EXHIBIT 2
ASSET PURCHASE AND SALE AGREEMENT
among
PLASTICS, INC.
and
HOME PRODUCTS INTERNATIONAL, INC.
and
NEWELL CO.
Dated as of July 31, 1998
Page
ARTICLE I
TRANSFER OF ASSETS AND LIABILITIES ............... 1
1.1 Transfer of Assets .................... 1
(a) Inventory ...................... 1
(b) Materials ...................... 1
(c) Receivables ..................... 1
(d) Business Records ................... 1
(e) Tangible Personal Property .............. 2
(f) Contracts ...................... 2
(g) Permits ....................... 2
(h) Real Property .................... 2
(i) Intellectual Property ................ 2
(j) Claims ........................ 2
(k) Miscellaneous .................... 2
1.2 Excluded Assets ...................... 2
(a) Anchor[R], Anchor Hocking[R], Vitri[R] and Wearever[R]
Brand Names and Trademarks ............ 2
(b) Cash ......................... 2
(c) Non-Assigned Contracts ................ 3
(d) Tax Refunds ..................... 3
(e) Insurance ...................... 3
(f) Corporate Records .................. 3
(g) Employee Plans .................... 3
(h) Bank Accounts and Lock Boxes ............. 3
(i) Molds ........................ 3
(j) Central Operations .................. 3
(k) Eminent Domain/Relocation Cost Proceedings ...... 3
(l) Certain Off-Site Environmental Matters ........ 3
(m) Other ........................ 3
1.3 Assumption of Certain Liabilities ............. 3
1.4 Excluded Liabilities ................... 4
(a) Liabilities Related to Excluded Assets ........ 4
(b) Liabilities Related to Non-Assigned Contracts .... 4
(c) Liabilities Related to Debarment Notice ....... 4
(d) Liabilities Related to Antitrust Litigation ..... 4
(e) Liabilities Related to Certain Off-Site Environmental
Matters ....................... 4
(f) Liabilities Related to Newell Pension Plan ...... 4
(g) Liabilities Related to Eminent Domain/Relocation Cost
Proceeding ...................... 4
(h) Liabilities Related to Certain Management Bonuses .. 4
(i) Other ........................ 4
ARTICLE II
PURCHASE PRICE, ADJUSTMENT AND ALLOCATION ........... 4
2.1 Purchase Price and Assumption of Liabilities ....... 4
2.2 Adjustment of Purchase Price ............... 5
(a) Purchase Price Adjustment .............. 5
(b) Closing Statement of Tangible Net Worth ....... 5
(c) Buyer's Review of Preliminary Closing Statement ... 5
(d) Seller's Response to Buyer's Letter ......... 6
(e) Meeting to Resolve Proposed Adjustments ....... 6
(f) Arbitration of Disputed Purchase Price Adjustments .. 6
(g) Notices Relating to the Closing Statement ...... 7
(h) Payment and Interest ................. 7
2.3 Purchase Price Allocation ................. 7
ARTICLE III
CLOSING; TRANSFER OF ASSETS .................. 8
3.1 Closing .......................... 8
3.2 Nonassignability of Assets ................ 8
3.3 Deliveries of Seller ................... 9
3.4 Buyer's Deliveries .................... 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES ................. 9
4.1 Representations and Warranties of Seller ......... 9
(a) Due Organization of Seller .............. 9
(b) Due Power and Authority ............... 9
(c) Authorization and Validity of Agreements ...... 10
(d) Good Title ..................... 10
(e) No Conflict .................... 10
(f) Financial Statements ................ 11
(g) Tax Matters .................... 11
(h) Title to Real and Personal Properties; Liens and
Encumbrances; No Other Interests ........ 11
(i) Business Contracts ................. 12
(j) Legal Proceedings ................. 12
(k) Government Licenses, Permits and Related Approvals . 12
(l) Conduct of Business in Compliance with Regulatory
Requirements .................... 12
(m) Labor Matters ................... 12
(n) Intellectual Property ............... 13
(o) Employee Benefit Plans ............... 13
(p) Brokers, Finders, etc. ............... 13
(q) Reserved ...................... 13
(r) Absence of Changes ................. 13
(s) Leased Real Property ................ 13
(t) Insurance ..................... 14
(u) Receivables. .................... 14
(v) Inventory ..................... 14
(w) Key Employees ................... 14
(x) Sufficiency of Assets ............... 14
(y) No Other Representations or Warranties ....... 14
4.2 Representations and Warranties of Buyer ......... 14
(a) Due Organization and Power ............. 15
(b) Authorization and Validity of Agreements ...... 15
(c) No Conflict .................... 15
(d) Brokers, Finders. etc. ............... 15
(e) Financial Capacity ................. 15
4.3 Supplements to Schedules ................ 16
ARTICLE V
PRE-CLOSING COVENANTS .................... 16
5.1 Access to Information Concerning Properties and Records;
Confidentiality ..................... 16
5.2 Conduct of the Business Prior to the Closing Date .... 16
(a) Ordinary Course .................. 16
(b) Changes in Compensation .............. 16
(c) Assets ....................... 17
(d) Capital Expenditures ................ 17
(e) Liens ....................... 17
(f) Accounting Practices ................ 17
(g) Constituent Documents ............... 17
(h) Other ....................... 17
5.3 Preservation of Business ................ 17
5.4 Authorizations ..................... 17
5.5 Cash Management ..................... 18
5.6 Intercompany Services and Products ........... 18
5.7 Further Actions ..................... 18
5.8 No Negotiation ..................... 18
5.9 Environmental Matters .................. 19
5.10 Assistance with Key Employees .............. 20
ARTICLE VI
CONDITIONS PRECEDENT ..................... 20
6.1 Conditions Precedent to Obligations of Parties ..... 20
(a) Antitrust Laws ................... 20
(b) No Injunction ................... 20
(c) Consents ...................... 20
6.2 Conditions Precedent to Obligation of Buyer ....... 20
(a) Accuracy of Representations and Warranties ..... 20
(b) Performance of Agreements ............. 21
(c) Certificate .................... 21
(d) Ancillary Agreements ................ 21
(e) Additional Matters ................. 21
6.3 Conditions Precedent to the Obligation of Seller .... 21
(a) Accuracy of Representations and Warranties ..... 21
(b) Performance of Agreements ............. 21
(c) Certificate .................... 22
(d) Payment of Stay Bonuses .............. 22
(e) Ancillary Agreements ................ 22
ARTICLE VII
PROVISIONS AS TO TAX MATTERS ................. 22
7.1 Certain Tax Matters ................... 22
(a) Preparation and Filing of Tax Returns ....... 22
(b) Payment of Taxes .................. 22
(c) Refunds ...................... 22
(d) Straddle Periods .................. 22
7.2 Tax Indemnification ................... 23
(a) Seller Indemnification ............... 23
(b) Buyer Indemnification ............... 23
(c) Determining Liability for Taxes .......... 23
7.3 Cooperation ....................... 23
ARTICLE VIII
LABOR MATTERS, EMPLOYEE RELATIONS AND BENEFITS ........ 23
8.1 Offers of Employment .................. 23
8.2 Collective Bargaining Agreements ............ 24
8.3 Participation in Buyer's Retirement Plans ........ 24
8.4 Transfer of Savings Plan Account Balances ........ 24
8.5 Health and Welfare Plans ................ 24
8.6 No Rights or Remedies .................. 25
8.7 Indemnification ..................... 25
ARTICLE IX
SURVIVAL AND INDEMNIFICATION ................. 25
9.1 Survival ........................ 25
9.2 Indemnification Provisions for the Benefit of Buyer ... 25
9.3 Indemnification Provisions for the Benefit of Seller .. 25
9.4 Matters Involving Third Parties ............. 26
9.5 Adjustments ....................... 26
9.6 Exclusive Remedy .................... 26
ARTICLE X
OTHER POST-CLOSING COVENANTS ................. 26
10.1 Post-Closing Accounting Cooperation ........... 26
10.2 Transfer Taxes ..................... 26
10.3 WARN .......................... 27
10.4 Further Actions ..................... 27
10.5 Subsequent Access .................... 27
10.6 Existing Insurance Coverage ............... 27
10.7 Payment of Remainder of Stay Bonuses .......... 27
10.8 Collection of Receivables ................ 27
10.9 Mail .......................... 28
10.10 Bulk Sales Laws .................. 28
10.11 Confidentiality .................. 28
(a) By Seller ..................... 28
(b) By Buyer. ..................... 28
(c) Exceptions ..................... 28
10.12 Noncompetition ................... 28
10.13 Reimbursement for Relocation Costs ......... 29
ARTICLE XI
MISCELLANEOUS ........................ 30
11.1 Termination ....................... 30
(a) General ...................... 30
(b) Procedure Upon Termination ............. 30
(c) Survival of Certain Provisions ........... 30
11.2 Fees and Expenses .................... 30
11.3 Notices ......................... 30
11.4 Entire Agreement .................... 31
11.5 Binding Effect; Benefit ................. 31
11.6 Assignability ...................... 32
11.7 Amendment and Modification; Waiver ........... 32
11.8 Public Announcements .................. 32
11.9 Interpretation ..................... 32
11.10 Counterparts .................... 33
11.11 Applicable Law ................... 33
11.12 Severability of Provisions ............. 33
11.13 Guarantor ..................... 33
SCHEDULES
Schedule 1.2(l) Off-Site Environmental Matters
Schedule 4.1(d) Good Title
Schedule 4.1(e)(i) Seller's Knowledge
Schedule 4.1(e)(ii) Governmental Approvals (Seller)
Schedule 4.1(e)(iv) Third Party Consents (Seller)
Schedule 4.1(f) Financial Statements
Schedule 4.1(g) Tax Matters
Schedule 4.1(h)(i) Permitted Liens
Schedule 4.1(h)(ii) Owned Real Property
Schedule 4.1(i) Contracts
Schedule 4.1(j) Legal Proceedings
Schedule 4.1(k) Government Licenses
Schedule 4.1(l) Compliance With Laws
Schedule 4.1(m) Labor Matters
Schedule 4.1(n) Intellectual Property
Schedule 4.1(s) Leased Real Property
Schedule 4.1(w) Key Employees
Schedule 4.1(x) Sufficiency of Assets
Schedule 4.2(c)(i) Buyer's Knowledge
Schedule 4.2(c)(ii) Governmental Approvals (Buyer)
Schedule 4.2(c)(iv) Third Party Consents (Buyer)
Schedule 5.2 Conduct of the Business Prior to Closing
Schedule 6.1(c) Third Party Consents
Schedule 6.3(d) Stay Bonuses
Schedule 10.13(a) Relocation Costs of St. Paul Operation to Eagan
Facility
Schedule 10.13(b) Costs Not Constituting Relocation Costs of St. Paul
Operation to Eagan Facility
EXHIBITS
Exhibit A Form of Distribution Agreement
Exhibit B Form of Trademark License Agreement
Exhibit C Form of Transition Services Agreement
Exhibit D Form of Lid Supply Agreement
Exhibit E Form of Supply Agreement
ASSET PURCHASE AND SALE AGREEMENT
This ASSET PURCHASE AND SALE AGREEMENT (this "Agreement"), is dated
as of July 31, 998, between HOME PRODUCTS INTERNATIONAL, INC., a
corporation organized and existing under the laws of the State of Delaware
("Buyer"), PLASTICS, INC., a corporation organized and existing under the
laws of the State of Delaware ("Seller"), and Newell Co., a corporation
organized and existing under the laws of the State of Delaware and
guarantor of the performance of Seller under this Agreement ("Guarantor").
WHEREAS, Seller is engaged in the design, manufacture, marketing and
sale of plastic products, consisting of upscale, plastic disposable
beverage and food servingware and reusable plastic food storage containers
and related products (the "Business"); and
WHEREAS, at the Closing (as defined below), Buyer desires to
purchase from Seller substantially all of the assets and assume
substantially all of the liabilities relating to the Business from Seller,
and Seller desires to sell to Buyer such assets, subject to such
liabilities, on the terms and subject to the conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
TRANSFER OF ASSETS AND LIABILITIES
1.1 Transfer of Assets. Upon the terms and subject to the
conditions and covenants of this Agreement, and except as set forth in
Section 1.2 Seller agrees to sell, assign, transfer and convey to Buyer at
the Closing, and Buyer agrees to acquire from Seller, the assets,
properties, business set forth on the unaudited consolidated balance sheet
of the Business as of June 30, 1998 included in the Financial Statements
(as defined in Section 4.1(f)) (the "Balance Sheet") (the "Assets"),
including:
(a) Inventory. All inventories of products and finished goods,
including any such items which are in transit as of the time of the
Closing (collectively, the "Inventory");
(b) Materials. All raw materials, packaging and packaging
materials;
(c) Receivables. All trade, accounts and notes receivable
("Receivables");
(d) Business Records. All books and records relating primarily
to the Business, including all business records, research material,
tangible data, documents, personnel records with respect to the Employees
(as defined in Section 8.1), invoices, customer lists, vendor lists,
service provider lists, promotional literature, catalogs and advertising
materials used for the marketing of products, if any (collectively, the
"Business Records"); provided, however, that Seller shall be entitled to
make and retain copies of such books and records to the extent that they
relate in any way to Excluded Assets pursuant to Section 1.2 or Excluded
Liabilities pursuant to Section 1.4;
(e) Tangible Personal Property. All tangible personal
property, including all equipment, furniture, furnishings, machinery,
vehicles, tools, molds and other tangible personal property, and all
warranties and guarantees, if any, express or implied, existing for the
exclusive benefit of the Business or located on or at the real property of
the Business in connection with the foregoing, to the extent assignable;
(f) Contracts. All contracts, including contracts with
finished goods suppliers, maintenance and service agreements, purchase
orders, purchase commitments for raw materials, goods and other services,
advertising and promotional agreements, leases and other agreements;
(g) Permits. All licenses, permits and franchises issued by
any governmental authority, whether foreign, federal, state, local
or other political subdivision or agency of any of the foregoing
("Governmental Authority"), to the extent legally transferable;
(h) Real Property. All interests in real property, including
all buildings, structures, fixtures and other improvements situated
thereon, and all easements, privileges, rights-of-way, riparian and
other water rights, lands underlying any adjacent streets or roads,
appurtenances, licenses and permits pertaining to or accruing to the
benefit of such properties (the "Real Property");
(i) Intellectual Property. All rights, title and interest in
and to the brand names, product trademarks, registered trademarks,
technical information, blueprints, management information systems,
software, technology, processes, know-how, specifications, designs,
drawings, patents, patent applications, inventions, trade secrets,
copyrights, works of authorship, service marks and any other proprietary
rights (the "Intellectual Property");
(j) Claims. All claims, prepayments, refunds (other than Tax
refunds), deposits, prepaid assets, causes of action, choses in action and
rights of offset or recoupment (collectively, the "Claims"); and
(k) Miscellaneous. Other assets set forth on the Balance
Sheet, excluding any such assets disposed of in accordance with Section
5.2 and assets not legally transferable in accordance with Section 3.2,
and including any such assets acquired by Seller during the period
commencing on June 30, 1998 and ending at the Closing Date in the ordinary
course of and exclusively for use in the Business.
1.2 Excluded Assets. The parties agree that the "Excluded Assets"
will include all right, title and interest in any assets, properties and
business of Seller or any affiliate (as defined in Rule 405 under the
Securities Act of 1933, as amended; each, an "Affiliate") thereof not
constituting the Assets, including, but not limited to, the following:
(a) Anchor[R], Anchor Hocking[R], Vitri[R] and Wearever[R]
Brand Names and Trademarks. Except as provided herein, all rights of
Seller and its Affiliates in the Anchor[R], Anchor Hocking[R], Vitri[R]
and Wearever[R] brand names, trademarks and logos;
(b) Cash. All cash and cash equivalents or similar types of
investments of Seller and its Affiliates;
(c) Non-Assigned Contracts. All of the rights and interests
in, under or pursuant to, any license, lease, contract, agreement,
commitment or undertaking, that do not constitute a part of the
Assets, including without limitation, the lease described as Item 1 on
Schedule 4.1(s) (collectively, the "Non-Assigned Contracts");
(d) Tax Refunds. All refunds of Taxes of any kind paid by
Seller or its Affiliates;
(e) Insurance. All insurance policies of Seller or its
Affiliates and all rights of Seller or its Affiliates of every nature and
description under or arising out of such insurance policies;
(f) Corporate Records. All minute books, stock books, share
certificates, stock ledger and corporate seals of Seller and its
Affiliates;
(g) Employee Plans. Except as provided in Section 8.4, any
interest of Seller or an Affiliate thereof in or to any funds or other
property held in connection with any employee benefit arrangement,
including the Newell Pension Plan (as defined below);
(h) Bank Accounts and Lock Boxes. All bank accounts and lock
boxes of Seller or its Affiliates;
(i) Molds. All molds used by the Business in the manufacturing
of products which are the subject of the Lid Supply Agreement referred to
in Section 6.2(d)(i);
(j) Central Operations. All centralized management information
systems, accounting systems and computer systems, including, without
limitation, system described in Annex A to the Transition Services
Agreement described in Section 6.1(d)(v);
(k) Eminent Domain/Relocation Cost Proceedings. All rights of
Seller or its Affiliates relating to Item 1 on Schedule 4.1(j) (the
"Eminent Domain Proceeding");
(l) Certain Off-Site Environmental Matters. All rights of
Seller or its Affiliates related to Items 1-4 on Schedule 1.2(l) (the
"Off-Site Environmental Matters"); and
(m) Other. All rights of Seller and its Affiliates under this
Agreement and the Ancillary Agreements.
1.3 Assumption of Certain Liabilities. In further consideration of
the sale, conveyance, assignment and transfer of the Assets to Buyer,
effective at the Closing, Buyer will assume and agree (solely for the
benefit of Seller and not for the benefit of any other Person) to pay,
perform and discharge as and when due all Liabilities that arise out of or
relate to the Business as reflected on the Balance Sheet (including,
without limitation, all rights and obligations under the Collective
Bargaining Agreement (as defined in Section 8.2)), and Liabilities arising
after June 30, 1998 in the ordinary course of business, other than the
Excluded Liabilities set forth in Section 1.4 (the "Assumed Liabilities").
For purposes of this Agreement, (a) a "Liability" is any debt, claim,
liability, obligation, damage or expense (whether known or unknown, vested
or unvested, asserted or unasserted, absolute or contingent, accrued or
unaccrued, assessed or unassessed, liquidated or unliquidated, actual or
potential, and due to or become due), and (b) a "Person" is any
individual, trustee, corporation, general or limited partnership, joint
venture, joint stock company, bank, firm, Governmental Authority, trust,
association, organization or unincorporated entity of any kind.
1.4 Excluded Liabilities. Buyer will not assume the following
Liabilities of the Business:
(a) Liabilities Related to Excluded Assets. Liabilities of
Seller or its Affiliates related to the Excluded Assets;
(b) Liabilities Related to Non-Assigned Contracts. Liabilities
of Seller or its Affiliates under or pursuant to the Non-Assigned
Contracts;
(c) Liabilities Related to Debarment Notice. Liabilities
related to the Notice of Proposed Debarment dated May 15, 1996 issued by
the General Services Administration against Seller (the "Debarment
Notice");
(d) Liabilities Related to Antitrust Litigation. Liabilities
of Seller or its Affiliates related to antitrust litigation arising from
the same facts that gave rise to the Debarment Notice;
(e) Liabilities Related to Certain Off-Site Environmental
Matters. Liabilities of Seller or its Affiliates related to the Off-Site
Environmental Matters;
(f) Liabilities Related to Newell Pension Plan. Liabilities of
Seller or its Affiliates for Contributions to the Newell Pension Plan for
Factory and Distribution Hourly-Paid Employees (the "Newell Pension Plan")
accruing prior to the Closing Date;
(g) Liabilities Related to Eminent Domain/Relocation Cost
Proceeding. Liabilities relating to the Eminent Domain Proceeding;
(h) Liabilities Related to Certain Management Bonuses.
Liabilities relating to the Newell Co. Executive Bonus Plan (A/B
Bonuses); and
(i) Other. Liabilities for which Seller has expressly assumed
responsibility pursuant to this Agreement.
ARTICLE II
PURCHASE PRICE, ADJUSTMENT AND ALLOCATION
2.1 Purchase Price and Assumption of Liabilities. In full
consideration of the sale, conveyance, assignment and transfer of the
Assets to Buyer, (a) Buyer will pay (in the manner to be specified by
Seller prior to the Closing) to Seller at the Closing a purchase price
(the "Purchase Price") in immediately available federal funds in an amount
equal to $78,000,000, such amount to be payable by wire transfer to a bank
account designated by Seller in writing prior to the Closing; and (b)
Buyer will assume the Assumed Liabilities as of the Closing Date. The
Purchase Price will be subject to adjustment, as described in Section 2.2.
2.2 Adjustment of Purchase Price.
(a) Purchase Price Adjustment. Any amounts payable under this
Section 2.2(a) will be paid within five Business Days following the date
on which the Final Closing Statement is finalized. The "Adjusted Purchase
Price" means the Purchase Price minus the amount, if any by which the
tangible net worth of the Business at June 30, 1998, $24,081,000, as
reflected in the Balance Sheet (the "Peg Tangible Net Worth"), exceeds the
tangible net worth of the Business as of the close of business on the
Closing Date (the "Closing Tangible Net Worth"), or plus the amount, if
any, by which the Closing Tangible Net Worth exceeds the Peg Tangible Net
Worth. If the Purchase Price is greater than the Adjusted Purchase Price,
Seller will pay the difference to Buyer. If the Adjusted Purchase Price
is greater than the Purchase Price, Buyer will pay the difference to
Seller. The statement of Closing Tangible Net Worth shall be prepared
using the same principles, practices, procedures, policies, computational
methods and assumptions, including United States Generally Accepted
Accounting Principles ("GAAP"), as those used in preparing the statement
of Peg Tangible Net Worth. The statement of Peg Tangible Net Worth is
reflected in the Balance Sheet.
(b) Closing Statement of Tangible Net Worth. Within 90 days
following the Closing Date, Seller will prepare and deliver to Buyer a
statement of Closing Tangible Net Worth (the "Preliminary Closing
Statement"). The Preliminary Closing Statement, as it may be modified
pursuant to Sections 2.2(c) - (g) to become the final statement of Closing
Tangible Net Worth (the "Final Closing Statement"), will set forth a
calculation of Closing Tangible Net Worth. Any dispute, controversy or
claim arising out of or relating to the Preliminary Closing Statement and
the Final Closing Statement (each, a "Dispute") will be resolved in
accordance with Sections 2.2(c) - (g). In connection with preparing the
Preliminary Closing Statement and the Final Closing Statement, Buyer, and
its Accountants, will give Seller and its representatives access to the
books, records and accounts of the Business that have been transferred to
Buyer. For purposes of this Agreement, "Accountants" means, in the case
of Buyer, Arthur Andersen LLP, Chicago, Illinois, and means, in the case
of Seller, Arthur Andersen LLP, Milwaukee, Wisconsin.
(c) Buyer's Review of Preliminary Closing Statement. Buyer
will have 25 days following receipt to review and respond to the
Preliminary Closing Statement, during which period Seller will grant Buyer
and its Accountants reasonable access during normal business hours to
Seller's records and the accounting work papers of Seller's Accountants
relating to the preparation of the Financial Statements, including any
accounting working papers or schedules prepared by Seller or its
Accountants with respect to the Preliminary Closing Statement. Buyer and
its Accountants will sign a customary accountants letter required by
Seller's Accountants prior to a review of work papers. If, within such
25-day period, Buyer has not delivered to Seller a written letter
("Buyer's Letter") setting forth in reasonable detail any proposed
adjustment to the Preliminary Closing Statement and the basis for such
adjustment (including a specific dollar amount and accompanied by a
reasonably detailed explanation), the Preliminary Closing Statement will
be the Final Closing Statement. Any amount set forth in the Preliminary
Closing Statement as to which Buyer has not objected and proposed an
adjustment (in a specific dollar amount and accompanied by a reasonably
detailed explanation) in Buyer's Letter will be deemed to be accepted and
will become part of the Final Closing Statement.
(d) Seller's Response to Buyer's Letter. Seller will have 25
days following receipt to review and respond to Buyer's Letter. If,
within such 25-day period, Seller has not delivered to Buyer a written
letter ("Seller's Letter") setting forth in reasonable detail its
objection to any proposed adjustment in Buyer's Letter and the basis for
such objection, the proposed adjustment will be deemed to be accepted, and
any amount set forth in Buyer's Letter as to which Seller has not objected
and proposed an adjustment (in a specific dollar amount and accompanied by
a reasonably detailed explanation) in Seller's Letter will be deemed to be
accepted and will become part of the Final Closing Statement.
(e) Meeting to Resolve Proposed Adjustments. As soon as
reasonably practicable following the periods provided in Sections 2.2(c)
and (d), but in any event no later than 15 days after Seller's delivery of
Seller's Letter, the parties will meet and endeavor to resolve the
unaccepted adjustments in Buyer's Letter. If the parties reach agreement
on such adjustments, the Final Closing Statement will be the Preliminary
Closing Statement, modified to reflect the adjustments accepted pursuant
to Sections 2.2(c) and 2.2(d) and those otherwise mutually resolved by the
parties.
(f) Arbitration of Disputed Purchase Price Adjustments.
(i) If the parties do not resolve to their mutual satisfaction
all disputed adjustments relating to the Preliminary Closing
Statement described in Buyer's Letter and Seller's Letter within 25
days following the period provided in Sections 2.2(d), any remaining
disputed adjustments will be settled by arbitration by a three-member
arbitration panel (the "Panel") in accordance with the Center for
Public Resources ("CPR") Rules for Non-Administered Arbitration of
Business Disputes, as modified by the provisions set forth in clauses
(ii) - (vii) below. The parties will each separately appoint to the
Panel an arbitrator selected from a panel of CPR neutrals in Chicago,
Illinois with relevant experience in mergers and acquisitions and
such arbitrators shall jointly appoint a third arbitrator from the
accounting firm of Price Waterhouse LLP, Chicago, Illinois, provided
such accounting firm does not represent either Buyer or Seller.
(ii) The parties will furnish the Panel with a copy of this
Agreement, the Peg Statement, the Preliminary Closing Statement,
Buyer's Letter, Seller's Letter and any other relevant correspondence
between them. Each party will also give the Panel access to the
Business Records, as well as any accounting work papers or other
schedules relating to the preparation of the Preliminary Closing
Statement, Buyer's Letter and Seller's Letter. There will be no
other discovery during the arbitration.
(iii) Within 25 days of submitting the disputed adjustments
to the Panel pursuant to Section 2.2(f)(i), Buyer and Seller will
provide to the Panel and to each other a copy of a written submission
setting forth its position with respect to each item in dispute that
is described in Buyer's Letter and Seller's Letter. Within 25 days
thereafter, each party may provide to the Panel and to each other a
written rebuttal, which will be limited to addressing the points
raised in the opposing party's initial written submission. No
additional written submission will be made to the Panel unless
specifically requested by the Panel. No party will be required to
disclose any information protected by the attorney-client privilege,
attorney work product doctrine or other applicable privilege.
(iv) After receiving the written submissions, rebuttal
responses, if any, and any other written information pursuant to
Section 2.2(f)(iii), the Panel will promptly schedule a date to
interview persons designated by each party to present that party s
position. Such interviews will take place in Chicago, Illinois. The
interviews will be held on at least seven days notice to each party,
and each party, its counsel and other advisors may be present and
participate in any questioning at such interviews. The interviewing
process will last no more than two days in the aggregate.
(v) The arbitration will be limited to (A) reviewing the
amounts properly placed in dispute by Buyer's Letter and Seller's
Letter pursuant to Sections 2.2(c) and (d); (B) reviewing the
parties written submissions described in Section 2.2(f)(iii); (C)
considering the interviews described in Section 2.2(f)(iv), (D)
applying GAAP on a basis consistent with the Peg Statement to
determine the proper amount for each disputed adjustment, provided
that such amount must fall within the range set by Seller's proposed
amount in the Preliminary Closing Statement and Buyer's proposed
adjustment in Buyer's Letter; (E) preparing the Final Closing
Statement showing the Net Working Capital, which will include those
amounts in the Preliminary Closing Statement accepted by Buyer
pursuant to Section 2.2(c), Buyer's proposed adjustments accepted by
Seller pursuant to Section 2.2(d) or otherwise mutually resolved by
the parties, and those amounts determined by the Panel pursuant to
subparagraph (D) hereof; and (F) calculating the Adjusted Purchase
Price. The Panel will be instructed to resolve issues in a manner
consistent with the provisions of this Agreement.
(vi) The Panel will complete its preparation of the Final
Closing Statement and calculation of the Adjusted Purchase Price
within 25 days of the final interview conducted pursuant to Section
2.2(f)(iv) and will deliver a copy of the Final Closing Statement and
the Adjusted Purchase Price to Seller and Buyer, together with a
report setting forth each disputed adjustment, the Panel's
determination with respect thereto, and a statement of the Panel's
reasons for such determination. The Panel's determinations will be
conclusive and binding upon the parties.
(vii) The Panel's decision will be entered and enforced in
any court of competent jurisdiction. Each of Guarantor and Buyer
will pay 50% of the fees, costs and expenses of the arbitration.
(g) Notices Relating to the Closing Statement. Each party will
deliver all notices and other communications under this Section 2.2 in
accordance with Section 11.3.
(h) Payment and Interest. Any payment required to be made by
Seller or Buyer pursuant to Section 2.2(a) shall be (i) made by wire
transfer of immediately available funds pursuant to written instructions
provided by the party that is to receive payment pursuant to Section
2.2(a) and (ii) bear interest from the Closing Date through the date of
payment on the basis of the average daily rate of interest publicly
announced by The Northern Trust in Chicago, Illinois from time to time as
its base rate from the Closing Date to the date of such payment.
2.3 Purchase Price Allocation. The Purchase Price represents the
amount agreed upon by the parties to be the aggregate value of the Assets,
and will be allocated among the Assets, in accordance with an allocation
schedule to be provided no later than five business days prior to the
Closing Date. Each of the parties will report the purchase and sale of
the Assets, including, without limitation, in all Federal, foreign, state,
local and other tax returns and reports prepared and filed by or for
either of Seller (and its Affiliates) and Buyer, in accordance with the
basis of allocation described in this Section 2.3.
ARTICLE III
CLOSING; TRANSFER OF ASSETS
3.1 Closing. The consummation of the sale, conveyance, assignment
and transfer of the Assets contemplated by this Agreement, the assumption
of the Assumed Liabilities by Buyer and the payment of the Purchase Price
will take place at a closing (the "Closing") at the offices of Schiff
Hardin & Waite, 7300 Sears Tower, Chicago, Illinois 60606, at 10:00 a.m.
on September 1, 1998 (or as soon as practicable thereafter as all the
conditions to Closing set forth in Article VI are satisfied or waived) or
such other place, time and date as the parties may agree up to and
including October 15, 1998, time being of the essence as to such date.
The actual date of the Closing is herein referred to as the "Closing
Date." At the Closing, Seller will make the deliveries provided for in
Section 3.3 of this Agreement, and Buyer will make the deliveries provided
for in Section 3.4 of this Agreement.
3.2 Nonassignability of Assets. Notwithstanding anything to the
contrary contained in this Agreement, to the extent that the sale,
assignment, transfer, conveyance or delivery or attempted sale,
assignment, transfer, conveyance or delivery to Buyer of any asset is
prohibited by any applicable law or would require any governmental or
third party authorizations, approvals, consents or waivers and such
authorizations, approvals, consents or waivers are not obtained prior to
the Closing, this Agreement shall not constitute a sale, assignment,
transfer, conveyance or delivery, or any attempted sale, assignment,
transfer, conveyance or delivery thereof. Following the Closing, the
parties will use reasonable efforts and cooperate with each other to
obtain promptly such authorizations, approvals, consents or waivers;
provided, however, that neither Seller nor Buyer will be required to pay
any consideration therefor. Pending such authorization, approval, consent
or waiver, the parties shall cooperate with each other in any reasonable
and lawful arrangements designed to provide to Buyer the benefits of use
of such Asset. Once authorization, approval, consent or waiver for the
sale, assignment, transfer, conveyance or delivery of an Asset not sold,
assigned, transferred, conveyed or delivered at the Closing is obtained or
made, Seller will or will cause an Affiliate to, assign, transfer, convey
and deliver such Asset to Buyer at no additional cost. To the extent that
any such Asset cannot be transferred or the full benefits of use of any
such Asset cannot be provided to Buyer following the Closing pursuant to
this Section 3.2, then Buyer and Seller will enter into such arrangements
(including subleasing or subcontracting if permitted) to provide to the
parties the economic (taking into account Tax costs and benefits) and
operational equivalent of obtaining such authorization, approval, consent
or waiver, and the performance by Buyer of the obligations thereunder;
provided that the determination as to whether such arrangements provide
the economic and operational equivalent shall be made by Buyer in its
reasonable discretion.
3.3 Deliveries of Seller. At the Closing, Seller will deliver to
Buyer:
(a) a bill of sale and other instruments of conveyance,
transfer and assignment, all in form and substance reasonably satisfactory
to Buyer as will be effective to vest in Buyer title to and ownership of
the Assets as contemplated by this Agreement;
(b) complete and correct copies of resolutions of Seller s
Board of Directors effecting authorization and approval of this Agreement
and the transactions contemplated herein, certified by the Secretary of
Seller; and
(c) all other documents required to be delivered by Seller
under Section 6.2
3.4 Buyer's Deliveries. At the Closing, Buyer will deliver to
Seller or as directed by Seller:
(a) the undertaking of Buyer, in form reasonably satisfactory
to Seller, whereby the Assumed Liabilities are assumed by Buyer;
(b) complete and correct copies of resolutions of Buyer's Board
of Directors effecting authorization and approval of this Agreement and
the transactions contemplated herein, certified by the Secretary of Buyer;
(c) the Purchase Price; and
(d) all other documents required to be delivered by Buyer under
Section 6.3.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Seller. Seller (and, where
applicable, Guarantor) represents and warrants to Buyer as follows:
(a) Due Organization of Seller. Each of Guarantor and Seller
is a corporation duly organized, validly existing and in good standing,
under the laws of the jurisdiction of its organization. Seller (i) has
the requisite power and authority to own, lease and operate its properties
and assets and to conduct the Business as it is now being conducted and
(ii) to the extent that the concept of good standing exists in the
relevant jurisdiction, is in good standing and is duly qualified to
transact business in each jurisdiction in which the nature of property
owned, leased or operated by it or the conduct of its business requires it
to be so qualified, except, in each case, where the failure to be so
qualified or to be in good standing would not have a material adverse
affect on the Business. Complete and correct copies of the respective
constituent documents of Seller, as amended to date, have been made
available to Buyer. Seller has no subsidiaries.
(b) Due Power and Authority. Each of Guarantor and Seller has
all requisite corporate power and authority to enter into this Agreement
and the Ancillary Agreements (as defined in Section 6.2(d) and together
with this Agreement, the "Transaction Agreements") to which it is a party
and to consummate the transactions contemplated hereby and thereby and
perform its obligations hereunder and thereunder.
(c) Authorization and Validity of Agreements. The execution,
delivery and performance, as applicable, by each of Guarantor and Seller
of the Transaction Agreements and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate and shareholder action, and no other corporate
action on its part is necessary for the execution, delivery and
performance by it of the Transaction Agreements and the consummation by it
of the transactions contemplated hereby and thereby. This Agreement has
been duly executed and delivered by each of Guarantor and Seller, and at
the Closing each of the Ancillary Agreements will be duly executed and
delivered by Seller and Guarantor as applicable. This Agreement is the
legal, valid and binding obligation of each of Guarantor and Seller,
enforceable against each of Guarantor and Seller in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and by general equity principle. At the
Closing, each of the Ancillary Agreements will be the legal, valid and
binding obligation of Seller or an Affiliate thereof, enforceable against
such party in accordance with its terms, except as the same may be limited
by bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and by general equity
principle.
(d) Good Title. Upon consummation of the transactions
contemplated hereby at the Closing, Seller shall deliver or shall cause to
be delivered to Buyer, good and marketable title to the Assets, free and
clear of any liens, claims, pledges, charges, security interests,
restrictions or other legal or equitable encumbrances ("Liens"), except in
each case (i) as permitted or disclosed in Schedule 4.1(d) and (ii) all
Permitted Liens (as such term is defined in Section 4.1(h) below). To
Seller's knowledge, (as defined in Section 4.1(e)), the Assets are in
satisfactory operating condition and repair, normal wear and tear
excepted. To Seller's knowledge, the buildings, plants, structures and
equipment are adequate for the uses to which they are being put, and none
of such buildings, plants, structures or equipment is in need of material
maintenance or repair except ordinary, routine maintenance and repair that
are not material in nature or cost.
(e) No Conflict. The execution, delivery and performance by
Seller of the Transaction Agreements and the consummation by Seller of the
transactions contemplated hereby and thereby, do not and will not, (i) to
the actual knowledge of the officers of Seller set forth on Schedule
4.1(e)(i) ("Seller's Knowledge") violate any provision of Federal, state,
local or foreign law, rule, regulation, order, injunction, judgment or
decree (each, a "Law") applicable to Seller or to which the Business is
subject; (ii) except as set forth on Schedule 4.1(e)(ii), require any
consent or approval of, or filing with or notice to, any governmental
authority whether foreign, federal, state, local or other political
subdivision or agency of any of the foregoing ("Governmental Authority")
under any provision of Law applicable to Seller or the Business; (iii)
violate any provision of the charter or by-laws or other constituent
documents of Seller or Guarantor; or (iv) except as set forth on Schedule
4.1(e)(iv), require any consent, approval or notice under, or result in
the breach, lapse, cancellation or termination of, or constitute a default
under, or result in the acceleration of any right or obligation of or the
performance by Seller under any material indenture, lease, license,
agreement, or other material instrument to which Seller is a party or by
which Seller, or any of its material assets, is bound or encumbered, or
result in the creation of any Lien on the material Assets (other than
Permitted Liens); except, with respect to clauses (i) and (ii) above,
for such violations, consents, approvals, notices, breaches, lapses,
cancellations, terminations, defaults or accelerations that could not,
individually or in the aggregate, be reasonably expected to have a
material adverse effect on the Business.
(f) Financial Statements. Seller has delivered to Buyer the
audited consolidated balance sheets of the Business as at December 31,
1997, 1996 and 1995 and the Balance Sheet, and the audited consolidated
statement of income for the fiscal years ended December 31, 1997, 1996 and
1995 (the "Financial Statements", copies of which are included in Schedule
4.1(f)). Except as described in Schedule 4.1(f), the Financial Statements
were prepared on a basis consistent with GAAP and are complete and correct
in all material respects. To Seller's Knowledge, there are no material
Liabilities that are not reflected on the Balance Sheet. Except as set
forth in Schedule 4.1(f), the Business Records accurately and fairly
reflect, in reasonable detail, all material transactions and all material
items of income and expense, assets and liabilities and accruals relating
to the Business.
(g) Tax Matters. Seller has filed all material Federal, state,
local and foreign tax returns ("Tax Returns"), including information
returns, required to be filed by Seller, and paid or made adequate
provision for the payment of all taxes shown on such returns to be owed by
Seller, including those with respect to income, withholding, social
security, unemployment, workers compensation, franchise, ad valorem,
premium, excise and sales taxes ("Taxes"). Except as set forth in
Schedule 4.1(g), Seller is not a party to any pending action or
proceeding, nor, to Seller's Knowledge, is any such action or proceeding
threatened, by any taxing authority for the assessment or collection of
material Taxes (including interest or penalties thereon). Schedule
4.1(g) sets forth a complete and accurate list of all audits of Tax
Returns for all taxable years subsequent to fiscal year 1992. All
interest and penalties proposed as a result of such audits have been paid.
Except as set forth in Schedule 4.1(g), Seller has not given or been
requested to give waivers or extensions (or is not or would not be subject
to a waiver or extension given by another Person of any statute of
limitations relating to the payment of any Tax for which Seller is or may
be liable. For each year not closed by the relevant statute of
limitations, Seller has not been a member of an affiliated group filing a
consolidated Federal income Tax Return other than a group the common
parent of which is Seller.
(h) Title to Real and Personal Properties; Liens and
Encumbrances; No Other Interests. Seller or an Affiliate thereof has, and
on Closing Date Seller will have, good and marketable title to all of the
material properties and assets, tangible or intangible, reflected in the
Financial Statements, free and clear of all Liens, except (i) as set forth
on Schedule 4.1(h)(i), (ii) Liens that are publicly disclosed or do not
affect the use thereof in any material respect, (iii) statutory Liens
securing payments not yet due and payable or due but not yet delinquent or
being contested in good faith by appropriate proceedings, (iv) mechanics',
carriers', workmen's, repairmen's or other like Liens arising or incurred
in the ordinary course of business, original purchase price conditional
sales contracts and equipment leases with third parties entered into in
the ordinary course of business, and (v) Liens that are not material
("Permitted Liens"). To the extent that such documents exist and are
readily available, Seller has or will deliver all deeds, title documents,
title policies and other material documents relating to such real
property. Schedule 4.1(h)(ii) lists all of Seller's owned real property.
(i) Business Contracts. Schedule 4.1(i) sets forth, as of the
date hereof, each contract, maintenance and service agreement, purchase
order, and purchase commitment for raw materials, goods and other
services, advertising and promotional agreement, lease, license, shipping
agreement, agreement with a finished goods supplier, and collective
bargaining agreement (i) that relate to the Business, and (ii) to which
Seller or an Affiliate thereof is a party and by which the assets of the
Business are bound, which (A) require any party thereto to pay an amount
(whether in a lump sum or in a series of installments) in excess of
$250,000 annually, (B) provides for a surety, cosigner, endorser, guaranty
or indemnity by Seller (in connection with the Business) of any obligation
or liability in excess of $250,000, contingent or otherwise, or that
contains material covenants that restrict or purport to restrict the
Business or limit the freedom of Seller to engage in any line of business
or compete with any Person, (C) has a stated term in excess of one year,
requires any party thereto to pay an amount (whether in a lump sum or in a
series of installments) in excess of $250,000 annually, or (D) is
otherwise material to the conduct of the Business (each, a "Business
Contract"). Except as set forth in Schedule 4.1(i), Seller is in
substantial compliance with each Business Contract and, to Seller s
Knowledge, each other Person obligated under each Business Contract is in
substantial compliance thereunder. To Seller's Knowledge, no event has
occurred or circumstance exists that (with or without notice or lapse of
time) would contravene, conflict with, result in a material breach of,
violation or default under (a "Violation Event") any Business Contract.
All Business Contracts were entered into at arms-length, except as set
forth on Schedule 4.1(i).
(j) Legal Proceedings. As of the date of this Agreement,
except as set forth in Schedule 4.1(j), there are no material actions,
suits or proceedings instituted or pending, or to Seller's Knowledge,
threatened, against Seller or the Business. Except as set forth on
Schedule 4.1(j), neither Seller nor the Business is subject to any
material judgment, order, writ, injunction or decree.
(k) Government Licenses, Permits and Related Approvals.
Schedule 4.1(k) lists each material license, permit, consent, approval,
authorization, qualification and order of any Governmental Authority
(each, a "Permit") required to permit Seller to conduct the Business as
presently conducted. Each such Permit is valid and in full force and
effect. To Seller's Knowledge no Violation Event relating to any Permit
exists that could cause a revocation or suspension of such Permit.
(l) Conduct of Business in Compliance with Regulatory
Requirements. To Seller's Knowledge, except as set forth in Schedule
4.1(l), Seller is in material compliance with each Law, applicable to the
operation or conduct of, or ownership of the property relating to, the
Business. To Seller's Knowledge, no Violation Event under any such Law
exists that may give rise to any material obligation on the part of Seller
to undertake or bear the cost of any remedial action of any nature with
respect to the Business.
(m) Labor Matters. Except as set forth in Schedule 4.1(m),
Seller is not a party to any collective bargaining agreement or other
contract or agreement with any labor organization or other representative
of any of the employees of the Business, and there is no labor strike,
slowdown, work stoppage or lockout in effect or, to Seller's Knowledge,
threatened or otherwise affecting Seller. To Seller's Knowledge, Seller
has complied in all material respects with, and continues to comply with
in all material respects, the terms of the collective bargaining
agreements set forth in Schedule 4.1(m), and all material laws relating to
employment, equal employment opportunity, non-discrimination, immigration,
wages, hours, benefits, payment of social security and similar taxes,
occupational safety and health and plant closing.
(n) Intellectual Property. Schedule 4.1(n) lists, as of the
date of this Agreement, all material (i) United States and foreign patents
and patent applications, (ii) United States and foreign trademark
registrations or any analogous rights and applications therefor, (iii)
United States and foreign copyright registrations and applications
therefor, (iv) registered designs and (v) utility models, in which Seller
has an interest and that relate to the Business and the nature of such
interest (collectively, the "Intellectual Property"). To Seller's
Knowledge, except as set forth on Schedule 4.1(n), no Intellectual
Property is infringed or has been challenged or threatened, in any way.
To Seller's knowledge, except as set forth on Schedule 4.1(n), no
Intellectual Property infringes or is alleged to infringe any intellectual
property of any other third party.
(o) Employee Benefit Plans. With respect to the Newell Long-
Term Savings and Investment Plan ("Newell's Savings Plan"), (i) Newell s
Savings Plan is intended to be qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code") and has received a
favorable IRS determination letter stating that it meets the requirements
of the Tax Reform Act of 1986; (ii) all contributions due to Newell s
Savings Plan have been made on a timely basis; and (iii) the
administration of Newell's Savings Plan has complied in all material
respects with its terms and all applicable laws, including, without
limitation, the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Code. Seller does not maintain any employee
benefit plan as defined in Section 3(3) of ERISA and does not contribute
to any multiemployer plan as defined in Section 3(37) of ERISA.
(p) Brokers, Finders, etc. Except for Robert W. Baird & Co.
Incorporated, whose fees are the sole responsibility of Seller, Seller has
not entered into any contract, arrangement or understanding with any
person or firm that may result in the obligation of Seller to pay any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the transactions contemplated hereby or by the Ancillary
Agreements.
(q) Reserved.
(r) Absence of Changes. Except as set forth in Schedule
4.1(r), since June 30, 1998, there has not been any event or circumstance
that, individually or in the aggregate, has had or would have a material
adverse effect on the Business.
(s) Leased Real Property. Schedule 4.1(s) lists all material
real property leased or subleased by Seller in connection with the
Business (the "Leased Real Property"). Seller has delivered to Buyer
correct and complete copies of the leases and subleases identified in
Schedule 4.1(s) (collectively, the "Leases"). Seller has not received
any written notice from any landlord, lessor or sublessor under any of the
Lease that it is in material default under any of the Leases, nor to
Seller's Knowledge, does any uncured default exist under any of the Leases
on the part of Seller or the landlord, lessor or sublessor.
(t) Insurance. Seller has casualty, general liability and
other insurance policies for the assets and properties of Seller that is
customary and adequate with respectable companies and in amounts and
coverage appropriate for the Business.
(u) Receivables. All Receivables of Seller that are reflected
on the Balance Sheet as of the Closing Date represent or will represent
valid obligations arising from sales actually made or services actually
performed in the ordinary course of business. Unless paid prior to the
Closing Date, such Receivables are or will be as of the Closing Date
current and collectible net of respective reserves shown on the Balance
Sheet as of the Closing Date (which reserves are adequate and calculated
consistent with past practice and, in the case of the reserve on the
Closing Date, will not represent a greater percentage of the Receivables
as of the Closing Date than the reserve reflected in the Balance Sheet).
Subject to such reserves, each of the Receivables either has been or will
be collected in full. To Seller's Knowledge, there is no contest, claim,
or right of setoff, other than returns in the ordinary course of business,
under any Business Contract with any obligor of a material Receivable
relating to the amount or validity of such Receivable.
(v) Inventory. All Inventory reflected in the Balance Sheet
consists of a quality and quantity usable and salable in the ordinary
course of business, except for obsolete items and items of below-standard
quality, all of which have been written off or written down to net
realizable value in the Balance Sheet as of the Closing Date, as the case
may be. All Inventory written off has been priced at the lower of cost or
market. The quantities of each item of Inventory (whether raw materials,
work-in-process or finished goods) are not excessive, but are reasonable
in the present circumstances of Seller.
(w) Key Employees. Schedule 4.1(w) contains a complete and
accurate list of the following information for each employee of Seller
earning an annual salary of at least $75,000 (each, a "Key Employee")
(including any such employee on leave of absence or layoff status): name,
title, current compensation [and any change in compensation since January
1, 1998, vacation accrued, service credited for purposes of vesting and
eligibility to participate in any of Seller's employee benefit plans and
severance pay obligations]. None of any such Key Employees is a party to
an employment agreement with Seller nor, to Seller's Knowledge, is any
such Key Employee a party or otherwise bound by any agreement or
arrangement between such Key Employee and any other Person which
materially adversely affects the performance of his duties as an employee
or the ability of the Seller to conduct the Business.
(x) Sufficiency of Assets. Except as set forth on Schedule
4.1(x), the Assets represent all of the material Assets necessary to
conduct the Business as presently conducted.
(y) No Other Representations or Warranties. Except for the
representations and warranties contained in this Section 4.1 and in the
Ancillary Agreements, Seller makes no other express or implied warranty or
representation in the Transaction Documents.
4.2 Representations and Warranties of Buyer. Buyer represents and
warrants on behalf of itself and, as applicable, its Affiliates, to Seller
as follows:
(a) Due Organization and Power. Each of Buyer and its
Affiliates that is a party to an Ancillary Agreement is a corporation duly
organized, validly existing and in good standing, under the laws of the
jurisdiction or its organization and has the requisite corporate power and
authority to enter into the Transaction Agreements to which it is a party
and perform its obligations thereunder.
(b) Authorization and Validity of Agreements. The execution,
delivery and performance by each of Buyer and any Affiliate of Buyer of
the Transaction Agreements to which it is a party, and the consummation by
Buyer or its Affiliates, as applicable, of the applicable transactions
contemplated hereby and thereby, have been duly authorized by all
necessary corporate and shareholder action, and no other corporate action
on its part is necessary for the execution, delivery and performance by it
of the Transaction Agreements to which it is a party and the consummation
by it of the applicable transactions contemplated hereby and thereby.
This Agreement has been, and at the Closing the Ancillary Agreements will
be, duly executed and delivered by Buyer. This Agreement is, and at the
Closing the Ancillary Agreements will be, the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with their
respective terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights generally and by general equity principles.
(c) No Conflict. The execution, delivery and performance by
each of Buyer and any Affiliate of Buyer of the Transaction Agreements to
which it is a party and the consummation by Buyer or its Affiliates, as
applicable, of the transactions contemplated thereby does not, and will
not (i) to the actual knowledge of the officers of Buyer set forth in
Schedule 4.2(c)(i) ("Buyer's Knowledge"), violate any provision of Law
applicable to Buyer or any of its Affiliates or to which their respective
properties are subject; (ii) except as set forth on Schedule 4.2(c)(ii),
require any consent or approval of, or filing with or notice to, any
Governmental Authority under any provision of Law applicable to Buyer or
any of its Affiliates; (iii) violate any provision of the charter or by-
laws or other constituent documents of Buyer or any of its Affiliates; or
(iv) except as set forth on Schedule 4.2(c)(iv), require any consent,
approval or notice under, or result in the breach, lapse, cancellation or
termination of, or constitute a default under, or result in the
acceleration of, any right or obligation of or the performance by Buyer or
any of its Affiliates under any material indenture, lease, franchise,
agreement, or other material instrument to which Buyer or any of its
Affiliates is a party or by which any of them or their material assets are
bound or encumbered, or result in the creation of any Lien; except, with
respect to clauses (i) and (ii) above, for such violations, consents,
approvals, notices, breaches, lapses, cancellations, terminations,
defaults or accelerations that could not, individually or in the
aggregate, be reasonably expected to have a material adverse effect.
(d) Brokers, Finders. etc. Except for Bancamerica Robertson
Stephens, whose fees are the sole responsibility of Buyer, none of Buyer
or its Affiliates have entered into any contract, arrangement or
understanding with any person or firm that may result in the obligation of
any of them to pay any finder's fees, brokerage or agent's commissions or
other like payments in connection with the transactions contemplated
hereby or by the Ancillary Agreements.
(e) Financial Capacity. Buyer has sufficient cash on hand, or
available under a committed credit facility or line of credit with
unutilized capacity (or other committed funded debt), in the aggregate
amount of not less than the Purchase Price, which cash on hand or
available as described above will be available at the Closing to pay the
Purchase Price.
4.3 Supplements to Schedules. From time to time prior to the
Closing, Seller will promptly supplement or amend the Schedules with
respect to any matter hereafter arising which, if existing or occurring at
the date of this Agreement, would have been required to be set forth or
described in the Schedules provided, however, that any such supplement
shall not constitute a cure of any material breach of any representation
or warranty previously made unless Buyer consents thereto in writing
(such consent not to be unreasonably withheld).
ARTICLE V
PRE-CLOSING COVENANTS
5.1 Access to Information Concerning Properties and Records;
Confidentiality.
During the period commencing on the date hereof and ending on the
Closing Date, Seller shall, upon reasonable notice, afford to Buyer, its
counsel, accountants and other authorized representatives such access,
during normal business hours, to the facilities, properties, books,
records, Tax Returns, documents, personnel and auditors of the Business,
as Buyer shall reasonably request. Buyer agrees that its inspections
shall be undertaken in a manner so as not to cause unreasonable
interference with the operations of Seller. Seller shall cause its
officers, employees, accountants and other agents to furnish to Buyer such
additional financial and operating data and information relating to the
Business as Buyer may from time to time reasonably request. If this
Agreement is terminated pursuant to Section 11.1 prior to the Closing
Date, Buyer shall return to Seller all copies held by Buyer or its
representatives of such books, records, Tax Returns and documents and
results of such inspections, assessments, audits and tests. Buyer agrees
that it will continue to treat all information so obtained from Seller as
"Evaluation Material" under the Confidentiality Agreement, dated as of
March 23, 1998, between Newell Co. and Buyer (the "Confidentiality
Agreement"), and will continue to honor its obligations thereunder.
5.2 Conduct of the Business Prior to the Closing Date. Seller
agrees that, except as provided in this Agreement or consented to or
approved in writing by Buyer (which consent shall not be unreasonably
withheld) or set forth on Schedule 5.2, during the period commencing on
the date hereof and ending at the Closing Date, Seller shall not take any
of the following actions with respect to the Business or its employees:
(a) Ordinary Course. Conduct the Business other than in the
ordinary course of business consistent with past practice
(b) Changes in Compensation. Grant any general increase in
compensation or benefits to its employees or to its officers, except in
the ordinary course of business or as required by law; pay any bonus
compensation except in the ordinary course of business or in accordance
with the provisions of any applicable program or plan adopted by the Board
of Directors of Seller or Seller prior to the date hereof; enter into or
amend the terms of any severance agreements with its officers; or effect
any change in retirement benefits for any Transferred Employees (as
defined herein) or officers (unless such change is required by applicable
law); provided, however, that nothing in this subsection (b) shall
prevent the payment or other performance of any award or grant made prior
to the date hereof and disclosed in the Schedules or pursuant to this
Agreement;
(c) Assets. Sell, lease or otherwise dispose of any of its
assets, other than inventory, or acquire any business or assets, in each
case except in the ordinary course of business, or for an amount not
exceeding $250,000;
(d) Capital Expenditures. Authorize or commit to, or make new
capital expenditures in any individual case in an amount exceeding
$300,000 or collectively, in a total amount exceeding $750,000;
(e) Liens. Mortgage or otherwise encumber or subject to any
Lien any Assets, except for such of the foregoing as are in the ordinary
course of business or Permitted Liens;
(f) Accounting Practices. Make any material change to the
accounting (including Tax accounting) methods, principles or practices of
the Business, except as may be required by GAAP;
(g) Constituent Documents. Make any material amendment to its
charter or by-laws; or
(h) Other. Agree to do any of the foregoing.
5.3 Preservation of Business. Seller will use its reasonable
efforts to preserve intact the business organization of the Business, to
keep available the services or their present officers and key employees,
and to preserve the good will of those having business relationships with
the Business.
5.4 Authorizations. Subject to the terms and conditions herein
provided, Seller and Buyer shall (a) promptly make their respective
filings and thereafter make any other required submissions under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"); (b) use
their reasonable best efforts to cooperate with each other in (i)
determining which filings are required to be made prior to the Closing
Date with, and which consents, approvals, permits or authorizations are
required to be obtained prior to the Closing Date from any Governmental
Authority in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, and (ii)
timely making all such filings and timely seeking all such consents,
approvals, permits or authorizations; and (c) use their reasonable best
efforts to, or cause to be taken, all other action and do, or cause to be
done, all other things necessary, proper or appropriate to consummate and
make effective the transactions contemplated by this Agreement. If, at
any time after the Closing Date, any further action is necessary or
desirable to carry out the purposes of this Agreement, the officers and
directors of the parties shall take all such necessary action.
5.5 Cash Management.
(a) Between the date of this Agreement and the Closing Date,
Seller shall continue to participate in the center cash management system
of its corporate parent (the "Cash Management System") in accordance with
prior practice prior to the Closing Date.
(b) Effective at the opening of business on the Closing Date,
Buyer shall be responsible for funding all disbursements of the Business,
but excluding the presentation for payment of all outstanding checks dated
prior to the Closing Date drawn on Seller's bank accounts.
(c) Effective as of the opening of business on the Closing
Date, the Business shall have the right to any funds received in any lock
box used by Seller or the Business, provided that Seller has received the
Purchase Price by wire transfer not later than 2:00 p.m. Chicago time on
the Closing Date.
5.6 Intercompany Services and Products. Any intercompany services
provided by Seller's Affiliates to the Business shall terminate as of the
Closing Date, except as set forth in this Agreement, and all amounts (but
without duplication of amounts included in accrued expenses) owing by
Seller or the Business with respect to such services as of the close of
business on the day preceding the Closing Date with respect to such
services shall be paid as soon as possible, but in no event later than 15
days after the Closing Date. Notwithstanding the foregoing, Seller or its
Affiliates shall provide transition services pursuant to the transition
services agreement (as defined in Section 5.2(d)) to the Business on such
terms and conditions and for such prices and duration as described in such
agreement (as further described herein).
5.7 Further Actions. Subject to the terms and conditions of this
Agreement, each of the parties hereto will use their reasonable best
efforts to take, or cause to be taken, all action, and to do, or cause to
be done, all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions
contemplated by this Agreement and shall use its best efforts to satisfy
the conditions to the transactions contemplated hereby and to obtain all
waivers, permits, consents and approvals and to effect all registrations,
filings and notices with or to third parties or Governmental Authority
that are necessary or desirable in connection with the transactions
contemplated by this Agreement.
5.8 No Negotiation. None of Seller or any of its Affiliates,
representatives, officers, employees, directors or agents shall, directly
or indirectly, (a) submit, solicit, initiate, encourage, entertain,
negotiate, accept or discuss, directly or indirectly, any proposal or
offer from any Person or enter into any agreement or accept any
offer relating to any (i) reorganization, liquidation, dissolution or
recapitalization of the Business, (ii) merger or consolidation involving
the Business, (iii) purchase or sale of any assets or capital stock (other
than a purchase or sale of inventory in the ordinary course of business
consistent with past custom and practice) of the Business, or (iv) similar
transaction or business combination involving the Business (each of the
foregoing actions described in clauses (i) through (iv), a "Company
Transaction"), (b) furnish any information with respect to, assist or
participate in or facilitate in any other manner any effort or attempt by
any person to do or seek to do any of the foregoing or (c) enter into any
agreement, arrangement or understanding requiring Seller to abandon,
terminate or fail to consummate any of the transactions contemplated
hereby. Seller agrees to notify Buyer immediately if any Person makes any
proposal, offer, inquiry or contact with respect to a Company Transaction.
5.9 Environmental Matters.
(a) Within five business days of this Agreement, ENSR, on
behalf of Buyer, shall conduct a Phase I Environmental Assessments (the
"Phase I Assessments") of Seller's real properties located in Coon Rapids,
Minnesota and Eagan, Minnesota in accordance with the scope of work set
forth in that certain ENSR Proposal No. 4757-A03 dated July 24, 1998
previously provided by Buyer to Seller. Seller and its representatives
may participate in the Phase I Assessments.
(b) Within seven business days of having completed the Phase I
Assessments, Buyer shall deliver to Seller a preliminary finding from ENSR
stating whether further investigation is warranted and specifying with
sufficient detail any further sampling or investigation that is warranted.
If such further sampling or investigatory work ("Phase II Work") is to be
conducted, Buyer shall give reasonable written notice of the date on which
such Phase II Work shall begin sufficient to minimize any interruption of
the operation of the Business and to allow Seller and its representatives
to be present for the duration of any such Phase II Work. During and
after conducting the Phase II Work, Buyer shall maintain the real
properties in the same condition as it was prior to the commencement of
same.
(c) Within five business days after Buyer receives the
analytical results for any samples collected and analyzed, Buyer will
deliver, or cause to be delivered, to Seller the preliminary written
report of ENSR setting forth such analytical results.
(d) Within 21 business days after completion of the work
described in paragraph (b) above, Buyer will deliver, or cause to be
delivered, to Seller the complete and definitive written report and any
other documentation or information prepared by ENSR relating to the Phase
II Work, including, without limitation, a description of any condition not
in compliance with any Environmental Law, identifying the Environmental
Law to which the alleged non-compliance relates and all documentation
relating to such sampling and investigation (each, a "Non-compliance
Item"), together with the actions that ENSR proposes be taken in
connection with each Non-compliance Item (collectively, the "Actions"), if
any. If ENSR's final report includes any Non-compliance Item, then Seller
agrees to implement the Actions, if any. Seller shall be responsible for
all costs and expenses associated with implementing any such Actions and
any Liabilities associated therewith, and shall indemnify Buyer and hold
Buyer harmless from all such costs, expenses and Liabilities for the
Actions.
(e) For purposes of this Agreement, "Environmental Law" means
Environmental Statutes and any common law (i) creating a cause of action
for Damages to person or property due to exposure to Hazardous Substances
or (ii) governing the contamination, pollution or protection of public
health or the environment or allocating liabilities in respect thereof;
"Environmental Statutes" means Federal, state, local and foreign statutes
and ordinances, and regulations promulgated thereunder, in effect prior to
Closing and intended to provide protection for public health or the
environment, including, without limitation, the Clean Air Act, the Federal
Water Pollution Control Act, the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), the Emergency Planning and
Community Right to Know Act, the Solid Waste Disposal Act (including the
Resource Conservation and Recovery Act), the Toxic Substances Control Act,
the Safe Drinking Water Act and other substantially similar state statutes
and regulations, as amended from time to time; and "Hazardous Substance"
means any hazardous material, hazardous substance, toxic substance or
words of similar import under any Environmental Statute.
(f) Buyer shall provide to Seller "split samples" therefrom
upon Seller's request. All information and documentation relating to this
Section shall constitute Evaluation Material pursuant to this Agreement.
5.10 Assistance with Key Employees. Seller will use its reasonable
efforts to assist Buyer in its negotiation of new arrangements with
certain of the Key Employees, provided that (a) Buyer complies with
Sections 6.3(d) and 10.7 of this Agreement, and (b) such assistance (and
new arrangements) will be at no cost to Seller or its Affiliates.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent to Obligations of Parties. The respective
obligations of Buyer and Seller hereunder are subject to the satisfaction
or waiver, at or prior to the Closing of each of the following conditions:
(a) Antitrust Laws. The waiting period applicable to the
consummation of the transactions contemplated hereby under the HSR Act
shall have expired or been terminated.
(b) No Injunction. None of the parties hereto shall be subject
to any order or injunction of a court of competent jurisdiction that
prohibits the consummation of the transactions contemplated by this
Agreement. In the event any such order or injunction shall have been
issued, each party agrees to use its reasonable best efforts to have any
such order overturned or injunction lifted.
(c) Consents. All consents, authorizations, orders and
approvals of (or filings or registrations with) any Governmental Authority
or, to the extent listed on Schedule 6.1(c), other third Person required
in connection with the execution, delivery and performance of this
Agreement (including the transfer of the Assets to Buyer) shall have been
obtained or made.
6.2 Conditions Precedent to Obligation of Buyer. The obligation of
Buyer to consummate the transactions contemplated by this Agreement is
subject to the satisfaction or waiver by Buyer at or prior to the Closing
Date of each of the following additional conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties of Seller contained herein shall be true
and correct in all material respects as of the date of this Agreement and
as of the Closing Date, with the same force and effect as though made and
as of the Closing Date, except for changes permitted or contemplated by
this Agreement and except that to the extent any representations or
warranties made as of a specified date, which need be true only as of such
date.
(b) Performance of Agreements. Each of the agreements and
contracts of Seller to be performed and complied with by Seller prior to
or at the Closing shall have been performed and complied with in all
material respects.
(c) Certificate. Buyer shall have received a certificate of
Seller, dated the Closing Date, executed on behalf of Seller by its
President or any of its Vice Presidents, to the effect that the conditions
specified in paragraphs (a) and (b) above have been fulfilled.
(d) Ancillary Agreements. Seller or an Affiliate thereof shall
have executed and delivered the following agreements (together with the
agreements described in Sections 6.3(e)(i) and (ii), the "Ancillary
Agreements"):
(i) a Distribution Agreement substantially in the form of
Exhibit A attached hereto;
(ii) Trademark License Agreements substantially in the form of
Exhibit B attached hereto;
(iii) a Transition Services Agreement substantially in the
form of Exhibit C attached hereto; and
(iv) a St. Paul Sublease in form reasonably satisfactory to
Buyer.
(e) Additional Matters. All corporate and other proceedings
and all documents, instruments and other legal matters in connection with
the transactions contemplated by the Transaction Agreements shall be
reasonably satisfactory to Buyer and Buyer shall have received such other
documents as it shall reasonably request.
6.3 Conditions Precedent to the Obligation of Seller. The obligation
of Seller to consummate the transactions contemplated by this Agreement is
subject to the satisfaction or waiver by Seller at or prior to the Closing
Date of each of the following additional conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties of Buyer contained herein shall be true and
correct in all material respects as of the date of this Agreement and as
of the Closing Date, with the same force and effect as though made on and
as of the Closing Date, except for changes permitted or contemplated by
this Agreement and except that to the extent any representations or
warranties is made as of a specified date, which need be true only as of
such date.
(b) Performance of Agreements. Each of the agreements and
covenants of Buyer to be performed prior to or at the Closing shall have
been performed and complied with in all material respects.
(c) Certificate. Seller shall have received a certificate of
Buyer, dated the Closing Date, executed on behalf of Buyer by its
President or any of its Vice Presidents, to the effect that the conditions
specified in paragraphs (a) and (b) above have been fulfilled.
(d) Payment of Stay Bonuses. Buyer shall have paid to each
"Eligible Participant" 33% of his or her "Stay Bonus" as described in
Schedule 6.3(d), with the remaining 67% to be paid by Buyer pursuant to
Section 10.7.
(e) Ancillary Agreements. Buyer shall have executed and
delivered the following agreements:
(i) a Lid Supply Agreement substantially in the form of Exhibit
D attached hereto; and
(ii) a Supply Agreement substantially in the form of Exhibit E
attached hereto.
ARTICLE VII
PROVISIONS AS TO TAX MATTERS
7.1 Certain Tax Matters.
(a) Preparation and Filing of Tax Returns. Seller shall
prepare and timely file (or shall cause to be prepared and timely filed)
all Tax Returns in respect of the Business and its assets and activities
(i) that are required to be filed on or before the Closing Date or (ii)
are required to be filed after the Closing Date and (A) are paid on a
consolidated, unitary, combined or similar basis with respect to Tax
Returns for any Tax period ending on or before the Closing Date
("Consolidated Tax Returns") or (B) are with respect to Taxes based upon,
measured by, or calculated with respect to gross or net income, receipts
or profits ("Income Taxes") and are required to be filed on a separate
return basis for any Tax period ending on or before the Closing Date.
Buyer shall prepare or cause to be prepared all other Tax Returns required
of the Business, its assets or activities.
(b) Payment of Taxes. Seller shall timely pay or cause to be
paid, (i) all Income Taxes and all Taxes other than Income Taxes due,
including all interest and penalties, with respect to Tax Returns that
Seller is obligated to prepare and file or cause to be prepared and filed
pursuant to Section 7.1(a) and (ii) all Taxes due on or before the Closing
Date for which no Tax Return is required to be filed. Buyer shall pay or
cause to be paid for all operations of the Business after the Closing Date
(i) all Income Taxes due with respect to Tax Returns that Buyer is
obligated to prepare and file or cause to be prepared and filed pursuant
to Section 7.1(a) and (ii) all other Taxes owed by Seller and assumed by
Buyer pursuant to Section 3.1 hereof.
(c) Refunds. Seller shall be entitled to retain (or receive
immediate payment from Buyer or any of its subsidiaries or Affiliates
equal to any refund or credit for Taxes with respect to any Tax period
ending on or before the Closing Date relating to Seller ("Seller s
Refunds").
(d) Straddle Periods. Any Taxes of Seller relating to the
Business attributable to a Tax period which begins before and ends after
the Closing Date (a "Straddle Period") shall be apportioned between Seller
and Buyer based on the actual operations and transactions of the Business
during the period ending on the day prior to the Closing Date, and the
portion of such period beginning on the Closing Date, respectively,
calculated as though the taxable year of the Business terminated at the
close of business on the day prior to the Closing Date.
7.2 Tax Indemnification.
(a) Seller Indemnification. Guarantor hereby agrees to
indemnify Buyer and hold it harmless from all liability for Taxes imposed
on the Business (including without limitation liability under Treas. Reg.
[A]1.1502-6 or any comparable provision of state law) for any taxable year
or period ending on or before the Closing Date and Seller's portion of the
Straddle Period Taxes.
(b) Buyer Indemnification. Buyer hereby agrees to indemnify
Seller and its Affiliates and hold them harmless from all liability for
Taxes imposed on the Business for any taxable year or period beginning
after the Closing Date and Buyer's portion of the Straddle Period Taxes.
(c) Determining Liability for Taxes. Whenever it is necessary
to determine liability for Straddle Period Taxes, the determination shall
be made assuming that there was a closing of the books at 11:59 p.m.
(local time) on the day prior to the Closing Date, except that Taxes other
than Income Taxes, as well as exemptions, allowances or deductions that
are calculated on an annual basis, shall be apportioned ratably on a daily
basis between the periods in question.
7.3 Cooperation. After the Closing, Buyer and Seller shall promptly
make available or cause to be made available to the other, as reasonably
requested, and to any taxing authority, all information, records or
documents relating to Tax liabilities, potential Tax liabilities, or
refunds of or relating to the Business for all periods prior to or
including the Closing Date and shall preserve all such information,
records and documents until the expiration of any applicable statute of
limitations or extensions thereof. Buyer and Seller shall otherwise
cooperate with respect to any Tax Matter or other claim for Seller's
Refunds, including by provision of appropriate powers of attorney. Buyer
shall reasonably prepare and provide to Seller any Federal, state, local
and foreign Tax information packages reasonably requested by Seller for
Seller's use in preparing its Tax Returns. Guarantor and Seller shall
prepare and provide to Buyer any Federal, state, local and foreign Tax
information packages reasonably requested by Buyer for Buyer's use in
preparing its Tax Returns. Seller shall prepare and provide to Buyer any
Federal, state, local and foreign Tax information packages reasonable
requested by Buyer for Buyer's use in preparing its Tax Returns. Such Tax
information packages shall be completed by such parties and provided to
the other party within 45 days after such party's request therefor. Buyer
shall bear its own expense, and Guarantor shall bear Seller's expense, in
complying with the foregoing provisions.
ARTICLE VIII
LABOR MATTERS, EMPLOYEE RELATIONS AND BENEFITS
8.1 Offers of Employment. Effective as of the Closing, Buyer shall
continue to employ any and all individuals who are employed by Seller for
the Business as of the Closing, including such individuals on short-term
disability, long-term disability or other leave of absence (each such
individual being referred to as an "Employee"); provided, however, that
this Section shall not require Buyer to continue the employment of any
Employee for a specified period of time after the Closing. Buyer shall
assume all liability for wages and payroll deductions with respect to
Employees for the period ending on the day preceding the Closing Date.
8.2 Collective Bargaining Agreements. Effective as of the Closing,
Buyer shall assume all of the Seller's rights and obligations under all
collective bargaining agreements to which Seller is a party, as set forth
in Schedule 4.1(m) (each, a "Collective Bargaining Agreement"), including
without limitation all pension plan, health and welfare and other benefit
plan obligations, for the remaining terms of the Collective Bargaining
Agreements. Buyer shall honor all recall rights former employees of
Seller may have under the Collective Bargaining Agreements.
8.3 Participation in Buyer's Retirement Plans. As of the Closing
Date, Buyer shall offer Employees not covered by a Collective Bargaining
Agreement the right to participate in the qualified retirement plans
sponsored by or contributed to by Buyer, on the terms and conditions set
forth in the applicable plans. Buyer's retirement plans shall credit such
Employees with all service credited to the Employees under Seller s
retirement plans for purposes of determining the Employees eligibility to
participate in and vesting under Buyer's retirement plans. Buyer shall
cause the Business to continue to honor all of its pension plan
obligations described in the Collective Bargaining Agreements for the
remaining terms of the Collective Bargaining Agreements.
8.4 Transfer of Savings Plan Account Balances. As promptly as
practicable after the Closing, Seller, the sponsor of Newell's Savings
Plan and Buyer shall arrange for the transfer of the vested portion of the
account balances (the "Accounts") of the Employees participating in
Newell's Savings Plan (as defined in Section 4.1(o)) to a defined
contribution plan maintained by Buyer ("Buyer's Savings Plan"). The
assets of Newell's Savings Plan to be transferred to Buyer's Savings Plan
shall be the total of the vested portion of all Accounts of the Employees
as of the date of such transfer and shall reflect all contributions earned
under Newell's Savings Plan by such Employees as of the Closing and
earnings on such Accounts through the date of such transfer. In
transferring the Accounts, Seller and Buyer shall comply with all
applicable requirements of Sections 411(d)(6), 414(l) and 401(a)(12) of
the Code. Buyer represents and warrants that Buyer's Savings Plan has (i)
been maintained in material compliance with its terms and with the
requirements prescribed by any applicable statute and regulations
including ERISA and the Code; and (ii) received a copy of a favorable
Internal Revenue Service ("IRS") determination letter stating that it
meets the requirements of the Tax Reform Act of 1986. The transfer of
assets from Newell's Savings Plan to Buyer's Savings Plan shall be made in
cash and, to the extent Employees have any outstanding loans from Newell s
Savings Plan as of the Closing, promissory notes evidencing such loans.
8.5 Health and Welfare Plans. As of the Closing, Buyer shall
provide Employees with coverage under Buyer's health and welfare plans on
terms substantially similar to those applicable to other similarly
situated employees of Buyer. Coverage under Buyer's health and welfare
plans that is provided to Employees who are covered by a Collective
Bargaining Agreement shall meet all of Seller's obligations under such
Collective Bargaining Agreement. Buyer's health and welfare plans shall
credit Employees with all service credited to the Employees under the
health and welfare plans provided by Seller for purposes of determining
eligibility to participate in Buyer's health and welfare plans. To the
extent permitted by Buyer's insurance carrier, Buyer shall waive any
waiting periods, pre-existing condition exclusions and actively-at-work
requirements and provide that any expenses incurred on or before the
Closing Date by an Employee or an Employee's covered dependents shall be
taken into account for purposes of satisfying applicable deductible,
coinsurance and maximum out-of-pocket provisions of Buyer's health and
welfare plans.
8.6 No Rights or Remedies. Nothing in this Article shall confer
upon any Employee or legal representative thereof any rights or remedies,
including any right to employment, or continued employment for any
specified period, of any nature or kind whatsoever under or by reason of
this Agreement.
8.7 Indemnification. Buyer shall indemnify Seller and its
Affiliates and hold each of them harmless and against any liabilities
which may be incurred or suffered by any of them in connection with any
claim made by any Employee by reason of Buyer's failure to comply with any
provision of this Article. Guarantor shall indemnify Buyer and hold it
harmless and against any Liabilities which may be incurred or suffered by
any of them in connection with any claim made by any employee by reason of
Seller's failure to comply with any provision of this Article.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1 Survival. All of the representations and warranties contained
in Sections 4.1 and 4.2 will survive the Closing and continue in full
force and effect until 12 months after the Closing, except for the
representations and warranties contained in Sections 4(d) and 4(h) which
shall survive for a period of three years, and the representations and
warranties contained in Sections 4(g) and 4(j) which shall survive for the
applicable statute of limitations period. All of the covenants contained
in this Agreement will survive the Closing and continue in full force and
effect in accordance with their terms.
9.2 Indemnification Provisions for the Benefit of Buyer. In the
event Seller breaches any of its representations, warranties, covenants or
agreements contained in this Agreement and provided that Buyer makes a
written claim for indemnification against Seller within the applicable
survival period, then Seller agrees to indemnify, defend and hold harmless
Buyer from and against all losses, liabilities, damages and expenses
(including reasonable attorneys fees and expenses) (collectively,
"Damages") Buyer suffers caused by such event; provided, however, that
Seller will not have any obligation to indemnify Buyer from and against
such Damages (a) until Buyer has suffered aggregate Damages, by reason of
all such breaches, in excess of $1,000,000 (after which point Seller will
be obligated only to indemnify Buyer from and against aggregate Damages in
excess of $1,000,000) and (b) to the extent the aggregate Damages Buyer
has suffered by reason of all of such breaches exceeds $15,000,000.
Notwithstanding the foregoing, if the amount of any claim or series of
related claims for Damages suffered by Buyer does not exceed $10,000, then
the amount of such claim or series of claims will be excluded from the
calculation of the aggregate amount of Damages for purposes of Section
9.2(a).
9.3 Indemnification Provisions for the Benefit of Seller. In the
event Buyer breaches any of its representations, warranties, covenants or
agreements contained in this Agreement and provided that Seller makes a
written claim for indemnification against Buyer, then Buyer agrees to
indemnify, defend and hold harmless Seller from and against any Damages
Seller suffers caused by such event, provided, however, that Buyer will
not have any obligation to indemnify Seller from and against all such
Damages until Seller has suffered aggregate Damages, by reason of such
breaches, in excess of $100,000.
9.4 Matters Involving Third Parties. If any third party notifies
any party hereto (the "Indemnified Party") with respect to any matter
which may give rise to a claim for indemnification against the other party
hereto (the "Indemnifying Party") under this Article IX, then the
Indemnified Party will notify the Indemnifying Party thereof promptly, but
in no event later than ten Business Days, after receiving such notice.
Once the Indemnified Party has given notice of the matter to the
Indemnifying Party, the Indemnifying Party may defend against the matter
in any manner it reasonably may deem appropriate. The Indemnified Party
will provide any assistance reasonably requested by the Indemnifying
Party. Neither the Indemnifying Party nor the Indemnified Party will
consent to the entry of a judgment or enter into any settlement with
respect to such matter without the written consent of the other (which
consent will not be withheld unreasonably). If the Indemnifying Party
does not notify the Indemnified Party within 30 days after the Indemnified
Party has given notice of the matter that the Indemnifying Party is
assuming all responsibility therefor, the Indemnified Party may defend
against, consent to the entry of any judgment or enter into any settlement
with respect to the matter in any manner the Indemnified Party reasonably
deems appropriate without waiving any right to indemnity therefor from the
Indemnifying Party.
9.5 Adjustments. Any Damages recovered pursuant to this Article IX
shall be reduced by any insurance coverage proceeds relating thereto
received by the Indemnified Party. Seller and Buyer agree to make
reasonable best efforts to receive or collect such benefits or proceeds
promptly. All indemnification payments made pursuant to this Article IX
shall be deemed to be adjustments to the Purchase Price.
9.6 Exclusive Remedy. Except as provided in this Agreement,
indemnification in accordance with the terms of this Article IX shall
constitute the sole and exclusive remedy for any claims relating to or
arising under this Agreement or the subject matter of any representations
and warranties contained herein for which Damages are available. The
parties agree that indemnification in accordance with the terms of this
Article IX shall not preclude any available equitable remedies.
ARTICLE X
OTHER POST-CLOSING COVENANTS
10.1 Post-Closing Accounting Cooperation. Each of Seller and Buyer
agree that the other party and/or its independent auditors shall have
reasonable access during normal business hours, provided such access shall
not interfere with the normal operations of the Business, to the books,
records and accounts applicable to the period the Business was directly or
indirectly owned by Seller or Buyer and have the reasonable assistance and
cooperation of the appropriate personnel of Buyer or Seller in the review
of such books and records consistent with assistance and cooperation
furnished during the period the Business was directly or indirectly owned
by such party.
10.2 Transfer Taxes. Buyer and Guarantor shall each pay one half of
all transfer, documentary, stamp, excise or similar Taxes (including,
without limitation, any real estate transfer or value-added Taxes)
incurred in connection with the transactions contemplated by this
Agreement, whether such Taxes are imposed on Buyer, Buyer's Affiliates,
Seller, or Seller's Affiliates.
10.3 WARN. Except as precluded by any Governmental Authority, Buyer
shall not on, or at any time prior to 90 days after the Closing Date,
effectuate a "plant closing" or "mass layoff," as those terms are defined
in the Worker Adjustment and Retraining Notification Act of 1988 ("WARN")
, affecting in whole or in part any site of employment of the Business, in
advance and without complying with the notice requirements and other
provisions of WARN.
10.4 Further Actions. Subject to the terms and conditions of this
Agreement, from and after the Closing, each of the parties hereto will use
their reasonable best efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement.
10.5 Subsequent Access. Following the Closing, Buyer shall provide
Seller and its representatives reasonable access to personnel and records
of Buyer relating to the Business when it was directly or indirectly owned
by Seller to the extent Seller reasonably requests such access.
10.6 Existing Insurance Coverage. As of the Closing Date, Seller
will cancel insurance coverage applicable to Seller occurrences (as such
term "occurrence" policies) or claims made (with respect to any "claims-
made" policies) after the Closing Date (other than insurance policies in
the name of Seller or an Affiliate thereof; provided, however, that the
remaining insurance coverage will be available to Buyer with respect to
insured occurrences or series of occurrences relating to the Business or
claims made on or prior to the Closing Date to the extent that Buyer has
retained, assumed or paid the loss or liability attributed to such
occurrence or series of occurrences or claims made. If after the Closing,
Seller receives cash proceeds (excluding any return of premium or
reimbursed attorneys or investigation or other fees) from an insurer that
are attributable to such insurance coverage with respect to any insured
occurrences or any series of occurrences on or prior to the Closing Date
or any claims that were made on or prior to the Closing Date, then such
cash proceeds will be paid to Buyer to the extent that Buyer has assumed
or paid the loss or liability attributed to such occurrence or series of
occurrences or claims made. Seller shall use its reasonable efforts to
cooperate with Buyer to ensure that there are no gaps in insurance
coverage with respect to the Business as a result of this Agreement.
10.7 Payment of Remainder of Stay Bonuses. Within 90 days following
the Closing, Buyer shall pay to each Eligible Participant the remaining
67% of his or her Stay Bonus described in Schedule 6.3(d).
10.8 Collection of Receivables. Seller agrees that Buyer will have
the right and authority to collect for its own account or the account of
its Affiliates all Receivables which are transferred and assigned to Buyer
as provided herein, and Buyer and its Affiliates have the right to endorse
with the name of Seller any checks received on account of any such
Receivable. Seller agrees that it will promptly transfer and deliver to
Buyer any cash or other property which Seller may receive in respect of
the Receivables.
10.9 Mail. Seller agrees that Buyer and its Affiliates will have the
right and authority to open all mail and other communications received by
the Business, even if addressed to Seller, for processing and forwarding
to Seller, as appropriate.
10.10 Bulk Sales Laws. Notwithstanding Section 10.2, Buyer
hereby waives any requirement that Seller comply with any bulk sales laws
applicable to the transactions contemplated hereby, and in exchange
therefor Seller agrees to pay, honor and discharge when due any claims of
creditors asserted against Buyer by reason of such noncompliance.
10.11 Confidentiality. After the Closing, the following
provisions shall apply.
(a) By Seller. Seller and its Affiliates will not disclose any
information which is confidential, proprietary or otherwise not publicly
available, some of which may constitute trade secrets ("Confidential
Information"), about (i) the Business, or (ii) Buyer and its Affiliates
obtained while in the performance of this Agreement for a period of three
(3) years following the Closing Date.
(b) By Buyer. Buyer and its Affiliates will not disclose any
Confidential Information about Seller and its Affiliates obtained in the
performance of the Agreement (other than with respect to the Business) for
a period of three (3) years following the Closing Date.
(c) Exceptions. The obligations provided for in this Section
11.13 will not apply to information which: (i) can be reasonably shown to
have been in the possession of the party receiving the information as of
the date of receipt; (ii) is disclosed to the receiving party by a third
party which has a legal right to make such disclosure; (iii) was in the
public domain or generally available as of the date of disclosure through
no fault of the receiving party or; (iv) which is required by law to be
disclosed.
10.12 Noncompetition.
(a) Seller and Guarantor agree that, for a period of three (3)
years from the Closing Date, none of Seller, Guarantor or any of their
Affiliates will engage, create, form, own, manage, operate, control,
participate or be connected in any manner, either directly or indirectly,
solely or jointly with others, in the United States, Canada or Mexico, in
the ownership, management, operation or control of any business that is
engaged in the design, manufacture, importation, marketing, distribution
or sale of (i) any product currently sold by the Business, or (ii) any
product similar to, of the same appearance as, any product currently sold
by the Business; provided, however, the restrictions set forth in this
Section 10.12(a) will not apply to Seller, Guarantor and its Affiliates if
any such party purchases or acquires the assets or stock of an individual
third party Person, the activities of which compete with the Business, if
such Person is not an Affiliate of Seller or Guarantor prior to the
consummation of such a purchase or acquisition..
(b) While the restrictions set forth in Section 10.12(a) are
considered by the parties to be reasonable in all the circumstances, it is
recognized that restrictions of the nature in question may fail for
technical reasons unforeseen, and accordingly it is hereby agreed and
declared that if any of such restrictions will be adjudged to be void as
going beyond what is reasonable in all the circumstances for the
protection of the Business or for any other reason but would be valid if
part of the wording thereof were deleted or the periods (if any) thereof
reduced or the range of activities or area dealt with thereby reduced in
scope, it is the parties intention that such restrictions will apply with
such modifications as may be necessary to make them valid and effective,
to the maximum extent permitted by applicable law.
(c) The parties acknowledge and agree that Section 10.12(a),
and the restrictions contemplated hereby, are included in this Agreement
in order to induce Buyer to enter into the Agreement and to acquire the
Assets and the Business, and have been required by the Business in part to
preserve the goodwill associated with the Business.
10.13 Reimbursement for Relocation Costs.
(a) Seller will reimburse Buyer for (i) 100% of Buyer's
Relocation Costs up to and including $5,000,000 and (ii) 50% of Buyer's
Relocation Costs between $5,000,000 and $5,500,000. The parties agree
that any Relocation Costs paid by Seller or an Affiliate of Seller prior
to the Closing Date shall be credited against both of the dollar
thresholds referenced in the first sentence of this Section 10.13(a). For
purposes of this Agreement, "Relocation Costs" means the costs and
expenses specifically described in Schedule 10.13(a) that are incurred (A)
in the course of moving the operations of the Business located in its St.
Paul facility to the facility in Eagan and (B) in accordance with the
plans for the move developed by management of the Business prior to the
Closing Date. All other cost or expense items, including those
specifically listed in Schedule 10.13(b), will not constitute Relocation
Costs.
(b) Seller will review and accept or reject each cost submitted
to Seller as a Relocation Cost within 10 days after receiving a valid
notice of payment and invoice from Buyer (plus any additional support
documentation reasonably requested by Seller) describing such cost in
reasonable detail, and Seller agrees to be reasonable in its review of
such costs. Seller will then reimburse Buyer for each cost so submitted
within 10 business days of Seller's acceptance of such cost as a
Relocation Cost. Unless Buyer otherwise advises Seller in writing, Seller
will make all payments under this Section 10.13 to the address for Buyer
set forth in Section 11.3(b). Neither Seller nor any of its Affiliates
will reimburse Buyer for Relocation Costs described in any notice of
payment and invoice submitted after the date that is two months after the
expiration or termination date (whichever is earlier) of the St. Paul
facility lease included as Item 2 in Schedule 4.1(s).
(c) Buyer agrees to cooperate fully with Seller and its
Affiliates in any proceedings with the City of St. Paul, including,
without limitation, the Eminent Domain Proceeding. Such cooperation will
include, without limitation, providing evidentiary support in connection
with Seller's efforts to recover relocation costs and expenses from the
City of St. Paul.
ARTICLE XI
MISCELLANEOUS
11.1 Termination.
(a) General. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time, but not
later than the Closing Date:
(i) by mutual written consent of Buyer and Seller;
(ii) by Seller or Buyer after October 15, 1998 if, through no
fault of the party seeking to terminate, the Closing shall not have
occurred; or
(iii) by Seller or Buyer, upon written notice to the other
party, if any Governmental Authority of competent jurisdiction shall
have issued an injunction, order or decree enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this
Agreement, and such injunction, order or decree shall have become
final and non-appealable; provided, however, that the party seeking
to terminate this Agreement pursuant to this clause (iii) has used
its reasonable best efforts to remove such injunction, order or
decree.
(b) Procedure Upon Termination. In the event of the
termination and abandonment of this Agreement, written notice thereof
shall promptly be given to the other party hereto and this Agreement shall
terminate and the transactions contemplated hereby shall be abandoned
without further action by any of the parties hereto.
(c) Survival of Certain Provisions. The respective obligations
of the parties hereto pursuant to Sections 11.2, 11.3, 11.11 and 11.13
shall survive any termination of this Agreement.
11.2 Fees and Expenses. Whether or not the transactions contemplated
hereby are consummated, each of Buyer and Guarantor shall pay its own
respective fees and expenses of itself and its Affiliates incident to the
negotiation, preparation and execution of this Agreement, including
attorneys', accountants' and other advisors' fees.
11.3 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if
delivered personally or by overnight courier with delivery charges
prepaid, or sent by telecopy, as follows:
(a) if to Seller:
c/o Newell Co.
One Millington Road
Beloit, Wisconsin 53511
Attention: William T. Alldredge
Facsimile No.: (608) 365-3453
with copies to:
Newell Co.
4000 Auburn Street
Rockford, Illinois 61101
Attention: Dale L. Matschullat
Facsimile No.: (815) 969-6106
and
Schiff Hardin & Waite
7300 Sears Tower
Chicago, Illinois 60606
Attention: Andrea L. Horne
Facsimile No.: (312) 258-5600
(b) if to Buyer:
Home Products International, Inc.
4501 W. 47th Street
Chicago, IL 60632
Attention: James R. Tennant
Facsimile No.: (773) 890-0523
with a copy to:
Much Shelist Freed Denenberg Ament Bell &
Rubenstein, P.C.
Suite 2100
200 N. LaSalle Street
Chicago, IL 60601
Attention: Jeffrey C. Rubenstein
Facsimile No.: (312) 621-1750
or to such other person or address as either party shall specify by notice
in writing to the other party. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the
date of delivery.
11.4 Entire Agreement. This Agreement (including the Exhibits and
Schedules, which are hereby fully incorporated into this Agreement),
together with the Ancillary Agreements and the Confidentiality Agreement,
constitutes the entire agreement between the parties hereto with respect
to the subject matter hereof and supersedes all prior agreements and
understandings, oral and written, between the parties hereto with respect
to the subject matter hereof.
11.5 Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or
implied, is intended to confer on any person other than the parties hereto
or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
11.6 Assignability. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns and shall not be assigned by either of the parties hereto without
the prior written consent of the other party; provided, however, that
Seller or Buyer may, at its election, assign this Agreement and its
rights, interests and obligations hereunder to one or more of its
Affiliates without the prior written approval of the other party in which
case the assigning party will continue to be liable for the performance of
its obligations under this Agreement.
11.7 Amendment and Modification; Waiver. Subject to applicable law,
this Agreement and any Schedule or Exhibit attached hereto may be amended,
modified and supplemented by a written instrument expressly identified as
an amendment hereto authorized and executed on behalf of Buyer and Seller
at any time prior to the Closing Date with respect to any of the terms
contained herein. No waiver by any party of any of the provisions hereof
shall be effective unless explicitly set forth in writing and executed by
the party so waiving. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver
of any other or subsequent breach. No failure on the part of either party
hereto to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof. The remedies herein are cumulative and not
exclusive of any remedies provided by law.
11.8 Public Announcements. Unless otherwise required by law, prior
to the Closing Date, no news release or other public announcement
pertaining to the transactions contemplated by this Agreement will be made
by or on behalf, of any party without the prior approval of the other
party (which approval shall not be unreasonably withheld).
11.9 Interpretation.
(a) Any reference to any Federal, state or local statute or
law will be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. When a reference is
made in this Agreement to an Article, Section, Schedule or Exhibit, such
reference is to an Article, Section, Schedule or Exhibit of this
Agreement, unless otherwise indicated. The table of contents contained in
this Agreement is for reference purposes only and will not affect in any
way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they will
be understood be followed by the words "without limitation." Words
(including defined terms) in the singular will be held to include the
plural and vice versa words of one gender will be held to include the
other genders as the context requires.
(b) Notwithstanding anything to the contrary contained in this
Agreement or in any Schedule, any information disclosed in one of such
Schedules shall be deemed to be disclosed in all of such Schedules.
Certain information set forth in the Schedules is included solely for
informational purposes and may not be required to be disclosed pursuant to
this Agreement. The disclosure of any information in the Schedules shall
not be deemed to constitute an acknowledgment that such information is
required to be disclosed in connection with the representations and
warranties made by Seller in this Agreement or that it is material, nor
shall such information be deemed to establish a standard of materiality.
11.10 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all
of which together shall be deemed to be one and the same instrument.
11.11 Applicable Law. This Agreement and the legal relations
between the parties hereto shall be governed by and construed in
accordance with the laws of the State of Illinois without regard to
conflict of laws principles thereof, except that the Federal Arbitration
Act, 9 U.S.C. Sections 1-16 will govern all questions relating to the
arbitrability of any claim or dispute in connection with Section 2.2, and
to the enforcement of the arbitration provisions contained in Section 2.2.
All actions and proceedings arising out of or relating to this Agreement
shall be heard and determined in any Illinois state or Federal court
sitting in the Northern District of Illinois, and the parties hereby
consent to the jurisdiction of such courts in any such action or
proceeding.
11.12 Severability of Provisions. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent and only for the duration of
such prohibition or enforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such
provisions in any other jurisdiction. If any provision of this Agreement
is so broad as to be unenforceable, the provision shall be interpreted to
be only so broad as is enforceable.
11.13 Guarantor. Guarantor hereby guarantees to Buyer the full
discharge by Seller of its obligations under this Agreement.
[Signature page to follow.]
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
PLASTICS, INC.
By:
Name:
Title:
HOME PRODUCTS INTERNATIONAL, INC.
By:
Name:
Title:
NEWELL CO.
as guarantor for Plastics, Inc.
By:
Name:
Title: