Exhibit 2.1
ASSET PURCHASE AGREEMENT
DATED AS OF JUNE 6, 2001
AMONG
HOME PRODUCTS INTERNATIONAL-NORTH AMERICA, INC.,
A & E PRODUCTS GROUP LP,
TYCO PLASTICS SERVICES AG
AND
TYCO (US) HOLDINGS INC.
TABLE OF CONTENTS
PAGE
1. DEFINITIONS .........................................................4
- -- -----------
1.1. Certain Defined Terms ...............................................4
- ---- ---------------------
1.2. Glossary of Defined Terms ...........................................7
- ---- -------------------------
1.3. Terms Generally .....................................................8
- ---- ---------------
2. PURCHASE AND SALE ...................................................9
- -- -----------------
2.1. Purchase and Sale of the Assets .....................................9
- ---- -------------------------------
2.2. Assumption and Exclusion of Liabilities ............................10
- ---- ---------------------------------------
2.3. Payment of Purchase Price; Allocation of Purchase Price ............13
- ---- -------------------------------------------------------
2.4. Determination of Inventory .........................................13
- ---- --------------------------
2.5. Post-Closing Adjustment ............................................13
- ---- -----------------------
2.6. Closing ............................................................15
- ---- -------
2.7. Closing Deliveries by the Seller ...................................15
- ---- --------------------------------
2.8. Closing Deliveries by the Purchaser ................................15
- ---- -----------------------------------
2.9. Nonassignability of Assets .........................................16
- ---- --------------------------
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER .......................17
- -- --------------------------------------------
3.1. Incorporation and Authority of the Seller ..........................17
- ---- -----------------------------------------
3.2. No Conflict ........................................................17
- ---- -----------
3.3. Consents and Approvals .............................................18
- ---- ----------------------
3.4. Financial Information ..............................................18
- ---- ---------------------
3.5. Absence of Certain Changes or Events ...............................19
- ---- ------------------------------------
3.6. Absence of Litigation ..............................................21
- ---- ---------------------
3.7. Compliance with Laws ...............................................21
- ---- --------------------
3.8. Governmental Licenses and Permits ..................................21
- ---- ---------------------------------
3.9. Good Title - Generally .............................................21
- ---- ----------------------
3.10. Title to Owned Real Properties .....................................21
- ----- ------------------------------
3.11. Leased Real Property ...............................................22
- ----- --------------------
3.12. Intellectual Property ..............................................22
- ----- ---------------------
3.13. Taxes ..............................................................22
- ----- -----
3.14. Environmental Matters ..............................................23
- ----- ---------------------
3.15. Material Contracts .................................................23
- ----- ------------------
3.16. Inventory ..........................................................24
- ----- ---------
3.17. Brokers ............................................................24
- ----- -------
3.18. Insurance ..........................................................24
- ----- ---------
3.19. Product Liability and Recalls ......................................25
- ----- -----------------------------
3.20. Books and Records ..................................................25
- ----- -----------------
3.21. Customers and Suppliers ............................................25
- ----- -----------------------
Exhibit 2.1
3.22. Powers of Attorney .................................................25
- ----- ------------------
3.23. Undisclosed Liabilities ............................................26
- ----- -----------------------
3.24. Restrictions on Business Activities ................................26
- ----- -----------------------------------
3.25. Accounts Receivable ................................................26
- ----- -------------------
3.26. Labor and Employment Matters .......................................26
- ----- ----------------------------
3.27. Product Warranty ...................................................26
- ----- ----------------
3.28. Exclusivity Of Representations .....................................27
- ----- ------------------------------
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND IP PURCHASER ...27
- -- ----------------------------------------------------------------
4.1. Incorporation and Authority of the Purchaser .......................27
- ---- --------------------------------------------
4.2. No Conflict ........................................................28
- ---- -----------
4.3. Consents and Approvals .............................................28
- ---- ----------------------
4.4. Absence of Litigation ..............................................28
- ---- ---------------------
4.5. Financial Ability ..................................................29
- ---- -----------------
4.6. Brokers ............................................................29
- ---- -------
5. ADDITIONAL AGREEMENTS ..............................................29
- -- ---------------------
5.1. Conduct of Business Prior to the Closing ...........................29
- ---- ----------------------------------------
5.2. Access to Information ..............................................31
- ---- ---------------------
5.3. Confidentiality ....................................................32
- ---- ---------------
5.4. Regulatory and Other Authorizations; Consents ......................33
- ---- ---------------------------------------------
5.5. Insurance ..........................................................34
- ---- ---------
5.6. Financing ..........................................................35
- ---- ---------
5.7. Inter-Company Services and Products ................................35
- ---- -----------------------------------
5.8. Resin Rebates ......................................................35
- ---- -------------
5.9. Further Action .....................................................35
- ---- --------------
5.10. Investigation ......................................................36
- ----- -------------
5.11. Covenant Not to Compete ............................................36
- ----- -----------------------
5.12. Environmental Matters ..............................................37
- ----- ---------------------
5.13. Eagan Premises .....................................................39
- ----- --------------
5.14. Transition Services ................................................39
- ----- -------------------
6. EMPLOYEE MATTERS ...................................................41
- -- ----------------
6.1. Transferred Employees ..............................................41
- ---- ---------------------
6.2. Stay Bonuses .......................................................43
- ---- ------------
6.3. Indemnity ..........................................................43
- ---- ---------
6.4. No Third-Party Beneficiaries .......................................43
- ---- ----------------------------
7. TAX MATTERS ........................................................44
- -- -----------
7.1. Tax Indemnities ....................................................44
- ---- ---------------
7.2. Contest of Tax Claims ..............................................45
- ---- ---------------------
7.3. Cooperation and Exchange of Information ............................46
- ---- ---------------------------------------
7.4. Conveyance Taxes ...................................................47
- ---- ----------------
7.5. Miscellaneous ......................................................47
- ---- -------------
8. CONDITIONS TO CLOSING ..............................................47
- -- ---------------------
8.1. Conditions to Obligations of the Seller ............................47
- ---- ---------------------------------------
8.2. Conditions to Obligations of the Purchaser .........................48
- ---- ------------------------------------------
9. TERMINATION, AMENDMENT AND WAIVER ..................................49
- -- ---------------------------------
9.1. Termination ........................................................49
- ---- -----------
9.2. Effect of Termination ..............................................49
- ---- ---------------------
9.3. Waiver .............................................................50
- ---- ------
10. INDEMNIFICATION ....................................................50
- --- ---------------
10.1. Indemnification by the Purchaser ...................................50
- ----- --------------------------------
10.2. Indemnification by the Seller ......................................51
- ----- -----------------------------
10.3. Notification of Claims .............................................52
- ----- ----------------------
10.4. Exclusive Remedies .................................................54
- ----- ------------------
10.5. Certain Adjustments ................................................55
- ----- -------------------
11. GENERAL PROVISIONS .................................................55
- --- ------------------
11.1. Survival ...........................................................55
- ----- --------
11.2. Expenses ...........................................................55
- ----- --------
11.3. Notices ............................................................56
- ----- -------
11.4. Public Announcements ...............................................57
- ----- --------------------
11.5. Headings ...........................................................57
- ----- --------
11.6. Severability .......................................................57
- ----- ------------
11.7. Entire Agreement ...................................................57
- ----- ----------------
11.8. Assignment .........................................................58
- ----- ----------
11.9. No Third-Party Beneficiaries .......................................58
- ----- ----------------------------
11.10. Amendment ..........................................................58
- ------ ---------
11.11. Governing Law; Submission to Jurisdiction; Waivers .................58
- ------ --------------------------------------------------
11.12. Counterparts .......................................................58
- ------ ------------
11.13. No Presumption .....................................................59
- ------ --------------
11.14. Guaranty ...........................................................59
- ------ --------
3
Exhibit 2.1
This ASSET PURCHASE AGREEMENT, dated as of June 6, 2001, is entered into by
and among HOME PRODUCTS INTERNATIONAL-NORTH AMERICA, INC., a Delaware
corporation ("Seller"), A & E PRODUCTS GROUP LP, a Delaware limited partnership
------
(the "Purchaser"), TYCO PLASTICS SERVICES AG, a Swiss corporation (the "IP
---------
Purchaser") and TYCO (US) HOLDINGS INC., a Delaware corporation ("Guarantor").
---------
RECITALS
A. The Seller, through Plastics, Inc., one of its divisions ("Plastics") is
engaged in the business of manufacturing and marketing of high quality
disposable beverage and food servingware (the "Business"); and
--------
B. The Seller wishes to sell to the Purchaser, and the Purchaser wishes to
purchase from the Seller all of the Seller's right, title and interest in and to
the assets of Plastics, excluding the Intellectual Property (as hereinafter
defined), and to assume from the Seller all of the liabilities of Plastics, upon
the terms and subject to the conditions set forth herein.
C. The Seller wishes to sell to the IP Purchaser, and the IP Purchaser
wishes to purchase from the Seller all of the Seller's right, title and interest
in the Intellectual Property, upon the terms and subject to the conditions set
forth herein.
RECITALS
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, the parties hereto hereby agree
as follows:
1. DEFINITIONS
1.1. Certain Defined Terms
---------------------
As used in this Agreement, the following terms shall have the
following meanings:
"Action" means any claim, action, suit, arbitration, inquiry,
------
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any other
---------
Person that, directly or indirectly through one or more intermediaries,
Controls, is Controlled by or is under common Control with, such specified
Person.
"Agreement" means this Asset Purchase Agreement (including the
---------
Exhibits hereto and the Disclosure Schedule) and all amendments hereto made
in accordance with Section 11.10.
4
Exhibit 2.1
"Assumption Agreement" means the Assumption Agreement to be executed
--------------------
by the Purchaser and the Seller on the Closing Date.
"Bill of Sale" means the bill of sale transferring the Assets to
------------
Purchaser to be executed by the Seller on the Closing Date.
"Business Day" means any day that is not a Saturday, a Sunday or other
------------
day on which banks are required or authorized by Law to be closed in the
City of Chicago.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Control" means, as to any Person, the power to direct or cause the
-------
direction of the management and policies of such Person, whether through
the ownership of voting securities, by contract or otherwise. The term
"Controlled" shall have a correlative meaning.
"Disclosure Schedule" means the Disclosure Schedule delivered by the
-------------------
Seller to the Purchaser on the date hereof.
"Environmental Law" means any Law relating to pollution or protection
-----------------
of the environment, including to the use, handling, transportation,
treatment, storage, disposal, release or discharge of Hazardous Materials.
"Environmental Liability" means any written claim or demand, order,
-----------------------
suit, obligation, liability, cost (including the cost of any investigation,
testing, compliance or remedial action), damages, loss or expense
(including reasonable attorneys' and consultants' fees and expenses)
arising out of, relating to or resulting from any environmental matter or
condition and related in any way to the Seller, its respective operations
or properties or to this Agreement or its subject matter.
"Environmental Permit" means any permit, approval, identification
--------------------
number, license and other authorization required under or issued pursuant
to any Environmental Law.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Governmental Authority" means any United States federal, state or
----------------------
local or any non-United States government, governmental, regulatory or
administrative authority, agency or commission or any court, tribunal, or
judicial or arbitral body.
"Governmental Order" means any order, writ, judgment, injunction,
------------------
decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Hazardous Materials" means (a) petroleum, petroleum products, by
-------------------
products or breakdown products, radioactive materials, friable asbestos or
5
Exhibit 2.1
polychlorinated biphenyls, and (b) any chemical, material or substance
defined or regulated as toxic or as a pollutant, contaminant or waste under
any Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
-------
1976, as amended, and the rules and regulations thereunder.
"Intellectual Property" means: (a) United States, international, and
---------------------
non-United States patents and patent applications, (b) trademarks and
service marks, whether or not registered, including all common law rights,
and registrations and applications for registration thereof, (c)
copyrights, whether or not registered, and registrations and applications
for registration thereof, and (d) confidential and proprietary information,
including trade secrets.
"IRS" means the Internal Revenue Service.
---
"Knowledge of the Seller" or "Seller's knowledge" means the actual
-----------------------
knowledge of James Tennant, James Winslow, Frank Biller, Loren Abrahamson
and Mark Suchinski.
"Law" means any federal, state, local or non-United States statute,
---
law, ordinance, regulation, rule, code, order or other requirement of law.
"Leased Real Property" means any of the real property leased by the
--------------------
Seller in connection with the Business, as tenant or lessor, together with,
to the extent leased by the Seller, all buildings and other structures,
facilities or improvements currently or hereafter located thereon, all
fixtures, systems, equipment and items of personal property of the Seller
attached or appurtenant thereto, and all easements, licenses, rights and
appurtenances relating to the foregoing.
"Lien" means any mortgage, deed or trust, pledge, hypothecation,
----
security interest, encumbrance, claim, lien or charge of any kind.
"Material Adverse Effect" means a material adverse effect on the
-----------------------
results of operations or the financial condition of the Business; provided,
however, that any adverse effect arising out of or resulting from (a) an
event or series of events or circumstances affecting (i) the plastics
industry generally (including raw material prices) in any one or more
countries in which the Seller operates or (ii) the United States economy
generally or the economy generally of any other country in which the Seller
operates or (b) the entering into of this Agreement or the consummation of
the transactions contemplated hereby or the announcement thereof, shall not
constitute a Material Adverse Effect.
"Owned Real Property" means the real property located at 9534 NW Foley
-------------------
Blvd., Coon Rapids, Minnesota.
6
Exhibit 2.1
"Permitted Liens" means the following Liens: (a) statutory Liens that
---------------
are not yet due or payable or due but not delinquent that are being
contested in good faith by appropriate proceedings; (b) statutory Liens of
landlords and Liens of carriers, warehousemen, mechanics, materialmen,
repairmen and other Liens imposed by Law and on a basis consistent with
past practice for amounts not yet due; (c) Liens incurred or deposits made
in the ordinary course of the business of the Seller and on a basis
consistent with past practice in connection with workers' compensation,
unemployment insurance or other types of social security; (d) minor defects
of title, easements, rights-of-way, restrictions and other similar charges
or encumbrances not materially interfering with the ordinary conduct of the
Business; (e) Liens not created by the Seller which affect the underlying
fee interest of any Leased Real Property; (f) Liens that are not material;
and (g) any statement of facts which would be shown by an accurate
up-to-date survey, provided such facts do not materially interfere with the
present use, enjoyment and occupation of the relevant property.
"Person" means any natural person, general or limited partnership,
------
corporation, limited liability company, firm, association or other legal
entity.
"Purchase Price" means Seventy-One Million Two Hundred Fifty Thousand
--------------
Dollars ($71,250,000).
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Tax" or "Taxes" means (a) federal, state, county, local, foreign, and
--- -----
other taxes (including, without limitation, income, profits, premium,
estimated, excise, sales, use, occupancy, gross receipts, franchise, ad
valorem, severance, capital levy, production, transfer, withholding,
employment and payroll related, and property taxes, import duties and other
governmental charges and assessments), whether or not measured in whole or
in part by net income, and including interest, additions to tax, and
penalties with respect thereto, and (b) any liability of a person for the
payment of any amount of any type described in clause (a) as a result of a
person being a transferee or a member of an affiliated or combined group
prior to the Closing.
"Tax Returns" means all returns and reports (including elections,
-----------
declarations, amendments, schedules, information returns or attachments
thereto) required to be supplied to a Tax authority relating to Taxes.
"Transition Services Agreement" means the Transition Services
-----------------------------
Agreement to be executed by Purchaser and Seller on the Closing Date,
substantially in the form as set forth as an Exhibit to this Agreement.
1.2. Glossary of Defined Terms
-------------------------
Each of the terms set forth below shall have the meaning ascribed
thereto in the following sections:
7
Exhibit 2.1
Term Section
---- -------
Accounts Receivable .............................2.1 (a) (viii)
Assessment ......................................5.12
Assets ..........................................2.1(a)
Assumed Liabilities .............................2.2(a)
Basket ..........................................10.2(b)
Business ........................................Recitals
Closing .........................................2.6
Closing Date ....................................2.6
Confidentiality Agreement .......................5.3
Contract Net Asset Statement ....................2.6.1
Contract Net Assets .............................2.6.1
Excluded Assets .................................2.1(b)
Excluded Liabilities ............................2.2(b)
Final Net Asset Statement .......................2.6.1
Final Net Assets ................................2.6.1
Financial Statements ............................3.4
Financing .......................................4.5
GAAP ............................................2.5 (b)
Guarantor .......................................Preamble
Indemnified Party ...............................10.3(a)
Indemnifying Party ..............................10.3(a)
Licensed Intellectual Property ..................3.12(a)
Losses ..........................................10.1(a)
Material Contracts ..............................3.15(a)
Material Licenses ...............................3.8
Owned Intellectual Property .....................3.12(a)
Plans ...........................................6.1(b)
Purchaser .......................................Preamble
Purchaser Indemnified Parties ...................10.2(a)
Purchaser's Consultant ..........................5.12
Release .........................................3.14
Seller Indemnified Parties ......................10.1(a)
Seller LOCs .....................................5.4(c)
Seller ..........................................Preamble
Tax Claim .......................................7.2(a)
Third Party Consultant ..........................5.12
Transferred Employee ............................6.1(a)
WARN ............................................6.1(d)
1.3. Terms Generally
---------------
(a) Words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other genders as
the context requires, (b) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to
refer to this
8
Exhibit 2.1
Agreement and not to any particular provision of this Agreement, and
Article, Section, paragraph, Exhibit and Schedule references are to the
Articles, Sections, paragraphs, Exhibits and Schedule to this Agreement
unless otherwise specified, (c) the word "including" and words of similar
importance when used in this Agreement shall mean "including, without
limitation," unless otherwise specified, (d) the word "or" shall not be
exclusive and (e) provisions shall apply, when appropriate, to successive
events and transactions.
2. PURCHASE AND SALE
2.1. Purchase and Sale of the Assets
-------------------------------
(a) Upon the terms and subject to the conditions of this Agreement,
including Section 2.1(b), at the Closing, the Seller shall sell,
assign, transfer, convey and deliver to the Purchaser, and the
Purchaser shall purchase from the Seller, all of the Seller's
right, title and interest in and to all of the assets used in or
relating to the Business (other than the Intellectual Property)
(the "Assets"), including:
(i) all inventories of products, work in process and finished
goods including any such items which are in transit as of
the Closing Date (the "Inventory");
(ii) all raw materials, packaging and packaging materials;
(iii) all tangible personal property, including all equipment,
furniture, furnishings, machinery, tools, molds and other
tangible personal property;
(iv) all contracts, maintenance and service agreements, purchase
orders, purchase commitments for raw materials, goods and
other services, advertising and promotional agreements,
leases and other agreements relating to the Business;
(v) all licenses, permits and franchises issued by any
Governmental Authority to the extent legally transferable;
(vi) all interests in real property including all buildings,
structures, fixtures and improvements situated thereon and
all easements, privileges, rights of way, licenses and
permits pertaining to or according to the benefit of such
properties;
(vii) management information systems, accounting systems and
computer systems used in the Business; and
(viii) all trade, accounts and notes receivable (collectively,
"Accounts Receivable").
9
Exhibit 2.1
(b) The Seller shall sell, assign, transfer, convey, and deliver to
the IP Purchaser, and the IP Purchaser shall purchase from the
Seller, all of the Seller's right, title and interest in the
Intellectual Property.
(c) Notwithstanding the terms of Section 2.1(a), the Seller shall not
sell, assign, transfer, covey or deliver to the Purchaser, and
the Purchaser shall not purchase, and the Assets shall not
include, the Seller's right, title and interest in and to the
following assets (the "Excluded Assets"):
---------------
(i) all cash and cash equivalents, securities, and negotiable
instruments of the Seller on hand, in lock boxes, in
financial institutions or elsewhere;
(ii) any rights to Tax refunds, credits or similar benefits
relating to or attributable to periods ending, or an event
occurring, on or prior to the Closing Date;
(iii) all 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;
(iv) all centralized management information systems, accounting
systems and computer systems utilized by Seller;
(v) all corporate minute books and records; and
(vi) all rights of the Seller under this Agreement.
2.2. Assumption and Exclusion of Liabilities
---------------------------------------
(a) Assumed Liabilities. Upon the terms and subject to the conditions
-------------------
set forth in this Agreement, the Purchaser shall, on the Closing
Date, assume, and agree to pay, perform and discharge when due,
any and all of the debts, liabilities and obligations that arise
out of or relate to the Business, whether fixed or contingent,
matured or unmatured, arising by law or by contract or otherwise,
on or prior to the Closing Date or thereafter (the "Assumed
-------
Liabilities"), other than the Excluded Liabilities.
-----------
(b) Excluded Liabilities. The Seller shall retain, and shall be
--------------------
responsible for paying, performing and discharging when due, and
the Purchaser shall not assume or have any responsibility for,
the following liabilities (the "Excluded Liabilities"):
--------------------
(i) all Taxes of the Seller attributable to the Business or the
Assets for any period, or any portion of any period, ending
on or prior to the Closing Date;
(ii) liabilities relating to the Excluded Assets;
(iii) any liability or obligation of Seller under this Agreement
or on account of any of the transactions contemplated
hereby,
10
Exhibit 2.1
including, without limitation, any liability or obligation
of Seller to attorneys, accountants, brokers, or others for
services rendered or expenses incurred by or on behalf of
Seller, and all other expenses associated with the transfer
of the Purchased Assets;
(iv) any wages, salary, severance, bonuses, commissions, vacation
or holiday pay, post retirement medical benefits, fringe
benefits, long-term disability benefits, life insurance
benefits, deferred compensation, any duties, obligations or
liabilities arising under any employee benefit plan, policy
or practice, whether defined by Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended and in
effect ("ERISA") or otherwise, relating to the employees of
the Business or other amounts due to any employees or former
employees of the Business which accrue on or prior to the
Closing Date, except for the following which shall be
Assumed Liabilities: (1) commissions payable to third party
sales representatives; (2) quarterly bonuses payable to
salesmen; and (3) accrued payroll as of the Closing Date;
(v) any liabilities which would arise as either a result of a
breach of any of Seller's representations and warranties
hereunder, or a breach of any of Seller's covenants or
agreements hereunder;
(vi) any liabilities or obligations of Seller relating to the
matters listed in Section 3.6 of the Disclosure Schedule;
(vii) except as otherwise provided in Section 7.4, any tax
(including, without limitation, any federal, state or local
income, franchise, sales, transfer, recording, documentary
or other tax) imposed upon or incurred by Seller arising out
of or in connection with the negotiation and preparation of
this Agreement and the consummation and performance of the
transactions contemplated hereby;
(viii) any liability or obligation of Seller relating to,
resulting from, caused by, or arising out of the ownership,
operations or control of the Business by Seller on or prior
to the Closing Date, arising out of the following:
(1) any accident or occurrence occurring on or prior to the
Closing Date resulting in personal injury, sickness,
death, property damage, property destruction or loss of
use of property arising out of or resulting from the
operation of the Business by Seller,
(2) any breach of contract claim, wrongful termination
claim, employment discrimination claim, any claim under
applicable occupational safety and health, and workers'
11
Exhibit 2.1
compensation claim or violation of any law or final
order of any federal, state, judicial, quasi-judicial
or governmental body,
(3) any personal injury, sickness, death or property damage
resulting from occurrences occurring on or prior to the
Closing Date arising out of a defect or alleged defect
of products manufactured or sold by Seller prior to the
Closing Date including, without limitation, any such
liabilities or obligations for defects or alleged
defects in design or failure to warn, or
(4) any product recall liabilities or warranty liabilities
relating to products which were manufactured or sold by
Seller prior to the Closing Date, or any shortage in
goods delivered before the Closing Date or in transit
at the time of the Closing;
(5) any violation, liability, penalty, cost, damage, fine,
order, judgment or obligation under Environmental Laws
to the extent they arise out of acts or omissions
occurring on or prior to the Closing Date, including,
without limitation, the matters disclosed on Section
3.14 of the Disclosure Schedule;
(6) any indebtedness for borrowed money; and
(7) any other liabilities (whether contingent, actual or
contractual), obligations, claims, or commitments,
disclosed or undisclosed, of the Seller which are not
expressly disclosed to and assumed by Purchaser
pursuant to Section 2.2 (a).
12
Exhibit 2.1
2.3. Payment of Purchase Price; Allocation of Purchase Price
-------------------------------------------------------
(a) The Purchaser and the IP Purchaser shall pay the Purchase Price
in cash to the Seller at the Closing as provided in Section
2.8(a). Prior to Closing, the Seller, the Purchaser and the IP
Purchaser shall determine the amount of the Purchase Price to be
paid for the Intellectual Property (the "IP Purchase Price"), and
-----------------
for all of the other Assets (the "Other Assets Purchase Price")
---------------------------
and shall specify such amounts in Section 2.3(a) of the
Disclosure Schedule.
(b) The sum of the Other Assets Purchase Price plus the Assumed
Liabilities (and subsequent adjustments, if any) shall be
allocated among the Assets in accordance with ss.1060 of the Code
and regulations thereunder. Purchaser represents that at least
$40,000,000 will be allocated to good will and other intangibles.
(c) The Seller and the Purchaser shall report the federal, state,
local and non-United States Tax consequences of the transactions
contemplated by this Agreement in a manner consistent with the
terms of this Agreement. The Seller and the Purchaser further
covenant and agree not to take a position with respect to Taxes
that is inconsistent therewith on any Tax Return, in any refund
claim, in any litigation or otherwise.
2.4. Determination of Inventory.
--------------------------
The quantity and valuation of the Inventory shall be determined as
follows:
(a) The value of the Inventory as of the Closing Date shall be
determined from the books and records of the Business. A physical
inventory shall be taken on the Closing Date, and the books and
records of Seller shall be adjusted for Inventory quantities as
of the Closing Date and such Inventory shall be valued in
accordance with paragraph (b) of this Section 2.4. Such physical
inventory shall be conducted by Seller's representatives at
Seller's expense jointly with Purchaser's representatives at
Purchaser's expense.
(b) The Inventory reflected on the Contract Net Asset Statement (as
defined in Section 2.5.1 hereof) and the Final Net Asset
Statement (as defined in Section 2.5.1 hereof) shall be
determined in accordance with generally accepted accounting
principles applied consistently with the practices of Seller
("GAAP").
(c) Any disagreement regarding the quantity or value of the
Inventory, or both, shall be resolved in the manner and at the
time described in Section 2.5.1 hereof.
2.5. Post-Closing Adjustment.
-----------------------
2.5.1 The Purchase Price will be adjusted dollar for dollar following
the Closing to the extent that the Net Assets (as hereinafter defined) of
the Business
13
Exhibit 2.1
as of the Closing Date (the "Final Net Assets") shown upon the Final Net
Asset Statement (as hereinafter defined) differs from the Net Assets of the
Business at December 30, 2000 (the "Contract Net Assets") shown upon the
statement set forth in Schedule 2.5.1 attached hereto and made a part
hereof (the "Contract Net Asset Statement"). For purposes of this
Agreement, the term "Net Assets" shall mean the difference between (i) the
sum of Inventory (net of reserves) and Accounts Receivable (net of
reserves), and net plant, property and equipment of the Business minus (ii)
the sum of accounts payable, accrued payables, and other accrued
liabilities of the Business. The Final Net Asset Statement will be prepared
by Purchaser from the books of account of the Business as of the Closing
Date. The Final Net Asset Statement shall be prepared in accordance with
GAAP, consistent with the practices of Seller used in the preparation of
the Contract Net Asset Statement except that: (i) accumulated depreciation
and amortization of plant, property and equipment shall be reduced by fifty
percent (50%) of the depreciation and amortization of plant, property and
equipment attributed to the period from December 30, 2000 to the Closing
Date; and (ii) prepaid expense relating to the U.S. Foodservice Contract
shall only be included on the Final Net Asset Statement. Purchaser will
deliver a statement showing the Final Net Assets (the "Final Net Asset
---------------
Statement") to Seller not later than 60 days after the Closing Date.
---------
Purchaser shall give Seller and its representatives reasonable access to
the books and records of the Business in connection with its review of the
Final Net Asset Statement. Unless Seller notifies Purchaser in writing that
it disagrees with the Final Net Asset Statement within 30 days after
receipt thereof, the Final Net Asset Statement shall be conclusive and
binding on Purchaser and Seller. If Seller notifies Purchaser in writing of
its disagreement with the Final Net Asset Statement within such 30-day
period, then Purchaser and Seller shall attempt to resolve their
differences with respect thereto within 30 days after Purchaser's receipt
of Seller's written notice of disagreement. Any dispute regarding the Final
Net Asset Statement not resolved by Purchaser and Seller within such 30-day
period will be resolved by an accounting firm mutually acceptable to both
parties or, in the absence of agreement, by an accounting firm of national
reputation selected by lot after eliminating Seller's and Purchaser's
principal outside accountants and one additional firm designated as
objectionable by each of Seller and Purchaser. The determination by the
accounting firm so selected of the Final Net Asset Statement and the Final
Net Assets (with such modifications therein, if any, as reflect such
determination) shall be conclusive and binding upon the parties. The fees
and expenses of such accounting firm in acting under this Section 2.5.1
shall be shared equally by Purchaser and Seller.
2.5.2 If the Contract Net Assets are greater than the Final Net
Assets, then Seller shall pay to Purchaser an amount equal to the
difference. If the Final Net Assets are greater than the Contract Net
Assets, then Purchaser shall pay to Seller an amount equal to the
difference. Payment shall be made by the party obligated to make such
payment not more than 5 business days following the determination of the
Final Net Assets pursuant to Section 2.5.1 in the manner described in
Section 2.8 (a) and the amount of such payment shall bear interest
14
Exhibit 2.1
from the Closing Date to the date of payment at the prime rate of interest
as published in the Wall Street Journal on the Closing Date.
2.6. Closing
-------
Subject to the terms and conditions of this Agreement, the sale and
purchase of the Assets contemplated hereby shall take place at a closing
(the "Closing") to be held at 10:00 a.m., Chicago time, on the third
Business Day following the later to occur of the satisfaction or waiver of
the conditions to the obligations of the parties set forth in Sections
8.1(a), (b) and (c) and 8.2(a), (b) and (c), at the offices of Much Shelist
Freed Denenberg Ament & Rubenstein, P.C., 200 North LaSalle Street, Suite
2100, Chicago, IL 60601, or at such other time or on such other date or at
such other place as Seller and the Purchaser may mutually agree upon in
writing (the day on which the Closing takes place being the "Closing
Date"). The Closing shall be deemed effective as of the close of business
on the Closing Date.
2.7. Closing Deliveries by the Seller
--------------------------------
At the Closing, the Seller shall deliver or cause to be delivered to
the Purchaser:
(a) a receipt for the Purchase Price;
(b) the Bill of Sale and such other documents as may be reasonably
requested by the Purchaser to transfer the Assets to the
Purchaser, all such documents to be in a form and substance
reasonably satisfactory to the Purchaser;
(c) the Transition Services Agreement;
(d) the certificate required to be delivered pursuant to Section
8.2(a);
(e) the resolutions required to be delivered pursuant to Section
8.2(d); and
(f) a warranty deed to the Owned Real Estate included in the Assets.
2.8. Closing Deliveries by the Purchaser.
------------------------------------
At the Closing, the Purchaser and the IP Purchaser, as appropriate,
shall deliver to the Seller:
15
Exhibit 2.1
(a) the Purchase Price, by wire transfer in immediately available
funds, to an account or accounts designated by the Seller in a
written notice to the Purchaser and the IP Purchaser;
(b) the Assumption Agreement and such other documents as may be
reasonably requested by the Seller to effect the assumption by
the Purchaser of the Assumed Liabilities, all such documents to
be in a form and substance reasonably satisfactory to the Seller;
(c) the Transition Services Agreement;
(d) the certificate required to be delivered pursuant to Section
8.1(a); and
(e) the resolutions required to be delivered pursuant to Section
8.1(d).
2.9. 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
Purchasers 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 Purchasers 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 Purchasers
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 assign, transfer, convey and deliver such
Asset to Purchasers 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 Purchasers following the Closing pursuant to this
Section 2.9, then Purchasers 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 Purchasers of the obligations thereunder;
provided that the determination as to whether such arrangements provide the
economic and operational equivalent shall be made by Purchasers in their
reasonable discretion.
16
Exhibit 2.1
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser (which for purposes
herein shall include the IP Purchaser), except as otherwise set forth in the
Disclosure Schedule, as follows:
3.1. Incorporation and Authority of the Seller
-----------------------------------------
The Seller is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has
all necessary corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by the Seller, the performance by the Seller of its obligations
hereunder and the consummation by the Seller of the transactions
contemplated hereby have been duly authorized by all requisite corporate
action on the part of the Seller. This Agreement has been duly executed and
delivered by the Seller, and (assuming due authorization, execution and
delivery by the Purchaser) this Agreement constitutes the legal, valid and
binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, subject to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance
or similar Laws affecting creditors' rights generally and subject, as to
enforceability, to the effect of general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or
at Law).
3.2. No Conflict
-----------
Assuming all consents, approvals, authorizations and other actions
described in Section 3.3 have been obtained, and except as may result from
any facts or circumstances relating to the Purchaser or as described in
Section 3.2 of the Disclosure Schedule or as otherwise provided in this
Article 3, the execution, delivery and performance of this Agreement by the
Seller do not and will not (a) violate or conflict with the Certificate of
Incorporation or By-Laws of the Seller, (b) to the Knowledge of Seller
conflict with or violate any Law or Governmental Order applicable to the
Seller, or (c) result in any breach of, or constitute a default (or event
which with the giving of notice or lapse of time, or both, would become a
default) under, or give to any Person any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of any Lien on
any of the Assets pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other material
instrument relating to the Business to which the Seller is a party or by
which any of the Assets are bound or affected, except in the case of
clauses (b) and (c) above (i) for Liens created by or through the Purchaser
or any of its Affiliates and (ii) as would not have a Material Adverse
Effect.
17
Exhibit 2.1
3.3. Consents and Approvals
----------------------
The execution and delivery of this Agreement by the Seller do not, and
the performance of this Agreement by the Seller will not, require any
material consent, approval, authorization or other action by, or filing
with or notification to, any Governmental Authority, except (a) as
described in Section 3.3 of the Disclosure Schedule, (b) the notification
requirements of the HSR Act, (c) where failure to obtain such consent,
approval, authorization or action, or to make such filing or notification,
would not prevent the Seller from performing any of its material
obligations under this Agreement, (d) as may be necessary as a result of
any facts or circumstances relating solely to the Purchaser or its
Affiliates or (e) where the failure to obtain such consents, approvals or
authorizations, to take such action, or to make such filing or notification
would not have a Material Adverse Effect.
3.4. Financial Information
---------------------
(a) The unaudited balance sheet of the Business for the fiscal year
ended December 30, 2000, and the related unaudited statement of
income of the Business, together with all schedules related
thereto, are set forth on Section 3.4 of the Disclosure Schedule
(collectively, the "Financial Statements"). The Financial
Statements (i) were prepared in accordance with GAAP based upon
the principles set forth in Section 3.4(i) of the Disclosure
Schedule, (ii) except as set forth in Section 3.4(ii) of the
Disclosure Schedule, fairly present in all material respects the
financial position and results of operations of the Business as
of the dates thereof and for the periods then ended, and (iii)
were prepared in accordance with the books of account and other
financial records of the Business. The Purchaser acknowledges
that the Financial Statements do not reflect the financial
position or results of operations of the Business that would have
occurred if the Business were operated as a separate business
from its Affiliates on the date and during the periods presented
as a result of (x) certain pricing or other benefits to which the
Business is entitled as a result of being part of the Seller
affiliated group; and (y) services provided at no cost by
Affiliates which do not exceed $200,000 per year..
(b) Net Asset Statements.
The Contract Net Asset Statement was prepared in accordance with GAAP
and on a basis consistent with principles set forth in Section 3.4(i) of
the Disclosure Schedule and fairly presents the Purchased Assets and the
Assumed Liabilities (whether accrued, contingent or otherwise) of the
Business at December 30, 2000. Except as set forth in Section 3.4B of the
Disclosure Schedule, to the Knowledge of Seller, Seller had no material
liabilities of any nature, whether absolute, accrued, asserted or
unasserted or contingent, or whether due or to
18
Exhibit 2.1
become due which will not be recorded or reserved for on the Final Net
Asset Statement.
3.5. Absence of Certain Changes or Events
------------------------------------
To the Knowledge of the Seller, since December 30, 2000, except as
disclosed in Sections 3.5 or 3.6 of the Disclosure Schedule or as
contemplated by this Agreement, the business of the Seller has been
conducted in the ordinary course and there has not occurred with respect to
the Business:
19
Exhibit 2.1
(a) any event which has had Material Adverse Effect;
(b) any payment, discharge or satisfaction of any liabilities or
obligations (whether accrued, absolute, contingent or otherwise)
in excess of One Hundred Thousand Dollars ($100,000), other than
the payment, discharge or satisfaction, in the ordinary course of
business, of liabilities or obligations incurred in the ordinary
course of business;
(c) except in the ordinary course of business, any assets (whether
real, personal or mixed, tangible or intangible) becoming subject
to any mortgage, pledge, lien, security interest, encumbrance, or
restriction or charge of any kind;
(d) any cancellation or waiver of any claims or rights of value, or
any sale, transfer, distribution or other disposal of any assets,
except for sales of finished goods inventory or other assets in
the ordinary course of business, or disposal of any assets not in
the ordinary course of business for any amount to affiliates of
the Seller;
(e) any disposal or lapse of any rights in, to or for the use of any
patent, trademark, trade name or copyright, or disposal of any
customer lists used by the Business;
(f) any increase in the base compensation or other payment to any
director, officer or employee of the Business, whether now or
hereafter payable or granted, or entry into or variation of the
terms of any employment or incentive agreement with any such
person (other than increases or variations in base compensation
in the ordinary course) or entry into or variation of the
material terms of any employment or incentive agreements with any
such person;
(g) any capital expenditure or commitment for additions to property,
plant or equipment, or lease agreement which have not been
budgeted or planned and disclosed to Purchaser and which exceeds
One Hundred Thousand Dollars ($100,000) and which, if purchased,
would be reflected in the property, plant or equipment accounts;
(h) any change in any method of accounting or keeping its books of
account or accounting practices;
(i) any damage, destruction or loss of any asset, whether or not
covered by insurance which exceeds One Hundred Thousand Dollars
($100,000);
(j) except liabilities incurred in the ordinary course of business,
incurrence of any obligation or liability, including, without
limitation, any liability for nonperformance or termination of
any contract; or
20
Exhibit 2.1
(k) any event which would require in accordance with GAAP an increase
in the reserve for bad debts set forth in the Contract Net Asset
Statement which in the aggregate exceeds One Hundred Thousand
Dollars ($100,000).
3.6. Absence of Litigation
---------------------
Except as set forth in Section 3.6 of the Disclosure Schedule, as of
the date of this Agreement, (a) there are no material Actions pending
against the Seller relating to the Business or any of the Assets and (b)
Seller and the Assets are not subject to any Governmental Order relating to
the Business.
3.7. Compliance with Laws
--------------------
To the Knowledge of the Seller, the Seller is not in violation of any
Laws or Governmental Orders applicable to the conduct of the Business or
any material Asset, or by which any of them is bound, except (a) as set
forth in Section 3.7 of the Disclosure Schedule or (b) for violations the
existence of which would not have a Material Adverse Effect.
3.8. Governmental Licenses and Permits
---------------------------------
The Seller holds all governmental qualifications, registrations,
filings, privileges, franchises, licenses, permits, approvals or
authorizations (collectively, "Material Licenses") material to the
operation of the Business. As of the date of this Agreement, all Material
Licenses are in full force and effect and the Seller is in compliance in
all material respects with each such Material License.
3.9. Good Title - Generally
----------------------
Upon consummation of the transaction contemplated hereby at the
Closing, Seller shall deliver or cause to be delivered to Purchaser good
and marketable title to the Assets, free and clear of any Liens, except in
each case (i) as disclosed in Sections 3.9, 3.10 and 3.11 of the Disclosure
Schedule; (ii) Permitted Liens. The Seller owns, has a valid leasehold
interest in or has the legal right to use all of the tangible personal
property necessary to carry on the Business. To the Knowledge of Sellers,
all such tangible personal property is in normal working order and
condition, ordinary wear and tear excepted, and its use complies in all
material respects with all applicable Laws.
3.10. Title to Owned Real Properties
------------------------------
The Seller has good and marketable title to the Owned Real Property,
free and clear of all Liens, except (i) as disclosed in Section 3.10 of the
Disclosure Schedule; and (ii) Permitted Liens.
21
Exhibit 2.1
3.11. Leased Real Property
--------------------
Section 3.11 of the Disclosure Schedule contains a true and correct
list of each parcel of Leased Real Property. Each lease or other contract
or agreement relating to the Leased Real Property is a valid contract or
agreement enforceable against the Seller in accordance with its terms and,
to the Knowledge of the Seller, against the other parties thereto. The
Seller is not in material default, or has not received any written notice
alleging that it is in material default, under any lease relating to the
Leased Real Property, and, to the Knowledge of the Seller, none of the
other parties to such leases is in material default thereunder.
3.12. Intellectual Property
---------------------
(a) The Seller owns all of the Intellectual Property identified in
Section 3.12(a) of the Disclosure Schedule and has the right to
use, all of the Intellectual Property identified in Section
3.12(b) of the Disclosure Schedule (the "Owned Intellectual
Property" or "Licensed Intellectual Property", as applicable),
subject to the terms of the license agreements relating to the
Licensed Intellectual Property. To the Knowledge of the Seller,
the Owned Intellectual Property and the Licensed Intellectual
Property include all of the Intellectual Property developed by
the Business as of the Closing Date.
(b) To the Knowledge of the Seller, (i) the products sold by the
Business as of the Closing Date do not infringe on the
Intellectual Property rights of any third party; (ii) the Owned
Intellectual Property does not infringe upon the Intellectual
Property rights of any third party, and (iii) no written claim
has been asserted to the Seller which is currently pending that
the products sold or methods used for manufacturing the products
as of the Closing Date, or the use of such Owned Intellectual
Property does or may infringe upon the Intellectual Property
rights of any third party.
(c) To the Knowledge of the Seller, no person is engaging in any
activity that infringes in any material respect upon the Owned
Intellectual Property.
(d) To the Knowledge of the Seller, (i) the Seller is not in breach
of, or default under, any material term of any license or
sublicense of the Licensed Intellectual Property and (ii) to the
Knowledge of the Seller, no other party to such license or
sublicense is in breach thereof or default thereunder.
(e) All of the Intellectual Property of the Business is valid and
free of all encumbances except as identified in the terms of the
license agreements identified in Section 3.12 (b) of the
Disclosure Schedule.
3.13. Taxes
-----
22
Exhibit 2.1
Except as disclosed in Section 3.13 of the Disclosure Schedule, (a)
the Seller has timely filed, or will timely file, all material Tax Returns
required to be filed by it with respect to Taxes which relate to the
Business for any period ending on or before the Closing Date, (b) Taxes
shown to be payable on such Tax Returns have been paid or will be paid
except to the extent the same are being contested in good faith, (c) all
such Tax Returns are true, complete and correct in all material respects,
and (d) no deficiency for any Tax relating to the Business has been
asserted or assessed in writing by a Tax authority against the Seller.
3.14. Environmental Matters
---------------------
Except as disclosed in Section 3.14 of the Disclosure Schedule, the
Seller is in material compliance with all applicable Environmental Laws and
has obtained and is in material compliance with all Environmental Permits
as they relate to the Business. Except as disclosed in Section 3.14 of the
Disclosure Schedule, there have been no Releases, or threatened Releases of
any Hazardous Materials into, on or under any of the properties owned or
operated (or formerly owned or operated) by the Seller in respect of the
Business, in any case in such a way as to create any liability (including
the costs of investigation and remediation) under any applicable
Environmental Law. For purposes of this Section 3.14, "Release" means any
past or present spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing of a
Hazardous Materials into the environment. Except as disclosed in Section
3.14 of the Disclosure Schedule, the Seller has not been identified as a
potentially responsible party at any federal or state National Priority
List ("Superfund") site.
3.15. Material Contracts
------------------
(a) Section 3.15(a) of the Disclosure Schedule lists each of the
following contracts and agreements relating to the Business (such
contracts being "Material Contracts"):
(i) each contract and agreement for the purchase or lease of
inventory, other materials or real or personal property with
any supplier or for the furnishing of services to Plastics
(A) under the terms of which the Seller (I) is likely to pay
or receive consideration of more than $100,000 in the
aggregate during the calendar year ending December 31, 2001,
or (II) is likely to pay or otherwise give consideration of
more than $250,000 in the aggregate over the remaining term
of such contract and (B) which cannot be canceled by the
Seller without penalty or further payment or without more
than thirty (30) days' notice;
(ii) each contract and agreement for the sale or lease of
inventory or other personal or real property or for the
23
Exhibit 2.1
furnishing of services by Plastics which (A) (I) is likely
to involve consideration of more than $100,000 in the
aggregate during the calendar year ended December 31, 2001,
or (II) is likely to involve consideration of more than
$250,000 in the aggregate over the remaining term of the
contract or (B) cannot be canceled by the Seller without
penalty or further payment or without more than thirty (30)
days' notice;
(iii) each contract and agreement relating to Plastics involving
indebtedness for borrowed money of the Seller, the principal
amount of which individually is in excess of $100,000; and
(iv) all contracts and agreements that limit or purport to limit
the ability of Plastics to compete in any line of business
or with any Person or in any geographic area after the
Closing Date.
(b) Except as disclosed in Section 3.15(b) of the Disclosure
Schedule, each Material Contract is valid and binding on the
Seller and is in full force and effect. To the Seller's
Knowledge, no party thereto is in breach of, or default
under, any Material Contract.
3.16. Inventory
---------
All Inventory consists of a quality and quantity usable and saleable
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. The quantities of each item of Inventory are not
excessive but are reasonable in the present circumstances of Plastics.
3.17. Brokers
-------
Except for William Blair and Company, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Seller. Seller is solely responsible
for the fees and expenses of William Blair and Company.
3.18. Insurance.
---------
Section 3.18 of the Disclosure Schedule accurately lists and describes
the policies of insurance covering the assets and operations of the
Business. All such policies are valid and subsisting and in full force and
effect in accordance with their terms. All such policies are with reputable
insurance carriers, provide full and adequate coverage for all normal risks
incident to the Business and its properties and assets and are in character
and amount at least equivalent to that carried by persons engaged in
similar businesses and subject to the same or similar perils or hazards.
Seller has not been denied insurance or suffered the
24
Exhibit 2.1
cancellation of any insurance with respect to the Business since
September, 1998.
3.19. Product Liability and Recalls.
------------------------------
(a) Except as set forth on Section 3.19 of the Disclosure Schedule,
there is no action, suit, claim, inquiry, proceeding or
investigation in any case by or before any court or governmental
body pending or, to the Knowledge of the Seller, threatened,
against or involving the Business relating to any product alleged
to have been designed, manufactured or sold by the Business and
alleged to have been defective or improperly designed or
manufactured.
(b) Except as set forth on Section 3.19 of the Disclosure Schedule,
there is no pending, or to the Knowledge of the Seller,
threatened recall or investigation of any product sold by Seller
in connection with the Business.
3.20. Books and Records
-----------------
The Books and Records of the Business are complete and correct in all
material respects and have been maintained in accordance with sound
business practices.
3.21. Customers and Suppliers
-----------------------
Section 3.21 of the Disclosure Schedule contains a list setting forth
the 10 largest customers of the Business, by dollar amount, over the 12
months ended December 31, 2000, and the 10 largest suppliers of the
Business, by dollar amount, over the 12 months ended December 31, 2000. All
purchase and sale orders and other commitments for purchases and sales made
by the Seller in connection with the Business have been made in the
ordinary course of business in accordance with past practices, and no
payments have been made to any supplier or customers or any of their
respective representatives other than payments to such suppliers for the
payment of the invoiced price of supplies purchased or goods sold in the
ordinary course of business. Trade inventories of the products of the
Business are not excessive in kind or amount. To the Knowledge of the
Seller, Seller does not have any obligation to accept returns of products
in excess of the reserve for returns set forth in the Contract Net Asset
Statement.
3.22. Powers of Attorney
------------------
Except as set forth in Section 3.22 of the Disclosure Schedule
attached hereto and made a part hereof, there are no powers of attorney
executed on behalf of the Seller.
25
Exhibit 2.1
3.23. Undisclosed Liabilities
-----------------------
To the Knowledge of the Seller, Seller has no liabilities or
obligations, whether accrued, absolute, contingent or otherwise, which are
material to the Business taken as a whole, except (i) to the extent
reflected or reserved for on the Contract Net Asset Statement, (ii)
liabilities or obligations disclosed in Section 3.23 of the Disclosure
Schedule and in the other Schedules hereto, or (iii) liabilities or
obligations disclosed in this Agreement.
3.24. Restrictions on Business Activities
-----------------------------------
Except for this Agreement or as set forth in Section 3.24 of the
Disclosure Schedule, to the Knowledge of the Seller, there is no agreement,
judgment, injunction, order or decree binding upon Seller which has or
could reasonably be expected to have the effect of prohibiting or impairing
any business practice of the Seller utilized in the Business, acquisition
of property by the Seller for the Business, or the conduct of the Business
as currently conducted or as proposed to be conducted.
3.25. Accounts Receivable
-------------------
The Accounts Receivable are reflected properly on its books and
records, are valid and existing receivables which arose in the ordinary
course of business and are subject to no material (i) refunds or other
adjustments, (ii) defenses, rights of setoff, assignments, restrictions,
encumbrances, conditions enforceable by third parties, or counterclaims,
and to the Knowledge of the Seller are current and collectable.
3.26. Labor and Employment Matters
----------------------------
To the Seller's Knowledge, the conduct of the Business is in material
compliance with all laws relating to the employment of labor, including
those related to wages, hours, collective bargaining, occupational safety,
discrimination and the payment of social security and other payroll related
taxes, and Seller has not received any written notice alleging a failure to
comply in any material respect with any such laws.
3.27. Product Warranty
----------------
Each product manufactured, sold, leased, or delivered by the Business
has been in conformity with all applicable contractual commitments and all
express and implied warranties, and Seller does not have any liability (and
there is no basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against any of
them giving rise to any liability) for replacement or repair thereof or
other damages in connection therewith, subject only to the reserve for
product warranty claims set forth on the Contract Net Asset Statement. No
product manufactured, sold, or delivered by the Business is subject to any
guaranty, warranty, or other indemnity
26
Exhibit 2.1
beyond the applicable standard terms and conditions of sale. Section 3.27
of the Disclosure Schedule includes copies of the standard terms and
conditions of sale for the Business (containing applicable guaranty,
warranty and indemnity provisions).
3.28. Exclusivity Of Representations
------------------------------
(a) THE REPRESENTATIONS AND WARRANTIES MADE BY THE SELLER IN THIS
AGREEMENT ARE IN LIEU OF AND ARE EXCLUSIVE OF ALL OTHER
REPRESENTATIONS AND WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES.
THE SELLER HEREBY DISCLAIMS ANY SUCH OTHER OR IMPLIED
REPRESENTATIONS OR WARRANTIES, NOTWITHSTANDING THE DELIVERY OR
DISCLOSURE TO THE PURCHASER OR ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS OR REPRESENTATIVES OF ANY DOCUMENTATION OR
OTHER INFORMATION (INCLUDING ANY FINANCIAL PROJECTIONS OR OTHER
SUPPLEMENTAL DATA).
(b) The Purchaser acknowledges that (i) the representations and
warranties contained in Sections 3.12, 3.13 and 3.14 are the only
representations and warranties being made with respect to (A)
Intellectual Property, (B) Taxes and (C) compliance with or
liability under Environmental Laws, respectively, or with respect
to any Intellectual Property, Tax or environmental, health or
safety matter related in any way to the Business, the Assets or
to this Agreement or its subject matter and (ii) no other
representation contained in this Agreement shall apply to any
such matters and no other representation or warranty, express or
implied, is being made with respect thereto.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND IP PURCHASER
The Purchaser and the IP Purchaser (collectively referred to in this ss.4
as the "Purchasers") represent and warrant to the Seller as follows:
----------
4.1. Incorporation and Authority of the Purchaser
--------------------------------------------
The Purchaser is a limited partnership duly incorporated, validly
existing and in good standing under the laws of Delaware and the IP
Purchaser is a corporation duly incorporated, validly existing and in good
standing under the laws of Switzerland and each has all necessary corporate
power and authority to enter into this Agreement, to carry out its
obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Purchasers, the
performance by the Purchasers of their obligations hereunder and the
consummation by the Purchasers of the transactions contemplated hereby have
been duly authorized by all requisite
27
Exhibit 2.1
corporate action on the part of the Purchasers. This Agreement has been
duly executed and delivered by the Purchasers, and (assuming due
authorization, execution and delivery by the Seller) constitutes the legal,
valid and binding obligation of the Purchasers enforceable against the
Purchasers in accordance with its terms, subject to the effect of any
applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent
conveyance or similar Laws affecting creditors' rights generally and
subject, as to enforceability, to the effect of general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at Law).
4.2. No Conflict
-----------
The execution, delivery and performance of this Agreement by the
Purchasers do not and will not (a) violate or conflict with the Partnership
Agreement, Certificate of Incorporation or By-laws of the Purchasers, (b)
conflict with or violate any Law or Governmental Order applicable to the
Purchasers or (c) result in any breach of, or constitute a default (or
event which with the giving of notice or lapse of time, or both, would
become a default) under, or give to any Person any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of
any Lien on any of the assets or properties of the Purchasers pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument relating to such assets or properties
to which the Purchasers or any of their subsidiaries is a party or by which
any of such assets or properties is bound or affected.
4.3. Consents and Approvals
----------------------
The execution and delivery of this Agreement by the Purchasers do not,
and the performance of this Agreement by the Purchasers will not, require
any consent, approval, authorization or other action by, or filing with or
notification to, any Governmental Authority, except (a) the notification
requirements of the HSR Act, (b) where failure to obtain such consent,
approval, authorization or action, or to make such filing or notification,
would not prevent the Purchasers from performing any of their material
obligations under this Agreement or (c) as may be necessary as a result of
any facts or circumstances relating solely to the Seller or its Affiliates.
4.4. Absence of Litigation
---------------------
There are no actions pending against the Purchasers or any of their
assets or properties of the Purchasers that, individually or in the
aggregate, would prevent either of the Purchasers from consummating the
transactions contemplated hereby or which would materially impair the
ability of the Purchasers to consummate the purchase of the Assets as
contemplated by this Agreement.
28
Exhibit 2.1
4.5. Financial Ability
-----------------
The Purchaser and the IP Purchaser have the cash available to enable
them to consummate the transactions contemplated by this Agreement.
4.6. Brokers
-------
No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf
of the Purchaser.
5. ADDITIONAL AGREEMENTS
5.1. Conduct of Business Prior to the Closing
----------------------------------------
(a) Unless the Purchaser otherwise agrees in writing and except (x)
as otherwise set forth in Section 5.1(i) or otherwise in this
Agreement or in the Disclosure Schedule and (y) to the extent not
reasonably practicable in light of this Agreement and the
transactions contemplated hereby, between the date of this
Agreement and the Closing Date, the Seller will (i) conduct the
Business only in the ordinary course, and (ii) use reasonable
efforts to keep available to the Purchaser the services of the
key employees of Plastics (except for retirements in the ordinary
course); provided, however, that the Seller shall not be required
to increase the compensation of, or provide any other retention
incentive to, any such key employee beyond that currently
provided.
(b) Except as expressly provided in Section 5.1(b) or in this
Agreement or the Disclosure Schedule, between the date of this
Agreement and the Closing Date, the Seller (with respect to the
Business) will conduct the Business in the ordinary course and
will not do any of the following as they specifically relate to
the Business without the prior written consent of the Purchaser
(which consent shall not be unreasonably withheld):
(i) except in the ordinary course of business, grant any Lien
(other than a Permitted Lien) on any Asset (whether tangible
or intangible);
(ii) grant any material increase in compensation or benefits to
the employees of Plastics or pay any bonus compensation,
except in the ordinary course of business or as may be
required by Law or any employment agreement;
(iii) except in the ordinary course of business, sell, assign,
transfer, lease or otherwise dispose of any of the Assets
having an aggregate value exceeding $100,000;
29
Exhibit 2.1
(iv) authorize or commit to new capital expenditures in excess of
$100,000 in the aggregate.
(v) incur or permit to be incurred any obligation or other
liabilities (exclusive of health and property insurance premiums)
in excess of One Hundred Thousand Dollars ($100,000) except for
Inventory purchases in the normal and ordinary course of business
consistent with past practice;
(vi) enter into or alter any employment, consulting, or service
agreement respecting the Business;
(vii) commence, enter into, or alter any profit sharing, deferred
compensation, bonus, stock option, stock purchase, pension,
retirement, or incentive plan or any fringe benefit plan for the
Employees; or
(viii) sever or terminate any of the Employees except in the ordinary
course of the Business.
30
Exhibit 2.1
5.2. Access to Information
---------------------
(a) From the date hereof until the Closing (upon reasonable notice to
and approval of Seller, which shall not be unreasonably withheld)
during normal business hours, Seller shall, and shall cause the
officers, directors, employees, auditors and agents of the Seller
to, (i) afford the officers, employees and authorized agents and
representatives of the Purchaser reasonable access to the
offices, properties, books and records of Plastics and (ii)
furnish to the officers, employees and authorized agents and
representatives of the Purchaser such additional financial and
operating data and other information regarding the Assets and
Business as the Purchaser may from time to time reasonably
request in order to assist the Purchaser in fulfilling its
obligations under this Agreement and to facilitate the
consummation of the transfer contemplated hereby; provided,
however, that such investigation shall not unreasonably interfere
with any of the businesses or operations of Plastics, the Seller
or any Affiliate of Seller.
(b) The Seller shall, and shall cause its officers, employees and
representatives to, provide the Purchaser reasonable access to
the financial books and records of Plastics in connection with
the Purchaser's preparation of such financial statements as the
Purchaser may reasonably determine are necessary to satisfy the
requirements of its financing sources, the Securities Act or the
Exchange Act applicable to the Purchaser and its Affiliates.
Under no circumstances shall the Seller or any such officer,
employee or representative have any liability whatsoever (other
than as expressly provided in this Agreement) to the Purchaser,
or otherwise to any Person or Governmental Authority, including
under the Securities Act or the Exchange Act, in connection with
such financial statements or the preparation or use thereof and
the Purchaser shall indemnify, defend and hold harmless the
Seller and each such Person against and reimburse the Seller and
each such Person for any and all such liability. The Purchaser
shall pay all expenses in connection with the preparation of such
financial statements, including any expenses incurred by the
Seller.
(c) The Seller shall have the right to retain copies of all books and
records relating to Plastics for periods ending on or prior to
the Closing Date. For a period of six years after the Closing,
the Purchaser shall (i) retain such books and records relating to
periods ending on or prior to the Closing Date in a reasonable
manner, and (ii) upon reasonable notice, afford the officers,
employees and authorized agents and representatives of the Seller
reasonable access (including the right to make, at the Seller's
expense, photocopies), during normal business hours, to such
books and records.
31
Exhibit 2.1
(d) Each party agrees that it will cooperate with and make available
to the other parties, during normal business hours, all books and
records, information and employees (without substantial
disruption of employment) retained and remaining in existence
after the Closing Date that are necessary or useful in connection
with any environmental report, filing or liability, any
litigation or investigation, any tax audit, investigation or
proceedings, or any other matter requiring any such books and
records, information or employees for any reasonable business
purpose similar to the foregoing. The party requesting any such
books and records, information or employees shall bear all of the
out-of-pocket costs and expenses (including, without limitation,
attorneys' fees, but excluding reimbursement for salaries and
employee benefits) reasonably incurred in connection with
providing such books and records, information or employees.
(e) On or before the eleventh day following the Closing Date,
Purchaser, at no cost to Seller, will cause the appropriate
personnel of Purchaser to prepare for Seller the normal closing
schedules and supporting documentation which Seller requires for
its monthly closings, consistent with the methodology used by
Seller.
5.3. Confidentiality
---------------
The terms of the letter agreement dated as of March 19, 2001 (the
"Confidentiality Agreement") between Seller and the Purchaser are hereby
incorporated herein by reference and shall continue in full force and
effect until the Closing, at which time such Confidentiality Agreement and
the obligations of the Purchaser under this Section 5.3 shall terminate;
provided, however, that the Confidentiality Agreement shall terminate only
in respect of that portion of the Information (as defined in the
Confidentiality Agreement) exclusively relating to the transactions
contemplated by this Agreement. If this Agreement is, for any reason,
terminated prior to the Closing, the Confidentiality Agreement shall
nonetheless continue in full force and effect.
32
Exhibit 2.1
5.4. Regulatory and Other Authorizations; Consents
---------------------------------------------
(a) The Purchaser shall use its reasonable commercial efforts to
promptly obtain all authorizations, consents, orders and
approvals of all Governmental Authorities that may be or become
necessary for its execution and delivery of, and the performance
of its obligations pursuant to, this Agreement, and Seller will
cooperate with the Purchaser in promptly seeking to obtain all
such authorizations, consents, orders and approvals; it being
understood that the Seller shall not be required to pay any fees
or other payments to any such Governmental Authority in order to
obtain any such authorization, consent, order or approval (other
than normal filing fees). The Purchaser will not take any action
that would have the effect of delaying, impairing or impeding the
receipt of any required approvals.
(b) Each party hereto agrees to make an appropriate filing of a
notification and report form pursuant to the HSR Act with respect
to the transactions contemplated hereby within five Business Days
after the date hereof and to supply promptly any additional
information and documentary material that may be requested
pursuant to the HSR Act. In addition, each party agrees to
promptly make any other filing that may be required under any
other antitrust or merger control Law or by any other antitrust
or merger control authority. The Purchaser agrees to take any and
all steps reasonably necessary to avoid or eliminate each and
every impediment under any antitrust Law that may be asserted by
any Governmental Authority or any other party so as to enable the
parties to expeditiously close the transactions contemplated
hereby. Each party shall bear its respective filing fees
associated with the HSR Act filings and any other similar filings
required in any other jurisdictions.
33
Exhibit 2.1
(c) The Purchaser shall use its reasonable commercial efforts (a) to
cause Seller and its Affiliates to be released as of the Closing,
or as soon thereafter as possible, from all indemnities,
guaranties and guaranty obligations of the Seller and such
Affiliates relating to obligations of the Business or otherwise
relating to or for the benefit of the Business, and (b)(i) to
arrange for substitute letters of credit to replace (x) the
letters of credit entered into by or on behalf of the Seller or
any of its Affiliates outstanding as of the date of this
Agreement in connection with the Business as set forth in Section
5.4(c) of the Disclosure Schedule and (y) any letters of credit
entered into by or on behalf of Seller or any of its Affiliates
in connection with the Business on or after the date of this
Agreement and prior to the Closing (collectively, the "Seller
------
LOCs") or (ii) to assume all obligations of reimbursement under
----
each Seller LOC, obtaining from the creditor a full release of
all parties liable, directly or indirectly, for reimbursement to
the creditor in connection with amounts drawn under each Seller
LOC under the existing terms of each Seller LOC. The Purchaser
agrees (A) to indemnify the Seller and its Affiliates for any and
all Losses incurred by the Seller and such Affiliates after the
date of this Agreement arising out of any such indemnity,
guaranty or guaranty obligation, whether or not such Losses
occurred prior to, on or after the Closing, and (B) that, to the
extent the beneficiary under any Seller LOC refuses to accept any
such substitute letter of credit proffered by the Purchaser, the
Purchaser shall indemnify, defend and hold harmless Seller and
its Affiliates against and reimburse Seller and such Affiliates
for any and all costs or expenses in connection with such Seller
LOCs, including Seller's expenses in maintaining such Seller LOCs
whether or not any such Seller LOC is drawn upon, and shall in
any event promptly reimburse Seller to the extent any Seller LOC
is called upon and Seller makes any payment thereunder or is
obligated to reimburse the party issuing the Seller LOC.
(d) Each party hereto agrees to use all reasonable commercial efforts
and to cooperate with the other parties hereto in promptly
obtaining any other third party consents and approvals that may
be required in connection with the transactions contemplated by
this Agreement; provided, however, Seller shall not be required
-------- -------
to compensate any third party to obtain any such consent or
approval.
5.5. Insurance
---------
Effective 5:00 p.m. on the Closing Date, the Business shall cease to
be insured by Seller's or its Affiliates' insurance policies. With respect
to events or circumstances covered by insurance coverage written on an
"occurrence basis", Seller and their Affiliates will have no liability for
occurrences that take place on and after 5:00 p.m. on the Closing Date.
With respect to events or
34
Exhibit 2.1
circumstances covered by insurance coverage written on a "claims made
basis", the Seller and their Affiliates will have no liability for claims
made after 5:00 p.m. on the Closing Date. The Purchaser agrees to
indemnify, defend and hold harmless Seller and its Affiliates against and
reimburse the Seller and its Affiliates for any Losses that Seller and its
Affiliates may at any time suffer or incur, or become subject to, as a
result or in connection with any such occurrences, losses or claims for
which they have no liability as described in this paragraph.
5.6. Financing
---------
The Purchaser covenants and agrees not to take any action between the
date of this Agreement and the Closing Date that would reasonably be
expected to make the Financing unavailable for any reason.
5.7. Inter-Company Services and Products
-----------------------------------
Except for those services being provided by Seller pursuant to the
Transition Service Agreement, any inter-company services provided by Seller
and its affiliates to the Business shall terminate as of the Closing Date,
except as the parties shall otherwise agree.
5.8. Resin Rebates
-------------
Plastics may have been entitled to a rebate on resin purchases, based
upon the volume of such purchases. Purchaser agrees to pay to Seller an
amount equal to $.01 for each pound of resin purchased by Plastics from
suppliers offering such rebates between December 30, 2000 and the Closing
Date. Seller shall pay such amount to Purchaser at the same time as the
post-closing adjustment amount is payable pursuant to Section 2.5.2.
5.9. Further Action
--------------
Each of the parties hereto shall execute and deliver such documents
and other papers and take such further actions as may be reasonably
required to carry out the provisions of this Agreement and give effect to
the transactions contemplated hereby.
35
Exhibit 2.1
5.10. Investigation
-------------
(a) The Purchaser acknowledges and agrees that it (i) has made its
own inquiry and investigation into, and, based thereon, has
formed an independent judgment concerning, the Business, (ii)
will not assert any claim against the Seller or any of its
directors, officers, employees, agents, stockholders, Affiliates,
consultants, counsel, accountants, investment bankers or
representatives, or hold Seller or any such Persons liable for
any inaccuracies, misstatements or omissions with respect to
information (other than, with respect to the Seller, the
representations and warranties contained in this Agreement)
furnished by Seller or any such Persons concerning Seller.
(b) In connection with the Purchaser's investigation of the Business
and the Assets, the Purchaser has received from Seller certain
estimates, projections and other forecasts for the Business, and
certain plan and budget information. The Purchaser acknowledges
that there are uncertainties inherent in attempting to make such
projections, forecasts, plans and budgets, that the Purchaser is
familiar with such uncertainties, that the Purchaser is taking
full responsibility for making its own evaluation of the adequacy
and accuracy of all estimates, projections, forecasts, plans and
budgets so furnished to it, and except for fraud and intentional
misrepresentation that the Purchaser will not assert any claim
against the Seller or any of its directors, officers, employees,
agents, stockholders, Affiliates, consultants, counsel,
accountants, investment bankers or representatives, or hold any
such Persons liable, with respect thereto. Accordingly, Seller
makes no representation or warranty with respect to any
estimates, projections, forecasts, plans or budgets referred to
in this Section 5.9(b).
5.11. Covenant Not to Compete
-----------------------
36
Exhibit 2.1
(a) Seller agrees that, as part of the consideration for the payment
by the Purchaser of the Purchase Price, for a period of five (5)
years immediately following the Closing Date, neither Seller nor
any of its divisions or subsidiaries will, directly or
indirectly, operate, perform, have any interest in or otherwise
be engaged in or concerned with a business which develops,
manufactures, prepares, sells, installs or distributes products
or performs services in competition with the Business. For these
purposes, any business (other than the Business) presently being
operated by Seller and its divisions and subsidiaries, including,
without limitation, the manufacture, distribution and sale of
food storage containers for retail sales, and the manufacture,
distribution and sale of low-end disposable servingware shall not
be considered to be in competition with Purchaser. In addition,
for these purposes, ownership of securities of a company whose
securities are publicly traded under a recognized securities
exchange not in excess of 10% of any class of such securities
shall not be considered to be competition with Purchaser.
(b) Further, Seller agrees that for a period of two (2) years
following the Closing Date neither Seller nor any of its related
or affiliated entities will induce any of Seller's employees
hired by Purchaser on the Closing Date to terminate his or her
relationship with Purchaser and to work in a business that
competes with the Business.
(c) Each of the Seller and the Purchaser acknowledges that the
restrictions on its activities under Sections 5.11 (a) and (b)
(as the case may be) are necessary for the reasonable protection
of the Purchaser and the Seller (as the case may be) and
constitute a material inducement to Purchaser's entering into and
performing this Agreement. Each of the Seller and the Purchaser
further acknowledges, stipulates and agrees that a breach of any
of such obligations and agreements will result in irreparable
harm and continuing damage to the other party for which there
will be no adequate remedy at law and further agrees that in the
event of any breach of said obligations and agreements, the other
party and its successors and assigns will be entitled to seek
injunctive relief and to such other relief as is proper under the
circumstances.
5.12. Environmental Matters
---------------------
The environmental condition disclosed by the site assessments, dated
August, 1998 and October, 1998, respectively prepared by ENSR and set forth
in Schedule 3.4 hereto constitutes, to Seller's Knowledge, the extent of
the environmental contamination of Owned Real Estate (the "Existing
--------
Contamination"). Seller retains the obligation for the remediation of the
-------------
Existing Contamination. Accordingly, Seller and Purchaser agree as follows:
37
Exhibit 2.1
(a) Prior to the Closing Date, Seller anticipates that an additional
environmental assessment (the "Assessment") of the Owned Real
Estate will be conducted by ENSR pursuant to the Scope of Work
described on Schedule 5.12. An environmental consultant selected
by Purchaser ("Purchaser's Consultant") will be permitted to
participate in such assessment. If based upon the result of such
assessment ENSR and Purchaser's Consultant determine that
notification to the Minnesota Pollution Control Agency ("MPCA")
----
is required, then within five (5) days of such determination,
Seller shall notify the MPCA of the Existing Contamination. If
ENSR and Purchaser's Consultant determine that notification is
not required, then Seller and Purchaser agree not to notify the
MPCA of the Existing Contamination. If one but not both of ENSR
and Purchaser's Consultant determines that notification is
required, and if they are unable to come to an agreement
regarding notification within thirty (30) days of completion of
the Assessment, then ENSR and Purchaser's Consultant shall
jointly appoint a qualified, independent environmental consultant
(the "Third Party Consultant") to review the results of the
Assessment to determine if notification is required. The decision
of the Third Party Consultant shall be binding on the parties.
Neither Seller nor Purchaser shall notify the MPCA until the
decision of the Third Party Consultant is received. Seller shall
indemnify and hold Purchaser harmless from and against any fines
or penalties, and any interest thereon, resulting from the
failure of Seller or any prior owner of the Owned Real Estate to
report the Existing Contamination to the MPCA or any other
Governmental Authority.
(b) If, for any reason, including, without limitation, Seller's
participation in the Minnesota Voluntary Investigation and
Cleanup Program ("VICP"), additional site investigation shall be
----
required, such investigation shall be at Seller's cost and
expense.
(c) Seller shall indemnify and hold Purchaser harmless from any
Losses which Purchaser may incur in connection with any remedial
action required by the MPCA or any other Governmental Authority
and any offsite contamination or third party claims or litigation
arising out of or relating to the Existing Contamination.
Purchaser shall give Seller access to the Owned Real Estate as
shall be reasonably necessary to carry out such remediation.
38
Exhibit 2.1
(d) Seller agrees that it shall, in connection within any activities
it may undertake pursuant to this Section 5.12 or otherwise, (i)
provide to Purchaser reasonable access to Seller's employees with
relevant facts about such activities, (ii) provide copies of any
material documents to Purchaser and reasonable opportunity to
comment on such documents, (iii) keep Purchaser reasonably
informed relating to the progress of such activities, (iv) where
applicable, select counsel, contractors and consultants of
recognized standing and competence after consultation with
Purchaser, (v) take all steps necessary in the defense of any
claims which are the subject of such activities, (vi) at all
times diligently and promptly pursue the resolution of any claims
which are subject of such activities, (vii) subject to Seller's
right to control any proceedings allow Purchaser to participate
in communications or proceedings involving a Governmental
Authority or any other person and consult with Purchaser as to
the manner of managing or resolving such communication or
proceedings, in each case, except to the extent necessary to
protect attorney-client privilege or attorney work product and
(viii) use reasonable efforts to avoid unreasonable interference
with Purchaser's normal business operations.
(e) Seller's indemnification obligation contained in this Section
5.12 shall survive the Closing and remain in full force and
effect until the expiration of sixty (60) months from the Closing
Date.
5.13. Eagan Premises
--------------
(a) Seller occupies certain property in Eagan, Minnesota (the "Eagan
-----
Premises") which property is presently used by Plastics. For a
--------
period of one year from the Closing Date, Purchaser will be
entitled to use and occupy a portion of the Eagan Premises
pursuant to a License Agreement in form and substance acceptable
to the parties. Purchaser agrees to pay to Seller the sum of
Seven Thousand Six Hundred and no/100 ($7,600) Dollars per month
for the use of the Eagan Premises.
(b) Purchaser acknowledges that except for certain desks, personal
computers, and furniture being used by Plastics at the Eagan
Premises, all remaining equipment, supplies, leasehold
improvements and other assets including, without limitation, the
phone system and computer system, are not assets of the Business
and therefore are Excluded Assets. Seller will permit Purchaser
to utilize the phone system during the term of the License
Agreement provided Purchaser pay one-half the cost of all local
phone services and all long distance charges attributable to
Purchaser's use of the phone system.
5.14. Transition Services
-------------------
39
Exhibit 2.1
After the Closing Date, Purchaser and Seller will enter into a
Transition Services Agreement pursuant to which Seller will provide certain
administrative services to Purchaser for a period of ninety (90) days from
the Closing Date, with the right to extend for an additional ninety (90)
days.
40
Exhibit 2.1
6. EMPLOYEE MATTERS
6.1. Transferred Employees
---------------------
(a) Following execution of this Agreement, Seller shall provide the
Purchaser with a true and complete list showing the names and
current annual salary rates of all of the salaried Employees of
Plastics as of the date hereof. As of the Closing Date, the
Purchaser shall offer employment to each Employee identified on
the list referred to in the preceding sentence at base
compensation levels not less than those in effect immediately
prior to the Closing Date, and shall offer employment to each
hourly Employee of Plastics as of the Closing Date at base salary
rates no less than those in effect immediately prior to the
Closing Date. Any Employee who has accepted such offer of
employment shall be referred to as a "Transferred Employee". With
respect to any Employee who is on a disability leave for less
than twelve consecutive weeks as of the Closing Date, such
employment with the Purchaser shall commence and such Employee
shall become a Transferred Employee as of the Closing Date. The
Seller shall retain the liability for any Employee on a leave of
absence for greater than 12 consecutive weeks as of the Closing
Date. Employment for individuals on a leave of absence for less
than 12 consecutive weeks as of the Closing Date will become
effective as of the date they present themselves for work with
the Purchaser. The Purchaser and the Seller agree that the
transactions contemplated by this Agreement shall not constitute
a severance of employment of any Transferred Employee by the
Seller, and that such Transferred Employees shall be deemed to
have continuous and uninterrupted employment before and
immediately after the Closing Date.
41
Exhibit 2.1
(b) The Purchaser hereby agrees that, for a period of one year
immediately following the Closing Date, it shall provide
compensation and employee benefit plans, programs, contracts and
arrangements (collectively, the "Plans") for the benefit of the
-----
Transferred Employees that in the aggregate will provide
compensation and benefits that are substantially comparable to
the compensation and benefits provided to other similarly
situated employees of the Purchaser, provided, however, Seller
shall retain the obligations to such Employees which an Affiliate
of Seller assumed upon the acquisition of Plastics from Newell
Co. From and after the Closing Date, the Purchaser shall honor in
accordance with their terms, all employment, severance agreements
and severance, incentive and bonus plans as in effect immediately
prior to the Closing Date that are applicable to the Transferred
Employees of the Seller other than the stay bonuses described in
Section 6.2 and bonuses payable under the management incentive
plan.
(c) With respect to any benefits plans of the Purchaser in which the
Transferred Employees participate after the Closing Date, the
Purchaser shall use reasonable efforts to: (i) waive any
limitations as to pre-existing conditions, exclusions and waiting
periods with respect to participation and coverage requirements
applicable to the Transferred Employees under any welfare benefit
plan in which such Transferred Employees may be eligible to
participate after the Closing Date; provided, however, that no
-------- -------
such waiver shall apply to a pre-existing condition of any
Transferred Employee who was, as of the Closing Date, excluded
from participation in or voluntarily did not participate in a
benefit plan maintained or contributed to for the benefit of such
Transferred Employee by nature of such pre-existing condition,
and (ii) recognize all service of the Transferred Employees with
the Seller or any Affiliate or predecessor thereof for purposes
of eligibility to participate, vesting credit, entitlement for
benefits and benefit accrual (other than benefit accrual under a
defined benefit pension plan) in any benefit plan in which such
Transferred Employees may be eligible to participate after the
Closing Date, except to the extent such treatment would result in
duplicative benefits. All account balances in qualified plans of
Transferred Employees which are directly rolled over to qualified
plans of Purchaser shall be fully vested in such plans of
Purchaser.
42
Exhibit 2.1
(d) WARN. The Purchaser shall not on or at any time prior to ninety
----
(90) days after the Closing Date, effectuate a "plant closing" or
"mass layoff" as those terms are defined in the Worker Adjustment
Retraining and 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. The Purchaser shall be responsible for
any obligation with respect to the Transferred Employees under
WARN and any applicable state or local equivalent arising or
accruing on or after the Closing Date.
6.2. Stay Bonuses
------------
Seller shall pay the portion of the Stay Bonuses as described in
Schedule 6.2 which are payable on the Closing Date. Purchaser shall pay the
balance of the Stay Bonuses within 180 days of the Closing Date and shall
receive a credit against the Purchase Price for the amount of such Stay
Bonuses to be paid by Purchaser.
6.3. Indemnity
---------
In addition to any other remedies that may be available to the Seller
or its Affiliates under this Agreement, the Purchaser hereby agrees to
indemnify, defend and hold harmless Seller and its Affiliates against and
reimburse Seller and its Affiliates for any Losses that the Seller and its
Affiliates may at any time suffer or incur, or become subject to, as a
result of or in connection with (a) any failure by the Purchaser to perform
its obligations hereunder, (b) any claim by Transferred Employees pursuant
to any Plan maintained for the benefit of the Transferred Employees, or (c)
any claim by Transferred Employees under any Law with respect to actions,
events or omissions relating to the Purchaser or any of its Affiliates.
6.4. No Third-Party Beneficiaries
----------------------------
Nothing in this Article 6 or elsewhere in this Agreement shall be
deemed to make any present or future Employees or Transferred Employees
third-party beneficiaries of this Agreement.
43
Exhibit 2.1
7. TAX MATTERS
7.1. Tax Indemnities
---------------
(a) The Seller shall be responsible for, shall pay or cause to be
paid, and shall indemnify and hold harmless the Purchaser against
and reimburse the Purchaser for all Taxes (other than conveyance
taxes which are allocated to the Purchaser pursuant to Section
7.4) arising in connection with the Business or the Assets
(including with respect to a breach of the representation and
warranty contained in Section 3.13) with respect to any Tax
period or portion thereof that ends on or before the Closing
Date; provided, however, that no indemnity shall be provided
under this Agreement for any Taxes resulting from a breach by the
Purchaser of its representations, warranties or obligations under
this Agreement.
(b) From and after the Closing Date, the Purchaser shall be
responsible for, shall pay or cause to be paid, and shall
indemnify, defend and hold harmless the Seller against and
reimburse the Seller for all Taxes that the Seller may at any
time suffer or incur, or become subject to, as a result of or in
connection with the Business or the Assets that are not subject
to indemnification pursuant to paragraph (a) of this Section 7.1.
(c) Payment by the indemnitor of any amount due to the indemnitee
under this Section 7.1 shall be made within 10 days following
written notice by the indemnitee that payment of such amounts to
the appropriate Tax authority is due by the indemnitor, provided
--------
that the indemnitor shall not be required to make any payment
earlier than two days before it is due to the appropriate Tax
authority. If Seller receives an assessment or other notice of
Tax due with respect to any Asset or the Business for any period
ending on or before the Closing Date for which the Seller is not
responsible, in whole or in part, pursuant to Section 7.1(a), and
Seller pays such Tax, then the Purchaser shall pay to the Seller
in accordance with the first sentence of this Section 7.1(c), the
amount of such Tax for which Seller is not responsible.
44
Exhibit 2.1
(d) For purposes of this Agreement, in the case of any Tax that is
imposed on a periodic basis and is payable for a period that
begins before the Closing Date and ends after the Closing Date,
the portion of such Taxes payable for the period ending on the
Closing Date shall be (i) in the case of any Tax other than a Tax
based upon or measured by income, the amount of such Tax for the
entire period multiplied by a fraction, the numerator of which is
the number of days in the period ending on the Closing Date and
the denominator of which is the number of days in the entire
period and (ii) in the case of any Tax based upon or measured by
income, the amount that would be payable based on the actual
operation of the Business during the portion of such period
ending on the Closing Date. Any Tax credit shall be prorated
based upon the fraction employed in clause (i) of the preceding
sentence. In the case of any Tax based upon or measured by
capital (including net worth or long-term debt) or intangibles,
any amount thereof required to be allocated under this Section
7.1(d) shall be computed by reference to the level of such items
on the Closing Date.
(e) The indemnification obligations hereunder relate solely to Taxes
and not to any other Losses which a party may incur in connection
with the defense or contest of any Tax audits or proceedings, and
each party waives the right to seek indemnification for such
other Losses under any other provision of this Agreement.
(f) Any amount payable under this Article 7 shall be made net of any
Tax benefit enjoyed by the indemnitee, determined in a manner
consistent with the last sentence of Section 10.5 hereof.
7.2. Contest of Tax Claims
---------------------
(a) After the Closing Date, if a claim shall be made in writing by
any Tax authority, which, if successful, would result in an
indemnity payment by either party to the other pursuant to
Section 7.1, the party claiming indemnification shall promptly
notify the other party in writing of such claim (a "Tax Claim").
If notice of a Tax Claim is not given to the Seller promptly
after receipt by the indemnitee, or in reasonable detail to
inform the indemnitor of the nature of the Tax Claim, in each
case taking into account the facts and circumstances with respect
to such Tax Claim, the indemnitor shall not be liable to the
indemnitee with respect to such Tax Claim, to the extent that its
position is materially prejudiced as a result of a failure to so
promptly notify or inform.
45
Exhibit 2.1
(b) With respect to any Tax Claim for a Tax period that ends on or
before the Closing Date, the Seller shall have the right to
direct, at its own expense, all proceedings in connection with
such Tax Claim (including selection of counsel) and, without
limiting the foregoing, may in its sole discretion pursue or
forego any and all administrative appeals, proceedings, hearings
and conferences with any Tax authority with respect thereto, and
may, in its sole discretion, either pay the Tax claimed and sue
for a refund where applicable Law permits such refund suits or
contest the Tax Claim in any permissible manner. Seller and the
Purchaser shall jointly control all proceedings taken in
connection with any Tax Claim relating solely to Taxes
attributable to a Tax period that includes (but does not end on)
the Closing Date. The Purchaser shall cooperate with the Seller
in contesting any Tax Claim, which cooperation shall include,
without limitation, the retention and (upon the Seller's request)
the provision to the Seller of records and information which are
reasonably relevant to such Tax Claim, and making employees
available on a mutually convenient basis to provide additional
information or explanation of any material provided hereunder or
to testify at proceedings relating to such Tax Claim.
(c) The Purchaser shall not settle or otherwise compromise any Tax
Claim without the Seller's prior written consent (which consent
shall not be unreasonably withheld). No party shall settle a Tax
Claim relating solely to Taxes with respect to the Business or
the Assets for a Tax period that includes (but does not end on)
the Closing Date without the other party's prior written consent
(which consent shall not be unreasonably withheld).
(d) In the case of any claim for Taxes pending on the Closing Date,
and involving any contested Tax for which the Seller would be
liable under this Article 7, the Seller shall direct such claims
for Taxes.
7.3. Cooperation and Exchange of Information
---------------------------------------
The Seller and the Purchaser will provide each other with such
cooperation and information as any of them reasonably may request of
another in filing any Tax Return, amended Tax Return or claim for refund or
any other filing required to be made with the IRS, including, without
limitation, any Form 5500, determining a liability for Taxes or a right to
a refund of Taxes or participating in or conducting any audit or other
proceeding in respect of Taxes. Each such party shall make its employees
available on a mutually convenient basis to provide explanations of any
documents or information provided hereunder. Each such party will retain
all Tax Returns, schedules and work papers and all material records or
other documents relating to Tax matters of the Business for their Tax
period first ending after the Closing Date and for all prior Tax periods
until the later of (a) the expiration of the statute of limitations of the
46
Exhibit 2.1
Tax periods to which such Tax Returns and other documents relate, without
regard to extensions except to the extent notified by another party in
writing of such extensions for the respective Tax periods, or (b) six years
following the filing of any such Tax Returns. Any information obtained
under this Section 7.4 shall be kept confidential, except as may be
otherwise necessary in connection with the filing of Tax Returns or claims
for refund or in conducting an audit or other proceeding.
7.4. Conveyance Taxes
----------------
Notwithstanding any provision herein to the contrary, the Purchaser
and Seller each agree to pay 50% of all sales, value added, transfer,
stamp, registration, real property transfer or gains and other similar
Taxes incurred as a result of the transactions contemplated hereby.
Purchaser agrees to file all required change of ownership and similar
statements. The parties shall cooperate with one another in the preparation
and filing of, and shall provide the other with, all documentation,
certificates and transfer Tax returns (including sales Tax exemption
certificates) necessary in connection with the transactions contemplated by
this Agreement. The Purchaser hereby waives compliance by the Seller with
any applicable bulk sale or bulk transfer Laws of any jurisdiction in
connection with the transactions contemplated by this Agreement.
7.5. Miscellaneous
-------------
(a) The parties agree to treat all payments made under this Article
7, under any other indemnity provision contained in this
Agreement, and for any misrepresentations or breach of warranties
or covenants as adjustments to the Purchase Price for Tax
purposes.
(b) Except as expressly provided otherwise, Section 3.13 and this
Article 7 shall be the sole provisions governing Tax matters and
indemnities therefor under this Agreement.
(c) For purposes of this Article 7, all references to the Purchaser,
the Seller and their Affiliates include successors thereto.
(d) The covenants and agreements of the parties hereto contained in
this Article 7 and Section 3.13 and any related rights of
indemnification shall survive the Closing and shall remain in
full force and effect with respect to each Tax until 60 days
after the expiration of all statutes of limitations with respect
to such Tax.
8. CONDITIONS TO CLOSING
8.1. Conditions to Obligations of the Seller
---------------------------------------
The obligations of the Seller to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment or
waiver, at or prior to the Closing, of each of the following conditions:
47
Exhibit 2.1
(a) Representations and Warranties; Covenants. (i) The
-----------------------------------------
representations and warranties of the Purchaser contained in
Article 4 shall be true and correct in all material respects as
of the Closing as though made on and as of the Closing, except
that those representations and warranties that address matters
only as of a particular date shall remain true and correct in all
material respects as of such date, (ii) the covenants contained
in this Agreement to be complied with by the Purchaser on or
before the Closing shall have been complied with in all material
respects, except that the Purchaser shall have complied in all
respects with its obligations under Article 2 hereof, and (iii)
the Seller shall have received a certificate of the Purchaser to
such effect signed by a duly authorized officer thereof;
(b) HSR Act. Any waiting period (and any extension thereof) under the
-------
HSR Act applicable to the purchase of the Assets contemplated
hereby shall have expired or shall have been terminated;
(c) No Governmental Order. There shall be no Governmental Order in
---------------------
existence which expressly prohibits or materially restrains the
transactions contemplated by this Agreement; and
(d) Resolutions. The Seller shall have received a true and complete
-----------
copy, certified by the Secretary or an Assistant Secretary of the
Purchaser, of the resolutions duly and validly adopted by the
Board of Directors of the Purchaser evidencing its authorization
of the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
8.2. Conditions to Obligations of the Purchaser
------------------------------------------
The obligations of the Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment or
waiver, at or prior to the Closing, of each of the following conditions:
48
Exhibit 2.1
(a) Representations and Warranties; Covenants. (i) The
-----------------------------------------
representations and warranties of the Seller contained in Article
3 shall be true and correct in all material respects as of the
Closing as though made on and as of the Closing, except that
those representations and warranties which address matters only
as of a particular date shall remain true and correct in all
material respects as of such date, except in any case for such
failures to be true and correct which would not, individually or
in the aggregate, have a Material Adverse Effect; (ii) the
covenants contained in this Agreement to be complied with by the
Seller on or before the Closing shall have been complied with in
all material respects, except that the Seller shall have complied
in all respects with its obligations under Article 2 hereof; and
(iii) the Purchaser shall have received a certificate of the
Seller to such effect signed by a duly authorized officer of the
Seller;
(b) HSR Act. Any waiting period (and any extension thereof) under the
-------
HSR Act applicable to the purchase of the Assets contemplated
hereby shall have expired or shall have been terminated;
(c) No Governmental Order. There shall be no Governmental Order in
---------------------
existence which expressly prohibits or materially restrains the
transactions contemplated by this Agreement; and
(d) Resolutions. The Purchaser shall have received a true and
-----------
complete copy, certified by the Secretary or an Assistant
Secretary of the Seller, of the resolutions duly and validly
adopted by the Board of Directors of the Seller evidencing its
authorization of the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby.
9. TERMINATION, AMENDMENT AND WAIVER
9.1. Termination
-----------
This Agreement may be terminated at any time prior to the Closing:
(a) by the mutual written consent of the Seller and the Purchaser;
(b) by the Seller or the Purchaser, if the Closing shall not have
occurred prior to September 1, 2001; or
(c) by the Purchaser or the Seller in the event of the issuance of a
final, nonappealable Governmental Order restraining or
prohibiting the transactions contemplated herein.
9.2. Effect of Termination
---------------------
In the event of the termination of this Agreement as provided in
Section 9.1, this Agreement shall immediately become void and there shall
be no liability on the part of any party hereto, except as set forth in
Sections 5.3 and
49
Exhibit 2.1
11.2; provided, however, that nothing herein shall relieve either the
Seller or the Purchaser from liability for (a) failure to perform the
obligations set forth in Section 5.4, (b) the failure of the representation
set forth in Section 4.5 to be true and correct when made or on the date of
termination or (c) any willful breach of this Agreement or willful failure
to perform hereunder.
9.3. Waiver
------
At any time prior to the Closing, any party may (a) extend the time
for the performance of any of the obligations or other acts of any other
party hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or
(c) waive compliance with any of the agreements or conditions contained
herein. Any such extension or waiver shall be valid only if set forth in an
instrument in writing signed by the party to be bound thereby.
10. INDEMNIFICATION
10.1. Indemnification by the Purchaser
--------------------------------
(a) Except for Tax matters and indemnities, which shall be governed
by Article 7, and subject to Sections 10.3, 10.4, 10.5 and 11.1,
the Purchaser shall indemnify, defend and hold harmless the
Seller, its Affiliates and their respective employees, officers
and directors (collectively, the "Seller Indemnified Parties")
--------------------------
against, and reimburse each Seller Indemnified Party for, any and
all losses, damages, costs, expenses, liabilities, obligations
and claims of any kind (including any Action brought by any
Governmental Authority or Person and including reasonable
attorneys' and consultants' fees and expenses and other legal
costs and expenses reasonably incurred in investigation,
remediation, defense or settlement) (collectively, "Losses") that
------
such Seller Indemnified Party may at any time suffer or incur as
a result of or in connection with:
(i) the breach of any representations and warranties made by the
Purchaser in this Agreement;
(ii) the failure by the Purchaser to perform any of its covenants
or agreements contained in this Agreement;
(iii) any claim or cause of action arising before, on or after
the Closing Date against any Seller Indemnified Party with
respect to the Business or any of the Assets, properties or
operations of the Business, except for any claims with
respect to which the Seller is obligated to indemnify the
Purchaser Indemnified Parties under Section 10.2 hereof;
(iv) the Assumed Liabilities;
(v) the Assets; and
50
Exhibit 2.1
(vi) the conduct of the Business by the Purchaser following the
Closing.
(b) Notwithstanding any other provision to the contrary contained
herein, the Purchaser shall not be required to indemnify, defend
or hold harmless any Seller Indemnified Party against or
reimburse any Seller Indemnified Party for any Losses pursuant to
subclauses (i) through (vi) of Section 10.1(a) unless the Seller
has notified the Purchaser in writing in accordance with Section
10.3(a) of a pending or threatened claim with respect to such
matters within the applicable survival period set forth in
Section 11.1.
10.2. Indemnification by the Seller
-----------------------------
(a) Except for Tax matters and indemnities, which shall be governed
by Article 7, and subject to Sections 10.2, 10.3, 10.4, 10.5 and
11.1 hereof, the Seller shall indemnify, defend and hold harmless
the Purchaser, its Affiliates and their respective employees,
officers and directors (collectively, the "Purchaser Indemnified
---------------------
Parties") against, and reimburse any Purchaser Indemnified Party
-------
for, any and all Losses that such Purchaser Indemnified Party may
at any time suffer or incur as a result or in connection with:
(i) the breach of any representations and warranties made by the
Seller in this Agreement;
(ii) any non-compliance by Seller with bulk sales laws or similar
laws which may be applicable to the sale or transfer of the
Assets;
(iii) the Excluded Liabilities; and
(iv) the failure by Seller to perform any of their respective
covenants or agreements contained in this Agreement.
51
Exhibit 2.1
(b) Notwithstanding any other provision to the contrary contained
herein, the Seller shall not be required to indemnify, defend or
hold harmless any Purchaser Indemnified Party against or
reimburse any Purchaser Indemnified Party for any Losses pursuant
to Section 10.2(a), (i) with respect to any claim, unless such
claim involves Losses in excess of $7,500 (nor shall such item be
applied to or considered for purposes of calculating the
aggregate amount of the Purchaser Indemnified Parties' Losses),
(ii) unless the Purchaser has notified the Seller in writing in
accordance with Section 10.3(a) of a pending or threatened claim
with respect to such matters within the applicable survival
period set forth in Section 11.1, and (iii) except with respect
to Losses resulting from the representations, warranties and
covenants provided in Section 3.14 and Section 5.12, which shall
not be subject to the Basket until the aggregate amount of the
Purchaser Indemnified Parties' Losses exceeds $500,000 (the
"Basket"), after which the Seller, as applicable, shall be
obligated for all Losses of the Purchaser Indemnified Parties in
excess of such amount; provided, however, that the cumulative
-------- -------
indemnification obligations of the Seller, as applicable, under
this Article 10 in respect of Section 10.2(a) shall in no event
exceed twenty-five percent (25%) of the aggregate Purchase Price.
(c) Notwithstanding any other provision to the contrary contained
herein, the Seller shall have no obligation and shall not
otherwise be required to indemnify, defend or hold harmless any
Purchaser Indemnified Party against or reimburse any Purchaser
Indemnified Party for any Losses pursuant to Article 10 with
respect to any matter (i) that was the subject of a dispute,
contest or objection under or pursuant to Section 2.5 (regardless
of whether such dispute, contest or objection was accepted or
rejected or resulted in an adjustment to the Purchase Price ), or
(ii) that could have been the subject matter of a dispute,
contest or objection under or pursuant to Section 2.5 but was not
asserted by the Purchaser pursuant to Section 2.5. Any such
matter shall be disregarded for all purposes of this Article 10.
10.3. Notification of Claims
----------------------
52
Exhibit 2.1
(a) A party that may be entitled to be indemnified pursuant to
Section 10.1 or 10.2 (the "Indemnified Party") shall promptly
-----------------
notify the party liable for such indemnification (the
"Indemnifying Party") in writing of any pending or threatened
------------------
claim or demand which the Indemnified Party has determined has
given or could give rise to a right of indemnification under this
Agreement (including a pending or threatened claim or demand
asserted by a third party against the Indemnified Party),
describing in reasonable detail the facts and circumstances with
respect to the subject matter of such claim or demand; provided,
--------
however, that the failure to provide such notice shall not
-------
release the Indemnifying Party from any of its obligations under
this Article 10 except to the extent the Indemnifying Party is
prejudiced by such failure. Subject to the Indemnifying Party's
right to defend in good faith third party claims as hereinafter
provided, the Indemnifying Party shall satisfy its obligations
under this Article 10 within 30 days after the receipt of written
notice thereof from the Indemnified Party.
53
Exhibit 2.1
(b) If the Indemnified Party shall notify the Indemnifying Party of
any claim or demand pursuant to Section 10.3(a), and if such
claim or demand relates to a pending or threatened claim or
demand asserted by a third party against the Indemnified Party
which the Indemnifying Party acknowledges is a claim or demand
for which it must indemnify, defend and hold harmless the
Indemnified Party against or reimburse the Indemnified Party for
under Section 10.1 or 10.2, the Indemnifying Party shall have the
right to employ counsel reasonably acceptable to the Indemnified
Party to defend any such claim or demand asserted against the
Indemnified Party. The Indemnified Party shall have the right to
participate in the defense of any such claim or demand at its own
expense. The Indemnifying Party shall notify the Indemnified
Party in writing, as promptly as practicable (but in any case
before the due date for the answer or response to a claim) after
the date of the notice of claim given by the Indemnified Party to
the Indemnifying Party under Section 10.3(a) of its election to
defend in good faith any such third party claim or demand. So
long as the Indemnifying Party is defending in good faith any
such claim or demand asserted by a third party against the
Indemnified Party, the Indemnified Party shall not settle or
compromise such claim or demand. The Indemnified Party shall make
available to the Indemnifying Party or its agents all records and
other material in the Indemnified Party's possession reasonably
required by it for its use in defending any third party claim or
demand. The Indemnifying Party shall not settle or compromise any
such claim or demand without the prior consent of the Indemnified
Party, unless the Indemnified Party is given a full and complete
release of any and all liability by all relevant parties relating
thereto. If the Indemnified Party assumes the defense of any such
claim or proceeding pursuant to this Section 10.3 and proposes to
settle such claim or proceeding prior to a final judgment thereon
or to forego any appeal with respect thereto, then the
Indemnified Party shall give the Indemnifying Party prompt
written notice thereof and the Indemnifying Party shall have the
right to participate in the settlement or assume or reassume the
defense of such claim or proceeding.
10.4. Exclusive Remedies
------------------
Following the Closing, except for performance of the obligations set
forth in Article 2 and Section 5.3 and except for the indemnification
obligations specified in Sections 5.2(b), 5.4 and 5.5 and in Article 6 and
Article 7, the Seller and the Purchaser acknowledge and agree that the
indemnification provisions of Sections 10.1 and 10.2 shall be the sole and
exclusive remedies of the Seller and the Purchaser, respectively, for any
breach of the representations or warranties herein or nonperformance of any
covenants and agreements herein of the other parties. Notwithstanding
anything to the contrary contained in this
54
Exhibit 2.1
Agreement, no party hereto shall have any liability under any provision of
this Agreement for any punitive, consequential or indirect damages. Each
party hereto shall take all reasonable steps to mitigate its Losses upon
and after becoming aware of any event which could reasonably be expected to
give rise to any Losses.
10.5. Certain Adjustments
-------------------
For all purposes of this Article 10, "Losses" shall be net of (i) any
insurance payable to the Indemnified Party from its own insurance policies
in connection with the facts giving rise to the right of indemnification
and (ii) the estimated present value of any Tax benefits received by or
accruing to the Indemnified Party. A Tax benefit will be considered to be
accrued by the Indemnified Party for purposes of this Section 10.5 in the
Tax period in which the indemnity payment occurs, and the amount of the Tax
benefit shall be determined by assuming that the Indemnified Party is in
the maximum applicable statutory Tax bracket after any deductions or other
allowances reportable with respect to a payment hereunder.
11. GENERAL PROVISIONS
11.1. Survival
--------
The representations, warranties, covenants and agreements of the
Seller and the Purchaser contained in or made pursuant to this Agreement
shall terminate at the Closing, except that (a) except as otherwise set
forth herein, the representations and warranties made in Article 3 and
Article 4 shall survive in full force and effect until the date that is
twenty-one (21) months after the Closing Date (unless Purchaser or Seller
knew of the other's material misrepresentation or breach of warranty at the
time of Closing), (b) the representations and warranties made in Section
3.14 shall survive in full force and effect until the date that is
thirty-six (36) months after the Closing Date, (c) the covenants and
agreements made in Sections 5.2, 5.3, 5.4, 5.5, 5.6, 5.7 and 5.8 and in
Article 6 of this Agreement shall survive in full force and effect as
provided in such sections and article or until such time as fully complied
with, (d) the covenants and agreements made in Article 2 shall survive in
full force and effect until such time as fully complied with, and (e) the
representations, warranties and covenants made in Section 3.13 and Article
7 shall remain in force as set forth in Section 7.5, and (f) the covenants
made in Section 5.12 shall remain in force as set forth in Section Section
5.12.
11.2. Expenses
--------
Except as may be otherwise specified herein, all costs and expenses,
including fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the
transactions contemplated
55
Exhibit 2.1
hereby shall be paid by the party incurring such costs and expenses,
whether or not the Closing shall have occurred.
11.3. Notices
-------
All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given or made (and shall be
deemed to have been duly given or made upon receipt) by delivery in person,
by overnight courier service, by facsimile (followed by delivery of a copy
via overnight courier service) or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 11.3):
(a) if to the Seller:
Home Products International-North America, Inc.
4501 West 47th Street
Chicago, IL 60632
Attention: James R. Tennant
Fax: 773-890-0523
with a copy to:
Much Shelist Freed Denenberg
Ament & Rubenstein, P.C.
200 North LaSalle Street, Suite 2100
Chicago, IL 60601
Attention: Jeffrey C. Rubenstein
Fax: 312-621-1750
E-Mail: jrubenstein@muchlaw.com
(b) if to the Purchaser:
A & E Products Group LP
One Harmon Meadow Boulevard
Secaucus, NJ 07094
Attention: President
Fax: 201-558-5276
with a copy to:
Tyco International (US) Inc.
One Tyco Park
Exeter, NH 03833
Attention: General Counsel
Fax: 603-778-2823
56
Exhibit 2.1
(c) if to IP Purchaser:
Tyco Plastics Services AG
Schwertstrasse 9
Schaffhausen CH-8200
Switzerland
Attention: Managing Director
Fax: 011-41-52-633-0259
(d) if to Guarantor:
Tyco (US) Holdings Inc.
One Tyco Park
Exeter, NH 03833
Attention: President
Fax: 603-778-7700
11.4. Public Announcements
--------------------
Except as may be required by applicable Law or stock exchange rules,
no party to this Agreement, prior to or after the Closing, shall make any
public announcements in respect of this Agreement or the transactions
contemplated hereby or otherwise communicate with any news media without
prior notification to the other party, and the parties shall cooperate as
to the timing and contents of any such announcement.
11.5. Headings
--------
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
11.6. Severability
------------
If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the greatest extent possible.
11.7. Entire Agreement
----------------
This Agreement and the Confidentiality Agreement constitute the entire
agreement of the parties hereto with respect to the subject matter hereof
and supersede all prior agreements and undertakings, both written and oral,
among
57
Exhibit 2.1
the Seller and the Purchaser with respect to the subject matter hereof and
except as otherwise expressly provided herein.
11.8. Assignment
----------
This Agreement shall not be assigned by operation of Law or otherwise,
except that Seller and Purchaser may assign any or all of their respective
rights and obligations under this Agreement to any of their respective
Affiliates; provided that no such assignment shall release the assigning
party from any liability hereunder.
11.9. No Third-Party Beneficiaries
----------------------------
Except as provided in Article 10, this Agreement is for the sole
benefit of the parties hereto and their permitted assigns and nothing
herein, express or implied, is intended to or shall confer upon any other
Person or entity any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
11.10. Amendment
---------
This Agreement may not be amended or modified except by an instrument
in writing signed by the Seller and the Purchaser.
11.11. Governing Law; Submission to Jurisdiction; Waivers
--------------------------------------------------
This Agreement shall be governed by, and construed in accordance with,
the Laws of the State of Illinois. The Seller and the Purchaser agree that
any dispute relating to or arising from this Agreement or the transactions
contemplated hereby shall be resolved only in the Courts of the State of
Illinois sitting in Cook County or the United States District Court for the
Northern District of Illinois and the appellate courts having jurisdiction
of appeals in such courts, and the parties hereto hereby irrevocably submit
to the exclusive jurisdiction of such courts in any such action or
proceeding and irrevocably waive the defense of an inconvenient forum to
the maintenance of any such action or proceeding.
11.12. Counterparts
------------
This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.
58
Exhibit 2.1
11.13. No Presumption
--------------
This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
11.14. Guaranty
--------
(a) In consideration for and as an inducement to Seller to enter into
this Agreement, the Guarantor guarantees to Seller and its
successors and assigns the payment of all sums and the
performance of all covenants and obligations of Purchaser and IP
Purchaser under this Agreement.
(b) Guarantor waives presentment for payment, demand for payment,
notice of nonpayment or dishonor, protest and notice of protest,
diligence in collection and any and all formalities which may be
legally required to charge it with liability; and Guarantor
agrees that its liability as Guarantor will not be impaired or
affected by (i) any forbearance or delay in enforcing any
obligation; or (ii) any assignment of this Agreement.
(c) All duties and obligations of the Guarantor pursuant to this
Agreement will be binding upon the successors and assigns of
Guarantor and will not be discharged or affected, in whole or in
part, by the dissolution, bankruptcy or insolvency of Guarantor.
This guaranty obligation is absolute, unconditional, irrevocable
and continuing.
(d) If Seller at any time is compelled to take action, by legal
proceedings or otherwise, to enforce or compel compliance with
the terms of Guarantor's obligation hereunder, the Guarantor
will, in addition to any other rights or remedies to which Seller
may be entitled hereunder or as a matter of law or in equity,
reimburse Seller for all costs, including reasonable attorneys'
fees, incurred or expended by Seller in connection therewith.
Such reimbursement shall be in addition to any and all amounts
payable by Guarantor.
(e) Guarantor represents and warrants to Seller that: (i) Guarantor
is duly incorporated, validly existing and in good standing under
the laws of the State of Delaware; (ii) Guarantor has all
necessary corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder; (iii) this
Agreement has been duly authorized by all requisite corporate
action on the part of Guarantor; (iv) this Agreement has been
duly executed and delivered by Guarantor and constitutes the
legal, valid and binding obligation of Guarantor; (v) Guarantor,
as an Affiliate of Purchaser, will derive an economic benefit
from the transaction contemplated by this Agreement; and (vi)
Guarantor has a net worth of at least $6,000,000,000.
59
Home Products International - North America, Inc.
By
------------------------------------------
Name:
Title:
A & E Products Group LP
By
------------------------------------------
Name:
Title:
Tyco Plastics Services AG
By
------------------------------------------
Name:
Title:
Tyco (US) Holdings Inc.
By
------------------------------------------
Name:
Title:
Home Products International - North America, Inc.
Asset Purchase Agreement
------------------------
Disclosure Schedule Index
-------------------------
Section Description
- ------- -----------
2.3 Purchase Price for Intellectual Property and Other Assets
3.2 No Conflicts
3.3 Consents and Approvals
3.4(a) Financial Statements
3.4(i) Accounting Principles
3.4B Net Asset Statements
3.5 Absence of Certain Changes or Events
3.6 Litigation
3.7 Compliance with Laws
3.9 Title; Permitted Liens
3.10 Title to Real Properties
3.11 Leased Real Property
3.12(a) Owned Intellectual Property
3.12(b) Licensed Intellectual Property
Exhibit 2.1
3.13 Taxes
3.14 Environmental Matters
3.15(a) Material Contracts
3.15(b) No Breaches, Defaults in Material Contracts
3.18 Insurance
3.19 Product Liability and Recalls
3.21 Customers and Suppliers
3.22 Powers of Attorney
3.23 Undisclosed Liabilities
3.24 Restrictions on Business Activity
3.27 Product Warranty/Standard Terms of Sale
5.4(c) Seller Letters of Credit
6.2 Stay Bonuses
Home Products International, Inc. agrees to furnish supplementally to the
Securities and Exchange Commission a copy of any of the disclosure schedules
listed above upon request.