
D.02 Labor Agreements. The Buyer Companies agree to recognize the
applicable labor unions, collective bargaining representative, trade unions or
work councils representing any employees of the HPG Business as the exclusive
collective bargaining representatives of such employees with respect to wages,
hours, fringe and other terms and conditions of employment to the extent so
recognized by Seller Companies for all such employees who are within the
appropriate bargaining unit as determined by Applicable Law. The Buyer Companies
shall become successor employers under any labor or collective bargaining
agreements and agree to honor the terms of and to assume all obligations of the
Seller Companies under applicable existing collective bargaining agreements in
respect of such unionized Transferred Employees from and after the Closing Date
and all legal obligations arising from such recognition or assumption.
D.03 Recalled or Rehired Employees. Buyer Companies confirm that any
employees of the HPG Business that are laid off or on leave as of the Closing
Date and who are recalled or rehired by a Buyer Company or return from leave on
or after the Closing Date will be recalled or rehired or returned to employment
in compliance with any applicable agreements, contracts or Applicable Law and
will be accorded the benefits otherwise provided to Transferred Employees by the
Buyer Companies.
D.04 Negotiations with Employees or Employee Representatives. If and to
the extent that any provisions of this Agreement are or may be subject to
negotiation with employees (including Transferred Employees), or applicable
labor unions, trade unions or work councils, by policy, contract, collective
agreement or Applicable Law, the Seller Companies and Buyer Companies shall
cooperate fully in such negotiations.
D.05 Termination and Plant Closing Notices; WARN. Seller shall provide
any notices to the Transferred Employees that may be required under any
Applicable Law, including but not limited to WARN or any similar state or local
law, with respect to events that occur prior to the Closing Date. Buyer shall
provide any such notices to Active Employees of the HPG Business with respect to
events that occur as a result of the Closing, and to Transferred Employees with
respect to events that occur on and after the Closing Date. Buyer shall not take
any action after the Closing that would cause any termination of employees by
the Seller Companies that occur on or before the Closing Date to constitute a
"plant closing" or "mass layoff" under WARN or any similar state or local law,
or create any liability to the Seller Companies for employment termination under
Applicable Law.
D.06 Immigration Matters. The Buyer Companies acknowledge that the
Contemplated Transactions may trigger certain obligations under the immigration
laws of the countries where the HPG Business operates. Buyer shall use
reasonable efforts to comply with all requirements of such immigration laws and
agrees to make any reasonable and necessary filings with the appropriate
Governmental Authority to attempt to ensure the continued employment eligibility
of the Transferred Employees, including ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇'▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇.
II. United States Employee Benefit Matters.
D.07 Pension Plans.
(a) Seller and its Affiliates shall retain all liabilities and
obligations in respect of benefits accrued by employees of the HPG Business
(including Transferred Employees) as of the Closing Date under The Black &
▇▇▇▇▇▇ Pension Plan ("Seller's Pension Plan"). Accrued benefits of US
Transferred Employees under Seller's Pension Plan shall be fully vested as of
the Closing Date. Benefit accruals in respect of US Transferred Employees under
Seller's Pension Plan shall cease as of the Closing Date. US Transferred
Employees participating in Seller's Pension Plan shall not be entitled to
receive any such vested accrued benefits under Seller's Pension Plan unless and
until their employment with Buyer Companies terminates. No assets of Seller's
Pension Plan shall be transferred to Buyer Companies or to any employee benefit
plan of Buyer or any of its Affiliates.
(b) Except as otherwise provided in Section D.07(c), prior to
or as soon as practicable after the Closing Date, Buyer shall designate or
establish a defined benefit pension plan for the benefit of US Transferred
Employees who were participants in Seller's Pension Plan ("Buyer's Pension
Plan"). Buyer's Pension Plan shall cover all US Transferred Employees, each of
whom shall be eligible to participate therein for a period of at least one year
following the Closing Date on substantially the same terms and conditions as
provided to the US Transferred Employees under Seller's Pension Plan immediately
prior to the Closing Date; provided, however, that with respect to benefit
accrual, Buyer may offset the benefit under the Buyer's Pension Plan for the
benefit accrual of US Transferred Employees under the Seller's Pension Plan as
of the Closing Date.
(c) Buyer covenants and agrees that service with Seller or any
of its Affiliates (and, to the extent applicable, with General Electric Company
or any of its Affiliates) prior to the Closing Date that is recognized for any
purpose by Seller's Pension Plan will be recognized by Buyer's Pension Plan for
such purpose.
(d) In lieu of adopting Buyer's Pension Plan, Buyer may make a
contribution to an individual account plan maintained by the Buyer, and/or make
a cash payment, to or for the benefit of each US Transferred Employee in an
amount not less than the value of the benefit that the US Transferred Employee
would have accrued under the Buyer's Pension Plan, after the offset for benefits
under Seller's Pension Plan, for the one-year period beginning on the Closing
Date. The Buyer shall make any such contribution, or cash payment net of any
withholding taxes, within 120 days after the first anniversary of the Closing
Date.
(e) Seller shall provide Buyer with any information relating
to the accrued benefits of the US Transferred Employees under Seller's Pension
Plan as shall be reasonably requested by Buyer to enable it to calculate the
benefits to be provided under the Buyer's Pension Plan pursuant to paragraph (b)
of this Section D.07 or the contributions or payments otherwise required to be
made by the Buyer pursuant to this paragraph (d) of this Section D.07.
D.08 Savings Plans.
(a) Seller shall cause the trustee of The Black & ▇▇▇▇▇▇
Retirement Savings Plan ("Seller's Savings Plan") to transfer as of the transfer
date specified below, the full account balances of the US Transferred Employees
under Seller's Savings Plan, to the Successor Savings Plan (as hereinafter
defined). Such assets shall be transferred to the Successor Savings Plan in
cash, provided that assets consisting of notes or other instruments evidencing
loans made to participating US Transferred Employees shall be transferred in
such form to the Successor Savings Plan. Seller and Buyer shall make any and all
filings and submissions to the appropriate Governmental Authorities, and shall
make any necessary plan amendments arising in connection with the transfer of
assets from Seller's Savings Plan to the Successor Savings Plan.
(b) As soon as practicable after the Closing Date, Buyer shall
establish or designate an individual account plan for the benefit of US
Transferred Employees (the "Successor Savings Plan"), shall take all necessary
action, if any, to qualify the Successor Savings Plan under the applicable
provisions of the Code and shall make any and all filings and submissions to the
appropriate Governmental Authorities required to be made by it in connection
with the transfer of assets contemplated hereby. The Successor Savings Plan
shall provide that those US Transferred Employees and their beneficiaries
covered by Seller's Savings Plan shall receive credit for all service and
compensation with Seller or any of its Affiliates (and, to the extent
applicable, with General Electric Company or any of its Affiliates) prior to the
Closing Date for all purposes, to the same extent such service and compensation
are recognized under Seller's Savings Plan immediately prior to the Closing
Date. Buyer shall take all action required or appropriate to vest fully all such
US Transferred Employees in their entire account balances transferred to the
Successor Savings Plan and, to the extent required under Section 411(d)(6) of
the Code, to protect and preserve all benefits, rights and features relating to
those account balances transferred from Seller's Savings Plan. As soon as
practicable following the earlier of the delivery to Seller of a favorable
determination letter from the Internal Revenue Service regarding the qualified
status of the Successor Savings Plan or the issuance of indemnities satisfactory
to Seller in its sole discretion, Seller shall cause the trustee of Seller's
Savings Plan, subject to any election by a US Transferred Employee to withdraw
his or her account balance prior to the transfer date in respect of Seller's
Savings Plan, to transfer the full account balances of US Transferred Employees
under Seller's Savings Plan as of the transfer date to the appropriate trustee
designated by the Buyer under the trust agreement forming a part of the
Successor Savings Plan; provided, that assets consisting of notes or other
instruments evidencing loans made to participating US Transferred Employees
shall be transferred in such form to the Successor Savings Plan.
(c) Buyer, effective as of the date of the transfer of assets
contemplated by this Section D.08, assumes all of the liabilities and
obligations of Seller or any of its Affiliates in respect of the account
balances accumulated by US Transferred Employees under Seller's Savings Plan,
and the Successor Savings Plan assumes all liabilities and obligations of
Seller's Savings Plan with respect to all account balances under Seller's
Savings Plan of such US Transferred Employees. Neither Buyer nor any of its
Affiliates shall assume any other obligations or liabilities arising under or
attributable to Seller's Savings Plan and neither Seller nor any of its
Affiliates shall assume any liabilities or obligations under or attributable to
the Successor Savings Plan. Prior to the transfer of assets contemplated by this
Section D.08, Buyer Companies, if consented to by the applicable US Transferred
Employee, shall withhold from such US Transferred Employee's pay, loan
repayments relating to any outstanding loan to such US Transferred Employee
under Seller's Savings Plan and shall promptly forward those withholdings to
Seller's Savings Plan.
D.09 Health and Welfare Plans; Benefit Arrangements.
(a) For a period of one year following the Closing Date, Buyer
Companies shall ensure that the US Transferred Employees are provided benefits
that are comparable in the aggregate to the health, medical, dental, life,
disability and severance benefits in effect for the US Transferred Employees
immediately prior to the Closing Date.
(b) In furtherance and not in limitation of the provisions of
this Section D.09, as of the Closing Date, Buyer (i) shall, subject to the
provisions of Section 10.02(b)(iv), establish severance plans, agreements and
arrangements with substantially the same terms and conditions as those provided
under the applicable severance agreements, plans or arrangements listed on
Schedule B.18, (ii) agrees to maintain such severance agreements, plans and
arrangements for a period of at least one year following the Closing Date, and
(iii) agrees to pay any benefits to any US Transferred Employees that they may
be entitled to receive under such severance agreements, plans or arrangements.
In furtherance and not in limitation of the provisions of this Section D.09, as
of the Closing Date, Buyer or the applicable Buyer Company shall assume the
obligations of Seller Companies under the individual employee severance
agreements listed on Schedule B.18.
(c) With respect to any US Transferred Employee (including any
beneficiary or dependent thereof), except as expressly set forth herein, Seller
Companies shall retain (i) all liabilities and obligations arising under any
group life, accident, medical, dental or disability plan or similar arrangement
(whether or not insured) to the extent that such liability or obligation relates
to claims incurred (whether or not reported) on or prior to the Closing Date,
and (ii) all liabilities and obligations arising under any worker's compensation
laws to the extent such liability or obligation relates to the period prior to
the Closing Date.
(d) Any group health plan, disability plan or other plans
established or designated by the Buyer Companies for the benefit of US
Transferred Employees shall not contain any exclusion or limitation with respect
to any preexisting condition.
(e) Except as otherwise expressly provided in this Exhibit D,
effective as of the Closing, Buyer shall assume the liabilities and obligations
of Seller Companies in respect of all US Transferred Employees (and their
beneficiaries and dependents) under the Benefit Arrangements sponsored or
maintained by Seller Companies at any time prior to the Closing Date, if and
only to the extent that such liabilities and obligations are reflected on the
Opening Statement.
D.10 Post-Retirement Medical and Life Insurance.
(a) Seller Companies shall retain responsibility for providing
health, medical, dental, hospitalization, life insurance or similar benefits
(including, without limitation, reimbursement for Medicare premiums) to any
employee or former employee of the HPG Business (other than US Transferred
Employees) who retires or has retired on or before the Closing Date. Buyer
Companies shall be responsible for providing any post-retirement medical, life
or similar benefits to US Transferred Employees if and only to the extent that
Buyer, in its sole discretion, agrees to provide such post-retirement benefits.
(b) Notwithstanding the provisions of this Exhibit D,
including but not limited to the provisions of this Section D.10, Seller
Companies may amend, modify or terminate any plans or arrangements providing
post-retirement health, medical, dental, hospitalization, life insurance or
similar benefits (including, without limitation, reimbursement for Medicare
premiums) to any employee or former employee of the HPG Business, subject in
each case to the provisions of Applicable Law.
(c) Buyer shall not be obligated by this Agreement to provide
post-retirement, health, medical, dental, hospitalization, life insurance or
similar benefits (including, without limitation, reimbursement for Medicare
premiums), or any particular level of such benefits, to US Transferred
Employees.
III. Other Country Employee Benefit Matters.
D.11 General. For a period of one year following the Closing Date,
Buyer shall ensure that the Non-US Transferred Employees are provided benefits
that are comparable in the aggregate to those provided under the Non-U.S.
Benefit Arrangements as in effect for those Non-US Transferred Employees
immediately prior to the Closing Date, it being understood that each Non-US
Transferred Employee shall receive credit for all service and compensation with
Seller Companies and any of their predecessors or Affiliates prior to the
Closing Date for all purposes to the same extent that service and compensation
are recognized immediately prior to the Closing.
D.12 Severance/Termination Indemnities. In furtherance and not in
limitation of the provisions of Section D.11, for a period of at least one year,
Buyer shall provide severance programs and termination indemnities with
substantially the same terms and conditions as those provided by the Seller
Companies to the Non-US Transferred Employees immediately prior to the Closing
and agrees to pay any benefit to Non-US Transferred Employees to which they may
be entitled under such severance programs and/or termination indemnities with
respect to events that occur as a result of the Closing and on or after the
Closing Date.
D.13 Mexico Plan. In furtherance and not in limitation of the
provisions of Section D.11:
(a) Except as otherwise provided in paragraph (d) of this
Section D.13, prior to or as soon as practicable after the Closing Date, Buyer
shall designate or establish a defined benefit pension plan ("Buyer's Mexico
Plan") for the benefit of Non-US Transferred Employees who were participants in
the Black & ▇▇▇▇▇▇, ▇.▇. de C.V. Pension and Seniority Premium Plans ("Seller's
Mexico Plan"). Buyer's Mexico Plan shall cover all Non-US Transferred Employees
who were participants in the Seller's Mexico Plan, each of whom shall be
eligible to participate therein for a period of at least one year following the
Closing Date on the same terms and conditions as provided to participants under
the Seller's Mexico Plan immediately prior to the Closing Date.
(b) Buyer covenants and agrees that service with the Seller or
any of its predecessors or Affiliates prior to the Closing Date that is
recognized for any purpose under the Seller's Mexico Plan will be recognized by
Buyer's Mexico Plan for such purpose.
(c) As of the Closing Date, Seller shall cause the Seller's
Mexico Plan to be amended to fully vest all Non-US Transferred Employees
participating in that plan in their entire accrued benefit determined as of the
Closing Date. The Seller shall cause assets of the Seller's Mexico Plan to be
transferred to the Buyer's Mexico Plan in an amount equal to the accrued benefit
of the Non-US Transferred Employees participating in the Seller's Mexico Plan,
calculated on a discontinuance basis as of the Closing Date (increased or
decreased by the rate of actual investment return realized with respect to such
assets under the Seller's Mexico Plan for the period between the Closing Date
and the date those assets are transferred to the Buyer's Mexico Plan). The
amount of the transferred assets shall be calculated in accordance with the
actuarial assumptions, used by the Seller's Mexico Plan actuary.
(d) In lieu of adopting Buyer's Mexico Plan, subject to the
provisions of Applicable Law, Buyer may make a contribution to an individual
account plan maintained by Buyer, and/or make a cash payment, to or for the
benefit of each Non-US Transferred Employee who was a participant in the
Seller's Mexico Plan in an amount not less than the value of the benefit that
the Non-US Transferred Employee would have accrued under the Buyer's Mexico
Plan, after the offset for benefits under the Buyer's Mexico Plan, for the
one-year period beginning on the Closing Date. The Buyer shall make any such
contribution, or cash payment net of any withholding taxes, within 120 days
after the first anniversary of the Closing Date.
(e) Seller shall provide Buyer with any information relating
to the accrued benefits of the Non-US Transferred Employees under the Buyer's
Mexico Plan as shall be reasonably requested by Buyer to enable it to calculate
the benefits to be provided under the Buyer's Mexico Plan pursuant to paragraph
(a) of this ▇▇▇▇▇▇▇ ▇.▇▇.
▇.▇▇ ▇▇▇▇▇▇ ▇▇▇▇ Plan. In furtherance and not in limitation of the
provisions of Section D.11:
(a) Seller shall cause the trustee of the Black & ▇▇▇▇▇▇
(Puerto Rico) Inc. 401(k)/165(e) Benefit Pension Plan ("Seller's Puerto Rico
Plan") to transfer, in cash, as of the transfer date specified below, the full
account balances of the Non-US Transferred Employees under the Seller's Puerto
Rico Plan to the Successor Puerto Rico Plan (as hereinafter defined). Seller and
Buyer shall make any and all filings and submissions to the appropriate
Governmental Authorities, and shall make any necessary plan amendments arising
in connection with the transfer of assets from Seller's Puerto Rico Plan to the
Successor Puerto Rico Plan.
(b) As soon as practicable after the Closing Date, Buyer shall
establish or designate an individual account plan for the benefit of Non-US
Transferred Employees who were participants in the Seller's Puerto Rico Plan
(the "Successor Puerto Plan"), shall take all necessary action, if any, to
qualify the Successor Puerto Rico Plan under Applicable Law and shall make any
and all filings and submissions to the appropriate Governmental Authorities
required to be made by it in connection with the transfer of assets contemplated
hereby. The Successor Puerto Rico Plan shall provide that those Non-US
Transferred Employees and their beneficiaries covered by Seller's Puerto Rico
Plan shall receive credit for all service and compensation with Seller or any of
its predecessors and Affiliates prior to the Closing Date for all purposes, to
the same extent such service and compensation is recognized under Seller's
Puerto Rico Plan immediately prior to the Closing Date. Buyer shall take all
action required or appropriate to vest fully all such Non-US Transferred
Employees in their entire account balances transferred to the Successor Puerto
Rico Plan and shall protect and preserve all benefits, rights and features
relating to those account balances transferred from Seller's Puerto Rico Plan.
As soon as practicable following the earlier of the delivery to Seller of
appropriate notification of the qualified status of the Successor Puerto Rico
Plan or the issuance of indemnities satisfactory to the Seller in its sole
discretion, Seller shall cause the trustee of Seller's Puerto Rico Plan, subject
to any election by a Non-US Transferred Employee to withdraw his or her account
balance prior to the transfer date in respect of Seller's Puerto Rico Plan, to
transfer the full account balances of Non-US Transferred Employees under
Seller's Puerto Rico Plan as of the transfer date to the appropriate trustee
designated by the Buyer under the trust deed forming part of the Successor
Puerto Rico Plan.
(c) Buyer, effective as of the date of the transfer of assets
contemplated by this Section D.14, assumes all of the liabilities and
obligations of Seller or any of its predecessors or Affiliates in respect of the
account balances accumulated by Non-US Transferred Employees under Seller's
Puerto Rico Plan and the Successor Puerto Rico Plan assumes all liabilities and
obligations of Seller's Puerto Rico Plan with respect to all account balances
under Seller's Puerto Rico Plan of such Non-US Transferred Employees. Neither
Buyer nor any of its Affiliates shall assume any other obligations or
liabilities arising under or attributable to Seller's Puerto Rico Plan and
neither Seller nor any of its predecessors or Affiliates shall assume any
liabilities or obligations under or attributable to the Successor Puerto Rico
Plan.
D.15 Canada Plan. In furtherance and not in limitation of the
provisions in Section D.11:
(a) Seller shall cause the trustee of the Black & ▇▇▇▇▇▇
Retirement Plan ("Seller's Canada Plan") to transfer, in cash, as of the
transfer date specified below, the full account balances of the Non-US
Transferred Employees under the Seller's Canada Plan to the Successor Canada
Plan (as hereinafter defined). Seller and Buyer shall make any and all filings
and submissions to appropriate Governmental Authorities, and shall make any
necessary plan amendments arising in connection with the transfer of assets from
Seller's Canada Plan to the Successor Canada Plan.
(b) As soon as practicable after the Closing Date, Buyer shall
establish or designate an individual account plan for the benefit of Non-US
Transferred Employees who were participants in the Seller's Canada Plan (the
"Successor Canada Plan"), shall take all necessary action, if any, to qualify
the Successor Canada Plan under Applicable Law and shall make any and all
filings and submissions to the appropriate Governmental Authorities required to
be made by it in connection with the transfer of assets contemplated hereby. The
Successor Canada Plan shall provide that those Non-US Transferred Employees and
their beneficiaries covered by Seller's Canada Plan shall receive credit for all
service and compensation with Seller or any of its predecessors and Affiliates
prior to the Closing Date for all purposes to the same extent such service and
compensation is recognized under Seller's Canada Plan immediately prior to the
Closing Date. Buyer shall take all action required or appropriate to vest fully
all such Non-US Transferred Employees in their entire account balances
transferred to the Successor Canada Plan and shall, to the extent required by
Applicable Law, protect and preserve all benefits, rights and features relating
to those account balances transferred from Seller's Canada Plan. As soon as
practicable following delivery to Seller of appropriate notification of the
qualified status of the Successor Canada Plan under Applicable Law or the
issuance of indemnities satisfactory to the Seller in its sole discretion,
Seller shall cause the trustee of Seller's Canada Plan to transfer the full
account balances of Non-US Transferred Employees under Seller's Canada Plan as
of the transfer date to the appropriate trustee designated by the Buyer under
the trust deed or other funding vehicle forming part of the Successor Canada
Plan.
(c) Buyer, effective as of the date of the transfer of assets
contemplated by this Section D.15, assumes all of the liabilities and
obligations of Seller or any of its predecessors or Affiliates in respect of the
account balances accumulated by Non-US Transferred Employees under Seller's
Canada Plan and the Successor Canada Plan assumes all liabilities and
obligations of Seller's Canada Plan with respect to all account balances under
Seller's Canada Plan of such Non-US Transferred Employees. Neither Buyer nor any
of its Affiliates shall assume any other obligations or liabilities arising
under or attributable to Seller's Canada Plan and neither Seller nor any of its
predecessors or Affiliates shall assume any liabilities or obligations under or
attributable to the Successor Canada Plan.
VII. General.
D.16 No Third Party Beneficiaries. No provision of this Exhibit D or
any other provision in the Transaction Documents shall create any third party
beneficiary or other rights in any employee or former employee (including any
beneficiary or dependent thereof) of Seller or of any of its Affiliates in
respect of continued employment (or resumption of employment) with Seller or
Buyer, or any of their Affiliates, and no provision of this Exhibit D shall
create any such rights in any such individuals in respect of any benefits that
may be provided, directly or indirectly, under any Employee Plan or Benefit
Arrangement, or any plan or arrangement which may be established by Buyer or any
of its Affiliates. Subject to Applicable Law, unless otherwise provided herein,
no provision of this Agreement shall constitute a limitation on rights to amend,
modify or terminate, either before or after Closing, any such Employee Plan or
Benefit Arrangement of the Seller or any of its Affiliates.
D.17 Indemnification by Buyer. Effective as of the Closing, except as
otherwise provided in Section D.18, Buyer hereby indemnifies Seller and its
Affiliates and their respective directors, officers, employees and agents
against, and agrees to hold them harmless from, any and all Damages arising out
of or pertaining to (i) the termination of employment of, hiring of or failure
or refusal to hire, any Transferred Employee on or after the Closing; (ii) in
relation to any Transferred Employee any modification of the pay, benefits or
other terms and conditions of employment of any Transferred Employee on or after
the Closing; and (iii) any breach of any covenants or agreements of the Buyer
contained in this Exhibit D.
D.18 Indemnification by Seller. Effective as of the Closing, Seller
hereby indemnifies Buyer and its Affiliates and their respective directors,
officers, employees and agents against, and agrees to hold them harmless from,
any liability for retrenchment benefits, notice pay, termination indemnities,
severance and other similar arrangements, as such arrangements exist on the
Closing Date, in respect of Non-US Transferred Employees who work in the HPG
Business at the Kuantan Facility notwithstanding that any termination of such
employees may occur after the Closing Date; provided, however, that Seller shall
have no liability under this Section D.18 for any increase in retrenchment
benefits, notice pay, termination indemnities, severance or other similar
benefits to the extent relating to actions taken by Buyer Companies following
Closing (other than the termination of such employees).
D.19 Miscellaneous. Except for the obligation to employ certain Active
Employees set forth in Section D.01 on the Closing Date, nothing in this Exhibit
D shall obligate Buyer or any Buyer Company to employ any Transferred Employee
for any specified period.
EXHIBIT E
ADDITIONAL MATTERS RELATING TO PRODUCT LIABILITY ISSUES
Seller and Buyer acknowledge and agree that each has a continuing
interest in ensuring that claims involving alleged product defects and product
safety are handled by Seller Companies and Buyer Companies after the Closing in
a manner that minimizes liability of the parties and otherwise protects the
parties' interests. This Exhibit E sets forth certain additional procedures,
covenants and agreements relating to product liability and related matters in
respect of products sold and services provided by the HPG Business that, among
other things, are intended to enhance the parties' ability to achieve these
objectives.
E.01 With respect to liabilities and obligations relating to claims of
manufacturing or design defects, the parties have agreed that certain of these
liabilities and obligations will constitute Assumed Liabilities for which Buyer
Companies will be responsible and certain of these liabilities and obligations
will constitute Excluded Liabilities for which Seller Companies will be
responsible. Because (i) it is likely that Buyer Companies may receive the
initial notice or claim with respect to liabilities and obligations that
ultimately prove to be Seller Companies' responsibility and vice versa and (ii)
in many cases, particularly in the case of claims involving fire damage, it is
critical to the defense of such claims that products and the location in which
the alleged incident occurs be inspected as soon as practicable, each of Seller
and Buyer agree to give immediate notice to the other party in the event that
they receive notice of a claim involving or potentially involving claims of
manufacturing or design defects where the party first receiving such notice
reasonably believes that the responsibility for the liability or obligation, if
any, will be that of the other party or if there is any doubt as to which party
ultimately will be responsible for any related liabilities or obligations. Each
of Seller and Buyer also agree with respect to each claim of manufacturing or
design defect that they will perform a prompt, diligent and continuing
investigation to determine whether the claim is an Assumed Liability or an
Excluded Liability, and agree to give immediate notice to the other party at any
time the investigation reveals that the responsibility for the liability or
obligation, if any, will be that of the other party if there is any doubt as to
which party ultimately will be responsible for any related liabilities or
obligations. Each of Seller and Buyer agree that the party providing such notice
will thereafter cooperate with the other party to permit the other party to
conduct its own investigation, and the party providing such notice will provide
to the other party reports on the status of the claim and subject to the
provisions of Article X an opportunity to participate in the defense of the
claim, at its own cost and expense. To expedite the review of these issues and
ensure that both parties' rights and defenses are preserved, Seller and Buyer
shall provide such notice by telecopy as follows:
if to Seller:
The Black & ▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Product Liability Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to Buyer:
Windmere-Durable Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
E.02 To the extent that either Seller or Buyer (or any of their
directors, officers, advisors, attorneys, accountants, employees, insurers or
agents) conducts an investigation or other inquiry into any events or
circumstances that lead to a claim of manufacturing or design defects in respect
of a product or product line generally or a specific claim or allegation and the
results of such investigation or inquiry relate to or otherwise affect the
liabilities or obligations of the other party hereunder, Seller or Buyer, as the
case may be, agree to share any information obtained as a result of the
investigation or inquiry, in each case subject to the express provisions of
Section 7.07 of this Agreement.
E.03 To assist each of the parties to this Agreement with the defense
of claims involving allegations of manufacturing or design defects and with
compliance with each parties' respective legal obligations under this Agreement
and otherwise, Seller and Buyer each agree from time to time to designate
individuals within their respective organizations as an "Engineering/Safety
Assurance Liaison" and a "Claims Liaison" for the purpose of coordinating the
defense of claims involving products sold and services provided by the HPG
Business. The initial individuals serving in these capacities shall be
designated in writing by Seller and Buyer at Closing and, thereafter, may be
changed from time to time by notice to the other party.
E.04 To assist each of the parties to this Agreement with the defense
of claims involving allegations of manufacturing or design defects and with
compliance with each parties' respective legal obligations under this Agreement
and otherwise, Seller and Buyer each agree from time to time to provide the
other party access to all information as provided in Section 5.04 and Section
6.02. Without limiting the generality of those provisions, Seller and Buyer
acknowledge and agree that the aforementioned information and access includes
the existing databases relating to consumer complaints, claims and litigation,
whether maintained at the headquarters of the HPG Business or otherwise, access
to personnel and engineering and design drawings or documents and any other
relevant information.
E.05 Seller and Buyer acknowledge that in the course of the
investigation or defense of claims involving allegations of manufacturing or
design product defects, or investigations regarding product safety, product
corrective action plans, product recalls and related matters, Seller Companies
and Buyer Companies may require documents from Underwriters Laboratories Inc.
("UL") or the Canadian Standards Association ("CSA") relating to UL or CSA
testing, listing, analysis or otherwise referring to products manufactured by
Seller Companies or Buyer Companies. Buyer, on behalf of itself and the other
Buyer Companies, hereby consents, and grants to Seller Companies the right and
permission to request and obtain from UL or CSA, and consents and grants
permission to UL and CSA the right to provide to Seller Companies, any and all
documents relating to products or product lines designed or manufactured by
Seller Companies, whether or not Buyer Companies continue to manufacture said
products or product lines. Buyer agrees to provide to Seller Companies at
Seller's request such other documents as Seller reasonably requires to evidence
and confirm Buyer's consent herein.
E.06 With respect to claims involving liabilities and obligations in
respect of investigations regarding product safety, product corrective action
plans, product recall and related matters, Seller and Buyer acknowledge that
companies frequently are asked to satisfy, or prefer to satisfy, their
corrective action plan obligations with the exchange of products or the sale of
substitute or replacement products at a specified price, which may include a
discount from normal retail prices. Seller and Buyer agree that it is in the
best interests of each of them and the HPG Business that product be available to
satisfy such obligations whether the ultimate responsibility for the liabilities
and obligations are those of Seller, Buyer or Seller and Buyer. Because
following Closing Seller no longer will have an ability to provide products to
satisfy such obligations, Buyer agrees to consult with Seller in any
circumstances in which Seller desires to satisfy corrective action plan or
similar obligations with products of the HPG Business and to the extent
practicable from time to time to make available to Seller quantities of such
products reasonable under the circumstances at a price equal to the HPG
Business' standard costs of production plus specifically allocable manufacturing
variances. With respect to claims involving liabilities and obligations in
respect of investigations regarding product safety, product corrective action
plans and product recall and related matters which include both Assumed
Liabilities and Excluded Liabilities, Seller and Buyer agree to cooperate in the
defense of such claims.