UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended June 28, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from to
Commission File Number: 1-1553
THE BLACK & DECKER CORPORATION
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(Exact name of registrant as specified in its charter)
Maryland 52-0248090
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
701 East Joppa Road Towson, Maryland 21286
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(Address of principal executive offices) (Zip Code)
(410) 716-3900
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address, and former fiscal
year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. X YES NO
The number of shares of Common Stock outstanding as of June 28, 1998: 92,956,594
The exhibit index as required by item 601(a) of Regulation S-K is included in
this report.
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THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
INDEX - FORM 10-Q
June 28, 1998
Page
PART I - FINANCIAL INFORMATION
Consolidated Statement of Earnings (Unaudited) For the Three
Months and Six Months Ended June 28, 1998 and June 29, 1997 3
-----------------
Consolidated Balance Sheet
June 28, 1998 (Unaudited) and December 31, 1997 4
----------------------------
Consolidated Statement of Changes in Stockholders' Equity (Unaudited)
For the Six Months Ended June 28, 1998 and June 29, 1997 5
--------------------
Consolidated Statement of Cash Flows (Unaudited)
For the Six Months Ended June 28, 1998 and June 29, 1997 6
--------------------
Notes to Consolidated Financial Statements (Unaudited) 7
-------------------------
Management's Discussion and Analysis of Financial Condition and
Results of Operations 14
------------------------------------------------------
Quantitative and Qualitative Disclosures About Market Risk 26
--------------------
PART II - OTHER INFORMATION 27
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SIGNATURES 31
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PART I - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
<TABLE>
CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
The Black & Decker Corporation and Subsidiaries
(Dollars in Millions Except Per Share Amounts)
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<CAPTION>
Three Months Ended Six Months Ended
June 28, 1998 June 29, 1997 June 28, 1998 June 29, 1997
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<S> <C> <C> <C> <C>
Sales $ 1,169.7 $ 1,182.2 $ 2,178.0 $ 2,197.2
Cost of goods sold 771.9 761.8 1,430.2 1,412.3
Selling, general, and
administrative expenses 285.5 316.1 565.4 607.3
Write-off of goodwill - - 900.0 -
Restructuring and exit costs - - 140.0 -
Gain on sale of businesses 36.5 - 36.5 -
- -------------------------------------------------------------------------------------------------------------------
Operating Income (Loss) 148.8 104.3 (821.1) 177.6
Interest expense (net of
interest income) 29.8 30.6 58.2 61.2
Other expense 2.7 3.6 2.4 5.9
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Earnings (Loss) Before Income
Taxes 116.3 70.1 (881.7) 110.5
Income taxes 57.9 24.6 31.3 38.7
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Net Earnings (Loss) $ 58.4 $ 45.5 $ (913.0) $ 71.8
===================================================================================================================
Net Earnings (Loss) Per Common
Share-- Basic $ .62 $ .48 $ (9.65) $ .76
===================================================================================================================
Shares Used in Computing Basic
Earnings Per Share (in Millions) 94.1 94.5 94.6 94.4
===================================================================================================================
Net Earnings (Loss) Per Common
Share-- Assuming Dilution $ .61 $ .47 $ (9.65) $ .75
===================================================================================================================
Shares Used in Computing Diluted
Earnings Per Share (in Millions) 95.8 96.1 94.6 96.1
===================================================================================================================
Dividends Per Common Share $ .12 $ .12 $ .24 $ .24
===================================================================================================================
<FN>
See Notes to Consolidated Financial Statements (Unaudited)
</FN>
</TABLE>
<PAGE>
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<TABLE>
CONSOLIDATED BALANCE SHEET
The Black & Decker Corporation and Subsidiaries
(Dollars in Millions Except Per Share Amount)
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<CAPTION>
(Unaudited)
June 28, 1998 December 31, 1997
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<S> <C> <C>
Assets
Cash and cash equivalents $ 204.1 $ 246.8
Trade receivables 815.7 931.4
Inventories 765.0 774.7
Other current assets 205.1 125.9
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Total Current Assets 1,989.9 2,078.8
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Property, Plant, and Equipment 781.3 915.1
Goodwill 935.7 1,877.3
Other Assets 510.7 489.5
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$ 4,217.6 $ 5,360.7
===================================================================================================================
Liabilities and Stockholders' Equity
Short-term borrowings $ 89.1 $ 178.3
Current maturities of long-term debt 60.6 60.5
Trade accounts payable 355.3 372.0
Other accrued liabilities 822.3 761.8
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Total Current Liabilities 1,327.3 1,372.6
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Long-Term Debt 1,658.1 1,623.7
Deferred Income Taxes 55.6 57.7
Postretirement Benefits 283.0 304.2
Other Long-Term Liabilities 192.3 211.1
Stockholders' Equity
Common stock, par value $.50 per share
(outstanding: June 28, 1998--92,956,594 shares;
December 31, 1997--94,842,544 shares) 46.5 47.4
Capital in excess of par value 1,145.3 1,278.2
Retained earnings (deficit) (373.7) 562.0
Accumulated other comprehensive income (116.8) (96.2)
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Total Stockholders' Equity 701.3 1,791.4
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$ 4,217.6 $ 5,360.7
===================================================================================================================
<FN>
See Notes to Consolidated Financial Statements (Unaudited)
</FN>
</TABLE>
<PAGE>
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<TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY (Unaudited)
The Black & Decker Corporation and Subsidiaries
(Dollars in Millions Except Per Share Amounts)
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<CAPTION>
Accumulated
Outstanding Capital in Retained Other Com- Total
Common Par Excess of Earnings prehensive Stockholders'
Shares Value Par Value (Deficit) Income Equity
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<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 94,248,807 $ 47.1 $ 1,261.7 $ 380.2 $ (56.6) $ 1,632.4
Comprehensive income:
Net earnings -- -- -- 71.8 -- 71.8
Foreign currency translation
adjustments, less effect of
hedging activities (net of tax) -- -- -- -- (34.2) (34.2)
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Comprehensive income (loss) -- -- -- 71.8 (34.2) 37.6
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Cash dividends ($.24 per share) -- -- -- (22.7) -- (22.7)
Common stock issued under
employee benefit plans 253,935 .2 6.6 -- -- 6.8
- -------------------------------------------------------------------------------------------------------------------
Balance at June 29, 1997 94,502,742 $ 47.3 $ 1,268.3 $ 429.3 $ (90.8) $ 1,654.1
===================================================================================================================
Balance at December 31, 1997 94,842,544 $ 47.4 $ 1,278.2 $ 562.0 $ (96.2) $ 1,791.4
Comprehensive income:
Net loss -- -- -- (913.0) -- (913.0)
Foreign currency translation
adjustments, less effect of
hedging activities (net of tax) -- -- -- -- (20.6) (20.6)
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Comprehensive income (loss) -- -- -- (913.0) (20.6) (933.6)
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Cash dividends ($.24 per share) -- -- -- (22.7) -- (22.7)
Purchase and retirement of
common stock (2,876,000) (1.4) (153.3) -- -- (154.7)
Common stock issued under
employee benefit plans 990,050 .5 20.4 -- -- 20.9
- -------------------------------------------------------------------------------------------------------------------
Balance at June 28, 1998 92,956,594 $ 46.5 $ 1,145.3 $ (373.7) $ (116.8) $ 701.3
===================================================================================================================
<FN>
See Notes to Consolidated Financial Statements (Unaudited)
</FN>
</TABLE>
<PAGE>
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<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
The Black & Decker Corporation and Subsidiaries
(Dollars in Millions)
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<CAPTION>
Six Months Ended
June 28, 1998 June 29, 1997
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<S> <C> <C>
Operating Activities
Net earnings (loss) $ (913.0) $ 71.8
Adjustments to reconcile net earnings (loss) to cash flow
from operating activities:
Gain on sale of businesses (36.5) -
Non-cash charges and credits:
Goodwill write-off 900.0 -
Restructuring charges and exit costs 140.0 -
Depreciation and amortization 81.6 110.5
Other 5.6 (2.6)
Changes in selected working capital items (excluding, for 1998,
effects of household products business sold):
Trade receivables (3.3) 2.1
Inventories (53.5) (177.1)
Trade accounts payable 2.8 29.9
Restructuring spending (13.0) -
Other assets and liabilities (104.6) (136.5)
Net decrease in receivables sold - (76.0)
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Cash Flow From Operating Activities 6.1 (177.9)
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Investing Activities
Proceeds from sale of business 288.0 -
Proceeds from disposal of assets 3.9 4.2
Capital expenditures (59.8) (85.0)
Cash inflow from hedging activities 168.7 219.4
Cash outflow from hedging activities (166.0) (208.6)
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Cash Flow From Investing Activities 234.8 (70.0)
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Cash Flow Before Financing Activities 240.9 (247.9)
Financing Activities
Net decrease in short-term borrowings (84.6) (101.6)
Proceeds from long-term debt (including revolving credit facility) 576.4 544.0
Payments on long-term debt (including revolving credit facility) (569.7) (186.1)
Redemption of preferred stock of subsidiary (41.7) -
Purchase of common stock (154.7) -
Issuance of common stock 15.3 2.9
Cash dividends (22.7) (22.7)
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Cash Flow From Financing Activities (281.7) 236.5
Effect of exchange rate changes on cash (1.9) (4.1)
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Decrease In Cash And Cash Equivalents (42.7) (15.5)
Cash and cash equivalents at beginning of period 246.8 141.8
- -------------------------------------------------------------------------------------------------------------------
Cash And Cash Equivalents At End Of Period $ 204.1 $ 126.3
===================================================================================================================
<FN>
See Notes to Consolidated Financial Statements (Unaudited)
</FN>
</TABLE>
<PAGE>
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
The Black & Decker Corporation and Subsidiaries
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include all the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, the unaudited
consolidated financial statements include all adjustments consisting only of
normal recurring accruals considered necessary for a fair presentation of the
financial position and the results of operations.
Operating results for the three- and six-month periods ended June 28, 1998,
are not necessarily indicative of the results that may be expected for a full
fiscal year. For further information, refer to the consolidated financial
statements and notes included in the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1997.
Effective January 1, 1998, the Corporation adopted Statement of Financial
Accounting Standards (SFAS) No. 130, Reporting Comprehensive Income. SFAS No.
130 requires that, as part of a full set of financial statements, entities must
present comprehensive income, which is the sum of net income and other
comprehensive income. Other comprehensive income represents total
non-stockholder changes in equity. The Corporation has included its presentation
of comprehensive income in the accompanying Consolidated Statement of Changes in
Stockholders' Equity for the six months ended June 28, 1998 and June 29, 1997.
Comprehensive income for the three months ended June 28, 1998 and June 29, 1997,
was $57.6 million and $55.2 million, respectively. In connection with the
adoption of SFAS No. 130, the Corporation has changed the designation of its
"Equity adjustment from translation" component of stockholders' equity in the
accompanying Consolidated Balance Sheet to "Accumulated other comprehensive
income."
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, which is required
to be adopted for years beginning after June 15, 1999. Early adoption of SFAS
No. 133 is permitted as of the beginning of any fiscal quarter after its
issuance. SFAS No. 133 will require the Corporation to recognize all derivatives
on the balance sheet at fair value. Derivatives that do not qualify as hedges
under the new standard must be adjusted to fair value through income. If a
derivative qualifies as a hedge, depending on the nature of the hedge, changes
in the fair value of derivatives will either be offset against the change in
fair value of the hedged assets, liabilities, or firm commitments through
earnings or recognized in other comprehensive income until the hedged item is
recognized in earnings. The ineffective portion of a derivative's change in
value will be immediately recognized in earnings.
The Corporation has not yet determined when it will adopt SFAS No. 133,
although early adoption is considered likely due to the new standard's more
favorable treatment of certain foreign currency hedges than that afforded under
prior accounting standards. Further, the Corporation has not yet determined what
effect SFAS No.133 will have on its earnings and financial position.
<PAGE>
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NOTE 2: STRATEGIC REPOSITIONING
Overview: A comprehensive strategic repositioning plan, designed to intensify
focus on core operations and improve operating performance, was approved by the
Corporation's Board of Directors on January 26, 1998. As announced, the program
includes the following components: (i) divestiture of the household products
business in North America, Latin America, and Australia, the recreational
products business, and the glass container-forming and inspection equipment
business; (ii) the repurchase of up to 10% of the Corporation's outstanding
common stock over a two-year period; and (iii) a restructuring of the
Corporation's remaining businesses. Also on January 26, 1998, the Board of
Directors elected to authorize a change in the basis upon which the Corporation
evaluates goodwill for impairment.
Divestitures: The Corporation has taken actions to divest its household products
business in North America, Latin America, and Australia, recreational products
business, and glass container-forming and inspection equipment business. The
Corporation has elected to retain the cleaning and lighting products component
of the household products business. The recreational products and household
products businesses are components of the Consumer and Home Improvement Products
(Consumer) segment; the glass container-forming and inspection equipment
business is a component of the Commercial and Industrial Products (Commercial)
segment.
In May 1998, the Corporation announced that it had entered into a definitive
agreement with Windmere-Durable Holdings, Inc. for the sale of the Corporation's
household products business (other than certain assets associated with the
Corporation's cleaning and lighting products, such as the Dustbuster,
SnakeLight, ScumBuster, and FloorBuster products) in North America, Central
America, the Caribbean, and South America (excluding Brazil) for a purchase
price of $315.0 million. The Corporation closed the sale to Windmere, with the
exception of the sale of the household products business in Mexico, on June 26,
1998, and received gross proceeds of $288.0 million. Gross proceeds of $27.0
million from the sale of the household products business in Mexico, which were
held in escrow at June 28, 1998 pending regulatory approval, were reflected in
the accompanying Consolidated Balance Sheet as "Other current assets" at June
28, 1998, and were received in July 1998. As part of the transaction, the
Corporation retained certain liabilities and agreed to license the Black &
Decker name to Windmere in existing household product categories for a period of
six and one-half years on a royalty-free basis, with extension options upon
request of Windmere and at the discretion of the Corporation on a
royalty-bearing basis. At the request of Windmere, additional product categories
may be licensed at the Corporation's option on a royalty-bearing basis. During
the six months ended June 28, 1998, the Corporation also completed the sale of
its household products business in Australia, the proceeds from which were
immaterial. The Corporation continues in its efforts to divest its household
products business in Brazil.
As more fully described in Note 8 of Notes to Consolidated Financial
Statements, subsequent to June 28, 1998, the Corporation announced that it had
signed a definitive agreement to recapitalize its recreational products business
and had entered into a contract to sell its glass container-forming and
inspection equipment business. These transactions are expected to close in 1998.
<PAGE>
-9-
The aforementioned sales of the household products business and glass
container-forming and inspection equipment business and recapitalization of the
recreational products business are expected to yield gross cash proceeds of over
$700 million and net cash proceeds of approximately $550 million. Net proceeds
from the sales or recapitalization of these businesses, augmented by cash
generated by remaining operations, have been and are expected to be utilized in
the repurchase of up to 10% of the Corporation's outstanding common stock and to
fund the restructuring program described below.
Sales of the businesses divested and to be divested, in aggregate, were
$146.9 million and $174.8 million for the three months ended June 28, 1998, and
June 29, 1997, and $287.8 million and $327.6 million for the six months ended
June 28, 1998, and June 29, 1997, respectively.
Repurchase of Common Stock: On January 26, 1998, the Board of Directors
authorized the repurchase of up to 10%, or 9,484,254 shares, of the
Corporation's outstanding common stock over a two-year period. A combination of
net proceeds from the sale of divested businesses and cash flow from remaining
operations have been and will be used to fund the stock repurchase program.
Prior to the receipt of proceeds from the sale of divested businesses, the
Corporation also may utilize its existing borrowing facilities to fund a portion
of the stock repurchase program.
During the six months ended June 28, 1998, the Corporation repurchased
2,876,000 shares of common stock at an aggregate cost of $154.7 million. The
aggregate cost of $154.7 million is net of $.7 million in premiums received in
connection with the Corporation's sale of put options on 400,000 shares of its
common stock.
Restructuring Charge: The restructuring program, announced in January 1998,
which will be completed over a period of two years, is being undertaken to
reduce fixed costs and simplify the supply chain and new product introduction
processes. During the first quarter of 1998, the Corporation commenced this
program and recognized a restructuring charge in the amount of $140.0 million.
The Corporation anticipates that additional restructuring charges will be
recognized over the course of the two-year program.
The major component of the restructuring charge relates to the elimination
of approximately 3,700 positions. As a result, an accrual of $102.7 million,
principally associated with European businesses in the Consumer segment, was
included in the restructuring charge. Included in that severance accrual was
$8.1 million related to severance actions taken in the businesses to be divested
and with respect to the closure of a facility in Kuantan, Malaysia, that
manufactures household products predominantly for sale in the United States and
was not included in the assets sold with the household products business.
To reduce fixed costs and simplify the supply chain and new product
introduction processes, the Corporation is taking actions to rationalize certain
manufacturing, sales, and administrative operations resulting in the closure of
a number of facilities. As a result, the restructuring charge also included a
$27.5 million write-down to fair value--less, if applicable, costs to sell--of
certain land, buildings, and equipment. Included in that $27.5 million
write-down was $9.0 million related to the closure of the Malaysian facility
described above. The remainder of the write-down to fair value primarily relates
to long-lived assets of European businesses in the Consumer segment.
<PAGE>
-10-
The remaining restructuring charge of $9.8 million, principally associated
with European businesses in the Consumer segment, relates to the accrual of
future expenditures, principally consisting of lease and other contractual
obligations, for which no future benefit will be realized.
Change in Accounting for Goodwill: On a periodic basis through December 31,
1997, the Corporation estimated the future undiscounted cash flows of the
businesses to which goodwill related in order to determine that the carrying
value of the goodwill had not been impaired.
As a consequence of the strategic repositioning plan, the Corporation
elected to change its method of measuring goodwill impairment from an
undiscounted cash flow approach to a discounted cash flow approach effective
January 1, 1998. On a periodic basis, the Corporation estimates the future
discounted cash flows of the businesses to which goodwill relates. When such
estimate of the future discounted cash flows, net of the carrying amount of
tangible net assets, is less than the carrying amount of goodwill, the
difference will be charged to operations. For purposes of determining the future
discounted cash flows of the businesses to which goodwill relates, the
Corporation, based upon historical results, current projections, and internal
earnings targets, determines the projected future operating cash flows, net of
income tax payments, of the individual businesses. These projected future cash
flows are then discounted at a rate corresponding to the Corporation's estimated
cost of capital, which also is the hurdle rate used by the Corporation in making
investment decisions. Future discounted cash flows for the recreational products
business, the glass container-forming and inspection equipment business, and the
household products business in North America, Latin America, and Australia
include an estimate of the proceeds from the eventual sale of such businesses,
net of associated selling expenses and taxes. The Corporation believes that
measurement of the value of goodwill through a discounted cash flow approach is
preferable in that such a measurement facilitates the timely identification of
impairment of the carrying value of investments in businesses and provides a
more current and, with respect to the businesses to be sold, more realistic
valuation than the undiscounted approach.
In connection with the Corporation's change in accounting policy with
respect to measurement of goodwill impairment, $900.0 million of goodwill was
written off through a charge to operations during the first quarter of 1998.
That goodwill write-off represented a per-share net loss of $9.51 both on a
basic and diluted basis for the six-month period ended June 28, 1998. That
write-down, which relates to goodwill associated with the security hardware,
plumbing products, and fastening and assembly systems businesses and includes a
$40.0 million write-down of goodwill associated with a business to be sold,
represents the amount necessary to write-down the carrying values of goodwill
for those businesses to the Corporation's best estimate, as of January 1, 1998,
of those businesses' future discounted cash flows using the methodology
described in the preceding paragraph. This change represents a change in
accounting principle which is indistinguishable from a change in estimate.
<PAGE>
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NOTE 3: INVENTORIES
The components of inventory at the end of each period, in millions of dollars,
consisted of the following:
<TABLE>
<CAPTION>
June 28, 1998 December 31, 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FIFO cost
Raw materials and work-in-process $ 205.1 $ 199.4
Finished products 584.7 599.4
- -------------------------------------------------------------------------------------------------------------------
789.8 798.8
Excess of FIFO cost over LIFO inventory value (24.8) (24.1)
- -------------------------------------------------------------------------------------------------------------------
$ 765.0 $ 774.7
===================================================================================================================
</TABLE>
Inventories are stated at the lower of cost or market. The cost of United
States inventories is based primarily on the last-in, first-out (LIFO) method;
all other inventories are based on the first-in, first-out (FIFO) method.
NOTE 4: GOODWILL
In connection with the Corporation's change in accounting policy with respect to
measurement of goodwill impairment as discussed in Note 2, goodwill in the
amount of $900.0 million was written off through a charge to operations during
the first quarter of 1998, and has been reflected in the Consolidated Statement
of Earnings as "Write-off of goodwill" for the six months ended June 28, 1998.
That write-down, which relates to goodwill associated with the security
hardware, plumbing products, and fastening and assembly systems businesses and
includes a $40.0 million write-down of goodwill associated with a business to be
sold, represents the amount necessary to write-down the carrying values of
goodwill for those businesses to the Corporation's best estimate, as of January
1, 1998, of those businesses' future discounted cash flows using the methodology
described in Note 2.
In addition, goodwill related to the Corporation's household products
business was written off in connection with the sale of that business during the
quarter ended June 28, 1998.
Goodwill at the end of each period, in millions of dollars, was as follows:
<TABLE>
<CAPTION>
June 28, 1998 December 31, 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Goodwill $1,513.3 $2,499.9
Less accumulated amortization 577.6 622.6
- -------------------------------------------------------------------------------------------------------------------
$ 935.7 $1,877.3
===================================================================================================================
</TABLE>
<PAGE>
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NOTE 5: LONG-TERM DEBT
In June 1998, a wholly owned subsidiary of the Corporation issued senior
unsecured notes that were guaranteed by the Corporation in the amount of $300.0
million. Of that amount, $150.0 million bear interest at a fixed rate of 6.55%
and are due in 2007, and $150.0 million bear interest at a fixed rate of 7.05%
and are due in 2028. Proceeds from the issuance of the senior unsecured notes
were used to repay indebtedness outstanding under the Corporation's unsecured
revolving credit facility.
Indebtedness of subsidiaries of the Corporation in the aggregate principal
amounts of $903.4 million and $776.0 million were included in the Consolidated
Balance Sheet at June 28, 1998 and December 31, 1997, respectively, under the
captions short-term borrowings, current maturities of long-term debt, and
long-term debt.
NOTE 6: SALE OF RECEIVABLES
As more fully described in Note 2 of Notes to Consolidated Financial Statements
included in the Corporation's Annual Report on Form 10-K for the year ended
December 31, 1997, the Corporation voluntarily terminated its sale of
receivables program in December 1997 as the program was no longer deemed
necessary to support its liquidity requirements. As of June 29, 1997, the
Corporation had sold $136.0 million of receivables under this program. The
discount on sale of receivables is included in "Other expense."
NOTE 7: INTEREST EXPENSE (NET OF INTEREST INCOME)
Interest expense (net of interest income) for each period, in millions of
dollars, consisted of the following:
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
Three Months Ended Six Months Ended
June 28, 1998 June 29, 1997 June 28, 1998 June 29, 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest expense $35.7 $32.1 $72.3 $65.4
Interest (income) (5.9) (1.5) (14.1) (4.2)
- -------------------------------------------------------------------------------------------------------------------
$29.8 $30.6 $58.2 $61.2
===================================================================================================================
</TABLE>
NOTE 8: SUBSEQUENT EVENTS
On June 29, 1998, the Corporation announced that it had signed a definitive
agreement with an affiliate of Cornerstone Equity Investors, LLC to recapitalize
its recreational products business, True Temper Sports. In connection with the
transaction, the Corporation will receive $202.7 million in cash and retain
approximately 6% of preferred and common stock valued at approximately $4
million. The transaction is expected to close during the third quarter of 1998,
subject to satisfaction of customary closing conditions.
<PAGE>
-13-
On July 14, 1998, the Corporation announced that it had entered into a
definitive agreement with Bucher Holding A.G., of Switzerland, to sell its glass
container-forming and inspection equipment business, Emhart Glass, for $194.0
million. Net proceeds, after costs and taxes, are expected to approximate $150
million. The transaction is expected to close by mid-October 1998, subject to
receipt of regulatory approvals and satisfaction of customary closing
conditions.
<PAGE>
-14-
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The Corporation reported net earnings of $58.4 million or $.61 per share on a
diluted basis for the three-month period ended June 28, 1998. Included in net
earnings for the quarter ended June 28, 1998, was an after-tax gain on sale of
businesses of $4.2 million ($36.5 million before tax) or $.04 per share on a
diluted basis. Excluding the gain on sale of businesses, net earnings were $54.2
million or $.57 per diluted share for the quarter ended June 28, 1998, compared
to net earnings of $45.5 million or $.47 per share on a diluted basis for the
comparable period in 1997.
During the quarter ended June 28, 1998, the Corporation closed the sale of
its household products business (excluding certain assets associated with the
Corporation's cleaning and lighting products) in North America, Central America,
the Caribbean, and South America (excluding Mexico and Brazil). Proceeds from
the sale of the household products business in Mexico (excluding certain assets
related to the cleaning and lighting business in that country), held in escrow
at June 28, 1998 pending regulatory approval, were received in July 1998.
Subsequent to June 28, 1998, the Corporation entered into definitive agreements
to recapitalize its recreational products business, True Temper Sports, and to
sell its glass container-forming and inspection equipment business, Emhart
Glass. The sales or recapitalization of these three businesses, which will
complete part of the Corporation's strategic repositioning plan, are expected to
yield gross cash proceeds of over $700 million and net cash proceeds of
approximately $550 million.
The Corporation reported a net loss of $913.0 million or $9.65 per share
on a diluted basis for the six-month period ended June 28, 1998, compared to net
earnings of $71.8 million or $.75 per share on a diluted basis for the six-month
period ended June 29, 1997. Excluding the effects of the restructuring charge of
$140.0 million ($100.0 million after tax) and the goodwill write-off of $900.0
million, both recognized in the first quarter of 1998, and the after-tax gain on
sale of businesses recognized in the second quarter of 1998, net earnings for
the six months ended June 28, 1998, would have been $82.8 million or $.86 per
share on a diluted basis.
STRATEGIC REPOSITIONING
As more fully described in Note 2 of Notes to Consolidated Financial Statements,
on January 26, 1998, the Board of Directors approved a comprehensive strategic
repositioning of the Corporation, consisting of three separate elements.
The first element of the strategic repositioning plan is to focus the
Corporation on its core operations-that is, those strategic businesses that the
Corporation believes are capable of delivering superior operating and financial
performance. As a result, the Corporation has taken actions to divest or
recapitalize its non-strategic businesses, which consist of True Temper Sports,
Emhart Glass, and the household products business in North America, Latin
America, and Australia.
During the quarter ended June 28, 1998, the Corporation closed the sale of
its household products business in North America, Central America, the
Caribbean, and South America (excluding Mexico and Brazil) and received gross
proceeds of $288.0 million. Gross proceeds of
<PAGE>
-15-
$27.0 million from the sale of the household products business in Mexico, held
in escrow at June 28, 1998 pending regulatory approval, were received by the
Corporation in July 1998. During 1998, the Corporation also completed the sale
of its household products business in Australia. The Corporation continues to
pursue the sale of its household products business in Brazil. In connection with
the sale of the household products businesses, the Corporation will retain its
cleaning and lighting product lines, which include the Dustbuster(R) cordless
vacuum. Subsequent to June 28, 1998, the Corporation entered into definitive
agreements to recapitalize True Temper Sports and to sell Emhart Glass. The
sales or recapitalization of these businesses are expected to yield gross cash
proceeds of over $700 million and net cash proceeds of approximately $550
million.
The pre-tax gain on sale of businesses of $36.5 million ($4.2 million after
tax) recognized by the Corporation during the quarter ended June 28, 1998,
represents the gain on the sale of the household products business (excluding
certain assets associated with the cleaning and lighting product lines) in North
America, Central America, the Caribbean, and South America (excluding Brazil),
and is net of losses recognized in connection with the agreement to sell Emhart
Glass and the anticipated sale of the household products business in Brazil.
Because True Temper Sports, Emhart Glass, and the household products business in
North America, Latin America, and Australia are not treated as discontinued
operations under generally accepted accounting principles, they remain a part of
the Corporation's reported results from continuing operations until their sale.
Under the accounting prescribed by Statement of Financial Accounting Standards
(SFAS) No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of, the Corporation is required to reflect the
long-lived assets of these businesses at the lower of their carrying amounts or
their expected fair value less costs to sell and has ceased depreciation of the
businesses' fixed assets and amortization of goodwill related to these
businesses during the period held for sale.
The net proceeds from the sales of these businesses, augmented by free cash
flow generated by the remaining businesses, have been and will be used to fund
the second element of the strategic repositioning plan-the repurchase of up to
10% of the Corporation's outstanding common shares over a two-year period.
During the six months ended June 28, 1998, the Corporation repurchased 2,876,000
common shares at an aggregate cost of $154.7 million, which is net of $.7
million in premiums received in connection with the Corporation's sale of put
options on 400,000 shares of its common stock. During the period from June 29,
1998, through August 11, 1998, the Corporation purchased an additional 1,408,500
common shares at an aggregate cost of $81.0 million, which is net of $.7 million
in premiums received in connection with the Corporation's further sale of put
options on 400,000 shares of its common stock.
The third element of the strategic repositioning plan involves a major
restructuring program. That restructuring program is being undertaken to reduce
fixed costs and to simplify the supply chain and new product introduction
processes. As part of the restructuring program, the Corporation expects to make
significant changes to its European power tools and accessories business by
consolidating distribution and transportation and centralizing finance,
marketing, and support services. These changes in Europe will be accompanied by
investment in state-of-the-art information systems similar to the investments
being made in the North American business. In addition, the worldwide power
tools and accessories business will rationalize its manufacturing plant and
design center network, resulting in the closure of a number of manufacturing
plants and
<PAGE>
-16-
design centers. The restructuring program also will include actions to improve
the cost position of other businesses.
This restructuring program is estimated to result in a pre-tax charge of up
to $225 million, of which $140.0 million was recognized in the first quarter of
1998, with the balance to be recognized as the program progresses over a
two-year period. The Corporation expects to recognize an additional portion of
the total anticipated restructuring charge in the third quarter of 1998 in
connection with a voluntary retirement program offered to employees in the
United States. In addition to the restructuring charge, related expenses of
approximately $60 million will be charged to operations over a two-year period
as the restructuring program progresses. These related expenses, which are
incremental to the plans being implemented, do not qualify as restructuring or
exit costs under generally accepted accounting principles.
The major component of the $140.0 million restructuring charge ($100.0
million net of tax) recognized in the first quarter of 1998 related to the
accrual of severance benefits in the amount of $102.7 million, principally
associated with European businesses in the Consumer segment. During the three
and six months ended June 28, 1998, the Corporation recognized $22.8 million and
$28.4 million of expenses, respectively, related to the restructuring program
and divestitures in operating income. Included in those restructuring-related
expenses were inventory write-downs associated with products in the retained
cleaning and lighting business that will be discontinued. Cash spending on the
restructuring program during 1998 is expected to range between $80 million to
$100 million.
Benefits from the restructuring charge taken in the first quarter of 1998,
estimated at more than $60 million on an annual, pre-tax basis once fully
implemented, are not expected to become evident until some time in 1999, as the
1998 benefits are likely to be offset by related expenses associated with the
program. As indicated in Note 2 of Notes to Consolidated Financial Statements,
the severance accrual included in the $140.0 million restructuring charge taken
in the first quarter of 1998 related to the elimination of approximately 3,700
positions. As the Corporation shifts certain production and other activities, it
is anticipated that an additional 1,300 positions will be created. As a result,
the Corporation's estimate of annual, pre-tax savings in excess of $60 million,
expected once the restructuring actions taken in the first quarter of 1998 are
fully implemented, reflects the savings from a net reduction of approximately
2,400 positions.
As a consequence of the strategic repositioning plan, the Corporation
elected to change its method of measuring goodwill impairment from an
undiscounted cash flow approach to a discounted cash flow approach, effective
January 1, 1998. The Corporation believes that measurement of the value of
goodwill through the discounted cash flow approach, as more fully described in
Note 2 of Notes to Consolidated Financial Statements, is preferable in that the
discounted cash flow measurement facilitates the timely identification of
impairment of the carrying value of investments in businesses and provides a
more current and, with respect to the businesses to be sold, realistic valuation
than the undiscounted approach. The adoption of this discounted cash flow
approach, however, may result in greater earnings volatility since decreases in
projected discounted cash flows of certain businesses will, as discussed above,
result in timely recognition of future impairment.
<PAGE>
-17-
In connection with this change in accounting with respect to the measurement
of goodwill impairment, a non-cash charge of $900.0 million was recognized
during the first quarter of 1998 ($9.51 per share both on a basic and diluted
basis for the six months ended June 28, 1998). The $900.0 million write-down,
which relates to goodwill associated with the Corporation's security hardware,
plumbing products, and fastening and assembly systems business and includes a
$40.0 million write-down of goodwill associated with a business to be sold,
represents the amount necessary to reduce the carrying values of goodwill for
those businesses to the Corporation's best estimate, as of January 1, 1998, of
those businesses' future discounted cash flows using the methodology described
in Note 2 of Notes to Consolidated Financial Statements. As a result of the
goodwill write-off and the cessation of goodwill amortization related to the
businesses to be sold, goodwill amortization declined from $15.9 million for the
three months ended June 29, 1997 ($31.9 million for the first half of 1997) to
$5.9 million for the three months ended June 28, 1998 ($12.4 million for the
first half of 1998).
SALES
The following chart sets forth an analysis of the consolidated changes in sales
for the three- and six-month periods ended June 28, 1998 and June 29, 1997.
<TABLE>
ANALYSIS OF CHANGES IN SALES
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
For the Three Months Ended For the Six Months Ended
(Dollars in Millions) June 28, 1998 June 29, 1997 June 28, 1998 June 29, 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total sales $1,169.7 $1,182.2 $2,178.0 $2,197.2
Unit volume 2% 1% 3% -%
Price (1)% (1)% (1)% (1)%
Currency (2)% (2)% (3)% (2)%
- -------------------------------------------------------------------------------------------------------------------
Change in total sales (1)% (2)% (1)% (3)%
===================================================================================================================
</TABLE>
The Corporation operates in two business segments: Consumer, including
consumer and professional power tools and accessories, household products,
security hardware, outdoor products (composed of electric lawn and garden tools
and recreational products), plumbing products, and product service; and
Commercial, including fastening and assembly systems and glass container-forming
and inspection equipment. As discussed above and in Note 2 of Notes to
Consolidated Financial Statements, the Corporation has sold the household
products business (excluding assets associated with the cleaning and lighting
product lines retained by the Corporation) in North America, Australia, Central
America, the Caribbean, and South America (excluding Brazil), has entered into
agreements to recapitalize True Temper Sports and sell Emhart Glass, and is
pursuing the sale of the household products business in Brazil. The results of
operations and financial positions of these businesses will be included in the
consolidated financial statements through the dates of consummation of the
respective transactions.
<PAGE>
-18-
The following chart sets forth an analysis of the change in sales for the
three and six months ended June 28, 1998, compared to the three and six months
ended June 29, 1997, by geographic area for each business segment.
<TABLE>
ANALYSIS OF CHANGES IN SALES
FOR THE THREE AND SIX MONTHS ENDED JUNE 28, 1998
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
United States Europe Other Total
(Dollars in Millions) 3 Months 6 Months 3 Months 6 Months 3 Months 6 Months 3 Months 6 Months
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Consumer
Total sales $610.7 $1,094.1 $279.0 $544.6 $123.3 $221.7 $1,013.0 $1,860.4
Unit volume 6% 6% 6% 6% (12)% (8)% 3% 4%
Price (1)% (1)% -% -% (1)% (2)% (1)% (1)%
Currency -% -% (4)% (6)% (5)% (5)% (2)% (2)%
- ----------------------------------------------------------------------------------------------------------------------
5% 5% 2% -% (18)% (15)% -% 1%
- ----------------------------------------------------------------------------------------------------------------------
Commercial
Total sales $ 71.6 $ 142.6 $ 63.1 $130.3 $ 22.0 $ 44.7 $ 156.7 $ 317.6
Unit volume (5)% (9)% (1)% 6% (27)% (21)% (8)% (5)%
Price (1)% -% 1% -% (1)% (1)% -% -%
Currency -% -% (3)% (5)% (5)% (4)% (2)% (3)%
- ----------------------------------------------------------------------------------------------------------------------
(6)% (9)% (3)% 1% (33)% (26)% (10)% (8)%
- ----------------------------------------------------------------------------------------------------------------------
Consolidated
Total sales $682.3 $1,236.7 $342.1 $674.9 $145.3 $266.4 $1,169.7 $2,178.0
Unit volume 4% 4% 5% 6% (15)% (11)% 2% 3%
Price (1)% (1)% -% -% (1)% (1)% (1)% (1)%
Currency -% -% (4)% (6)% (5)% (5)% (2)% (3)%
- ----------------------------------------------------------------------------------------------------------------------
Change in total sales 3% 3% 1% -% (21)% (17)% (1)% (1)%
======================================================================================================================
</TABLE>
The negative effects of a stronger United States dollar compared to most
major foreign currencies caused a decrease in the Corporation's consolidated
sales from the prior year's level of 2% and 3% for the three and six months
ended June 28, 1998, respectively. Pricing actions had a 1% negative effect on
sales for both the three-and six-month periods ended June 28, 1998, compared to
the corresponding periods in 1997. Unit volume increased by 2% for the
three-month period ended June 28, 1998, compared to the prior year's level. For
the six-month period ended June 28, 1998, unit volume rose 3% over the 1997
level.
Unit volume in the Consumer segment for the three months ended June 28,
1998, increased by 3% compared to the corresponding quarter in 1997 while, for
the six months ended June 28, 1998, unit volume exceeded the 1997 level by 4%.
<PAGE>
-19-
Sales in the Corporation's Consumer businesses in the United States
increased by 5% for both the three- and six-month periods ended June 28, 1998,
over the 1997 levels. Excluding the sales declines experienced by the
Corporation's accessories business and, most significantly, household products
business in the three and six months ended June 28, 1998, sales in the
Corporation's other domestic Consumer businesses for those periods exceeded the
prior year's levels.
Sales increased at double-digit rates during the three- and six-month
periods ended June 28, 1998, over the corresponding periods in 1997 in the
domestic plumbing products and recreational products businesses. Sales in the
domestic power tools business increased at a high single-digit rate and at a
double-digit rate during the three- and six-month periods ended June 28, 1998,
respectively, compared to the corresponding periods in 1997. Sales in the
security hardware business increased at a double-digit rate for the three-month
period ended June 28, 1998, and at a mid-single digit rate for the six-month
period ended June 28, 1998, both compared to the corresponding periods in 1997.
Sales in the domestic accessories business decreased by mid-single digit rates
for the three- and six-month periods ended June 28, 1998, compared to the
corresponding 1997 periods principally due to SKU reduction efforts in that
business. The domestic power tools business benefited from the strength of the
DEWALT(R) professional power tools line, due largely to products introduced over
the past year, and of outdoor products during the three- and six-month periods
ended June 28, 1998, but those benefits were partially offset by weakness during
the same periods in sales of consumer power tools. Sales gains in the domestic
security hardware business during 1998 were driven by the introduction of the
AccessOneTM Remote Keyless Entry lock and The Society Brass CollectionTM,
principally in the second quarter of 1998. The sales increases in these
businesses were partially offset by sharply lower sales in the domestic
household products business in the three and six months ended June 28, 1998,
compared to the corresponding periods in 1997. The most significant declines in
the household products business were in the cleaning products category,
specifically with respect to the ScumBusterTM cordless submersible scrubber.
While the Corporation sold the domestic household products business on June 26,
1998, it has retained the cleaning and lighting product lines. The Corporation
anticipates that negative comparisons to the prior year with respect to the
retained cleaning and lighting business as well as negative sales comparisons
for the businesses sold or to be sold will continue to affect the Corporation's
1998 results.
Excluding the significant negative effect of changes in foreign exchange
rates, sales in the Corporation's Consumer businesses in Europe improved by 6%
for both the three and six months ended June 28, 1998, from the corresponding
periods in 1997. Increased sales in Europe of consumer and professional power
tools and accessories, outdoor lawn and garden tools, security hardware, and
product service during the three and six months ended June 28, 1998, as compared
to the prior year's levels more than offset declines during those periods in
sales of household products.
Sales of the Corporation's Consumer businesses in Other geographic areas for
the three and six months ended June 28, 1998, decreased by 13% and 10%,
respectively, from the same periods in 1997, excluding the negative effect of
changes in foreign exchange rates during 1998. The continuing effect of the
Asian economic crisis as well as sales weakness in Latin America, excluding
Mexico, were the principal reasons for the decline.
<PAGE>
-20-
Excluding the negative effect of changes in foreign exchange rates, sales in
the Corporation's Commercial businesses decreased by 8% and 5% during the three
and six months ended June 28, 1998, respectively, from the prior year's levels.
Despite lower automotive sales during 1998 due to softness in Asia and the
effects of the General Motors strike in the United States during the second
quarter of 1998, sales in the Corporation's fastening and assembly systems
business increased at a low single-digit rate for the three and six months ended
June 28, 1998, compared to the corresponding periods in 1997, exclusive of
negative currency effects. This sales growth was more than offset by sharply
lower sales, exclusive of negative currency effects, in the Emhart Glass
business during the three and six months ended June 28, 1998, compared to the
comparable periods in 1997.
EARNINGS
Operating income for the three-month period ended June 28, 1998, excluding the
gain on sale of businesses of $36.5 million, was $112.3 million, or 9.6% of
sales, compared to $104.3 million, or 8.8% of sales, for the corresponding
period in 1997. An operating loss of $821.1 million was recognized for the six
months ended June 28, 1998, compared to operating income of $177.6 million for
the corresponding period in 1997. Excluding the effects of the $140.0 million
restructuring charge and the $900.0 million write-off of goodwill, both
recognized in the first quarter of 1998, and of the $36.5 million gain on sale
of businesses recognized in the second quarter of 1998, operating income for the
first half of 1998 was $182.4 million, or 8.4% of sales, compared to $177.6
million, or 8.1% of sales, for the first half of 1997.
Operating results for the three and six months ended June 28, 1998, included
$22.8 million and $28.4 million, respectively, of expenses directly related to
the strategic repositioning plan that do not qualify as restructuring or exit
costs under generally accepted accounting principles ("restructuring-related
expenses"). Included in these amounts is the write-down to net realizable value
of cleaning and lighting inventories that will be discontinued in connection
with the assumption of those product lines in North America by the Corporation's
power tool business. Excluding the effects of both these restructuring-related
expenses and the gain on sale of businesses, operating income would have
increased by 30% from $104.3 million, or 8.8% of sales, for the quarter ended
June 29, 1997, to $135.1 million, or 11.5% of sales, for the quarter ended June
28, 1998. Excluding the effects of these restructuring-related expenses, the
restructuring charge, the goodwill write-off, and the gain on sale of
businesses, all recognized in the first half of 1998, operating income would
have increased by 19% from $177.6 million, or 8.1% of sales, for the six months
ended June 29, 1997, to $210.8 million, or 9.7% of sales, for the six months
ended June 28, 1998. In addition to the realization of benefits from
restructuring actions taken in 1998, a major contributor to these improvements
was the $10.0 million and $19.5 million reduction in the level of goodwill
amortization experienced in the three and six months ended June 28, 1998,
respectively, as compared to the corresponding periods in 1997, as a result of
the goodwill write-off and cessation of amortization of goodwill associated with
the businesses to be sold. The lower level of goodwill amortization experienced
in the first half of 1998 will continue in future periods.
<PAGE>
-21-
Improvements in operating income as a percentage of sales, exclusive of, for
the six months ended June 28, 1998, the restructuring charge and goodwill
write-off and, for the three and six months ended June 28, 1998, the gain on
sale of businesses and restructuring-related expenses, were experienced in the
Corporation's domestic power tools and accessories business, European security
hardware business, plumbing products business, recreational products business,
and fastening and assembly systems business, offset by decreased profitability
in the household products and Emhart Glass businesses, in the domestic security
hardware business, and in the power tools and accessories businesses outside the
United States.
Gross margin as a percentage of sales was 34.0% and 35.6% for the
three-month periods ended June 28, 1998, and June 29, 1997, respectively. Gross
margin as a percentage of sales was 34.3% for the first half of 1998, compared
to 35.7% for the first half of 1997. The decline in gross margin during the
three and six months ended June 28, 1998, compared to the corresponding periods
in 1997 primarily resulted from adverse foreign exchange effects on product
costs, principally in the European operations, competitive pressures that
continued to constrain pricing, and restructuring-related expenses, partially
offset by increased productivity net of inflation.
Selling, general, and administrative expenses as a percentage of sales for
the three-month period ended June 28, 1998, were 24.4% compared to 26.7% for the
comparable period in 1997. Selling, general, and administrative expenses as a
percentage of sales for the six-month period ended June 28, 1998, were 26.0%,
compared to 27.6% for the comparable period in 1997. These improvements were the
result of lower goodwill amortization in the three and six months ended June 28,
1998, compared to the corresponding periods in 1997, as a result of the goodwill
write-off and cessation of amortization of goodwill related to the businesses to
be sold, as well as benefits realized from restructuring actions taken in 1998.
Net interest expense (interest expense less interest income) was $29.8
million and $58.2 million for the three and six months ended June 28, 1998,
respectively, compared to $30.6 million and $61.2 million for the three and six
months ended June 29, 1997, respectively. The lower level of net interest
expense in the three and six months ended June 28, 1998, as compared to the
corresponding periods in 1997 was primarily the result of more favorable debt
mix in 1998 coupled with a lower level of net debt (total debt less cash and
cash equivalents) due to improved cash flows from operating activities in 1998.
The Corporation maintains a portfolio of interest rate hedge instruments for
the purpose of managing interest rate exposure. During the six months ended June
28, 1998, the Corporation's portfolio was reduced as a result of the following
scheduled maturities: (i) variable to fixed rate interest rate swaps with an
aggregate notional principal amount of $50.0 million; (ii) fixed to variable
rate interest rate swaps with an aggregate notional principal amount of $100.0
million; (iii) rate basis swaps with an aggregate notional principal amount of
$50.0 million; and (iv) interest rate swaps that swapped from fixed rate United
States dollars into fixed rate Japanese yen with an aggregate notional principal
amount of $15.0 million. The Corporation also reduced its portfolio as a result
of its termination of fixed to variable interest rate swaps with an aggregate
notional principal amount of $250.0 million and of termination by the
counterparties of fixed to variable rate interest rate swaps with an aggregate
notional principal amount of $300.0 million. Deferred gains
<PAGE>
-22-
and losses on the early termination of interest rate swaps as of June 28, 1998,
were not significant. Partially offsetting these decreases in the interest rate
hedge portfolio, the Corporation entered into new fixed to variable rate
interest rate swaps with an aggregate notional principal amount of $250.0
million during the six months ended June 28, 1998.
Other expense for the three- and six-month periods ended June 28, 1998,
principally consisted of currency losses. Other expense for the three- and
six-month periods ended June 29, 1997, primarily included the discount on the
sale of receivables.
Income tax expense of $57.9 million for the quarter ended June 28, 1998,
included income tax expense of $32.3 million related to the gain on sale of
businesses recognized during that quarter. Excluding the taxes associated with
the gain on sale of businesses, the Corporation's reported tax rate would have
been 32% in the second quarter of 1998, compared to a tax rate of 35% in the
second quarter of 1997.
Income tax expense of $31.3 million was recognized on the Corporation's
pre-tax loss of $881.7 million for the six months ended June 28, 1998. Excluding
the income tax benefit of $40.0 million related to the pre-tax restructuring
charge of $140.0 million and the non-deductible write-off of goodwill in the
amount of $900.0 million, both recognized in the first quarter of 1998, and the
$32.3 million of tax expense recognized on the gain on sale of businesses in the
second quarter of 1998, the Corporation's reported tax rate would have been 32%
in the first six months of 1998, compared to a tax rate of 35% in the first half
of 1997.
This decrease in the effective tax rate in 1998 resulted from the lower
amount of goodwill amortization, which is not tax deductible, in 1998 as
compared to 1997 due to the $900.0 million write-off of goodwill that occurred
in the first quarter of 1998 as a result of the Corporation's change in method
of measuring goodwill impairment.
The Corporation reported net earnings of $58.4 million, or $.62 per basic
share and $.61 per diluted share, for the three months ended June 28, 1998.
Excluding the after-tax gain on sale of businesses of $4.2 million recognized in
the second quarter of 1998, net earnings were $54.2 million, or $.58 per basic
share and $.57 per diluted share, for the three-month period ended June 28,
1998, compared to $45.5 million, or $.48 per basic share and $.47 per diluted
share, for the three-month period ended June 29, 1997.
The Corporation reported a net loss of $913.0 million, or $9.65 per share
both on a basic and diluted basis, for the six-month period ended June 28, 1998,
principally as a result of the restructuring charge and goodwill write-off
during that period. Because the Corporation reported a net loss for the six
months ended June 28, 1998, the calculation of reported earnings per share on a
diluted basis excludes the impact of stock options since their inclusion would
be anti-dilutive--that is, decrease the per-share loss. For comparative
purposes, however, the Corporation believes that the dilutive effect of stock
options should be considered when evaluating the Corporation's performance
excluding the restructuring charge and goodwill write-off. If the dilutive
effect of stock options were considered, net earnings, excluding the goodwill
write-off and the after-tax restructuring charge and gain on sale of businesses,
would have been $82.8 million or $.86 per share on this diluted basis for the
six-month period ended June 28, 1998, compared to net earnings of $71.8 million
or $.75 per share on a diluted basis for the six-month period ended June 29,
1997.
<PAGE>
-23-
Interest Rate Sensitivity
As a result of the significant changes during the six months ended June 28,
1998, described above, in the Corporation's interest rate hedge portfolio, the
following table provides information as of June 28, 1998, about that portfolio.
This table should be read in conjunction with the information contained in
Management's Discussion and Analysis of Financial Condition and Results of
Operations under the heading "Interest Rate Sensitivity" included in the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1997.
<TABLE>
Notional Principal Amounts and Interest Rate Detail by Contractual Maturity Dates
<CAPTION>
Year Ending Dec. 31, Fair Value
6 Mos. Ending ------------------------------------------- (Assets)/
(U.S. Dollars in Millions) Dec. 31, 1998 1999 2000 2001 2002 Thereafter Total Liabilities
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Rate Derivatives
Interest Rate Swaps
(all U.S. dollar denomi-
nated except for U.S. rates
to foreign rates)
Fixed to variable rates $ -- $ -- $ 50.0 $ -- $ -- $ 250.0 $ 300.0 $ .7
Average pay rate (a)
Average receive rate 5.54% 6.02% 5.94%
Variable to fixed rates $200.0 $ -- $ -- $ -- $ -- $ -- $ 200.0 $ (.6)
Average pay rate 7.17% 7.17%
Average receive rate (b)
Fixed U.S. rates to fixed
foreign rates (c)
To Japanese yen $ -- $100.0 $ -- $ -- $ -- $ -- $ 100.0 $ (23.3)
Average pay rate (in
Japanese yen) (d) 1.99% 1.99%
Average receive rate 6.66% 6.66%
To deutsche marks $ -- $100.0 $ -- $ -- $ -- $ -- $ 100.0 $ (15.3)
Average pay rate (in
deutsche marks) (e) 4.73% 4.73%
Average receive rate 6.64% 6.64%
To Dutch guilders $ -- $ 50.0 $ -- $ -- $ -- $ -- $ 50.0 $ (8.1)
Average pay rate (in
Dutch guilders) (f) 4.58% 4.58%
Average receive rate 6.77% 6.77%
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
(a) The average pay rate is based upon 6-month forward LIBOR.
(b) The average receive rate is based upon 3-month forward LIBOR.
(c) The indicated fair values of interest rate swaps that swap from fixed U.S.
rates to fixed foreign rates include the fair values of the exchange of the
notional principal amounts at the end of the swap terms as well as the
exchange of interest streams over the life of the swaps. The fair values of
the currency exchange are also included in the disclosures of foreign
currency exchange rate sensitivity included in the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1997.
(d) The average pay rate (in Japanese yen) is based upon a notional principal
amount of 10.9 billion Japanese yen.
(e) The average pay rate (in deutsche marks) is based upon a notional principal
amount of 153.3 million deutsche marks.
(f) The average pay rate (in Dutch guilders) is based upon a notional principal
amount of 85.9 million Dutch guilders.
</FN>
</TABLE>
<PAGE>
-24-
FINANCIAL CONDITION
Operating activities provided cash of $6.1 million for the six months ended June
28, 1998, compared to $101.9 million of cash used before the sale of receivables
for the corresponding period in 1997. This increased cash generation was
principally the result of improved working capital management in the six months
ended June 28, 1998, as compared to the corresponding period in 1997.
Investing activities for the six months ended June 28, 1998, provided cash
of $234.8 million due principally to the receipt of $288.0 million of proceeds
from the sale of the household products business in North America and Latin
America, excluding Mexico and Brazil. Excluding the $288.0 million of sales
proceeds, investing activities for the six months ended June 28, 1998, used cash
of $53.2 million compared to $70.0 million in cash used in the corresponding
period in 1997. This lower cash usage in 1998 primarily resulted from a reduced
level of capital expenditures in the first half of 1998 compared to the
corresponding period in 1997.
Financing activities used cash of $281.7 million for the six months ended
June 28, 1998, compared to cash generated of $236.5 million in the first six
months of 1997. The increase in cash used in financing activities during the
first half of 1998 over the corresponding period in 1997 was principally the
result of cash expended for the stock repurchase program and for the redemption
of preferred stock of a subsidiary, coupled with lower borrowing levels in 1998
due, in part, to increased cash from operating activities and the receipt of
proceeds from the sale of a portion of the household products business.
During the six months ended June 28, 1998, a wholly owned subsidiary of the
Corporation issued $300.0 million of fixed rate, senior unsecured notes that
were guaranteed by the Corporation, of which $150.0 million is due in 2007 and
the balance is due in 2028. Proceeds of that debt issuance were used to repay
borrowings outstanding under the Corporation's revolving credit facility. In
addition, during that period, the Corporation retired $182.2 million of
long-term indebtedness in advance of their scheduled maturities. As a result of
changes in the Corporation's debt portfolio, average debt maturity was 6.1 years
at June 28, 1998, compared to 3.9 years at December 31, 1997. These changes in
the Corporation's debt portfolio, coupled with changes in the Corporation's
interest rate hedge portfolio described above, had the effect of decreasing the
Corporation's variable rate debt to total debt ratio from 63% at December 31,
1997, to 39% at June 28, 1998.
<PAGE>
-25-
In addition to measuring its cash flow generation and usage based upon the
operating, investing, and financing classifications included in the Consolidated
Statement of Cash Flows, the Corporation also measures its free cash flow. Free
cash flow, a measure commonly employed by bond rating agencies and banks, is
defined by the Corporation as cash available for debt reduction (including
short-term borrowings), prior to the effects of cash received from divested
businesses, issuances of equity, and sales of receivables and to the effects of
cash paid for stock repurchases and for the redemption of stock of subsidiaries.
Free cash flow, a more inclusive measure of the Corporation's cash flow
generation than cash flow from operating activities included in the Consolidated
Statement of Cash Flows, considers items such as cash used for capital
expenditures and dividends, as well as net cash inflows or outflows from hedging
activities. During the six months ended June 28, 1998, the Corporation
experienced negative free cash flow of $98.0 million compared to negative free
cash flow of $183.3 million for the corresponding period in 1997. This $85.3
million improvement in free cash flow during the first half of 1998 over the
1997 level was primarily the result of improved working capital management.
FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes statements that constitute "forward
looking statements" within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934 and that are
intended to come within the safe harbor protection provided by those sections.
By their nature, all forward looking statements involve risks and uncertainties.
Actual results may differ materially from those contemplated by the forward
looking statements for a number of reasons, including but not limited to: market
acceptance of the new products introduced in 1997 and 1998 and scheduled for
introduction in 1998; the level of sales generated from these new products
relative to expectations, based on the existing investments in productive
capacity and commitments of the Corporation to fund advertising and product
promotions in connection with the introduction of these new products; the
ability of the Corporation and its suppliers to meet scheduled timetables of new
product introductions; unforeseen competitive pressure or other difficulty in
maintaining mutually beneficial relationships with key distributors or
penetrating new channels of distribution; adverse changes in currency exchange
rates or raw material commodity prices, both in absolute terms and relative to
competitors' risk profiles; delays in or unanticipated inefficiencies resulting
from manufacturing and administrative reorganization actions in progress or
contemplated by the strategic repositioning described in the Corporation's
Annual Report on Form 10-K for the year ended December 31, 1997, and updated
herein; and the continuation of modest economic growth in the United States and
Europe and gradual improvement in the economic environment in Asia.
In addition to the foregoing, the Corporation's ability to realize the
anticipated benefits during 1998 and in the future of the restructuring actions
undertaken in 1998 is dependent upon current market conditions, as well as the
timing and effectiveness of the relocation or consolidation of production and
administrative processes. The ability to realize the benefits inherent in the
balance of the restructuring actions is dependent on the selection and
implementation of economically viable projects in addition to the restructuring
actions taken to date. The ability to achieve certain
<PAGE>
-26-
sales and profitability targets and cash flow projections also is dependent upon
the Corporation's ability to identify appropriate selected acquisitions that are
complementary to the repositioned business units at acquisition prices that are
consistent with these objectives.
There can be no assurance that the Corporation will consummate the sales of
the household products business in Brazil and the glass container-forming and
inspection equipment business and complete the recapitalization of the
recreational products business. Further, the Corporation's ability to realize
aggregate proceeds from the sales of the household products business (excluding
certain assets associated with the Corporation's cleaning and lighting products)
in North America and Latin America, excluding Brazil, and the glass
container-forming and inspection business and from the recapitalization of the
recreational products business of over $700 million on a gross basis or
approximately $550 million on a net basis, is dependent upon, with respect to
the sale of the glass container-forming and inspection equipment business, the
Corporation's receipt of regulatory and other necessary approvals and the
satisfaction of customary closing conditions, and with respect to the
recapitalization of the recreational products business, the satisfaction of
customary closing conditions.
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information required under this Item is included in Item 2 of Part I of this
report under the caption "Interest Rate Sensitivity" and in the seventh
paragraph under the caption "Earnings" and is incorporated by reference herein.
In addition, reference is made to Item 7A of the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1997.
<PAGE>
-27-
THE BLACK & DECKER CORPORATION
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
The Corporation is involved in various lawsuits in the ordinary course of
business. These lawsuits primarily involve claims for damages arising out of the
use of the Corporation's products and allegations of patent and trademark
infringement. The Corporation is also involved in litigation and administrative
proceedings involving employment matters and commercial disputes. Some of these
lawsuits include claims for punitive as well as compensatory damages. The
Corporation, using current product sales data and historical trends, actuarially
calculates the estimate of its current exposure for product liability claims for
amounts in excess of established deductibles and accrues for the estimated
liability as described above up to the limits of the deductibles. All other
claims and lawsuits are handled on a case-by-case basis.
The Corporation also is involved in lawsuits and administrative proceedings
with respect to claims involving the discharge of hazardous substances into the
environment. Certain of these claims assert damages and liability for remedial
investigations and cleanup costs with respect to sites at which the Corporation
has been identified as a potentially responsible party under federal and state
environmental laws and regulations (off-site). Other matters involve sites that
the Corporation currently owns and operates or has previously sold (on-site).
For off-site claims, the Corporation makes an assessment of the cost involved
based on environmental studies, prior experience at similar sites, and the
experience of other named parties. The Corporation also considers the ability of
other parties to share costs, the percentage of the Corporation's exposure
relative to all other parties, and the effects of inflation on these estimated
costs. For on-site matters associated with properties currently owned, an
assessment is made as to whether an investigation and remediation would be
required under applicable federal and state law. For on-site matters associated
with properties previously sold, the Corporation considers the terms of sale as
well as applicable federal and state laws to determine if the Corporation has
any remaining liability. If the Corporation is determined to have potential
liability for properties currently owned or previously sold, an estimate is made
of the total cost of investigation and remediation and other potential costs
associated with the site.
The Corporation's estimate of the costs associated with legal, product
liability, and environmental exposures is accrued if, in management's judgment,
the likelihood of a loss is probable. These accrued liabilities are not
discounted. Insurance recoveries for environmental and certain general liability
claims are not recognized until realized.
As of June 28, 1998, the Corporation had no known probable but inestimable
exposures for awards and assessments in connection with environmental matters
and other litigation and administrative proceedings that could have a material
effect on the Corporation.
<PAGE>
-28-
Management is of the opinion that the amounts accrued for awards or
assessments in connection with the environmental matters and other litigation
and administrative proceedings to which the Corporation is a party are adequate
and, accordingly, ultimate resolution of these matters will not have a material
adverse effect on the Corporation.
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
As indicated in Note 5 of Notes to Consolidated Financial Statements, in June
1998, a wholly owned subsidiary of the Corporation issued senior unsecured notes
(the "Debt Securities") that were guaranteed by the Corporation. Closing on the
sale of the Debt Securities occurred on June 26, 1998, and the title and amount
of the Debt Securities were as follows: $150,000,000 of 6.55% Senior Notes due
2007 and $150,000,000 of 7.05% Senior Notes due 2028. The Debt Securities were
unconditionally and irrevocably guaranteed by the Corporation. The initial
purchasers of the Debt Securities were Lehman Brothers Inc., Citicorp
Securities, Inc., NationsBanc Montgomery Securities LLC, and Chase Securities
Inc. The Debt Securities were issued pursuant to the exemption from registration
in Section 4(2) of the Securities Act of 1933 and may be resold in reliance upon
the exemption to the registration requirements provided by Rule 144A. All of the
Debt Securities were sold for cash and the Price to Investors, Discounts and
Commissions, and Proceeds to Issuers were are follows:
<TABLE>
===================================================================================================================
<CAPTION>
Price to Discounts and Proceeds to
Investors(1) Commissions Issuer(2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per 2007 Note.......................... 99.703% .65% 99.053%
Total ................................. $149,554,500 $975,000 $148,579,500
- -------------------------------------------------------------------------------------------------------------------
Per 2028 Note......................... 99.837% .875% 98.962%
Total................................. $149,755,500 $1,312,500 $148,443,000
===================================================================================================================
<FN>
(1) Plus accrued interest, if any, from June 26, 1998.
(2) Before deducting expenses payable by the Issuer estimated at $550,000.
</FN>
</TABLE>
As indicated in Note 2 of Notes to Consolidated Financial Statements under
the heading "Repurchase of Common Stock," in connection with the Corporation's
stock repurchase program the Corporation sold put options on 400,000 shares of
its Common Stock during the first six months of 1998. The put options were sold
in a series of transactions with an investment banking firm subject to customary
transfer restrictions in reliance upon the exemption from registration in
Section 4(2) of the Securities Act of 1933. The Corporation received aggregate
premiums of $.7 million in connection with these transactions. Each of the put
options is exercisable on a single fixed date specified in the option contract.
The average strike price of the put options sold during the first six months of
1998 was $53.11 per share.
<PAGE>
-29-
ITEM 5 OTHER INFORMATION
As indicated in the Proxy Statement distributed to the Corporation's
stockholders in connection with the 1998 Annual Meeting of Stockholders, it is
expected that the Corporation's 1999 Annual Meeting of Stockholders (the "1999
Meeting") will be held on April 27, 1999.
Stockholders wishing to submit a proposal to be considered for inclusion in
the Corporation's proxy statement for the 1999 Meeting in accordance with the
provisions of Rule 14a-8 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), must submit the proposal in writing and the proposal must
be received by the Corporation on or before November 3, 1998.
The advance notice provisions included in the Corporation's Bylaws provide
that stockholders wishing to bring business before a stockholders' meeting,
among other things, must give written notice to the Corporation of the business
to be introduced at the meeting and the notice must be received by the
Corporation's Corporate Secretary not less than 90 nor more than 110 days prior
to the meeting. As a result, with the exception of stockholder proposals
submitted in accordance with the provisions of Rule 14a-8 under the Exchange
Act, to be properly brought before the 1999 Meeting, business introduced by a
stockholder of the Corporation must be received by the Corporation's Corporate
Secretary on or before January 27, 1999, but not before January 7, 1999.
<PAGE>
-30-
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
Exhibit No. Description
2(a)(i) Transaction Agreement dated as of May 10, 1998, by and between The
Black & Decker Corporation and Windmere-Durable Holdings, Inc.*
2(a)(ii) Amendment No. 1 to Transaction Agreement dated as of June 26,
1998, by and between The Black & Decker Corporation and
Windmere-Durable Holdings, Inc.*
2(b)(i) Reorganization, Recapitalization and Stock Purchase Agreement
dated as of June 29, 1998, by and between The Black & Decker
Corporation, True Temper Sports, Inc. and TTSI LLC.*
2(b)(ii) Amendment No. 1 to Reorganization, Recapitalization and Stock
Purchase Agreement dated as of August 1, 1998, by and between The
Black & Decker Corporation, True Temper Sports, Inc. and TTSI
LLC.*
2(c) Transaction Agreement dated as of July 12, 1998, by and between
The Black & Decker Corporation and Bucher Holding AG.*
3 Bylaws of the Corporation, as amended.
4 Indenture dated as of June 26, 1998, by and between Black & Decker
Holdings Inc., as Issuer, the Corporation, as Guarantor, and The
First National Bank of Chicago, as Trustee.
11 Computation of Earnings Per Share.
12 Computation of Ratios.
27 Financial Data Schedule.
- ---------------------
* Certain schedules and attachments have been omitted. The Corporation agrees
to provide a copy of these schedules and attachments to the Securities and
Exchange Commission upon request.
On April 15, 1998, the Corporation filed a Current Report on Form 8-K with the
Securities and Exchange Commission. This Current Report on Form 8-K, filed
pursuant to Item 5 of that Form, stated that the Corporation had reported its
earnings for the quarter ended March 29, 1998. The Corporation did not file any
other reports on Form 8-K during the three-month period ended June 28, 1998.
All other items were not applicable.
<PAGE>
-31-
THE BLACK & DECKER CORPORATION
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE BLACK & DECKER CORPORATION
By /s/ THOMAS M. SCHOEWE
Thomas M. Schoewe
Senior Vice President and
Chief Financial Officer
Principal Accounting Officer
By /s/ STEPHEN F. REEVES
Stephen F. Reeves
Vice President and Controller
Date: August 12, 1998
EXHIBIT 2(a)(i)
TRANSACTION AGREEMENT
Dated as of May 10, 1998
By and Between
THE BLACK & DECKER CORPORATION
and
WINDMERE-DURABLE HOLDINGS, INC.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 Definitions....................................... 1
ARTICLE II
TRANSACTIONS AND CLOSING
Section 2.01 Closing Transactions.............................. 1
Section 2.02 Exchange Consideration............................ 3
Section 2.03 Closing........................................... 4
Section 2.04 Adjustment of Exchange Consideration.............. 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 3.01 Representations and Warranties of Seller.......... 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.01 Representations and Warranties of Buyer........... 6
ARTICLE V
COVENANTS AND AGREEMENTS OF SELLER
Section 5.01 Conduct of Business............................... 7
Section 5.02 Access to Information; Confidentiality............ 8
Section 5.03 Change of Lockbox Accounts........................ 9
Section 5.04 Access to Information; Cooperation After Closing.. 9
Section 5.05 Maintenance of Insurance Policies................. 9
Section 5.06 Noncompetition; Nonsolicitation; etc.............. 10
<PAGE>
ARTICLE VI
COVENANTS AND AGREEMENTS OF BUYER
Section 6.01 Confidentiality................................... 12
Section 6.02 Provision and Preservation of and Access to
Certain Information; Cooperation.................. 12
Section 6.03 Insurance; Financial Support Arrangements......... 13
Section 6.04 Use of Intellectual Property...................... 14
Section 6.05 Certain Environmental Investigations.............. 14
Section 6.06 Nonsolicitation of Employees, etc................. 15
ARTICLE VII
COVENANTS AND AGREEMENTS OF THE PARTIES
Section 7.01 Further Assurances................................ 16
Section 7.02 Certain Filings; Consents......................... 16
Section 7.03 Public Announcements.............................. 16
Section 7.04 Intellectual Property............................. 16
Section 7.05 HSR Act........................................... 17
Section 7.06 Certain Environmental Insurance Matters........... 17
Section 7.07 Legal Privileges.................................. 18
ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFIT MATTERS
Section 8.01 Employees and Employee Benefit Matters............ 18
ARTICLE IX
CONDITIONS TO CLOSING
Section 9.01 Conditions to the Obligations of Each Party....... 18
Section 9.02 Conditions to Obligation of Buyer................. 19
Section 9.03 Conditions to Obligation of Seller................ 20
Section 9.04 Effect of Waiver.................................. 20
<PAGE>
ARTICLE X
SURVIVAL; INDEMNIFICATION
Section 10.01 Survival.......................................... 20
Section 10.02 Indemnification................................... 22
Section 10.03 Procedures........................................ 23
Section 10.04 Limitations....................................... 25
ARTICLE XI
TERMINATION
Section 11.01 Termination....................................... 26
Section 11.02 Effect of Termination............................. 27
ARTICLE XII
MISCELLANEOUS
Section 12.01 Notices........................................... 27
Section 12.02 Amendments; Waivers............................... 28
Section 12.03 Expenses; Taxes................................... 29
Section 12.04 Successors and Assigns............................ 29
Section 12.05 Disclosure........................................ 29
Section 12.06 Construction...................................... 29
Section 12.07 Entire Agreement.................................. 30
Section 12.08 Governing Law..................................... 30
Section 12.09 Counterparts; Effectiveness....................... 30
Section 12.10 Jurisdiction...................................... 31
Section 12.11 Severability...................................... 31
Section 12.12 Captions.......................................... 31
Section 12.13 Bulk Sales........................................ 31
<PAGE>
EXHIBITS
EXHIBIT A Definitions
EXHIBIT B Representations and Warranties of Seller
EXHIBIT C Representations and Warranties of Buyer
EXHIBIT D Employees and Employee Benefit Matters
EXHIBIT E Additional Matters Relating to Product Liability
Issues
<PAGE>
ATTACHMENTS
Attachment I Opening Statement
Attachment II Form of Bill of Sale, Assignment and Assumption
Agreement
Attachment III Form of Assignment of United States Trademarks,
Trademark Registrations and Applications for
Registration
Attachment IV Form of Assignment of Foreign Trademarks, Trademark
Registrations and Applications for Registration
Attachment V Form of Assignment of United States Patents and
Patent Applications
Attachment VI Form of Assignment of Foreign Patents and
Applications for Patents
Attachment VII Form of Trademark License Agreement
Attachment VIII Form of Assignment of U.S. Copyrights
Attachment IX Form of Assignment of Mexican Trademarks, Trademark
Registrations and Applications for Registration
Attachment X Form of Cross License Agreement
Attachment XI Exchange Consideration Allocation Schedule
Attachment XII Certain Intellectual Property Assets
Attachment XIII Consents and Approvals Required Prior to Closing
Attachment XIV HPG Financial Statements
Attachment XV Certain Active Employees
Attachment XVI Form of Distribution Services Agreement (United
States)
Attachment XVII Form of Distribution Services Agreement (Latin
America)
Attachment XVIII Form of Services Agreement (United States and Canada)
Attachment XIX Form of Services Agreement (GPA)
<PAGE>
Attachment XX Form of Services Agreement (Mexico)
Attachment XXI Form of Services Agreement (Latin American Group and
CCA)
Attachment XXII Form of Services Agreement (Colombia)
Attachment XXIII Form of Services Agreement (Chile)
Attachment XXIV Form of Services Agreement (Peru)
Attachment XXV Form of Services Agreement (Argentina)
Attachment XXVI Form of Services Agreement (Puerto Rico)
Attachment XXVII Form of Services Agreement (Venezuela)
Attachment XXVIII Asheboro Facility
Attachment XXIX Opinion of Seller's Counsel
<PAGE>
-1-
TRANSACTION AGREEMENT
This Transaction Agreement (together with the Exhibits, Schedules and
Attachments hereto, this "Agreement") is made as of the 10th day of May 1998, by
and among The Black & Decker Corporation, a Maryland corporation ("Seller"), and
Windmere-Durable Holdings, Inc., a Florida corporation ("Buyer"), on behalf of
itself and its wholly owned Subsidiaries ("Buyer Companies").
W I T N E S S E T H:
WHEREAS, Seller, through certain of its direct and indirect
Subsidiaries, is engaged in the HPG Business;
WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement, Seller desires to transfer or to cause the Affiliated Transferors to
transfer substantially all of the assets held, owned by or used to conduct the
HPG Business, and to assign certain liabilities associated with the HPG
Business, to Buyer or Buyer Companies designated by Buyer, and Buyer desires to
receive or to cause such designated Buyer Companies to receive such assets and
assume such liabilities; and
WHEREAS, in connection with the sale of the HPG Business to Buyer,
Seller and Buyer desire to enter into certain agreements and arrangements
ancillary to such sale;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Capitalized terms used in this Agreement
shall have the meanings specified in this Agreement or in Exhibit A.
ARTICLE II
TRANSACTIONS AND CLOSING
Section 2.01 Closing Transactions. Upon the terms and subject to the
conditions set forth in this Agreement, the parties agree that at the Closing,
among other things:
(i) Seller and the Affiliated Transferors will transfer or
cause to be transferred to Buyer or Buyer Companies designated by Buyer
all Transferred Assets and Buyer or Buyer Companies designated by Buyer
will assume all Assumed Liabilities in accordance with this Agreement;
<PAGE>
-2-
(ii) to effect the transfer of certain assets and the
assumption of liabilities contemplated by the foregoing clause (i),
Seller or the Affiliated Transferors, as the case may be, and Buyer or
Buyer Companies shall execute and deliver the Assignment and Assumption
Agreements;
(iii) to effect the transfer by Seller or the Affiliated
Transferors of certain rights in respect of Intellectual Property used
or held for use exclusively in connection with the HPG Business, Seller
or the Affiliated Transferors, as the case may be, shall execute and
deliver the Intellectual Property Assignment Agreements;
(iv) to effect the license of certain rights in respect of
Intellectual Property, Seller or the Affiliated Transferors, as the
case may be, and Buyer or Buyer Companies shall execute (a) the
Trademark License Agreement in the form contemplated by Attachment VII
to this Agreement, and (b) the Cross License Agreement;
(v) Seller or the Affiliated Transferors, as the case may be,
and Buyer or Buyer Companies, as the case may be, shall execute and
deliver the Services Agreements; provided, however that Buyer shall
have the right to decline to enter into any or all of such Services
Agreements by notice given to Seller at any time prior to Closing;
(vi) Seller or the Affiliated Transferors, as the case may be,
and Buyer or Buyer Companies, as the case may be, shall execute and
deliver the Distribution Services Agreement (United States) and the
Distribution Services Agreement (Latin America) in the forms
contemplated by Attachment XVI and Attachment XVII to this Agreement;
(vii) Seller or the Affiliated Transferors, as the case may
be, and Buyer or Buyer Companies, as the case may be, to the extent
requested by Buyer, shall execute and deliver sublease agreements for
the sublease by Buyer or Buyer Companies, as the case may be, relating
to the facilities located in Richmond Hill, Ontario, Canada, Miami,
Florida, and Bosques de Las Lomas, Mexico and shared by the HPG
Business and Seller's power tools business, on terms and conditions to
be negotiated in good faith prior to the Closing consistent with the
terms and conditions of the applicable lease for such shared facilities
(including rent and expense reimbursement on a pro rata basis taking
into account the space used by the HPG Business and the space used by
Seller's power tools business) and on such other terms and conditions
as may be agreed to by Seller and Buyer. Such subleases shall be on a
month-to-month basis with 30 days advance written notice being required
to terminate the subleases, but in no event shall expire later than the
close of business on February 28, 1999;
(viii) Seller or the Affiliated Transferors, as the case may
be, and Buyer or Buyer Companies shall execute and deliver a supply
agreement relating to the continued supply, at Seller's option, for a
period commencing on the Closing Date and ending on the date on which
the Trademark License Agreement terminates in respect of the Black &
Decker trademark, of products and related parts, accessories or
attachments manufactured or sold by the HPG Business following the
Closing for sale by Seller Companies at the service centers and outlet
stores of Seller Companies, on terms and conditions to be negotiated
<PAGE>
-3-
in good faith prior to the Closing, it being understood and agreed that
the price of such products to Seller Companies shall be equal to
Buyer's standard cost of production calculated on a basis consistent
with current practices plus 15%;
(ix) Seller or the Affiliated Transferors, as the case may be,
and Buyer or Buyer Companies, as the case may be, shall execute and
deliver a lease agreement for the lease of the Kuantan Facility and any
related fixtures and equipment at the Kuantan Facility for a period of
up to six months following the Closing Date at a rental rate equal to
the reasonable out-of-pocket costs to Seller Companies of the continued
operation of the Kuantan Facility during the lease term plus $1.00, and
an agreement providing Buyer with a right of first refusal on the sale
by Seller Companies of any excess manufacturing equipment at the
Kuantan Facility that Seller Companies decide not to use in their
businesses;
(x) Seller or the Affiliated Transferors, as the case may be,
and Buyer or Buyer Companies, as the case may be, shall execute and
deliver a lease agreement for the lease of the Asheboro Property for a
period expiring on September 30, 1999, on terms and conditions
consistent with Attachment XXVIII to this Agreement;
(xi) Buyer Companies shall pay and deliver to Seller, for its
own account and as agent for the Affiliated Transferors, $315,000,000
in immediately available funds by wire transfer to an account or
accounts designated by Seller (which account shall be designated by
Seller by written notice to Buyer at least two Business Days prior to
the Closing Date, or such shorter notice as Buyer shall agree to
accept); and
(xii) At Closing, Seller shall deliver to Buyer: (A) in a form
agreed to by both Buyer and Seller, the instruments of conveyance in
form sufficient under Applicable Law to convey fee simple title to the
Queretaro Property, and (B) a No Lien Certificate issued by the Public
Registry of Property and Commerce in Queretaro, which confirms that fee
simple title to the Queretaro Property is vested in Seller, and that
the Queretaro Property is free and clear of all Liens, other than
Permitted Liens; provided, however, that if it is impractical because
of the legal formalities in Mexico to complete and record the
instruments of conveyance on the Closing Date, the parties hereto agree
that the Closing shall be consummated and such legal formalities will
be completed as soon as practicable after the Closing Date.
Section 2.02 Exchange Consideration.
(a) The consideration to be paid to Seller and the Affiliated
Transferors for the Transferred Assets (the "Exchange Consideration") shall
consist of the following:
(i) subject to adjustment in accordance with Section 2.04,
$315,000,000 in cash (as so adjusted, the "Adjusted Purchase Price");
and
(ii) the assumption by Buyer Companies of the Assumed
Liabilities in accordance with the Transaction Documents.
<PAGE>
-4-
(b) The Exchange Consideration shall be allocated to and among the
respective Transferred Assets in the manner contemplated by Attachment XI to
this Agreement. Seller and Buyer agree that the allocation of the Exchange
Consideration contemplated by Attachment XI to this Agreement is consistent with
the value of the Transferred Assets and the principles of Section 1060 of the
Code and the regulations thereunder. Seller and Buyer agree that they shall use
the allocation of the Exchange Consideration determined in accordance with
Attachment XI to this Agreement in any Tax Returns or other reports that deal
with the Contemplated Transactions and are filed with any Tax Authority.
Section 2.03 Closing. The closing (the "Closing") of the Contemplated
Transactions shall take place at the offices of Miles & Stockbridge P.C., 10
Light Street, Baltimore, Maryland 21202, on the 15th day following the delivery
by Seller to Buyer of the audited financial statements contemplated by Section
9.02(g) (or the next Business Day if the 15th day is not a Business Day),
provided, however, that unless the Buyer agrees otherwise, the Closing shall not
occur prior to June 9, 1998, and, provided further, that if all of the
conditions to Closing set forth in Article IX have not been satisfied (or
waived) as of that date and if closing on that date therefore would be
impractical, the Closing shall take place on the fifth Business Day following
the satisfaction or waiver (by the party entitled to waive the condition) of all
conditions to the Closing set forth in Article IX, or at such other time and
place as the parties to this Agreement may agree. The Closing will occur at 9:00
a.m. on the Closing Date.
Section 2.04 Adjustment of Exchange Consideration.
(a) Promptly following the Closing Date, but in no event later than 60
days after the Closing Date, Seller shall, at its expense, with the assistance
of Buyer, prepare and submit to Buyer a statement of net tangible assets (and,
if applicable, net working capital) setting forth, in reasonable detail,
Seller's calculation of the Net Tangible Assets as of the close of business on
the day prior to the Closing Date (the "Proposed Final Net Tangible Asset
Amount") and in addition, if the Closing Date is any day after June 28, 1998,
Seller's calculation of the amount of the difference (the "Proposed Net Working
Capital Change Amount") between the Net Working Capital as of the close of
business on the day prior to the Closing Date (the "Closing Net Working Capital
Amount") and the Net Working Capital as of the close of business on June 28,
1998 (the "June 28 Net Working Capital Amount"). In the event Buyer disputes the
correctness of the Proposed Final Net Tangible Asset Amount or the Proposed Net
Working Capital Change Amount, Buyer shall notify Seller of its objections
within 45 days after receipt of Seller's calculation of the Proposed Final Net
Tangible Asset Amount and the Proposed Net Working Capital Change Amount and
shall set forth, in writing and reasonable detail, the reasons for Buyer's
objections. If Buyer fails to deliver such notice of objections within such
time, Buyer shall be deemed, for purposes of this Section 2.04, to have accepted
Seller's calculation. To the extent Buyer does not object, in writing and in
reasonable detail as required and within the time period contemplated by this
Section 2.04(a) to a matter in the statement of net tangible assets (including,
but not limited to, matters impacting Net Working Capital) prepared and
submitted by Seller, Buyer shall be deemed to have accepted Seller's calculation
and presentation in respect of the matter and the matter shall not be considered
to be in dispute. Seller and Buyer shall endeavor in good faith to resolve any
matters disputed under this Section 2.04 within 20 days after Seller's receipt
of Buyer's notice of objections. If they are unable to do so, Seller and
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Buyer shall select a nationally known independent accounting firm (other than
Ernst & Young LLP or Grant Thornton LLP) to resolve the matters in dispute and
only those matters (in a manner consistent with Section 2.04(b) and with any
matters not in dispute), and the determination of such firm in respect of the
correctness of each matter remaining in dispute shall be conclusive and binding
on Seller and Buyer. With respect to each disputed matter, the determination of
such firm as to the appropriate amount shall not exceed the higher amount or be
less than the lower amount asserted by Buyer or Seller for such disputed matter
on or before the date of Seller's receipt of Buyer's notice of objections. The
Net Tangible Assets as of the close of business on the day prior to the Closing
Date, and, if applicable, the amount of the difference between the Closing Net
Working Capital Amount and the June 28 Net Working Capital Amount, as finally
determined pursuant to this Section 2.04(a) (whether by failure of Buyer to
deliver notice of objection, by agreement of Seller and Buyer or by
determination of the independent accountants selected as set forth above), are
referred to herein respectively as the "Final Net Tangible Asset Amount" and the
"Final Net Working Capital Change Amount."
(b) The Proposed Final Net Tangible Asset Amount, the Proposed Net
Working Capital Change Amount, the Final Net Tangible Asset Amount and the Final
Net Working Capital Change Amount shall be determined in accordance with the
accounting principles, policies, practices and methods utilized in the
preparation of the Opening Statement, as disclosed in the notes to the Opening
Statement and, to the extent applicable, the notes to the special-purpose
statement of net assets as of March 29, 1998, which is included in the HPG
Financial Statements, except as otherwise set forth in Note E to the Opening
Statement. Seller shall provide Buyer with notice of the time and location at
which all procedures relating to the determination of inventory will be
undertaken with respect to determination of the Proposed Final Net Tangible
Asset Amount and the Proposed Net Working Capital Change Amount and shall permit
Buyer and its representatives to be present to coordinate and observe the
counting procedure performed and to take such test counts as such
representatives of Buyer consider appropriate in the circumstances.
(c) If the Final Net Tangible Asset Amount is equal to or greater than
$107,500,000, there shall be no adjustment of the Exchange Consideration on
account of the Final Net Tangible Asset Amount. If the Final Net Tangible Asset
Amount is less than $107,500,000, the difference shall be paid to Buyer by
Seller with simple interest thereon from the Closing Date to the date of payment
at a floating rate per annum equal to the per annum interest rate announced from
time to time by Citibank, N.A. as its prime rate in effect. Such payment shall
be made in immediately available funds not later than five Business Days after
the determination of the Final Net Tangible Asset Amount by wire transfer to a
bank account designated in writing by Buyer.
(d) If the Closing Date is any day after June 28, 1998, the Exchange
Consideration shall be subject to adjustment on account of the Final Net Working
Capital Change Amount as provided in this Section 2.04(d). If the Final Net
Working Capital Change Amount is zero or constitutes a decrease of the Closing
Net Working Capital Amount from the June 28 Net Working Capital Amount, there
shall be no adjustment of the Exchange Consideration on account of the Final Net
Working Capital Change Amount. If the Final Net Working Capital Change Amount
constitutes an increase of the Closing Net Working Capital Amount over the June
28 Net Working Capital Amount, Buyer shall pay to Seller an amount equal to the
Net Working Capital
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Adjustment Amount (as hereinafter defined), together with interest thereon as
provided below in this Section 2.04(d). The "Net Working Capital Adjustment
Amount" shall equal the lesser of (i) the Final Net Working Capital Change
Amount or (ii) the amount of the excess of the Final Net Tangible Asset Amount
over $107,500,000. Interest shall accrue on the Net Working Capital Adjustment
Amount from the Closing Date to the date of payment at a floating rate per annum
equal to the per annum interest rate announced from time to time by Citibank,
N.A. as its prime rate in effect. Payment of the Net Working Capital Adjustment
Amount and accrued interest thereon shall be made in immediately available funds
not later than five Business Days after the determination of the Final Net
Working Capital Change Amount by wire transfer to a bank account designated in
writing by Seller.
(e) Seller shall make available and shall cause Ernst & Young LLP to
make available, in accordance with reasonable and customary practices and
professional standards and subject to such reasonable conditions as Ernst &
Young LLP shall impose, the books, records, documents and work papers underlying
the preparation and review of the Opening Statement and the calculation of the
Proposed Final Net Tangible Asset Amount and the Proposed Net Working Capital
Change Amount. Buyer shall make available and shall cause Grant Thornton LLP to
make available, in accordance with reasonable and customary practices and
professional standards and subject to such reasonable conditions as Grant
Thornton LLP shall impose, the books, records, documents and work papers created
or prepared by or for Buyer in connection with the review of the Proposed Final
Net Tangible Asset Amount, the Proposed Net Working Capital Change Amount and
the other matters contemplated by Section 2.04(a).
(f) The fees and expenses, if any, of the accounting firm selected to
resolve any disputes between Seller and Buyer in accordance with Section 2.04(a)
shall be paid one-half by Seller and one-half by Buyer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 3.01 Representations and Warranties of Seller. Seller
represents and warrants to Buyer as set forth in Exhibit B.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.01 Representations and Warranties of Buyer. Buyer represents
and warrants to Seller as set forth in Exhibit C.
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ARTICLE V
COVENANTS AND AGREEMENTS OF SELLER
Section 5.01 Conduct of Business. Except with the written consent of
Buyer (which consent shall not be unreasonably withheld or delayed), as set
forth in Schedule 5.01, as permitted below or required by Applicable Law, or in
accordance with the terms and conditions of Contracts entered into in the
ordinary course of business and consistent with past practices and in existence
on the date of this Agreement, from the date of this Agreement until the Closing
Date, Seller Companies shall conduct the HPG Business in all material respects
in accordance with the historical and customary operating practices relating to
the conduct of the HPG Business and shall use reasonable commercial efforts to
preserve intact the HPG Business and the relationships of Seller Companies with
third parties in connection with the HPG Business, and Seller Companies shall
not:
(i) except for expenditures contemplated by the 1998 capital
expenditure plan for the HPG Business, make any capital expenditure, or
group of related capital expenditures, relating to the HPG Business in
excess of $500,000 in the aggregate;
(ii) sell or dispose of more than an aggregate of $500,000 of
assets that would constitute Transferred Assets if owned, held or used
by any Seller Companies on the Closing Date (other than the sale of
Inventory in the ordinary course of business consistent with past
practices or obsolete Inventory whether or not in the ordinary course
of business, and the sale of surplus equipment and materials arising
out of or relating to the closing of the Kuantan Facility);
(iii) sell, transfer, license or otherwise dispose of (other
than in the ordinary course of business consistent with past practices
to suppliers, vendors, or other Persons doing work for the HPG Business
as part of such work for the HPG Business) any Intellectual Property
used exclusively in the HPG Business;
(iv) terminate the coverage of any policies of title,
liability, fire, workers' compensation, property and any other form of
insurance covering the operations of the HPG Business, except where
such policies are replaced by policies that are substantially similar
in all material respects to the terminated policies;
(v) settle any lawsuit or claim if such settlement imposes a
material continuing non-monetary obligation on the HPG Business or any
of the Transferred Assets;
(vi) grant any new or modified severance or termination
arrangement or increase or accelerate in any material respect any
amount payable under the severance or termination pay policies in
effect on the date of this Agreement with respect to any Transferred
Employee; or
(vii) except as otherwise may be permitted or required by this
Agreement or Applicable Law, adopt or amend in any material respect any
Employee Plan or Benefit
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Arrangement in respect of any Transferred Employee or, other than
compensation increases in the ordinary course of business, with respect
to any Transferred Employee at a level of Vice President or above,
increase the compensation or fringe benefits of such Transferred
Employee or pay any benefit not required by any Employee Plan or
Benefit Arrangement with respect to such Transferred Employee.
Section 5.02 Access to Information; Confidentiality.
(a) Except as may be necessary to comply with any Applicable Laws, from
the date of this Agreement until the Closing Date, Seller Companies shall (i)
give Buyer and its Representatives reasonable access to the records of Seller
Companies relating to the HPG Business during normal business hours and upon
reasonable prior notice, (ii) give Buyer and its Representatives reasonable
access to any facilities the possession of which will be transferred to Buyer at
Closing during normal business hours and upon reasonable prior notice, (iii)
furnish to Buyer and its Representatives such financial and operating data and
other information relating to the HPG Business as Buyer may reasonably request
and (iv) instruct the employees and Representatives of Seller Companies to
provide reasonable cooperation to Buyer in its investigation of the HPG
Business. Without limiting the generality of the foregoing, subject to the
limitations set forth in the first sentence of this Section 5.02(a), from the
date of this Agreement to the Closing Date Seller shall (i) use reasonable
commercial efforts to enable Buyer and its Representatives to conduct, at
Buyer's expense, business and financial reviews, investigations and studies as
to the operation of the HPG Business, including any tax, operating or other
efficiencies that may be achieved and (ii) give Buyer and its Representatives
access upon reasonable request to information relating to the HPG Business.
(b) For a period commencing on the Closing Date and ending on the date
on which the Trademark License Agreement terminates in respect of the Black &
Decker trademark, Seller Companies will treat and hold as confidential, any
confidential information relating primarily to the operations or affairs of the
HPG Business. In the event any Seller Companies are requested or required (by
written request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand or similar process or by
Applicable Law) to disclose any such confidential information, then Seller shall
notify Buyer promptly of the request or requirement so that Buyer, at its
expense, may seek an appropriate protective order or waive compliance with this
Section 5.02(b). If, in the absence of a protective order or receipt of a waiver
hereunder, any Seller Companies are, on the advice of counsel, compelled to
disclose such confidential information, Seller Companies may so disclose the
confidential information, provided that Seller Companies shall use their
reasonable efforts to obtain reliable assurance that confidential treatment will
be accorded to such confidential information. The provisions of this Section
5.02(b) shall not be deemed to prohibit the disclosure of confidential
information relating to the operations or affairs of the HPG Business by any
Seller Companies to the extent reasonably required (i) to prepare or complete
any required Tax Returns or financial statements, (ii) in connection with audits
or other proceedings by or on behalf of a Governmental Authority, (iii) in
connection with any insurance claims, (iv) to the extent necessary to comply
with any Applicable Laws or (v) to provide services to any Buyer Companies in
accordance with the terms and conditions of any of the Transaction Documents.
Notwithstanding the foregoing, the provisions of this Section 5.02(b) shall not
apply to information that (i) is or becomes publicly available
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other than as a result of a disclosure by any Seller Company, (ii) is or becomes
available to a Seller Company on a non-confidential basis from a source that, to
Seller's knowledge, is not prohibited from disclosing such information by a
legal, contractual or fiduciary obligation or (iii) is or has been independently
developed by a Seller Company (other than solely for the HPG Business). This
Section 5.02(b) shall not apply to the disclosure of confidential information
concerning the household products businesses of Seller Companies headquartered
in countries other than the Designated Countries or to the use, license or sale
of Intellectual Property not constituting Transferred Assets.
Section 5.03 Change of Lockbox Accounts. Immediately after the Closing,
Seller shall take such steps as Buyer may reasonably request to cause Buyer to
be substituted as the sole party having control over any lockbox or similar bank
account maintained exclusively by the HPG Business to which customers of the HPG
Business directly make payments in respect of the HPG Business or to direct the
bank at which any such lockbox or similar account is maintained to transfer any
payments made thereto to an account established by Buyer.
Section 5.04 Access to Information; Cooperation After Closing.
(a) On and after the Closing Date, Seller shall, and shall cause each
of the other Seller Companies to, at their expense (i) afford Buyer and its
Representatives reasonable access upon reasonable prior notice during normal
business hours, to all employees, offices, properties, agreements, records,
books and affairs of Seller Companies to the extent relating to the conduct of
the HPG Business prior to the Closing and (ii) cooperate fully with Buyer with
respect to matters relating to the conduct of the HPG Business prior to the
Closing, including, without limitation, in the defense or pursuit of any
Transferred Asset or Assumed Liability or any claim or action that relates to
occurrences involving the HPG Business prior to the Closing Date. In addition,
Seller shall cause its independent accountants to make available their work
papers in respect of the HPG Financial Statements and the financial statements
contemplated by Section 9.02(g).
(b) Subject to and consistent with the obligations of senior management
to continue to manage and operate the HPG Business, Seller shall cause the
members of the senior management team of the HPG Business to make themselves
available to assist Buyer and their representatives in the review and
preparation of offering memoranda and related documents to be used by Buyer in
the financing of the Contemplated Transactions, and shall cause its independent
accountants to provide comfort letters in customary form at Buyer's expense in
connection with such financing and in connection therewith shall provide such
representation letters to its independent accountants as are reasonably
required.
Section 5.05 Maintenance of Insurance Policies. Except as otherwise
provided in Exhibit D, on and after the date of this Agreement and until the
Closing Date, Seller shall not take or fail to take any action if such action or
inaction, as the case may be, would adversely affect the applicability of any
insurance (including reinsurance) in effect on the date of this Agreement that
covers all or any part of the assets that would constitute Transferred Assets if
owned, held or used by any Seller Companies on the Closing Date, the HPG
Business or the Transferred Employees. Except as otherwise provided in Exhibit D
or as may otherwise be
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agreed in writing by the parties, Seller shall not have any obligation to
maintain the effectiveness of any such insurance policy after the Closing Date
or to make any monetary payment in connection with any such policy, unless such
monetary payment relates to a period prior to Closing under a policy in effect
prior to Closing.
Section 5.06 Noncompetition; Nonsolicitation; etc.
(a) Seller covenants and agrees, as an inducement to Buyer to enter
into this Agreement and to consummate the Contemplated Transactions, that: (i)
with respect to Additional Products (as defined in the Trademark License
Agreement), for a period commencing on the Closing Date and ending on the date
on which the Trademark License Agreement terminates in respect of the Black &
Decker trademark ("Period One"), and (ii) with respect to products that are
Designated Products as of the date of this Agreement, for a period commencing on
the Closing Date and ending on the date that is the fifth anniversary of the
date on which the Trademark License Agreement terminates in respect of the Black
& Decker trademark (the "Fifth Anniversary Date"), no Seller Company (for so
long but only for so long as it remains a Seller Company) will, directly or
indirectly, carry on or participate in the ownership, management or control of
any Competing Business (as hereinafter defined). "Competing Business" shall mean
(i) during Period One, any business enterprise that sells in any Designated
Countries any of the Additional Products or products that are Designated
Products as of the date of this Agreement, and (ii) during the period commencing
on the day after the date of termination of Period One and ending on the Fifth
Anniversary Date, any business enterprise that sells in any Designated Countries
any products that are Designated Products as of the date of this Agreement.
(b) Nothing contained in this Section 5.06 shall limit or restrict the
right of any Seller Company to hold and make investments in securities of any
Person that has securities listed on a national securities exchange or admitted
to trading privileges thereon or actively traded in a generally recognized
over-the-counter market, provided that the aggregate equity interest therein of
Seller Companies does not exceed five percent of the outstanding shares or
interests in such Person at the time of Seller Companies' investment therein
provided that such Seller Company does not take any active management role.
Notwithstanding any provisions of this Section 5.06 to the contrary, if Seller
or any other Seller Company acquires securities of any Person that is engaged in
a Competing Business, Seller Companies shall not be deemed to be in violation of
this Section 5.06, provided that (A) (i) at the time of acquisition the
Competing Business represents less than 10% of the gross revenues of the
acquired Person for the acquired Person's most recently completed fiscal year
and (ii) Seller Companies use reasonable commercial efforts to divest the
operations of such Competing Business subsequent to such acquisition, or (B) at
the time of acquisition the Competing Business represents less than five percent
of the gross revenues of the acquired Person for the acquired Person's most
recently completed fiscal year.
(c) Nothing contained in this Section 5.06 shall limit or restrict the
right of any Seller Company to engage in any business outside of the Designated
Countries or to sell any Designated Products to Persons outside of the
Designated Countries so long as the Seller Company in connection with the sale
of any such Designated Products to Persons outside of the Designated Countries
takes commercially reasonable steps to ensure that the Designated Products will
not be sold in the Designated Countries by such Persons. Nothing contained in
this Section 5.06 shall
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limit or restrict the right of any Seller Company to sell new products purchased
from Buyer or Buyer Companies on or after the Closing Date, new products in
inventory at or for the Seller Companies' service centers, company stores and
outlet stores or reconditioned products (or any related parts, accessories or
attachments) of the HPG Business through Seller Companies' service center
network (consisting of both owned and authorized service centers) in a manner
consistent with past practices or in accordance with any agreements or
arrangements between a Seller Company and the HPG Business.
(d) Notwithstanding any provisions of this Section 5.06 to the
contrary, Seller Companies shall not be deemed to be in violation of this
Section 5.06 to the extent that, following the Closing, Seller Companies sell
Designated Products (i) that are in the Inventory of Seller Companies at or for
the Seller Companies' service centers, company stores and outlet stores as of
the Closing Date (or result from raw materials or work in process in the
Inventory of Seller Companies at or for the Seller Companies' service centers,
company stores and outlet stores as of the Closing Date) or (ii) to fulfill
contracts, agreements, commitments, sales or purchase orders or other similar
instruments of any kind, whether oral or written, at or for the Seller
Companies' service centers, company stores and outlet stores as in effect on the
Closing Date. Notwithstanding any provisions of this Section 5.06 to the
contrary, Seller Companies shall not be deemed to be in violation of this
Section 5.06 to the extent that, following the Closing, Seller Companies sell
Cleaning and Lighting Products.
(e) From and after the date of this Agreement until the first
anniversary of the Closing Date, Seller Companies shall not, without prior
written approval of Buyer employ any non-exempt (within the meaning of the Fair
Labor Standards Act) Transferred Employee. In addition, from and after the date
of this Agreement until the fifth anniversary of the Closing Date, no Seller
Company shall, without the prior written approval of Buyer, directly or
indirectly solicit any individual who was a non-exempt (within the meaning of
the Fair Labor Standards Act) Transferred Employee to terminate his or her
employment relationship with Buyer or Buyer Companies; provided, however, that
the foregoing shall not apply to individuals hired as a result of the use of an
independent employment agency (so long as the agency was not directed to solicit
a particular individual or a class of individuals that could only be satisfied
by employees of Buyer Companies) or as a result of the use of a general
solicitation (such as an advertisement) not specifically directed to employees
of Buyer Companies. From and after the date of this Agreement until the fifth
anniversary of the Closing Date, no Seller Company will induce or seek to induce
any contractor, supplier, client or customer of Buyer or Buyer Companies to
terminate their relationship with Buyer or Buyer Companies in respect of the HPG
Business.
(f) Seller recognizes and agrees that a breach by Seller Companies of
any of the covenants and agreements in this Section 5.06 could cause irreparable
harm to Buyer, that Buyer's remedies at law in the event of such breach would be
inadequate, and that, accordingly, in the event of such breach a restraining
order or injunction or both may be issued against Seller Companies, in addition
to any other rights and remedies that may be available to Buyer under Applicable
Law. If this Section 5.06 is more restrictive than permitted by the Applicable
Laws of the jurisdiction in which Buyer seeks enforcement hereof, this Section
5.06 shall be limited to the extent required to permit enforcement under such
Applicable Laws.
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ARTICLE VI
COVENANTS AND AGREEMENTS OF BUYER
Section 6.01 Confidentiality. Buyer agrees that all information
provided or otherwise made available in connection with the Contemplated
Transactions, to Buyer or any of its Representatives shall be treated as if
provided under the Confidentiality Agreement (whether or not the Confidentiality
Agreement is in effect or has been terminated). With the exception of the sixth
paragraph of the Confidentiality Agreement, which shall continue to apply in
accordance with the terms of the Confidentiality Agreement following the
Closing, the other terms of the Confidentiality Agreement shall no longer apply
following the Closing. Nothing in this Section 6.01, however, shall limit or
otherwise restrict the applicability of any other confidentiality or similar
provisions included in the Transaction Documents.
Section 6.02 Provision and Preservation of and Access to Certain
Information; Cooperation.
(a) Prior to the Closing Date, Buyer shall provide to Seller promptly
upon its receipt thereof copies of all environmental audit and similar reports
with respect to facilities the possession of which will be transferred to Buyer
at the Closing. Buyer shall provide to Seller a copy of all sampling results,
boring logs, analyses and other data and reports regarding any environmental
review conducted by Buyer immediately upon obtaining them.
(b) On and after the Closing Date, Buyer shall preserve all books and
records of the HPG Business for a period of six years commencing on the Closing
Date (or in the case of books and records relating to Tax, employment and
employee matters, until such time as Seller notifies Buyer in writing that all
statutes of limitations to which such records relate have expired), and
thereafter, not to destroy or dispose of such records without giving notice to
Seller of such pending disposal and offering Seller such records. In the event
Seller has not requested such materials within 90 days following the receipt of
notice from Buyer, Buyer may proceed to destroy or dispose of such materials
without any liability. Notwithstanding the foregoing, Buyer shall be entitled to
destroy or dispose of any books and records of the HPG Business on or after the
tenth anniversary of the Closing Date.
(c) From and after the Closing Date, Buyer shall at its expense (i)
afford Seller and its Representatives reasonable access upon reasonable prior
notice during normal business hours, to all employees, offices, properties,
agreements, records, books and affairs of Buyer relating to the HPG Business and
provide copies of such information concerning the HPG Business as Seller may
reasonably request in connection with the matters contemplated by Section 2.04,
the preparation of any Tax Returns, in connection with any judicial,
quasi-judicial, administrative, Tax, audit or arbitration proceeding, in
connection with the preparation of any financial statements or reports required
in accordance with Applicable Laws and in connection with the defense of any
third party claims or allegations that relate to or may relate to Excluded
Liabilities and (ii) cooperate fully with Seller for any proper purpose,
including, without limitation, the defense of or pursuit of any Excluded
Liability, Excluded Asset or Indemnified Claim, or any
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third party claim or action that relates to an Excluded Liability, Excluded
Asset or Indemnified Claim.
Section 6.03 Insurance; Financial Support Arrangements.
(a) Buyer acknowledges and agrees that as of the Closing Date, neither
Buyer, the HPG Business, any property owned or leased by any of the foregoing
nor any of the directors, officers, employees (including, without limitation,
the Transferred Employees) or agents of any of the foregoing will be insured
under any insurance policies maintained by Seller or any of its Affiliates,
except (i) in the case of certain claims made policies, to the extent that a
claim has been reported as of the Closing Date, (ii) in the case of a policy
that is an occurrence policy, to the extent the accident, event or occurrence
that results in an insurable loss occurs prior to the Closing Date and has been,
is or will be reported or noticed to the respective carrier by Buyer or any
Seller Company in accordance with the requirements of such policies (which
claims Seller shall, at Buyer's cost and expense, pursue diligently on Buyer's
behalf and the net proceeds of which claims (except to the extent they relate to
Excluded Liabilities) shall be remitted promptly to Buyer upon receipt thereof),
and (iii) as otherwise provided in Exhibit D or agreed to in writing by the
parties. Except as otherwise provided in Exhibit D or as otherwise may be agreed
to in writing by the parties, from and after the Closing Date, Seller shall have
no obligation of any kind to maintain any form of insurance covering all or any
part of the Transferred Assets, the HPG Business or the Transferred Employees.
(b) From and after the Closing Date, Buyer agrees to reimburse Seller
within 30 days of receipt of an invoice for any self insurance, retention,
deductible, retrospective premium, cash payment for reserves calculated or
charged on an incurred loss basis and similar items, including but not limited
to associated administrative expenses and allocated loss adjustment or similar
expenses (collectively, "Insurance Liabilities") allocated to the HPG Business
by Seller on a basis consistent with past practices resulting from or arising
under any and all current or former insurance policies maintained by Seller or
any of its Affiliates to the extent that such Insurance Liabilities relate to or
arise out of Assumed Liabilities or any activities of Buyer. Buyer agrees that,
to the extent any of the insurers under the insurance policies, in accordance
with the terms of the insurance policies, requests or requires collateral,
deposits or other security to be provided with respect to claims made against
such insurance policies relating to or arising from Assumed Liabilities, Buyer
shall provide the collateral, deposits or other security or, upon request of
Seller, will replace any collateral, deposits or other security provided by
Seller or any of its Affiliates.
(c) Buyer agrees that, for a period of six years commencing on the
Closing Date, to the extent it maintains product liability or similar insurance
coverage, Buyer will use reasonable efforts (at Seller's cost to the extent of
any additional cost therefor, provided that, in the event there will be such a
cost, Buyer will give Seller a reasonable period of time to determine whether it
desires to incur such cost before Buyer commits to such coverage with respect to
Seller) to include Seller and its Affiliates as an additional insured/loss payee
on any such policies in respect of which Seller or its Affiliates has or may
have an insurable interest with respect to the HPG Business, the Transferred
Assets, any of the Assumed Liabilities or any facilities the possession of which
will be transferred to Buyer at the Closing. Seller agrees, for a period of six
years commencing on the Closing Date, to include Buyer Companies as additional
insured/loss payees
<PAGE>
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on any product liability policies or similar insurance coverage of Seller (at
Buyer's cost to the extent of any additional cost therefor, provided that, in
the event there will be such a cost, Seller will give Buyer a reasonable period
of time to determine whether it desires to incur such cost before Seller commits
to such coverage with respect to Buyer) as to all claims or occurrences that
constitute Excluded Liabilities.
(d) Buyer agrees that, not later than December 31, 1998, and in a
manner reasonably satisfactory to Seller, Buyer shall in good faith seek to
release Seller and its Affiliates from all obligations under all Financial
Support Arrangements.
(e) If, at any time after the Closing Date, (i) any amounts are drawn
on or paid under any Financial Support Arrangement where Seller or any of its
Affiliates is obligated to reimburse the Person making such payment or (ii)
Seller or any of its Affiliates pays any amounts under, or any fees, costs or
expenses relating to, such Financial Support Arrangement, Buyer shall pay Seller
such amounts promptly after receipt from Seller of notice thereof accompanied by
written evidence of the underlying payment obligation and payment thereof.
(f) In the event that Buyer fails to ensure that Seller and its
Affiliates are unconditionally released from all obligations under the Financial
Support Arrangements not later than December 31, 1998, Buyer shall either (i)
promptly deposit with Seller cash in an amount equal to the aggregate principal
or stated amount, as may be applicable, of the Financial Support Arrangements
not so released or (ii) provide back-up letters of credit issued by one or more
commercial banks reasonably satisfactory to Seller, payable to Seller in such
aggregate principal or stated amount and otherwise in form and substance
reasonably satisfactory to Seller with respect to such Financial Support
Arrangements. Any cash deposited with Seller in accordance with clause (i) shall
be held by Seller in a segregated interest-bearing account and shall be used by
Seller solely to satisfy its payment obligations in respect of such Financial
Support Arrangements, and the unused portion of any cash (including interest) so
deposited with Seller shall be returned to Buyer promptly following the release
of Seller Companies with respect to, or any other termination of, the Financial
Support Arrangement.
Section 6.04 Use of Intellectual Property. Buyer acknowledges and
agrees that except as otherwise specifically contemplated by the Transaction
Documents, no Buyer Company is obtaining any rights in or to use any
Intellectual Property. Buyer further acknowledges and agrees that
notwithstanding any provision to the contrary in the Transaction Documents,
except as permitted by the Trademark License Agreement or the Cross License
Agreement, Buyer shall not use, and Buyer shall cause its Affiliates not to use,
any trademark, logo or tradename of Seller or any Affiliate of Seller (other
than those listed on Attachment XII as Transferred Assets and transferred to
Buyer under the terms of this Agreement) or any trademarks, logos or trade names
that are confusingly similar thereto or that are a translation or
transliteration thereof into any language or alphabet.
Section 6.05 Certain Environmental Investigations.
(a) Buyer agrees that, if Buyer decides to conduct prior to Closing an
environmental audit or similar review of the HPG Business that involves testing,
drilling or sampling at any
<PAGE>
-15-
facility, possession of which is contemplated to be transferred to a Buyer
Company at Closing, Buyer will so advise Seller and will give Seller sufficient
prior written notice to enable Seller's Representatives to be present during any
such testing, drilling or sampling, and to review and comment on any work plans
related to such audit or review. Buyer further agrees to arrange for split
samples to be taken in connection with any such audit or review, with any
additional costs therefor to be paid by Seller. Except with respect to split
samples, Buyer agrees that it will conduct such testing, drilling, or sampling,
including disposal of all materials associated with such activities, such as
drill cuttings, wastewater, and sampling equipment, at Buyer's sole cost and
expense and in accordance with all Applicable Laws, including Environmental
Laws. If the Closing contemplated by the Transaction Documents is not
consummated for any reason, Buyer agrees to restore each facility at which any
such testing, drilling or sampling was conducted to reasonable working
condition.
(b) Except to the extent Buyer is otherwise required to take action
itself in accordance with Applicable Law, all information obtained from Buyer's
environmental review shall be kept confidential and Buyer shall not provide it
to any Person other than its advisors and Seller, and in the event that Buyer's
environmental review discloses conditions at any of Seller's facilities that may
require notice to a Governmental Authority prior to Closing, Seller shall
determine what reporting, if any, is necessary and shall conduct any such
reporting.
Section 6.06 Nonsolicitation of Employees, etc. From and after the date
of this Agreement until the fifth anniversary of the Closing Date, neither Buyer
nor any Buyer Companies shall, without the prior written approval of Seller,
directly or indirectly solicit any individual who is a non-exempt (within the
meaning of the Fair Labor Standards Act) employee of a Seller Company to
terminate his or her employment relationship with Seller Companies; provided,
however, that the foregoing shall not apply to individuals hired as a result of
the use of an independent employment agency (so long as the agency was not
directed to solicit a particular individual or a class of individuals that could
only be satisfied by employees of Seller Companies) or as a result of the use of
a general solicitation (such as an advertisement) not specifically directed to
employees of Seller Companies. Buyer recognizes and agrees that a breach by
Buyer or Buyer Companies of any of the covenants and agreements in this Section
6.06 could cause irreparable harm to Seller, that Seller's remedies at law in
the event of such breach would be inadequate, and that, accordingly, in the
event of such breach a restraining order or injunction or both may be issued
against Buyer or Buyer Companies, in addition to any other rights and remedies
that may be available to Seller under Applicable Law. If this Section 6.06 is
more restrictive than permitted by Applicable Laws of the jurisdiction in which
Seller seeks enforcement hereof, this Section 6.06 shall be limited to the
extent required to permit enforcement under such Applicable Laws.
<PAGE>
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ARTICLE VII
COVENANTS AND AGREEMENTS OF THE PARTIES
Section 7.01 Further Assurances. Subject to the terms and conditions of
this Agreement, each party shall use reasonable commercial efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary or desirable under Applicable Laws to consummate the Contemplated
Transactions. Seller and Buyer shall execute and deliver, and shall cause Seller
Companies and Buyer Companies, as appropriate or required and as the case may
be, to execute and deliver such other documents, certificates, agreements and
other writings and to take such other actions as may be necessary or desirable
to consummate or implement the Contemplated Transactions, specifically including
the reading and formalization of a public deed in Spanish, in front of a Notary
Public in Queretaro, Mexico, and the recordation of said public deed in the
applicable governmental office or registry. Except as otherwise expressly set
forth in the Transaction Documents, nothing in this Section 7.01 shall require
any Seller Companies or Buyer Companies to make any payments in order to obtain
any consents or approvals necessary or desirable in connection with the
consummation of the Contemplated Transactions.
Section 7.02 Certain Filings; Consents. Seller and Buyer shall
cooperate with one another (i) in determining whether any action by or in
respect of, or filing with, any Governmental Authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material Contracts, in connection with the consummation of the
Contemplated Transactions and (ii) subject to the terms and conditions of this
Agreement, in taking such actions or making any such filings, furnishing
information required in connection therewith and seeking timely to obtain any
such actions, consents, approvals or waivers.
Section 7.03 Public Announcements. Prior to the Closing, Seller and
Buyer shall consult with each other before issuing any press release or making
any public statement with respect to this Agreement or the Contemplated
Transactions and, except as may be required by Applicable Law or any listing
agreement with any national or international securities exchange, shall not
issue any such press release or make any such public statement prior to such
consultation. Notwithstanding the foregoing, no provision of this Agreement
shall relieve Buyer from any of its obligations under the Confidentiality
Agreement, or terminate any of the restrictions imposed upon Buyer by Section
6.01.
Section 7.04 Intellectual Property.
(a) Buyer acknowledges and agrees that Buyer Companies shall hold all
Intellectual Property constituting part of the Transferred Assets subject to any
licenses thereof granted by Seller Companies prior to the Closing Date and,
other than in the ordinary course of business consistent with past practices to
suppliers, vendors, or other Persons doing work for the HPG Business as part of
such work for the HPG Business, Seller will not take any action to impair,
encumber, impede or invalidate such Intellectual Property prior to the Closing
Date.
<PAGE>
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(b) Buyer further acknowledges and agrees that the transfer of
Intellectual Property constituting Transferred Assets to Buyer Companies shall
not affect the right of Seller Companies to use, disclose or otherwise freely
deal with any know-how, trade secrets and other technical information not
constituting Transferred Assets, except to the extent otherwise limited in the
Cross License Agreement and subject to the provisions of Section 5.06.
Section 7.05 HSR Act. Seller and Buyer shall take all actions necessary
or appropriate to cause the prompt expiration or termination of any applicable
waiting periods under the HSR Act and the Mexican Federal Law of Economic
Competition in respect of the Contemplated Transactions, including, without
limitation, complying as promptly as practicable with any requests for
additional information.
Section 7.06 Certain Environmental Insurance Matters. The provisions of
this Section 7.06 shall not have any effect on any insurance policies of Buyer
or Buyer Companies. Notwithstanding any provision to the contrary in this
Agreement, this Section 7.06 shall constitute Seller's and Buyer's agreement
regarding the allocation of insurance proceeds with respect to matters that
arise under or relate to Environmental Laws that are comprised, in whole or in
part, of Environmental Liabilities that constitute Assumed Liabilities (the
"Environmental Insurance Claims"). Buyer acknowledges and agrees that,
notwithstanding any other provisions of the Transaction Documents, Seller shall
control the Environmental Insurance Claims and shall have the right to
compromise or settle any Environmental Insurance Claims; provided, however, that
without the prior written consent of Buyer, Seller shall not have the right to
enter into any compromise or settlement of any Environmental Insurance Claim
that (i) imposes any liability, obligation or responsibility on any Buyer
Company or (ii) imposes any condition, restriction or limitation on the
operation or conduct of the HPG Business. Seller agrees to act in good faith and
with reasonable prudence to maximize recovery (after costs and Taxes) with
respect to the Environmental Insurance Claims and shall allocate any recovery
received with respect to such Environmental Insurance Claims, first, to the
costs incurred to collect such recovery (whether incurred before or after
Closing) and, second, to all net Tax costs related to such recovery. With
respect to any recovery remaining (the "Remaining Recovery"):
(i) if the recovery applies to liabilities that are Assumed
Liabilities and to liabilities that are not Assumed Liabilities, and
the recovery was not designated as arising from specific liabilities
(e.g., a global settlement with an insurance carrier), Seller will pay
Buyer an amount equal to the Remaining Recovery multiplied by X
multiplied by (one minus Y); where X equals the total of the
Environmental Insurance Claims (estimated by Seller as of the date of
recovery) under said insurance policies divided by the total
environmental and other claims by Seller under said insurance policies;
and Y equals Seller's past expenditures on said liabilities divided by
the sum of (A) Seller's past expenditures in respect of said
liabilities and (B) the total estimated expenditures to be made by
Seller or Buyer in respect of said liabilities (estimated by Seller as
of the date of recovery), or
(ii) if the recovery was designated as arising from a specific
liability that is an Assumed Liability, Seller will pay Buyer the
Remaining Recovery multiplied by (one minus Y).
<PAGE>
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Any obligations assumed in any such compromise or settlement of the
Environmental Insurance Claims shall be apportioned between Seller and Buyer in
the same proportion as a recovery would be allocated pursuant to this Section
7.06.
Section 7.07 Legal Privileges. Except as to attorney-client work
product and other legal privileges with respect to the negotiation of, and
matters relating to, the Contemplated Transactions, Seller and Buyer acknowledge
and agree that all attorney-client, work product and other legal privileges that
may exist with respect to the Transferred Assets, Excluded Assets, Assumed
Liabilities or Excluded Liabilities shall, from and after the Closing Date, be
deemed common privileges of Seller and Buyer to the extent that Seller and Buyer
have common interests in the matter. Both Seller and Buyer shall use all
commercially reasonable efforts after the Closing Date to preserve all such
privileges and neither Seller nor Buyer shall knowingly waive any such privilege
without the prior written consent of the other party (which consent shall not be
unreasonably withheld or delayed).
ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFIT MATTERS
Section 8.01 Employees and Employee Benefit Matters. The parties agree
as to employee and employee benefit matters as set forth in Exhibit D.
ARTICLE IX
CONDITIONS TO CLOSING
Section 9.01 Conditions to the Obligations of Each Party. The
obligations of Seller and Buyer to consummate the Closing are subject to the
satisfaction (or waiver) of the following conditions:
(a) any applicable waiting period under the HSR Act relating to the
Contemplated Transactions shall have expired or been terminated without any
action being taken by a Governmental Authority that restrains, prevents or
results in a Material Adverse Effect on the HPG Business;
(b) no provision of any Applicable Law and no judgment, injunction,
order or decree shall restrain or prohibit the transactions contemplated hereby
or shall exist which would materially limit or adversely effect Buyer's
ownership or control of the Transferred Assets, and there shall not have been
threatened, nor shall there be pending, any action or proceeding by or before
any court or Governmental Authority challenging any of the Contemplated
Transactions or seeking monetary relief by reason of the consummation of the
Contemplated Transactions that reasonably could be expected to have a Material
Adverse Effect on the HPG Business; and
<PAGE>
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(c) all actions by or in respect of or filings with any Governmental
Authority required to permit the Contemplated Transactions shall have been
obtained.
Section 9.02 Conditions to Obligation of Buyer. The obligations of
Buyer to consummate the Closing are subject to the satisfaction (or waiver by
Buyer) of the following further conditions:
(a) (i) Seller shall have performed in all respects all of its
obligations under the Transaction Documents required to be performed by it on or
prior to the Closing Date, (ii) the representations and warranties of Seller
contained in the Transaction Documents shall be true and correct at and as of
the date of this Agreement and as of the Closing Date, as if made at and as of
each such date, except that those representations and warranties which are by
their express terms made as of a specific date shall be true and correct only as
of such date, in each case except for inaccuracies that could not reasonably be
expected to have a Material Adverse Effect on the HPG Business (except with
respect to the representations and warranties contained in Sections B.01 and
B.02, which shall be true and correct subject only to the exceptions set forth
therein), and (iii) Buyer shall have received a certificate signed by an
executive officer of Seller to the foregoing effect;
(b) since March 29, 1998, no event has occurred that has had a Material
Adverse Effect on the HPG Business;
(c) Seller or the applicable Affiliated Transferor shall have executed
and delivered, on or before the Closing Date, the Transaction Documents that are
required to be signed by a Seller Company;
(d) Seller or the applicable Affiliated Transferor, as the case may be,
shall have obtained the consents, approvals or permits contemplated by
Attachment XIII to this Agreement;
(e) Seller or the applicable Affiliated Transferor shall have prepared
and delivered on or before the Closing Date a patent docket and a trademark
docket, each of which shall set forth with particularity and accuracy with
respect to all Intellectual Property that constitute Transferred Assets all
actions known as of the date of preparation that are required to be taken to
maintain such Intellectual Property within the six months following the Closing
Date;
(f) Buyer shall have received an opinion of Miles & Stockbridge P.C. in
the form attached hereto as Attachment XXIX to this Agreement; and
(g) Buyer shall have received audited financial statements of the HPG
Business consisting of the balance sheets as of December 31, 1997 and 1996 and
the related statements of operations, owners' equity and cash flows for each of
the three years in the period ended December 31, 1997, together with the opinion
of Ernst & Young LLP thereon, which opinion shall state that such financial
statements have been prepared in accordance with GAAP and shall be without
qualification, and unaudited financial statements of the HPG Business consisting
of the balance sheet as of March 28, 1998, and statements of operations and cash
flows for the quarter then ended.
<PAGE>
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Section 9.03 Conditions to Obligation of Seller. The obligation of
Seller to consummate the Closing is subject to the satisfaction (or waiver by
Seller) of the following further conditions:
(a) (i) Buyer shall have performed in all respects all of its
obligations under the Transaction Documents required to be performed by Buyer at
or prior to the Closing Date, (ii) the representations and warranties of Buyer
contained in the Transaction Documents shall be true and correct at and as of
the date of this Agreement and as of the Closing Date, as if made at and as of
each such date, except that those representations and warranties which are by
their express terms made as of a specific date shall be true and correct only as
of such date, in each case except for inaccuracies that could not reasonably be
expected to have a Material Adverse Effect on the HPG Business (except with
respect to the representations and warranties contained in Sections C.01 and
C.02, which shall be true and correct subject only to the exceptions set forth
therein), and (iii) Seller shall have received a certificate signed by an
executive officer of Buyer to the foregoing effect; and
(b) Buyer or the applicable Buyer Company shall have executed and
delivered, on or before the Closing Date, the Transaction Documents that are
required to be signed by a Buyer Company.
Section 9.04 Effect of Waiver. Any waiver by Buyer of the conditions
specified in clause (ii) of Section 9.02(a), and any waiver by Seller of the
conditions specified in clause (ii) of Section 9.03, if made knowingly, shall
also be deemed a waiver of any claim for Damages as the result of the matters
waived.
ARTICLE X
SURVIVAL; INDEMNIFICATION
Section 10.01 Survival.
(a) None of the representations, warranties, covenants or agreements of
the parties contained in any Transaction Document or in any certificate or other
writing delivered pursuant to any Transaction Document or in connection with any
Transaction Document shall survive the Closing, except for:
(i) the representations and warranties in Sections B.01 and
B.02 shall survive indefinitely;
(ii) the representations and warranties in Section B.13 shall
not survive the Closing Date;
(iii) the representations and warranties in Section B.15
relating to Intellectual Property (other than patents and copyrights)
and the representations and warranties in Sections B.07 and B.15 to the
extent but only to the extent they relate to title to
<PAGE>
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Transferred Assets shall survive for a period of six years and six
months from the Closing Date;
(iv) the representations and warranties in Sections B.16 and
B.18 shall survive until 30 days after the expiration of the applicable
statute of limitations (or extensions or waivers thereof);
(v) the representations and warranties in Exhibit B (other
than (A) those Sections of Exhibit B referenced in the preceding
clauses (i), (ii) and (iv), (B) those representations and warranties in
Section B.15 relating to Intellectual Property (other than patents and
copyrights) and (C) those representations and warranties in Sections
B.07 and B.15 to the extent but only to the extent they relate to title
to Transferred Assets) shall survive for a period of one year from the
Closing Date;
(vi) the representations and warranties in Sections C.01 and
C.02 shall survive indefinitely;
(vii) the representations and warranties in Exhibit C (other
than those Sections of Exhibit C referenced in the preceding clause
(v)) shall survive for a period of one year from the Closing Date; and
(viii) those covenants and agreements set forth in the
Transaction Documents that, by their terms, are to have effect after
the Closing Date shall survive for the period contemplated by the
covenants and agreements, or if no period is expressly set forth,
indefinitely.
The representations, warranties, covenants and agreements referenced in the
preceding clauses (i) and (iii) through (viii) are referred to herein as the
"Surviving Representations or Covenants." It is understood and agreed that, (i)
before the Closing the remedies expressly set forth in Article XI are the sole
and exclusive remedies for any breach of any representation, warranty, covenant
or agreement and (ii) following the Closing the sole and exclusive remedy with
respect to any breach of any representation, warranty, covenant or agreement
(other than (1) with respect to a breach of the terms of a covenant or
agreement, as to which Buyer or Seller, as the case may be, shall be entitled to
seek specific performance or other equitable relief and (2) with respect to
claims for fraud) shall be a claim for Damages (whether by contract, in tort or
otherwise, and whether in law, in equity or both) made pursuant to this Article
X.
(b) Except as otherwise provided in this Agreement, Buyer for itself,
its Affiliates and their respective Representatives and successors, effective as
of the Closing, releases and discharges Seller, its Affiliates and their
respective Representatives from any and all Damages (whether by contract, in
tort or both, and whether in law, in equity or both), rights of subrogation and
contribution and remedies of any nature whatsoever, known or unknown, relating
to or arising out of Environmental Liabilities or Environmental Laws, in either
case, arising in connection with or in any way relating to the HPG Business and
constituting an Assumed Liability.
<PAGE>
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Section 10.02 Indemnification.
(a) Effective as of the Closing and subject to the limitations set
forth in Section 10.04(a), Buyer hereby indemnifies Seller and its Affiliates
and their respective directors, officers, employees and agents against, and
agrees to hold them harmless from any and all Damages incurred or suffered by
any of them arising out of (i) any misrepresentation, breach or nonfulfillment
of any Surviving Representation or Covenant made or to be performed by Buyer
Companies pursuant to any of the Transaction Documents, (ii) except as otherwise
contemplated by Sections 10.02(b)(iv), 10.04(b)(ii) and D.18, any Assumed
Liabilities (including, without limitation, Buyer's (or any other Buyer
Company's) failure to perform or in due course pay or discharge any Assumed
Liability), (iii) any Financial Support Arrangement, (iv) any matters for which
indemnification is provided under Exhibit D (it being understood that the terms
of such indemnification shall be governed by and subject to the terms of Exhibit
D) or (v) any Environmental Laws to the extent such liabilities arise out of,
relate to, are based on or result from any action taken (or a failure to take
action) or any event occurring on or after the Closing Date. Other than costs
associated with split samples, Buyer hereby indemnifies Seller and its
Affiliates and their respective directors, officers, employees and agents
against, and agrees to hold them harmless from any and all Damages incurred or
suffered by any of them arising out of or related in any way to any actions
taken by Buyer Companies or any of their Representatives in connection with any
environmental audit or similar review of the HPG Business that involves testing,
drilling or sampling at any facility possession of which is contemplated to be
transferred to a Buyer Company at Closing, including, without limitation, (A)
personal injury, wrongful death, economic loss or property damage claims, (B)
claims for natural resource damages, (C) violations of Applicable Law or (D) any
Damages with respect thereto.
(b) Effective as of the Closing and subject to the limitations set
forth in Section 10.04(b), Seller hereby indemnifies Buyer and its Affiliates
and their respective directors, officers, employees and agents against, and
agrees to hold them harmless from any and all Damages incurred or suffered by
any of them arising out of or related in any way to (i) any misrepresentation,
breach or nonfulfillment of any Surviving Representation or Covenant made or to
be performed by the Seller Companies pursuant to any Transaction Document, (ii)
any Excluded Liability or any other liability or obligation of the HPG Business,
other than Assumed Liabilities (provided that nothing herein shall diminish
Seller's obligations pursuant to Section 10.04(b)(ii)), to the extent arising
out of, relating to, based on or resulting from actions taken (or failures to
take action), events occurring or conditions existing prior to the Closing
(including, without limitation, Seller's (or any other Seller Company's) failure
to perform or in due course pay or discharge any Excluded Liability), (iii) any
matters for which indemnification is provided under Exhibit D (it being
understood that the terms of such indemnification shall be governed by and
subject to the terms of Exhibit D) or (iv) Asheboro Closing Costs in an amount
equal to 50% of the first $20,000,000 of Asheboro Closing Costs and 100% of all
Asheboro Closing Costs in excess of $20,000,000.
<PAGE>
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Section 10.03 Procedures.
(a) If Seller or any of its Affiliates or any of their directors,
officers, employees and agents, shall seek indemnification pursuant to Section
10.02(a), or if Buyer or any of its Affiliates or any of their directors,
officers, employees and agents, shall seek indemnification pursuant to Section
10.02(b), the Person seeking indemnification (the "Indemnified Party") shall
give written notice to the party from whom such indemnification is sought (the
"Indemnifying Party") promptly (and in any event within 30 days) after the
Indemnified Party (or, if the Indemnified Party is a corporation, any officer or
employee of the Indemnified Party) becomes aware of the facts giving rise to
such claim for indemnification (an "Indemnified Claim") specifying in reasonable
detail the factual basis of the Indemnified Claim, stating the amount of the
Damages, if known, the method of computation thereof, containing a reference to
the provision of the Transaction Documents in respect of which such Indemnified
Claim arises and demanding indemnification therefor. The failure of an
Indemnified Party to provide notice in accordance with this Section 10.03 shall
not constitute a waiver of that party's claims to indemnification pursuant to
Section 10.02, except to the extent that (i) any such failure or delay in giving
notice causes the amounts paid by the Indemnifying Party to be greater than they
otherwise would have been or otherwise results in prejudice to the Indemnifying
Party or (ii) such notice is not delivered to the Indemnifying Party prior to
the expiration of the applicable survival period set forth in Section 10.01. If
the Indemnified Claim arises from the assertion of any claim, or the
commencement of any suit, action, proceeding or Remedial Action brought by a
Person that is not a party hereto (a "Third Party Claim"), any such notice to
the Indemnifying Party shall be accompanied by a copy of any papers theretofore
served on or delivered to the Indemnified Party in connection with such Third
Party Claim. With respect to any Third Party Claim asserted or brought prior to
the Closing Date, notice of such Third Party Claim shall be deemed to have been
delivered on the Closing Date.
(b) (i) Upon receipt of notice of a Third Party Claim from an
Indemnified Party pursuant to Section 10.03(a), the Indemnifying Party
will be entitled to assume the defense and control of such Third Party
Claim subject to the provisions of this Section 10.03, provided that in
the case of matters involving actions or claims that, if not first
paid, discharged or otherwise complied with would result in a material
interruption or cessation of the conduct of the HPG Business, the
Indemnifying Party shall act promptly to avoid, to the extent
practicable, any such effects on the HPG Business. After written notice
by the Indemnifying Party to the Indemnified Party of its election to
assume the defense and control of a Third Party Claim, the Indemnifying
Party shall not be liable to such Indemnified Party for any legal fees
or expenses subsequently incurred by such Indemnified Party in
connection therewith. Notwithstanding anything in this Section 10.3 to
the contrary, if the Indemnifying Party does not assume defense and
control of a Third Party Claim as provided in this Section 10.3, the
Indemnified Party shall have the right to defend such Third Party
Claim, subject to the limitations set forth in this Section 10.03, in
such manner as it may deem appropriate. Whether the Indemnifying Party
or the Indemnified Party is defending and controlling any such Third
Party Claim, it shall select counsel, contractors, experts and
consultants of recognized standing and competence, shall take all steps
necessary in the investigation, defense or settlement thereof, and
shall at all times diligently and promptly pursue the resolution
<PAGE>
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thereof. The party conducting the defense thereof shall at all times
act as if all Damages relating to the Third Party Claim were for its
own account and shall act in good faith and with reasonable prudence to
minimize Damages therefrom. The Indemnified Party shall, and shall
cause each of its Affiliates, directors, officers, employees, and
agents to, cooperate fully with the Indemnifying Party in connection
with any Third Party Claim.
(ii) Subject to the provisions of Section 10.03(b)(iii) and
Section 10.03(b)(iv), the Indemnifying Party shall be authorized to
consent to a settlement of, or the entry of any judgment arising from,
any Third Party Claims, and the Indemnified Party shall consent to a
settlement of, or the entry of any judgment arising from, such Third
Party Claims; provided, that the Indemnifying Party shall (1) pay or
cause to be paid all amounts arising out of such settlement or judgment
concurrently with the effectiveness thereof; (2) shall not encumber any
of the assets of any Indemnified Party or agree to any restriction or
condition that would apply to such Indemnified Party or to the conduct
of that party's business; and (3) shall obtain, as a condition of any
settlement or other resolution, a complete release of each Indemnified
Party against any and all damages resulting from, arising out of or
incurred with respect to such settlement or other resolution. Except
for the foregoing, no settlement or entry of judgment in respect of any
Third Party Claim shall be consented to by any Indemnifying Party or
Indemnified Party without the express written consent of the other
party.
(iii) Notwithstanding the provisions of Section 10.03(b)(i),
Buyer shall manage all Remedial Actions conducted with respect to
facilities which constitute Transferred Assets, provided that Seller
and its Representatives shall have the right, consistent with Buyer's
right to manage such Remedial Actions as aforesaid, to participate
fully in all decisions regarding any Remedial Action, including
reasonable access to sites where any Remedial Action is being
conducted, reasonable access to all documents, correspondence, data,
reports or information regarding the Remedial Action, reasonable access
to employees and consultants of Buyer with knowledge of relevant facts
about the Remedial Action and the right to attend all meetings and
participate in any telephone or other conferences with any Government
Authority or other third party regarding the Remedial Action.
(iv) In the case of the indemnification contemplated by
Section 10.02(b)(iii), in the event that the Indemnifying Party desires
to settle the matters referenced therein or consent to the entry of any
judgment arising thereunder and the Indemnified Party does not wish to
consent to such settlement or entry of judgment, the Indemnified Party
shall have no obligation to consent to the settlement or entry of
judgment provided that it agrees in writing to pay and be responsible
for 100% of any Damages; provided that the Indemnified Party shall not
be required to consent to any settlement or agree to be responsible for
the payment of Damages thereafter incurred with respect to any matter
the settlement or entry of judgment of which would require the consent
of such Indemnified Party pursuant to Section 10.03(b)(ii). The
obligation of an Indemnified Party that rejects any proposed settlement
offer or entry of any such judgment to pay and be responsible for 100%
of any Damages in accordance with this Section 10.03(b)(iv) shall be
conditioned upon and subject to the payment by the Indemnifying Party,
within five
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Business Days of the date such Indemnified Party provides the written
agreement contemplated by the preceding sentence, of an amount, in
immediately available funds, equal to the portion of the total
settlement that would have been payable by the Indemnifying Party
according to the percentage sharing arrangement contemplated by Section
10.04(b)(ii). Thereafter, the Indemnified Party shall be solely
responsible for any Damages and for the defense of the matter that is
the subject of the proposed settlement or entry of judgment.
Notwithstanding the foregoing, an Indemnifying Party may, at its option
and expense, participate in the defense of any Indemnified Claim.
(v) In furtherance of and not in limitation of the provisions
of this Section 10.03, with respect to product liability matters and
other matters contemplated by Exhibit E, Seller and Buyer covenant and
agree as set forth in Exhibit E.
(c) If the Indemnifying Party and the Indemnified Party are unable to
agree with respect to a procedural matter arising under Section 10.03(b)(iii),
the Indemnifying Party and the Indemnified Party shall, within 10 days after
notice of disagreement given by either party, agree upon a third-party referee
("Referee"), who shall be an attorney and who shall have the authority to review
and resolve the disputed matter. The parties shall present their differences in
writing (each party simultaneously providing to the other a copy of all
documents submitted) to the Referee and shall cause the Referee promptly to
review any facts, law or arguments either the Indemnifying Party or the
Indemnified Party may present. The Referee shall be retained to resolve specific
differences between the parties within the range of such differences. Either
party may request that all discussions with the Referee by either party be in
each other's presence. The decision of the Referee shall be final and binding
unless both the Indemnifying Party and the Indemnified Party agree. The parties
shall share equally all costs and fees of the Referee.
(d) If an Indemnifying Party makes any payment on an Indemnified Claim,
the Indemnifying Party shall be subrogated, to the extent of such payment, to
all rights and remedies of the Indemnified Party to any insurance benefits or
other claims of the Indemnified Party with respect to such claim.
Section 10.04 Limitations. Notwithstanding anything to the contrary in
this Agreement or in any of the Transaction Documents:
(a) Buyer shall only have liability to Seller or any other Person
hereunder with respect to the representations and warranties described in clause
(i) of Section 10.02(a) if such matters were the subject of a written notice
given by the Indemnified Party pursuant to Section 10.03(a) within the period
following the Closing Date specified for each respective matter in Section
10.01.
(b) Seller shall only have liability to Buyer or any other Person
hereunder:
(i) with respect to the representations and warranties
described in clause (i) of Section 10.02(b), (y) to the extent that the
aggregate Damages of all Indemnified Parties as the result thereof
exceed $3,500,000 but are not greater than an amount equal to
$3,500,000 plus 25% of the Adjusted Purchase Price (it being understood
that Seller's
<PAGE>
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maximum liability under Section 10.02(b)(i) with respect to
representations and warranties and this Section 10.04(b)(i) shall be an
amount equal to 25% of the Adjusted Purchase Price), and (z) if such
matters were the subject of a written notice given by the Indemnified
Party pursuant to Section 10.03(a) within the period following the
Closing Date specified for each respective matter in Section 10.01;
provided, however, that such $3,500,000 threshold shall not apply to
any such breach of representation or warranty in respect of the Black &
Decker Trademarks (as defined in the Trademark License Agreement).
(ii) with respect to Environmental Liabilities constituting
Assumed Liabilities, to the extent of 75% of the first $5,000,000 in
aggregate Damages, and 100% of the aggregate Damages in excess of
$5,000,000, in each case only to the extent incurred and paid within
five years following the Closing Date by all Indemnified Parties as the
result thereof based on the use of the facilities constituting
Transferred Assets as of the Closing Date; and
(iii) with respect to the matters described in clause (ii) of
Section 10.02(b), there shall be no limitation on Seller's liability.
ARTICLE XI
TERMINATION
Section 11.01 Termination. The Transaction Documents may be terminated
at any time prior to the Closing:
(i) by mutual written agreement of Seller and Buyer;
(ii) by Seller or Buyer if the Closing shall not have been
consummated by July 31, 1998; provided, however, that neither Seller
nor Buyer may terminate the Transaction Documents pursuant to this
clause (ii) if the Closing shall not have been consummated by July 31,
1998, by reason of the failure of such party or any of its Affiliates
to perform in all material respects any of its or their respective
covenants or agreements contained in the Transaction Documents;
(iii) by either Seller or Buyer if there shall be any
Applicable Law or regulation that makes consummation of the
Contemplated Transactions illegal or otherwise prohibited or if
consummation of the Contemplated Transactions would violate any
nonappealable final order, decree or judgment of any Governmental
Authority having competent jurisdiction;
(iv) by Buyer if the representations and warranties of Seller
shall not be true and correct as at any date prior to Closing or if
Seller shall have failed to perform all of the covenants and comply
with all of the provisions required by any Transaction Document to be
performed or complied with by it on or before the Closing, unless such
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matters would not rise to the level of a failure of the Closing
condition contemplated by Section 9.02(a) if Seller fails to so
perform, comply or otherwise cure such matter within 15 days of receipt
of notice from Buyer of such matter; and
(v) by Seller if the representations and warranties of Buyer
shall not be true and correct as at any date prior to Closing or if
Buyer shall have failed to perform all of the covenants and comply with
all of the provisions required by any Transaction Document to be
performed or complied with by it on or before the Closing, but only
unless such matters would not rise to the level of a failure of the
Closing condition contemplated by Section 9.03(a) if Buyer fails to so
perform, comply or otherwise cure such matter within 15 days of receipt
of notice from Seller of such matter.
Any party desiring to terminate this Agreement pursuant to this Section 11.01
shall give written notice of such termination to the other parties to this
Agreement.
Section 11.02 Effect of Termination. If this Agreement is terminated as
permitted by Section 11.01, such termination shall be without liability of any
party (or any Affiliate, stockholder, director, officer, employee, agent,
consultant or Representative of such party) to any other party to this
Agreement; provided, however, that if the Contemplated Transactions fail to
close as a result of a breach of the provisions of any Transaction Document by
Seller or Buyer, such party shall be fully liable for any and all Damages
incurred or suffered by the other party as a result of all such breaches if the
other party is ready, willing and able to otherwise satisfy its obligations
under the Transaction Documents. Notwithstanding the foregoing, the provisions
of Sections 6.01 and 12.03, the second sentence of Section 10.02(a), and this
Section 11.02 shall survive any termination hereof pursuant to Section 11.01.
ARTICLE XII
MISCELLANEOUS
Section 12.01 Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
if to Seller:
The Black & Decker Corporation
701 East Joppa Road
Towson, Maryland 21286
Attention: Senior Vice President and
Chief Financial Officer
Telecopy: (410) 716-3318
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with a copy to:
The Black & Decker Corporation
701 East Joppa Road
Towson, Maryland 21286
Attention: Senior Vice President and
General Counsel
Telecopy: (410) 716-2660
and
Miles & Stockbridge P.C.
10 Light Street
Baltimore, Maryland 21202
Attention: Glenn C. Campbell
Telecopy: (410) 385-3700
if to Buyer:
Windmere-Durable Holdings, Inc.
5980 Miami Lakes Drive
Miami Lakes, Florida 33014-2467
Attention: Harry D. Schulman
Telecopy: (305) 364-0635
with a copy to:
Greenberg Traurig
1221 Brickell Avenue
Miami, Florida 33131
Attention: Paul Berkowitz
Telecopy: (305) 579-0717
or to such other address or telecopy number and with such other copies, as such
party may hereafter specify for the purpose by notice to the other parties. Each
such notice, request or other communication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section 12.01 and evidence of receipt is received or (ii) if given by any
other means, upon delivery or refusal of delivery at the address specified in
this Section 12.01.
Section 12.02 Amendments; Waivers.
(a) Any provision of the Transaction Documents may be amended or waived
prior to the Closing Date if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by Seller and Buyer, or in the
case of a waiver, by the party against whom the waiver is to be effective.
<PAGE>
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(b) No failure or delay by any party in exercising any right, power or
privilege under any Transaction Document shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 12.03 Expenses; Taxes. Except as otherwise provided in the
Transaction Documents, all costs and expenses incurred in connection with the
Transaction Documents shall be paid by the party incurring such cost or expense.
Notwithstanding the foregoing, (i) all real estate transfer and similar taxes or
governmental charges resulting from or relating to the transfer of the
Transferred Assets to Buyer Companies by Seller or any of the Affiliated
Transferors, shall be borne one-half by Seller and one-half by Buyer, (ii) all
sales, use and similar taxes or governmental charges (other than value added or
similar taxes for which Buyer or Buyer Companies can obtain a credit or refund)
resulting from or relating to the transfer of the Transferred Assets to Buyer
Companies by Seller or any of the Affiliated Transferors, shall be borne
one-half by Seller and one-half by Buyer, and (iii) all value added or similar
taxes for which Buyer or Buyer Companies can obtain a credit or refund shall be
borne solely by Buyer and Buyer Companies. Each of Buyer and Seller shall
reimburse the other for one-half of such fees and taxes and charges paid by the
other promptly upon presentation of a demand therefor consistent with this
Section 12.03. Any property taxes that are assessed on an annual basis and have
been paid by Seller Companies prior to Closing shall be prorated at Closing and
Buyer shall reimburse Seller Companies for amounts attributable to any period or
portion thereof on or after the Closing Date.
Section 12.04 Successors and Assigns. The provisions of the Transaction
Documents shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other party, except that Buyer may assign
its rights and delegate its obligations hereunder to any Buyer Company, provided
that Buyer shall remain responsible for the fulfillment of all such obligations
and shall remain fully liable hereunder for its own actions or omissions and the
actions or omissions of any such assignee as if such rights and obligations had
not been assigned or delegated, and the Buyer may assign its rights hereunder to
NationsBank, N.A., as collateral agent for Buyer's lenders.
Section 12.05 Disclosure. Certain information set forth in the
Disclosure Schedules has been included and disclosed solely for informational
purposes and may not be required to be disclosed pursuant to the terms and
conditions of the Transaction Documents. The disclosure of any such information
shall not be deemed to constitute an acknowledgement or agreement that the
information is required to be disclosed in connection with the representations
and warranties made in the Transaction Documents or that the information is
material, nor shall any information so included and disclosed be deemed to
establish a standard of materiality or otherwise used to determine whether any
other information is material.
Section 12.06 Construction. As used in the Transaction Documents, any
reference to the masculine, feminine or neuter gender shall include all genders,
the plural shall include the singular, and the singular shall include the
plural. With regard to each and every term and
<PAGE>
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condition of the Transaction Documents, the parties understand and agree that
the same have or has been mutually negotiated, prepared and drafted, and that if
at any time the parties desire or are required to interpret or construe any such
term or condition or any agreement or instrument subject hereto, no
consideration shall be given to the issue of which party actually prepared,
drafted or requested any term or condition of the Transaction Documents.
Section 12.07 Entire Agreement.
(a) The Transaction Documents and any other agreements contemplated
thereby (including, to the extent contemplated herein, the Confidentiality
Agreement) constitute the entire agreement among the parties with respect to the
subject matter of such documents and supersede all prior agreements,
understandings and negotiations, both written and oral, between the parties with
respect to the subject matter thereof.
(b) The parties hereto acknowledge and agree that no representation,
warranty, promise, inducement, understanding, covenant or agreement has been
made or relied upon by any party hereto other than those expressly set forth in
the Transaction Documents. Without limiting the generality of the disclaimer set
forth in the preceding sentence, (i) neither Seller nor any of its Affiliates
has made or shall be deemed to have made any representations or warranties, in
any presentation or written information relating to the HPG Business given or to
be given in connection with the Contemplated Transactions, in any filing made or
to be made by or on behalf of Seller or any of its Affiliates with any
Governmental Authority, and no statement, made in any such presentation or
written materials, made in any such filing or contained in any such other
information shall be deemed a representation or warranty hereunder or otherwise,
and (ii) Seller, on its own behalf and on behalf of the other Seller Companies,
expressly disclaims any implied warranties, including but not limited to
warranties of fitness for a particular purpose and warranties of
merchantability. Buyer acknowledges that Seller has informed them that no Person
has been authorized by Seller or any of its Affiliates to make any
representation or warranty in respect of the HPG Business or in connection with
the Contemplated Transactions, unless in writing and contained in this Agreement
or in any of the Transaction Documents to which they are a party.
(c) Except as expressly provided herein or in any other Transaction
Document, no Transaction Document or any provision thereof is intended to confer
upon any Person other than the parties hereto any rights or remedies hereunder.
Section 12.08 Governing Law. Except as otherwise provided in any of the
Transaction Documents, this Agreement and the other Transaction Documents shall
be construed in accordance with and governed by the law of the State of New York
(without regard to the choice of law provisions thereof).
Section 12.09 Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by the other party hereto.
<PAGE>
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Section 12.10 Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, any of the Transaction Documents or the Contemplated Transactions shall be
brought in the United States District Court for the Southern District of New
York (or, if subject matter jurisdiction is unavailable, in the state courts of
the State of New York), and each of the parties hereby consents to the exclusive
jurisdiction of such court (and of the appropriate appellate court) in any such
suit, action or proceeding and waives any objection to venue laid therein.
Process in any such suit, action or proceeding may be served on any party
anywhere in the world. Without limiting the foregoing, Seller and Buyer agree
that service of process upon such party at the address referred to in Section
12.01, together with written notice of such service to such party, shall be
deemed effective service of process upon such party.
Section 12.11 Severability. Any provision of the Transaction Documents
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of the
Transaction Documents or affecting the validity or enforceability of such
provision in any other jurisdiction. To the extent any provision of the
Transaction Documents is determined to be prohibited or unenforceable in any
jurisdiction Seller and Buyer agree to use reasonable commercial efforts, and
agree to cause the other Seller Companies or Buyer Companies, as the case may
be, to use reasonable commercial efforts, to substitute one or more valid, legal
and enforceable provisions that, insofar as practicable implement the purposes
and intent of the prohibited or unenforceable provision.
Section 12.12 Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
Section 12.13 Bulk Sales. Buyer hereby waives compliance by Seller and
each Affiliated Transferor, in connection with the Contemplated Transactions,
with the provisions of Article 6 of the Uniform Commercial Code as adopted in
the States of Connecticut, Maryland and North Carolina, and as adopted in any
other states or jurisdictions where any of the Transferred Assets are located,
and any other applicable bulk sales laws with respect to or requiring notice to
Seller's (or any Affiliated Transferor's) creditors, as the same may be in
effect on the Closing Date. Seller shall indemnify and hold harmless Buyer
against any and all liabilities (other than liabilities in respect of Assumed
Liabilities) which may be asserted by third parties against Buyer as a result of
noncompliance with any such bulk sales law.
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IN WITNESS WHEREOF, the parties hereto caused this Agreement to be duly
executed by their respective authorized officers on the day and year first above
written.
THE BLACK & DECKER CORPORATION
By: /s/ CHARLES E. FENTON
Charles E. Fenton
Senior Vice President and General
Counsel
WINDMERE-DURABLE HOLDINGS, INC.
By: /s/ DAVID M. FRIEDSON
David M. Friedson
Chairman, President and Chief
Executive Officer
<PAGE>
EXHIBIT A
DEFINITIONS
(a) The following terms have the following meanings:
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with such other
Person. For purposes of determining whether a Person is an Affiliate, the term
"control" shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of securities, contract or otherwise.
"Affiliated Transferors" means any Seller Company that owns any of the
assets that would constitute Transferred Assets if owned, held or used by Seller
or any of its Affiliates on the Closing Date or is liable for any of the Assumed
Liabilities.
"Applicable Law" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, decree or other requirement
of any Governmental Authority (including any Environmental Law) applicable to
such Person or any of their respective properties, assets, officers, directors,
employees, consultants or agents (in connection with such officer's, director's,
employee's, consultant's or agent's activities on behalf of such Person).
"Asheboro Closing Costs" means the following cash closing costs in
respect of the Asheboro Property: (a) employee severance benefits in respect of
employees working at the Asheboro property, (b) dismantle, freight and
installation costs, (c) travel and living expenses in connection with relocation
to the Queretaro Property, (d) contract engineering and recruitment expenses,
(e) any special bonus arrangements for employees working at the Asheboro
Property as of the Closing Date that are agreed to in writing by Seller and
Buyer, and (f) cleanup and maintenance costs after relocation.
"Asheboro Property" means the property located at 1758 South
Fayetteville Street, Asheboro, North Carolina 27203.
"Assignment and Assumption Agreements" means the Bill of Sale,
Assignment and Assumption Agreements to be entered into by Seller and an
Affiliated Transferor and Buyer and a Buyer Company in respect of each of the
countries where Transferred Assets are located as of the Closing Date, in the
form contemplated by Attachment II (with such changes as may be required to
satisfy any requirements of Applicable Law in any country or jurisdiction where
such Transferred Assets are located) and any other similar agreements or further
assurances documents contemplated by this Agreement executed and delivered by
Seller and an Affiliated Transferor and Buyer and a Buyer Company in connection
with the sale, assignment and transfer by Seller or an Affiliated Transferor of
Transferred Assets and the assumption by a Buyer Company of Assumed Liabilities,
as the same may be amended from time to time.
"Assumed Liabilities" means all liabilities and obligations of Seller
Companies, to the extent relating to or arising out of the operation, affairs
and conduct of the HPG Business, the Transferred Assets or the HPG Leases, of
any kind, character or description, whether liquidated or unliquidated, known or
unknown, fixed or contingent, accrued or unaccrued, absolute, determined,
determinable or indeterminable or otherwise, whether or not reflected or
reserved against in the Opening Statement or in the calculation of the Final Net
Tangible Asset Amount and whether presently in existence or arising hereafter,
except for Excluded Liabilities, including but not limited to the following:
(i) all liabilities and obligations relating to the HPG
Business or the Transferred Assets (and, to the extent provided in clauses (a)
or (d) below, in connection with the Cleaning and Lighting Products), whether
accrued, liquidated, contingent, matured or unmatured, at or prior to the
Closing, that (a) are set forth on, reflected or referred to in the Opening
Statement (including those liabilities relating to the Cleaning and Lighting
Products), (b) are disclosed in any of the Disclosure Schedules delivered
hereunder, (c) would be subject to disclosure in any of the Disclosure Schedules
delivered in connection with any of Seller's representations and warranties but
for the materiality standards contained in such representation and warranty
(provided that any such liabilities or obligations covered by this clause (c)
shall not, in the aggregate, exceed an amount that reasonably could be expected
to have a Material Adverse Effect on the HPG Business), (d) are reflected in the
Final Net Tangible Asset Amount as determined in accordance with Section 2.04
herein (including without limitation accounts payable and reserves reflected as
contra-asset accounts) or (e) are otherwise a liability or obligation that Buyer
is expressly assuming pursuant to this Agreement;
(ii) all liabilities and obligations arising under Contracts
entered into in the ordinary course of business consistent with past practices,
whether or not the Contracts have been completed or terminated prior to the
Closing Date, including, without limitation, any such liabilities and
obligations arising from or relating to the performance or non-performance of
such Contracts by the HPG Business, a Buyer Company or any other Person, whether
arising prior to, on or after the Closing Date, except to the extent they
constitute Excluded Liabilities;
(iii) all liabilities and obligations in respect of
Transferred Employees, and beneficiaries of employees and former employees of
the HPG Business, including, without limitation, liabilities and obligations
under or relating to WARN or any similar state or local law to the extent
relating to or arising out of any actions taken by Buyer Companies on or after
the Closing Date, except to the extent otherwise provided in Exhibit D to be
retained by Seller;
(iv) all liabilities and obligations in respect of Transferred
Employees and dependents and beneficiaries of Transferred Employees under
Employee Plans and Benefit Arrangements, except to the extent otherwise provided
in Exhibit D to be retained by Seller;
(v) all liabilities and obligations relating to claims of
manufacturing or design defects with respect to any product manufactured or sold
or service provided by the HPG Business on or after the Closing Date (other than
any product in the finished goods inventory of Seller Companies as of the close
of business on the day preceding the Closing Date), including liabilities and
obligations in respect of investigations regarding product safety, product
recall and related matters, except to the extent they constitute Excluded
Liabilities;
(vi) all liabilities and obligations relating to warranty
obligations or services with respect to any product sold or service provided by
the HPG Business prior to, on or after the Closing Date;
(vii) all Environmental Liabilities, whether arising prior to,
on or after the Closing Date, to the extent relating to or arising out of
conditions at the Queretaro Property;
(viii) all liabilities and obligations relating to the HPG
Leases, whether arising prior to, on or after the Closing Date;
(ix) all liabilities and obligations (except to the extent
they constitute Environmental Liabilities, which shall be governed by the
foregoing clause (vii)) relating to the Occupational Safety and Health Act of
1970, as amended, and any regulations, decisions or orders promulgated
thereunder, together with any state or local law, regulation or ordinance
pertaining to worker, employee or occupational safety or health in effect as the
same may be amended, supplemented or superseded, whether arising prior to, on or
after the Closing Date, as the same relates to the HPG Business;
(x) all liabilities and obligations arising from or relating
to governmental, judicial or adversarial proceedings (public or private),
litigation, suits, arbitration, disputes, claims, causes of action or
investigations (collectively, "Proceedings") to the extent arising from or
relating to the HPG Business or any Transferred Assets, whether or not accrued,
liquidated, contingent, matured, unmatured, or known or unknown to Seller or
Buyer at or prior to the Closing, except for liabilities and obligations of a
type contemplated by the foregoing clause (v), which shall be governed by such
clause;
(xi) all liabilities and obligations relating to the ownership
by Buyer Companies or any of their successors of the Transferred Assets,
directly or indirectly relating to or arising under the Employee Plans and
Benefit Arrangements or relating to the Transferred Employees, the lease of
properties under the HPG Leases or otherwise, or the conduct of the HPG Business
or any other business, in each case, from and after the Closing Date, including,
without limitation, any and all Proceedings in respect thereof; and
(xii) a pro rata portion of all ad valorem real property taxes
for the portion of the taxable year ending on the Closing Date.
"Benefit Arrangements" means all life and health insurance,
hospitalization, retirement, savings, bonus, deferred compensation, incentive
compensation, severance pay, disability and fringe benefit plans, holiday or
vacation pay, profit sharing, seniority, and other policies, practices,
agreements or statements of terms and conditions providing employee or executive
compensation or benefits to Transferred Employees or any of their dependents,
maintained by Seller Companies, other than an Employee Plan.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to close.
"Cleaning and Lighting Products" means hand held vacuums, upright floor
vacuums, battery powered bathroom and outdoor cleaners sold under the
Scumbuster(R) name, flexible flashlights, flexible lanterns, leashlights and
rechargeable lights, together in each case with any related accessories or
attachments.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means the letter agreement dated February
3, 1998, by and between Seller and Buyer, as the same has been or may be amended
from time to time.
"Contemplated Transactions" means the transactions contemplated by the
Transaction Documents.
"Contracts" means all contracts, agreements, leases (including leases
of real property), licenses, commitments, sales and purchase orders, and other
undertakings of any kind, whether written or oral, relating exclusively to the
HPG Business, except to the extent that any of the foregoing constitute any of
the Employee Plans, Benefit Arrangements or funding vehicles associated with any
of the Employee Plans or Benefit Arrangements.
"Cross License Agreement" means the Intellectual Property Cross License
Agreement in the form contemplated by Attachment X.
"Damages" means all demands, claims, actions or causes of action,
assessments, losses, damages, costs, expenses, liabilities, judgments, awards,
fines, sanctions, penalties, charges and amounts paid in settlement, including,
without limitation, reasonable costs, fees and expenses of attorneys, experts,
accountants, appraisers, consultants, witnesses, investigators and any other
agents or representatives of such Person (with such amounts to be determined net
of any resulting Tax benefit actually received or realized and net of any refund
or reimbursement of any portion of such amounts actually received or realized,
including, without limitation, reimbursement by way of insurance or third party
indemnification), but specifically excluding (i) any costs incurred by or
allocated to an Indemnified Party with respect to time spent by employees of the
Indemnified Party or any of its Affiliates, (ii) any lost profits or opportunity
costs (except to the extent assessed in connection with a third-party claim with
respect to which the Person against which such damages are assessed is entitled
to indemnification hereunder), and (iii) the decrease in the value of any
Transferred Asset to the extent that such valuation is based on any use of the
Transferred Asset other than its use as of the Closing Date.
"Designated Countries" means the countries located in the Caribbean and
North, Central and South America, but excluding Brazil, Paraguay and Uruguay.
"Designated Products" means coffeemakers, espresso makers, cappuccino
makers, toasters, toaster ovens, steamers, choppers, can openers, mixers, food
processors, irons, breadmakers, skillets, electric knives, blenders, juicers,
grills, kettles and wafflebakers, together in each case with any related
accessories or attachments, and all products in the foregoing categories under
development in the HPG Business as of the Closing Date or that have been under
development in the HPG Business at any time during the year prior to the Closing
Date, but excluding step stools, Cleaning and Lighting Products, shop,
construction and similar vacuums, and VersaPak(R) rechargeable battery packs and
chargers, together in each case with related accessories or attachments.
"Disclosure Schedules" means the Disclosure Schedules dated the date of
this Agreement relating to this Agreement. Matters disclosed in one Schedule of
the Disclosure Schedules shall be applicable to such Schedule only.
"Employee Plans" means each "employee benefit plan" as defined in
Section 3(3) of ERISA, maintained or contributed to by Seller or any of its
Affiliates which provides benefits to employees of the HPG Business or their
dependents.
"Environmental Claim" means any written or oral notice, claim, demand,
action, suit, complaint, proceeding or other communication by any third Person
alleging liability or potential liability (including without limitation
liability or potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages, property damage, personal
injury, fines or penalties) arising out of, relating to, based on or resulting
from (i) the presence, discharge, emission, release or threatened release of any
Hazardous Substances at any location, (ii) circumstances forming the basis of
any violation or alleged violation of any Environmental Laws, or (iii) otherwise
relating to obligations or liabilities under any Environmental Laws.
"Environmental Laws" means any and all past, present or future federal,
state, local and foreign statutes, laws, regulations, ordinances, judgments,
orders, permits, codes, or injunctions, which (i) imposes liability for or
standards of conduct concerning the manufacture, processing, generation,
distribution, use, treatment, storage, disposal, cleanup, transport or handling
of Hazardous Substances including, The Resource Conservation and Recovery Act of
1976, as amended, The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, The Superfund Amendment and Reauthorization
Act of 1984, as amended, The Toxic Substances Control Act, as amended, the
Occupational Safety and Health Act of 1970, as amended, to the extent it relates
to the handling of and exposure to hazardous or toxic materials or similar
substances, and any other so-called "Superfund" or "Superlien" law or (ii)
otherwise relates to the protection of human health or the environment.
"Environmental Liabilities" means all liabilities to the extent arising
in connection with or in any way relating to the HPG Business or Seller's or any
of its Affiliates' use or ownership thereof, whether vested or unvested,
contingent or fixed, actual or potential, which arise under or relate to
Environmental Laws including, without limitation, (i) Remedial Actions, (ii)
personal injury, wrongful death, economic loss or property damage claims, (iii)
claims for natural resource damages, (iv) violations of Applicable Law or (v)
any Damages with respect thereto. Notwithstanding the foregoing, Environmental
Liabilities shall not include any increased liabilities resulting from or
arising out of a use of a facility constituting a Transferred Asset after the
Closing other than the use of the facility as of the Closing Date.
"ERISA" means the Employee Retirement Income Security act of 1974, as
amended.
"Excluded Assets" means:
(i) all cash and cash equivalents of Seller Companies,
including, without limitation, cash and cash equivalents used as collateral for
letters of credit, deposits with utilities, insurance companies and other
Persons, except to the extent taken into account in the determination of the
Final Net Tangible Asset Amount;
(ii) all original books and records that Seller Companies
shall be required to retain pursuant to any Applicable Law (in which case copies
of such books and records to the extent relating to the HPG Business shall be
provided to Buyer), or that portion of such records that contain information
relating to any business or activity of Seller Companies not forming a part of
the HPG Business, or any employee of a Seller Company that is not a Transferred
Employee;
(iii) all Tax assets of any Seller Companies, other than Tax
assets relating to sales and use taxes, gross receipts taxes, property taxes,
licenses, employee and employer withholding and unemployment taxes and other
non-income related taxes;
(iv) all assets of Seller Companies not held or owned by or
used exclusively in connection with the HPG Business;
(v) all rights and claims of Seller Companies under any of the
Transaction Documents and the agreements and instruments delivered to Seller
Companies by Buyer Companies pursuant to any of the Transaction Documents;
(vi) all accounts receivable, notes receivable or similar
claims or rights (whether or not billed or accrued) of the HPG Business from any
Seller Companies;
(vii) all trade accounts receivable, trade notes receivable or
similar trade claims or rights (whether or not billed or accrued) of the HPG
Business relating to the sale of products by an Affiliated Transferor to a
Person other than a Seller Company for sale outside of the United States
(excluding Puerto Rico) or Canada;
(viii) all capital stock or any other securities of any Seller
Companies or any other Person;
(ix) all GE Intellectual Property and all Intellectual
Property not used or held for use exclusively in the HPG Business, it being
understood and agreed that the only Intellectual Property deemed used or held
for use exclusively in the HPG Business that is registered or as to which an
application for registration is pending is listed as "Transferred Assets" on
Attachment XII;
(x) all assets related to Excluded Liabilities;
(xi) all rights and claims of Seller Companies against
SAI/Earle Palmer Brown Promotions, or any of its predecessors, successors or
affiliates, in connection with the design, manufacture, purchase or sale of
"Sharpei puppets" sold and/or packaged with irons sold by the HPG Business prior
to the Closing Date;
(xii) all ownership and leasehold interests of Seller
Companies in respect of the facility, real property, fixtures and equipment
located at or constituting the Kuantan Facility, except to the extent
specifically contemplated within the definition of Transferred Assets;
(xiii) all accounts receivable, notes receivable or similar
claims or rights of Seller Companies arising out of or relating to any judgments
entered by a court or arbitrator prior to the Closing Date in favor of Seller
Companies in respect of Designated Products;
(xiv) all rights, claims, credits and assets of Seller
Companies arising out of or relating to media barter contracts, agreements or
arrangements of Seller Companies;
(xv) all Inventory (and any related parts, accessories or
attachments) that is owned by Seller Companies and held for sale, use or
consumption by Seller's national disposition center (i.e., Nashville facility),
service centers, outlet stores and company stores in the United States or
Canada, and all returned goods that are being held for reconditioning or are
being considered for reconditioning by Seller's national disposition center
(i.e., Nashville facility), service centers, outlet stores and company stores in
the United States or Canada;
(xvi) all assets related to Cleaning and Lighting Products,
except for accounts receivable and prepaid expenses;
(xvii) the 28 mold presses identified as relating to the
Cleaning and Lighting Products located at the Asheboro Property and listed on
Schedule A; and
(xviii) all assets (other than Inventory) relating to
operations in the Designated Countries other than the United States (excluding
Puerto Rico) and Canada, and other than the manufacturing operations located at
the Queretaro Property.
"Excluded Liabilities" means the following liabilities and obligations:
(i) all liabilities and obligations of Seller Companies not
arising out of the conduct of the HPG Business, except as otherwise specifically
provided in the Transaction Documents;
(ii) except as otherwise specifically provided in the
Transaction Documents, all liabilities or obligations for any Tax arising from
or with respect to the Transferred Assets or the operations of the HPG Business
prior to the Closing, other than Tax liabilities or obligations relating to
sales and use taxes, gross receipts taxes, property taxes, licenses, employee
and employer withholding and unemployment taxes and other non-income related
taxes;
(iii) all liabilities or obligations, whether presently in
existence or arising after the date of this Agreement, in respect of accounts
payable, notes payable (including intercompany promissory notes and similar
financing arrangements) or similar obligations (whether or not billed or
accrued) to Seller Companies, except for amounts accrued by the HPG Business and
not billed by Seller Companies to the HPG Business as of the Closing Date in
respect of accounts payable, notes payable or similar obligations relating to
specific services provided to and specific expenses paid on behalf of the HPG
Business by Seller Companies;
(iv) all liabilities or obligations, whether presently in
existence or arising after the date of the Agreement, relating to fees,
commissions or expenses owed to any broker, finder, investment banker,
accountant, attorney or other intermediary or advisor employed by Seller
Companies in connection with the Contemplated Transactions;
(v) all liabilities or obligations retained by Seller pursuant
to Exhibit D;
(vi) all liabilities or obligations related to Excluded Assets
and not otherwise included in the Assumed Liabilities by express provision of
this Agreement;
(vii) all liabilities or obligations related to claims of
manufacturer or design defects with respect to any products sold or service
provided by the HPG Business prior to, on or after the Closing Date, including
liabilities and obligations in respect of investigations regarding product
safety, product recall and related matters, to the extent but only to the extent
relating to products manufactured or sold prior to the Closing Date or any
product in the finished goods inventory of Seller Companies as of the close of
business on the day preceding the Closing Date;
(viii) all Environmental Liabilities, whether arising prior
to, on or after the Closing Date, to the extent arising out of actions taken
prior to the Closing Date, (1) relating to the disposal by Seller Companies or
any of their predecessors or respective agents prior to Closing of Hazardous
Substances at any location that at the time of such disposal were not owned or
leased by a Seller Company or any of its predecessors, it being understood and
agreed that the migration of Hazardous Substances in soil or groundwater from a
facility included in the Transferred Assets to surrounding properties shall not
be considered a disposal of Hazardous Substances, or (2) relating to or arising
out of conditions at, or the current or former operations at, any facilities
other than the Queretaro Property;
(ix) all Environmental Liabilities, whether arising prior to,
on or after the Closing Date, relating to the operations at the Asheboro
Property or Kuantan Facility prior to the Closing Date;
(x) all liabilities or obligations, whether presently existing
or arising after the date of this Agreement, relating directly or indirectly to
(i) the home security alarm systems and related products (including, but not
limited to, digital dialers) business previously conducted by Seller Companies,
and (ii) the Agreement of Sale dated August 1, 1991, by and between Black &
Decker Monitoring Services, Inc., Black & Decker (U.S.) Inc. and Monital Signal
Corporation; and
(xi) all liabilities or obligations relating directly or
indirectly to the litigation titled Emerson Electric Co. v. Black & Decker Inc.
pending in the United States District Court for the Southern District of New
York.
"Financial Support Arrangements" means the agreements listed in
Schedule B.10 as "Financial Support Arrangements."
"GAAP" means Generally Accepted Accounting Principles as in effect on
the date of the Agreement, consistently applied.
"GE Intellectual Property" means the Intellectual Property identified
as such on Table 2 in Attachment XII.
"Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.
"Hazardous Substances" means (i) substances defined as "hazardous
substances," "hazardous materials" or "hazardous waste" pursuant to The
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or The Resource Conservation and Recovery Act of 1976, as amended, (ii)
substances defined as "hazardous wastes" in the regulations adopted and
publications promulgated pursuant to any of said laws, (iii) substances defined
as "toxic substances" in The Toxic Substances Control Act, as amended, and (iv)
petroleum, its derivatives and petroleum products, and asbestos and asbestos
containing materials.
"HPG Business" means (i) the household products business as presently
conducted by Seller Companies involving the manufacturing, marketing or sale in
the Designated Countries of the Designated Products, (ii) the manufacturing or
sale of Designated Products (or components thereof) at the Kuantan Facility and
(iii) the purchase or sourcing of Designated Products (or components thereof)
for import and sale by Seller Companies into the Designated Countries.
"HPG Financial Statements" means the special-purpose financial
statements attached in Attachment I and Attachment XIV to this Agreement.
"HPG Leases" means the real property leases listed on Schedule B.07(d)
relating to the facilities used exclusively by the HPG Business, and any other
real property leases entered into after the date of this Agreement and on or
prior to the Closing Date with the consent of Buyer, exclusively for the benefit
of the HPG Business, as the same may be amended and supplemented from time to
time, including the interests of Seller Companies in any related fixtures,
improvements and personal property located therein.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Intellectual Property" means all patents, copyrights, technology,
know-how, processes, trade secrets, inventions, proprietary data, formulae,
research and development data and computer software programs; all trademarks,
trade names, service marks and service names; all registrations, applications,
recordings, licenses and common-law rights relating thereto, all rights to sue
at law or in equity for any infringement or other impairment thereto, including
the right to receive all proceeds and damages therefrom, and all rights to
obtain renewals, continuations, divisions or other extensions of legal
protections pertaining thereto; and all other United States, state and foreign
intellectual property owned by Seller Companies on the Closing Date.
"Intellectual Property Assignment Agreements" means the Assignment of
United States Trademarks, Trademark Registrations and Applications for
Registration, the Assignment of Foreign Trademarks, Trademark Registrations and
Applications for Registration, the Assignment of United States Patents and
Patent Applications, the Assignment of Foreign Patents and Application for
Patents, the Assignment of U.S. Copyrights, and the Assignment of Mexican
Trademarks, Trademark Registrations and Applications for Registration, in the
forms contemplated by Attachments III, IV, V, VI, VIII and IX to this Agreement,
and such other assignment agreements as Buyer may reasonably request in order to
effect the change of title to the Intellectual Property contemplated by such
Attachments.
"Inventory" means all items of inventory notwithstanding how classified
in the financial records of Seller Companies, including all raw materials,
work-in-process, finished goods, reconditioned products and to be reconditioned
products.
"Kuantan Facility" means the manufacturing facility located at Lot
109A, KWS. Perinbustrain Gebeng, P.O. Box 6, Kuantan, Pahang 26080, Malaysia.
"Licensed Software" shall mean any software used by and material to the
operation of the HPG Business that constitutes Transferred Assets, which
software constitutes "off-the-shelf" software or is licensed by Seller Companies
pursuant to a Contract.
"Lien" means, with respect to any asset, any mortgage, lien, claim,
pledge, charge, security interest or other encumbrance of any kind in respect of
such asset.
"Material Adverse Effect" means (i) with respect to the HPG Business, a
material adverse effect on the assets, properties, business, financial condition
or results of operations of the HPG Business taken as a whole, or (ii) with
respect to any other Person, a material adverse effect on the assets,
properties, business, financial condition or results of operations of such
Person and its Subsidiaries taken as a whole.
"Net Tangible Assets" means (i) all Transferred Assets, minus (ii) all
Assumed Liabilities, calculated in accordance with the practices and policies
that were employed in the preparation of the Opening Statement, determined, in
each case, consistent with the Opening Statement and the notes thereto, except
as provided in Note E thereto.
"Net Working Capital" means (i) Net Tangible Assets, minus (ii) real
property, equipment and capitalized software, other fixed assets and all other
non-current assets, plus (iii) all non-current liabilities of the HPG Business,
calculated in accordance with the practices and policies that were employed in
the preparation of the Opening Statement, determined, in each case, consistent
with the Opening Statement and the notes thereto, except as provided in Note E
thereto.
"Non US Benefit Arrangements" means Benefit Arrangements in respect of
Non US Transferred Employees.
"Non US Transferred Employees" means Transferred Employees who are not
US Transferred Employees.
"Opening Statement" means the "Base Business" column of the
special-purpose combining statement of net assets of the HPG Business at March
29, 1998, together with the notes thereto, as included in the Other Financial
Information section of Attachment I to this Agreement.
"Owned Software" shall mean software used by and material to the
operation of the HPG Business that constitutes Transferred Assets that has been
designed and developed by Seller Companies separate from any Licensed Software
as set forth and described on Schedule B.19.
"Permitted Liens" means any of the following:
(i) Liens for Taxes that (x) are not yet due or delinquent or
(y) are being contested in good faith by appropriate proceedings;
(ii) statutory Liens or landlords', carriers', warehousemen's,
mechanic's, suppliers', materialmen's or other like Liens arising in the
ordinary course of business with respect to amounts not yet overdue for a period
of 60 days or amounts being contested in good faith by appropriate proceedings;
(iii) easements, rights of way, restrictions and other similar
charges or encumbrances on real property interests, that, individually or in the
aggregate, do not materially interfere with the ordinary course of operation of
the HPG Business or the use of any such real property for its current uses;
(iv) with respect to real property, title defects or
irregularities that do not in the aggregate materially impair the value of or
the use of such real property for its current use;
(v) rights and licenses granted to others in Intellectual
Property that have been disclosed to Buyer prior to Buyer's execution of this
Agreement, that are not material to the HPG Business taken as a whole or that
have no effect upon the Transferred Assets;
(vi) with respect to any of the HPG Leases where any Seller
Company is a lessee, any Lien affecting the interest of the landlord thereunder;
(vii) with respect to the Queretaro Property, the encroachment
of a structure from the neighboring facility across a shared property line,
approximately eight meters into the Queretaro Property;
(viii) a lease of approximately 750 square feet of space at
the Queretaro Property to BanaMex, which operates an automated teller machine
and office for the use of the employees at the Queretaro Property; and
(ix) Encumbrances disclosed in the Disclosure Schedule or
taken into account in the Opening Statement.
"Person" means an individual, a corporation, a general partnership, a
limited partnership, a limited liability company, limited liability partnership,
an association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Queretaro Property" means the property located at Accesco III SIN,
Fracc., Industrial Benito Juarez, Queretaro, QRO. 76130, Mexico.
"Remedial Action(s)" means the investigation, clean-up or remediation
of environmental contamination or damage caused by, related to or arising from
the generation, use, handling, treatment, storage, transportation, disposal,
discharge, release, or emission of Hazardous Substances, including, without
limitation, investigations, response, removal and remedial actions under The
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, corrective action under The Resource Conservation and Recovery Act of
1976, as amended, and clean-up requirements under similar state Environmental
Laws.
"Representatives" means (i) with respect to Buyer, any of the
"Representatives" as defined in the Confidentiality Agreement and (ii) with
respect to Seller, each of its respective directors, officers, advisors,
attorneys, accountants, employees or agents.
"Seller Companies" means Seller and its Subsidiaries.
"Services Agreements" means the Services Agreement (United States and
Canada), Services Agreement (GPA), Services Agreement (Mexico), Services
Agreement (Latin American Group and CCA), Services Agreement (Colombia),
Services Agreement (Chile), Services Agreement (Peru), Services Agreement
(Argentina), Services Agreement (Puerto Rico) and Services Agreement
(Venezuela), in the forms contemplated by Attachments XVIII, XIX, XX, XXI, XXII,
XXIII, XXIV, XXV, XXVI and XXVII to this Agreement, as the same may be amended
from time to time.
"Subsidiary" as it relates to any Person, shall mean with respect to
any Person, any corporation, partnership, joint venture or other legal entity of
which such Person, either directly or through or together with any other
Subsidiary of such Person, owns more than 50% of the voting power in the
election of directors or their equivalents, other than as affected by events of
default.
"Tax Authority" shall mean a foreign or United States federal, state or
local Governmental Authority having jurisdiction over the assessment,
determination, collection or imposition of any Tax, as the context requires.
"Tax Returns" means all returns (including information returns),
declarations, reports, estimates and statements regarding Taxes, required to be
filed with any Tax Authority.
"Taxes" means all taxes, charges, fees, levies or other assessments,
including without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, excise, estimated, severance, stamp, occupation, property
or other taxes, customs, duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any Tax Authority.
"Transaction Documents" means this Agreement, the Assignment and
Assumption Agreements, the Services Agreements, the Intellectual Property
Assignment Agreements, the Cross License Agreement, the Trademark License
Agreement, the Distribution Services Agreement (United States), and the
Distribution Services Agreement (Latin America), and any exhibits or attachments
to any of the foregoing, as the same may be amended from time to time.
"Transferred Assets" means, other than Excluded Assets, all of the
assets, properties, rights, licenses, permits, Contracts, causes of action and
business of every kind and description as the same now exist (except to the
extent transferred in the ordinary course consistent with past practices prior
to the Closing Date) or exists on the Closing Date, wherever located, real,
personal or mixed, tangible or intangible, owned by, leased by or in the
possession of Seller or any Affiliated Transferor, whether or not reflected in
the books and records thereof, and held or used exclusively in the conduct of
the HPG Business as the same now exist (except to the extent transferred in the
ordinary course consistent with past practices prior to the Closing Date) or
exists on the Closing Date, and all assets of the HPG Business acquired by any
Seller Company, on or prior to the Closing Date and not disposed of prior to the
Closing Date in accordance with this Agreement, and including, without
limitation, except as otherwise specified herein, all direct or indirect right,
title and interest of Seller or any Affiliated Transferor in, to and under:
(i) the Queretaro Property, together with all buildings,
fixtures, easements, rights of way, and improvements thereon and appurtenances
thereto to the extent relating to the HPG Business;
(ii) the rights and interests of Seller Companies under the
HPG Leases;
(iii) all personal property and interests therein (other than
Intellectual Property and other than that located at the Kuantan Facility),
including machinery, equipment, furniture, office equipment, communications
equipment, vehicles, storage tanks, spare and replacement parts, fuel and other
tangible property (and interests in any of the foregoing) owned by any Seller
Company that are used exclusively in connection with the HPG Business;
(iv) all Inventory that is owned by Seller Companies and held
for sale, use or consumption exclusively in the HPG Business;
(v) all Contracts; provided, however that the license of the
Spacemaker(R) trademark shall be limited to the Designated Countries;
(vi) all accounts, accounts receivable and notes receivable
whether or not billed, accrued or otherwise recognized in the Opening Statement
or taken into account in the determination of the Final Net Tangible Asset
Amount, together with any unpaid interest or fees accrued thereon or other
amounts due with respect thereto of Seller Companies that relate exclusively to
the HPG Business, and any security or collateral for any of the foregoing;
(vii) all expenses that have been prepaid by Seller Companies
relating exclusively to the operation of the HPG Business, including but not
limited to ad valorem Taxes, lease and rental payments;
(viii) all of Seller's or any of Seller Companies' rights,
claims, credits, causes of action or rights of set-off against Persons other
than Seller Companies relating exclusively to the HPG Business or the
Transferred Assets, including, without limitation, unliquidated rights under
manufacturers' and vendors' warranties;
(ix) all Intellectual Property (other than Intellectual
Property constituting an Excluded Asset) used or held for use exclusively in the
HPG Business, including the goodwill of the HPG Business symbolized thereby, it
being understood and agreed that the only Intellectual Property deemed used or
held for use exclusively in the HPG Business that is registered or as to which
an application for registration is pending is listed as "Transferred Assets" on
Attachment XII;
(x) all transferable franchises, licenses, permits or other
governmental authorizations owned by, or granted to, or held or used by, Seller
Companies and exclusively related to the HPG Business;
(xi) except to the extent a Seller Company is required to
retain the originals pursuant to any Applicable Law (in which case copies will
be provided to Buyer), all business books, records, files and papers, whether in
hard copy or computer format, of a Seller Company used exclusively in the HPG
Business, including, without limitation, books of account, invoices, engineering
information, sales and promotional literature, trademark and service mark legal
files, other legal files, archival materials comprising historical advertising
and sales information relating to Transferred Assets and Designated Products,
manuals and data, sales and purchase correspondence, lists of present and former
suppliers, lists of present and former customers, personnel and employment
records of present or former employees, documentation developed or used for
accounting, marketing, engineering, manufacturing, or any other purpose relating
to the conduct of the HPG Business at any time prior to the Closing, except to
the extent relating to Excluded Liabilities;
(xii) the right to represent to third parties that Buyer is
the successor to the HPG Business;
(xiii) all insurance proceeds (except to the extent relating
to Excluded Assets or Excluded Liabilities or to the extent relating to or
arising out of Environmental Insurance Claims), net of any retrospective
premiums, deductibles, retention or similar amounts, arising out of or related
to damage, destruction or loss of any property or asset of or used exclusively
in connection with the HPG Business to the extent of any damage or destruction
that remains unrepaired, or to the extent any property or asset remains
unreplaced at the Closing Date;
(xiv) the equipment in the Kuantan Facility listed on Schedule
A, which assets shall be included in the calculation of the Final Net Tangible
Asset Amount; and
(xv) accounts receivable and prepaid expenses relating to
Cleaning and Lighting Products in the United States (except for the operations
located in Miami, Florida) and Canada.
"US Benefit Arrangements" means Benefit Arrangements in respect of US
Transferred Employees.
"US Transferred Employees" means Transferred Employees employed by the
HPG Business in the United States.
"WARN" means the Worker Adjustment Retraining and Notification Act, as
amended.
(b) "To the knowledge," "known by" or "known" (and any similar phrase) means (i)
with respect to Seller, to the knowledge of any of the Chief Financial Officer,
the General Counsel, the Treasurer or the Controller of Seller, or the President
of the HPG Business, and shall be deemed to include a representation that a
reasonable investigation or inquiry of the subject matter thereof has been made
of such individuals, (ii) with respect to Buyer, to the knowledge of the
President, Chief Financial Officer, the General Counsel, the Treasurer or the
Controller of Buyer, and shall be deemed to include a representation that a
reasonable investigation or inquiry of the subject matter thereof has been made
of such individuals.
(c) Each of the following terms is defined in the Section set forth opposite
such term:
Term Section
Active Employee....................................................D.01
Adjusted Purchase Price............................................2.02
Agreement......................................................Preamble
Buyer..........................................................Preamble
Buyer Companies................................................Preamble
Buyer's Mexico Plan................................................D.13
Buyer's Pension Plan...............................................D.07
Closing............................................................2.03
Closing Net Working Capital Amount.................................2.04
Competing Business.................................................5.06
CSA................................................................E.05
Encumbrances....................................................... A
Environmental Insurance Claims.....................................7.06
Exchange Consideration.............................................2.02
Fifth Anniversary Date.............................................5.06
Final Net Tangible Asset Amount....................................2.04
Final Net Working Capital Change Amount............................2.04
Indemnified Claim.................................................10.03
Indemnified Party.................................................10.03
Indemnifying Party................................................10.03
Insurance Liabilities..............................................6.03
June 28 Net Working Capital Amount.................................2.04
Leased Real Property...............................................B.07
Net Working Capital Adjustment Amount..............................2.04
Owned Real Property................................................B.07
PBGC...............................................................B.18
Period One.........................................................5.06
Proceedings....................................................... A
Proposed Final Net Tangible Asset Amount...........................2.04
Proposed Net Working Capital Change Amount.........................2.04
Referee...........................................................10.03
Remaining Recovery.................................................7.06
Seller.........................................................Preamble
Seller's Canada Plan...............................................D.15
Seller's Mexico Plan...............................................D.13
Seller's Pension Plan..............................................D.07
Seller's Puerto Rico Plan..........................................D.14
Seller's Savings Plan..............................................D.08
Successor Canada Plan..............................................D.15
Successor Puerto Rico Plan.........................................D.14
Successor Savings Plan.............................................D.08
Surviving Representations or Covenants............................10.01
Third Party Claim.................................................10.03
Transferred Employees..............................................D.01
UL.................................................................E.05
Year 2000 Compliant................................................B.19
<PAGE>
EXHIBIT B
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants prior to Buyer, that:
B.01 Corporate Existence and Power. Each of Seller and each
Affiliated Transferor is a corporation duly incorporated, validly existing and
in good standing under the laws of the state or jurisdiction of its
incorporation and has all corporate powers, and has all governmental licenses,
authorizations, consents and approvals required to carry on the HPG Business as
now conducted, except where the failure to have such licenses, authorizations,
consents and approvals has not had, and could not reasonably be expected to
have, a Material Adverse Effect on the HPG Business. Each of Seller and each
Affiliated Transferor, as the case may be, is duly qualified to do business as a
foreign corporation in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities make such qualification
necessary to carry on the HPG Business as now conducted, except where the
failure to be so qualified has not had, and could not reasonably be expected to
have, a Material Adverse Effect on the HPG Business.
B.02 Corporate Authorization. The execution, delivery and
performance by Seller of each of the Transaction Documents to which it is a
party and the consummation by Seller of the Contemplated Transactions are within
its corporate powers and have been duly authorized by all necessary corporate
action on its part. The execution, delivery and performance by Seller Companies
other than Seller of the Transaction Documents to which a Seller Company other
than Seller is a party and the consummation by such Seller Company of the
Contemplated Transactions are within such Seller Company's corporate powers and
as of Closing will have been duly authorized by all necessary corporate action
on its part. Each of the Transaction Documents to which it is a party
constitutes or will constitute at Closing a legal, valid and binding agreement
of the applicable Seller Company, enforceable against it in accordance with its
terms (i) except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally, including the
effect of statutory and other laws regarding fraudulent conveyances and
preferential transfers and (ii) subject to the limitations imposed by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding at law or in equity).
B.03 Governmental Authorization. The execution, delivery and
performance by each Seller Company of the Transaction Documents to which it is a
party require no action by or in respect of, or consent or approval of, or
filing with, any Governmental Authority other than:
(i) compliance with any applicable requirements of
the HSR Act;
(ii) actions, consents, approvals or filings set
forth in Schedule B.03 or otherwise expressly referred to in this
Agreement; and
(iii) such other consents, approvals, authorizations,
permits and filings the failure to obtain or make would not have, in
the aggregate, a Material Adverse Effect on the HPG Business.
B.04 Non-Contravention. Except as set forth in Schedule B.04, the
execution, delivery and performance by Seller or any Affiliated Transferor of
the Transaction Documents do not and will not (i)(A) contravene or conflict with
the charter or bylaws of Seller or any Affiliated Transferor, (B) assuming
compliance with the matters referred to in Section B.03, contravene or conflict
with or constitute a violation of any provisions of any Applicable Law binding
upon Seller or any Affiliated Transferor that is applicable to the HPG Business;
(C) assuming compliance with the matters referred to in Section B.03, constitute
a default under or give rise to any right of termination, cancellation or
acceleration of, or to a loss of any benefit relating exclusively to the HPG
Business to which Seller or any Affiliated Transferor is entitled under, any
Contract binding upon Seller or any Affiliated Transferor and relating
exclusively to the HPG Business or by which any of the Transferred Assets is or
may be bound or any license, franchise, permit or similar authorization held by
Seller or any Affiliated Transferor relating exclusively to the HPG Business
except, in the case of clauses (B) and (C), for any such contravention,
conflict, violation, default, termination, cancellation, acceleration or loss
that could not reasonably be expected to have a Material Adverse Effect on the
HPG Business or (ii) result in the creation or imposition of any Lien on any
transferred Asset, other than Permitted Liens.
B.05 Financial Statements.
(a) The Opening Statement is presented fairly, in all material
respects, and in conformity with GAAP (except as set forth in the notes thereto)
applied on a basis consistent in all material respects with the manner in which
the HPG Business reported as of December 31, 1997 its financial position for
inclusion in the audited consolidated financial statements of Seller.
(b) The HPG Financial Statements present fairly, in all
material respects, the financial position and results of operations at the dates
and for the periods set forth therein, in conformity with GAAP (except as set
forth in the notes thereto).
B.06 Absence of Certain Changes. Except for matters that would be
permitted in accordance with Section 5.01 if they occurred after the date of
this Agreement or as set forth in Schedule B.06, from March 30, 1998 to the date
of this Agreement, there has not been any material adverse change in the
business, financial condition or results of operations of the HPG Business and
there has not been:
(a) any event or occurrence that has had a Material Adverse
Effect on the HPG Business;
(b) any damage, destruction or other casualty loss affecting
the HPG Business or any assets that would constitute Transferred Assets if
owned, held or used by Seller or any of the Affiliated Transferors on the
Closing Date that has had a Material Adverse Effect on the HPG Business;
(c) any transaction or commitment made, or any Contract
entered into, by Seller or any Affiliated Transferor relating primarily to the
HPG Business or any assets that would constitute Transferred Assets if owned,
held or used by Seller or any of the Affiliated Transferors on the Closing Date
(including the acquisition or disposition of any assets) or any termination or
amendment by Seller or any Affiliated Transferor of any Contract or other right
relating primarily to the HPG Business, in either case, material to the HPG
Business taken as a whole, other than transactions and commitments in the
ordinary course of business consistent with past practices and those
contemplated by this Agreement;
(d) any sale or other disposition of more than an aggregate of
$500,000 of assets (other than the sale of Inventory in the ordinary course of
business consistent with past practices, the sale of obsolete Inventory whether
or not in the ordinary course of business, any sale made in the ordinary course
of business and the sale of surplus equipment and materials arising out of or
relating to the closing of the Kuantan Facility) that would constitute
Transferred Assets if owned, held or used by any Seller Companies on the Closing
Date;
(e) any increase in the compensation of any current employee
of the HPG Business at a level of vice president or above, other than
nondiscretionary increases pursuant to Employee Plans or Benefit Arrangements
disclosed in Schedule B.18 or referenced in Exhibit D; and
(f) any cancellation, compromise, waiver or release by Seller
or any Affiliated Transferor of any claim or right (or a series of related
rights and claims) related to the HPG Business, other than cancellations,
compromises, waivers or releases in the ordinary course of business consistent
with past practices.
B.07 Sufficiency of and Title to the Transferred Assets.
(a) Except as set forth in Schedule B.07, the Transferred
Assets, together with the services to be provided to Buyer Companies pursuant to
the Services Agreements, the Distribution Services Agreement (United States) and
the Distribution Services Agreement (Latin America), and the Intellectual
Property to be licensed to Buyer pursuant to the Trademark License Agreement,
and the Cross License Agreement, and the subleases contemplated by Section 2.01,
constitute, and on the Closing Date will constitute, all of the assets and
services that are necessary or appropriate to permit the operation of the HPG
Business in substantially the same manner as such operations have heretofore
been conducted.
(b) Except as set forth in Schedule B.07, subject to the
receipt of any consents or approvals of any other Person, upon consummation of
the Contemplated Transactions, Buyer will have acquired good and marketable
title in and to, or a valid leasehold interest in, each of the Transferred
Assets (except for the Intellectual Property as to which no representation is
made in this Section B.07), free and clear of all Liens, except for Permitted
Liens. Except as set forth in Schedule B.07, subject to the receipt of any
consents or approvals of any other Person set forth in Schedules B.03 and B.04
or referenced in Section B.03, upon consummation of the Contemplated
Transactions, Buyer will be in a position to operate the HPG Business in
substantially the same manner as operations have heretofore been conducted.
(c) Schedule B.07 includes a true and complete list of all
real property owned by Seller Companies (or real property which Seller Companies
have a right to acquire in connection with the operation of the HPG Business)
which is included in the Transferred Assets (collectively, the "Owned Real
Property"). Schedule B.07 sets forth (i) the address of each parcel of Owned
Real Property and (ii) the owner of such Owned Real Property.
(d) Schedule B.07 includes a true and complete list of all
agreements (together with any amendments thereof) pursuant to which Seller
Companies lease, sublease or otherwise occupy (whether as landlord, tenant,
subtenant or other occupancy arrangement) any real property used in the HPG
Business (collectively, the "Leased Real Property"). Schedule B.07 sets forth
(i) the address of each parcel of Leased Real Property and (ii) the owner of the
leasehold, subleasehold or occupancy interest for each Leased Real Property.
B.08 No Undisclosed Liabilities. There are no liabilities of Seller or
any Affiliated Transferor relating to the HPG Business that constitute Assumed
Liabilities of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, other than:
(a) liabilities disclosed in or provided for in the Opening
Statement and liabilities for matters taken into account in the determination of
the Final Net Tangible Asset Amount;
(b) liabilities (i) disclosed in Schedule B.08, (ii) related
to any contract, agreement, lease, license, commitment, sales or purchase order
or other undertaking or matter disclosed in the Disclosure Schedules or (iii)
related to any Employee Plan or Benefit Arrangements identified in Exhibit D or
disclosed in Schedule B.18; and
(c) liabilities incurred in the ordinary course of business
consistent with past practices since March 29, 1998.
B.09 Litigation. Except as set forth in Schedule B.09, there is no
action, suit, investigation or proceeding pending against, or to the knowledge
of Seller, threatened against or affecting, the HPG Business or any Transferred
Asset before any Governmental Authority that could reasonably be expected to
have a Material Adverse Effect on the HPG Business.
B.10 Material Contracts.
(a) Except as set forth in Schedule B.10 and except for
Contracts that do not constitute Assumed Liabilities, Seller Companies, with
respect to the HPG Business, are not parties to or otherwise bound by or subject
to:
(i) any written employment, severance, consulting or
sales representative Contract which contains an obligation (excluding
commissions) to pay more than $100,000 per year and constitutes an
Assumed Liability;
(ii) any Contract containing any covenant limiting
the freedom of Seller Companies, with respect of the HPG Business or
the operations of the HPG Business, to engage in any line of business
or compete with any Person in any geographic area in any material
respect if such Contract will be binding on Buyer Companies after the
Closing;
(iii) any Contract in effect on the date of this
Agreement relating to the disposition or acquisition of the assets of,
or any interest in, any business enterprise which relates to the HPG
Business other than in the ordinary course of business consistent with
past practices;
(iv) any Financial Support Arrangements;
(v) any indebtedness for borrowed money of the HPG
Business that would constitute an Assumed Liability if in existence on
the Closing Date, with a principal amount in excess of $500,000; or
(vi) any offset agreement entered into in connection
with an international sales transaction and relating to any Contract
that imposes on the HPG Business an obligation to perform that will
continue in effect on or after the Closing Date.
(b) Except as disclosed in Schedule B.10, each Contract
disclosed in Schedule B.10 is a legal, valid and binding obligation of Seller
(or the applicable Affiliated Transferor) enforceable against Seller (or the
applicable Affiliated Transferor) in accordance with its terms (except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally, including the effect of statutory and other laws
regarding fraudulent conveyances and preferential transfers, and subject to the
limitations imposed by general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in equity), and Seller
(or the applicable Affiliated Transferor) is not in default and has not failed
to perform any obligation thereunder, and, to the knowledge of Seller, there
does not exist any event, condition or omission which would constitute a breach
or default (whether by lapse of time or notice or both) by any other Person. As
of the date of this Agreement, Seller has not received any notification from any
other Person party to any of the Contracts disclosed in Schedule B.10 of a claim
of default by Seller.
B.11 Licenses and Permits. To the knowledge of Seller, except as set
forth in Schedule B.11, Seller (or the appropriate Affiliated Transferor) has
all licenses, franchises, permits and other similar authorizations affecting, or
relating in any way to, the HPG Business required by law to be obtained by
Seller (or the appropriate Affiliated Transferor) to permit Seller to conduct
the HPG Business in substantially the same manner as the HPG Business has
heretofore been conducted.
B.12 Finders' Fees. Except for Goldman, Sachs & Co., whose fees will be
paid by Seller, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of
Seller who might be entitled to any fee or commission from Seller or Buyer or
any of their Affiliates upon consummation of the Contemplated Transactions.
B.13 Environmental Compliance. Except as disclosed in Schedule B.13 and
except as reserved against or referred to in the Opening Statement, to the
knowledge of Seller the HPG Business is and has been in substantial compliance
with all applicable Environmental Laws, and has obtained all permits, licenses
and other authorizations that are required under applicable Environmental Laws,
except where the failure to be in compliance or to have obtained all material
permits, licenses and other authorizations has not had, and cannot reasonably be
expected to have, a Material Adverse Effect on the HPG Business. Except as set
forth in Schedule B.13 and except as reserved against or referred to in the
Opening Statement, to the knowledge of Seller (i) the HPG Business is and has
been in material compliance with the terms and conditions under which the
permits, licenses and other authorizations referenced in the preceding sentence
were issued or granted, (ii) Seller Companies hold all permits required by
Environmental Laws that are necessary and appropriate to conduct the HPG
Business as presently conducted in all material respects and to operate the
Transferred Assets and the Asheboro Property in all material respects as they
are presently operated; (iii) no suspension, cancellation or termination of any
permit referred to in clause (ii) is pending or threatened; (iv) Seller has not
received written notice of any material Environmental Claim relating to or
affecting the HPG Business or the Transferred Assets, and there is no such
threatened Environmental Claim; (v) Seller, in connection with the HPG Business
or the Transferred Assets, has not entered into, agreed in writing to, or is
subject to any judgment, decree, order or other similar requirement of any
Governmental Authority under any Environmental Laws; and (vi) no event has
occurred and no circumstance exists that is reasonably likely to give rise to or
serve as a basis for any Environmental Liability; except in the case of clauses
(i) through (vi) where such failure, event or other circumstance has not had,
and cannot reasonably be expected to have, a Material Adverse Effect on the HPG
Business.
B.14 Compliance with Laws. Except as set forth in Schedule B.14, for
violations or infringements of Environmental Laws, and for violations or
infringements that have not had, and may not reasonably be expected to have, a
Material Adverse Effect on the HPG Business, to the knowledge of Seller the
operation of the HPG Business and condition of the Transferred Assets have not
violated or infringed, and do not violate or infringe, in any respect any
Applicable Law or any order, writ, injunction or decree of any Governmental
Authority.
B.15 Intellectual Property. With respect to Intellectual Property that
constitute Transferred Assets, except as set forth in Schedule B.15:
(a) Seller (or an Affiliated Transferor) owns, free and clear
of all Liens other than Permitted Liens, and subject to any licenses disclosed
in Schedule B.15 or that in the aggregate are not material to the HPG Business
as a whole granted by Seller Companies prior to the Closing Date, all right,
title and interest in such Intellectual Property;
(b) the use of such Intellectual Property in connection with
the operation of the HPG Business as conducted during the past three years does
not conflict with, infringe upon or violate the intellectual property rights of
any other Persons;
(c) Seller (or an Affiliated Transferor) has the right to use
all such Intellectual Property used by the HPG Business and necessary for the
continued operation of the HPG Business in the same manner as its operations
have been conducted during the past three years and the list of such
Intellectual Property comprising patents, patent applications, trademark and/or
service mark registrations and applications that is included in Table 1 of
Attachment XII sets forth a complete and accurate list of all such Intellectual
Property that constitutes Transferred Assets;
(d) Seller (or an Affiliated Transferor) is the owner of
record of the pending patent applications and issued patents and of the
applications or issued registrations for trademarks and service marks comprising
Intellectual Property included in Table 1 of Attachment XII in each country or
state of application or registration, and each trademark or service mark and
each issued patent constituting such Intellectual Property is subsisting and in
full force and effect;
(e) Upon the consummation of the Closing hereunder, (i) Buyer
will be vested with all of Seller's (or the Affiliated Transferors') rights,
title and interest in, and Seller's (or the Affiliated Transferors') rights and
authority to use in connection with the HPG Business, all of the Intellectual
Property that constitute Transferred Assets and (ii) such Intellectual Property,
together with the Intellectual Property licensed to Buyer in accordance with the
Cross License Agreement and Trademark License Agreement and any other interests
in Intellectual Property transferred hereunder will collectively constitute such
rights and interests in Intellectual Property which are necessary for the
continued operation of the HPG Business as a whole in the same manner as its
operations have heretofore been conducted during the past three years; and
(f) Notwithstanding the provisions of this Section B.15,
Seller makes no representation or warranty, and no such representation or
warranty shall be implied, that any of such Intellectual Property included in
Table 1 of Attachment XII not constituting a trademark or service mark is valid
or enforceable.
B.16 Taxes.
(a) Except as set forth in Schedule B.16, Seller and each
Affiliated Transferor has exercised reasonable care in the preparation of, and
has duly and timely filed, all applicable Tax Returns with respect to all Taxes
required to be filed to the date hereof and, as of the Closing Date will have
exercised reasonable care in the preparation of, and will have timely filed, all
applicable Tax Returns with respect to Taxes required to have been filed to the
Closing Date, except for Taxes relating to periods that close on or before the
Closing Date that under Applicable Law are not obligations of Buyer Companies.
Except as set forth in Schedule B.16, all Taxes shown on the Tax Returns or
pursuant to any declarations or assessments received by Seller and each
Affiliated Transferor (including estimated Taxes) have been duly and timely
paid, except for Taxes relating to periods that close on or before the Closing
Date that under Applicable Law are not obligations of Buyer Companies, and no
such Taxes have created a Lien (other than a Permitted Lien) against or impair
the ability to transfer the Transferred Assets to Buyer Companies free and clear
of any Lien (other than a Permitted Lien) in accordance with the terms of this
Agreement. Except as set forth in Schedule B.16, all such Tax Returns are true,
correct and complete, except for Taxes relating to periods that close on or
before the Closing Date that under Applicable Law are not obligations of Buyer
Companies. Except as set forth in Schedule B.16, there exists no Tax deficiency
or unpaid Tax assessed or proposed by any Governmental Authority against Seller
or any Affiliated Transferor, except for Taxes relating to periods that close on
or before the Closing Date that under Applicable Law are not obligations of
Buyer Companies.
(b) As of the date of this Agreement, Schedule B.16 contains a
list of all states and other jurisdictions where Seller Companies have filed Tax
Returns during the past three years with respect to Transferred Assets.
(c) None of the Assumed Liabilities is or may be an obligation
to make (i) a payment that will not be deductible by Buyer Companies under Code
section 280G; or (ii) a payment under any tax allocation or tax sharing
agreement or in respect of any liability for the Taxes of any Person under
Treasury regulation section 1.1502-6 (or any similar provision of state, local
or foreign law), as a transferee or successor, by contract, or otherwise.
(d) None of the Transferred Assets consists of stock in any
corporation (whether or not it currently holds any assets) that is or has been a
member of any consolidated, combined, unitary or other similar group in respect
of any Taxes.
B.17 Insurance. Schedule B.17 contains a correct and complete list of
all material policies of insurance held by any Seller Companies that are in
effect on the date of this Agreement or in calendar years 1997 or 1996 and that
insure the HPG Business. Schedule B.17 contains an accurate and complete
description of any provision contained in said policies which provides for
retrospective or retroactive premium adjustment. None of the insurance carriers
listed in Schedule B.17 are related to or affiliated with Seller, other than
Shenandoah Insurance, Inc. Seller has not received notice or any other
indication from any insurer or agent (other than Shenandoah Insurance, Inc.) of
any intent to cancel or not to renew any of the insurance policies listed in
Schedule B.17, except for cancellations or failures to renew that will occur as
a result of the Closing. No Seller Company has been refused any insurance, nor
has any Seller Company's coverage been limited by any insurance carrier to which
it has applied for insurance or with which it has carried insurance during the
last five years, except as limited by insurance carrier's internal policy
regarding maximum coverage and limits.
B.18 Employee Benefit Matters.
(a) Schedule B.18 lists each Employee Plan or material Benefit
Arrangement (other than Benefit Arrangements as to which Buyer has no
obligations hereunder) which covers Transferred Employees and each collective
bargaining agreement covering Transferred Employees.
(b) Except as set forth in Schedule B.18, with respect to the
HPG Business:
(i) neither Seller nor any member of its "Controlled
Group" (defined as any organization which is a member of a controlled
group of organizations within the meaning of Code Sections 414(b), (c),
(m) or (o)) has ever contributed to or had any liability to a
multi-employer plan, as defined in Section 3(37) of ERISA, which could
reasonably be expected to have a Material Adverse Effect on the HPG
Business;
(ii) no fiduciary of any funded Employee Plan has
engaged in a nonexempt "prohibited transaction" (as that term is
defined in Section 4975 of the Code and Section 406 of ERISA) which
could subject Buyer to a penalty tax imposed by Section 4975 of the
Code or Section 502(i) of ERISA;
(iii) no Employee Plan that is subject to Section 412
of the Code has incurred an "accumulated funding deficiency" within the
meaning of Section 412 of the Code, whether or not waived;
(iv) each Employee Plan and Benefit Arrangement has
been established and administered in all material respects in
accordance with its terms and in compliance with Applicable Law;
(v) no Employee Plan subject to Title IV of ERISA has
incurred any material liability under such title other than for the
payment of premiums to the Pension Benefit Guaranty Corporation
("PBGC"), all of which to the knowledge of Seller have been paid when
due;
(vi) no defined benefit Employee Plan has been
terminated; nor have there been any "reportable events" (as that term
is defined in Section 4043 of ERISA and the regulations thereunder),
other than reportable events arising directly from the Contemplated
Transactions, which would present a risk that an Employee Plan would be
terminated by the PBGC in a distress termination;
(vii) each Employee Plan intended to qualify under
Section 401 of the Code has received a determination letter that it is
so qualified and no event has occurred with respect to any such
Employee Plan which could cause the loss of such qualification or
exemption;
(viii) with respect to each Employee Plan listed in
Schedule B.18, Seller has made available to Buyer the most recent copy
(where applicable) of (1) the plan document; (2) the most recent
determination letter; (3) any summary plan description; and (4) Form
5500;
(ix) with respect to the Transferred Employees, there
are no post-retirement medical or health plans, dental plans,
hospitalizations, life insurance or other plans or arrangements in
effect;
(x) there are no actions, claims or investigations
pending or, to the knowledge of Seller threatened, against any Employee
Plan, Benefit Arrangement, or any administrator, fiduciary or sponsor
thereof with respect to the HPG Business, other than benefit claims
arising in the normal course of operation of such Employee Plan or
Benefit Arrangement; and
(xi) except as otherwise expressly provided in
Exhibit D, the consummation of the Contemplated Transactions in and of
themselves will not entitle any individual to severance pay that is
payable by Buyer Companies, and will not accelerate the time of payment
or vesting, or increase the amount of any compensation or benefits due
any Transferred Employee to the extent such compensation or benefits
are the responsibility of any Buyer Companies.
B.19 Software Applications.
(a) Software Applications: Year 2000. All of the Owned and
Licensed Software has been considered in Year 2000 remediation plans developed
by the HPG Business. Except as otherwise set forth on Schedule B.19, Seller
represents that to its knowledge the Owned Software will operate without
interruption and/or malfunction due to the recognition and processing of dates
on and beyond January 1, 2000, except to the extent that a failure to do so
could not reasonably be expected to have a Material Adverse Effect on the HPG
Business ("Year 2000 Compliant").
(b) Licensed Software. Seller's interest in Licensed Software
reflected by a Contract listed on Schedule B.19, subject to consents
contemplated by Schedule B.04 or Schedule B.19, is transferrable to Buyer.
(c) No Errors; Non-Conformity. The Owned Software is free from
defects in workmanship and materials, except for defects that could not
reasonably be expected to have a Material Adverse Effect on the HPG Business.
(d) No Bugs or Viruses. Seller has not knowingly altered its
data to create a bug or virus which would cause either the Owned or Licensed
Software to be fully dysfunctional, and there are no such bugs or viruses,
except in either case to the extent that such bugs or viruses could not
reasonably be expected to have a Material Adverse Effect on the HPG Business.
(e) Passthrough Warranties. Seller shall, to the extent
permitted by Applicable Law and the applicable manufacturer and supplier and
provided that it is at no cost to Seller, transfer to Buyer all manufacturers'
and suppliers' warranties for the Licensed Software, and the Seller shall, upon
the Buyer's reasonable request, execute such documentation reasonably acceptable
to Seller that is necessary to effectuate the transfer.
(f) Documentation. Seller has furnished Buyer, or will furnish
upon Buyer's request, copies of all documentation (End-User or otherwise) in its
possession relating to the use, maintenance and operation of the Owned Software.
B.20 Real Property. Except as otherwise set forth in Schedule B.20:
(a) Subject only to the permitted Liens, there are no leases,
tenancies or other occupancy agreements, either oral or written, which affect
the Queretaro Property, and Seller has exclusive possession of the Queretaro
Property;
(b) Seller has no notice or knowledge of: (i) any pending
improvement liens to be made by any Governmental Authority with respect to the
Queretaro Property; (ii) any violations of building codes and/or zoning
ordinances or other governmental regulations with respect to the Queretaro
Property; or (iii) any pending or threatened condemnation proceedings with
respect to the Queretaro Property;
(c) To Seller's knowledge, no fact or condition exists which
would result in the termination or impairment of access to the Queretaro
Property or the discontinuation of necessary sewer, water, electric, gas,
telephone or other utilities or services to the Queretaro Property;
(d) All of the structural elements, mechanical systems,
utility systems and roofs of the Queretaro Property are in good working order,
ordinary wear and tear and routine maintenance excepted;
(e) To Seller's knowledge, without independent investigation,
all improvements on the Queretaro Property were permitted, conforming structures
under applicable zoning and building laws and ordinances in effect when the
improvements were constructed and the present uses thereof are permitted,
conforming uses under applicable zoning and building laws and ordinances;
(f) All water, sewer, gas, electric, telephone, drainage and
other utility equipment and facilities necessary for the operation of the
Queretaro Property are installed and connected pursuant to valid permits, are
adequate to service the Queretaro Property and are in good operating condition;
(g) To Seller's knowledge, all requirements applicable to the
Queretaro Property imposed under zoning and building laws and ordinances adopted
subsequent to the construction of the improvements have been complied with to
the extent required by Applicable Law; and
(h) Seller is vested with good and marketable fee simple title
to the Queretaro Property subject only to the Permitted Liens. Without limiting
the generality of the foregoing, there are no so-called "ejido" rights
encumbering or otherwise affecting the Queretaro Property.
<PAGE>
EXHIBIT C
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that:
C.01 Organization and Existence. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Florida and has all corporate powers, and has all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted, except where the failure to have such licenses, authorizations,
consents and approvals has not had and may not reasonably be expected to have, a
Material Adverse Effect on Buyer. As of the Closing Date, Buyer will be duly
qualified to do business as a foreign corporation in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
(after giving effect to the Contemplated Transactions) make such qualification
necessary to carry on its business as now conducted, except for those
jurisdictions where failure to be so qualified has not had, and may not
reasonably be expected to have, a Material Adverse Effect on Buyer.
C.02 Corporate Authorization. The execution, delivery and performance
by Buyer of the Transaction Documents and the consummation by Buyer of the
Contemplated Transactions are within the corporate powers of Buyer and have been
(or, prior to the Closing, will have been) duly authorized by all necessary
corporate action on the part of Buyer. Each of the Transaction Documents
constitutes a legal, valid and binding agreement of Buyer, enforceable against
Buyer in accordance with its terms (i) except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting creditors'
rights generally, including the effect of statutory and other laws regarding
fraudulent conveyances and preferential transfers and (ii) subject to the
limitations imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
C.03 Governmental Authorization. Except as set forth on Schedule C.03,
the execution, delivery and performance by Buyer of the Transaction Documents
require no action by or in respect of, consents or approvals of, or filing with,
any governmental body, agency, official or authority other than compliance with
any applicable requirements of the HSR Act.
C.04 Non-Contravention. The execution, delivery and performance by
Buyer of the Transaction Documents do not and will not (i) contravene or
conflict with the charter or bylaws of Buyer, (ii) assuming compliance with the
matters referred to in Section C.03, contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to Buyer, or (iii) constitute a default
under or give rise to any right of termination, cancellation or acceleration of
any right or obligation of Buyer or to a loss of any benefit to which Buyer is
entitled under any provision of any agreement, contract or other instrument
binding upon Buyer or any license, franchise, permit or other similar
authorization held by Buyer, except, in the case of clauses (ii) and (iii), for
any such contravention, conflict, violation, default, termination, cancellation,
acceleration or loss that could not reasonably be expected to have a Material
Adverse Effect on Buyer Companies taken as a whole.
C.05 Finders' Fees. Except for NationsBanc Montgomery Securities LLC,
whose fees will be paid by Buyer, there is no investment banker, broker, finder
or other intermediary that has been retained by or is authorized to act on
behalf of Buyer who might be entitled to any fee or commission from Seller or
Buyer (or any of their Affiliates) upon consummation of the Contemplated
Transactions.
C.06 Litigation. There is no action, suit, investigation or proceeding
pending against, or to the knowledge of Buyer, threatened against or affecting,
Buyer before any court or arbitrator or any Governmental Authority that in any
manner challenges or seeks to prevent, enjoin, alter or materially delay the
Contemplated Transactions.
C.07 Inspections. Buyer acknowledges that Seller has made no
representation or warranty as to the prospects, financial or otherwise, of the
HPG Business except as expressly set forth in the Transaction Documents. Buyer
agrees that it shall accept the Transferred Assets and the Assumed Liabilities
as they exist on the Closing Date based on Buyer's inspection, examination,
determination with respect thereto as to all matters, and without reliance upon
any express or implied representations or warranties of any nature, whether in
writing, orally or otherwise, made by or on behalf of or imputed to Seller,
except as expressly set forth in the Transaction Documents.
C.08 Financing. Buyer has available to it cash, marketable securities
or other investments, or presently available sources of credit, to enable it to
consummate the Contemplated Transactions.
<PAGE>
EXHIBIT D
EMPLOYEES AND EMPLOYEE BENEFIT MATTERS
I. Employees and Employment.
D.01 General. On the Closing Date, the employment of all Active
Employees of the HPG Business including employees based in the HPG Business'
headquarters in Shelton, Connecticut, employees based in the Asheboro Property,
the Queretaro Property and the Kuantan Facility, and the employees listed on
Attachment XV, shall be transferred to the Buyer Companies such that the
employment of such persons shall be considered continuous employment under
Applicable Law. "Active Employee" shall mean any individual who is actively
employed by any Seller Company in connection with the HPG Business or is on
authorized leave of absence, military service (without restriction) or lay-off
with recall rights (without restriction) with respect to the HPG Business and
where applicable shall include independent contractors. The Active Employees of
the HPG Business who are employed at any time on or after the Closing Date with
any of the Buyer Companies are herein collectively referred to as "Transferred
Employees." Subject to the terms and conditions of this Exhibit D, such
employment shall be at the same workplace and on substantially the same terms
and conditions as those under which such employees are currently employed by
Seller Companies and the employment of each Transferred Employee shall be
continued by the Buyer Companies for the maximum applicable termination notice
period to which the Seller Companies may be subject under Applicable Law as a
result of the Contemplated Transactions. From and after the Closing Date, except
as otherwise provided herein or in the Agreement, each Buyer Company employing a
Transferred Employee shall assume all obligations under any agreements,
contracts or Applicable Law relating to the terms and conditions of employment
of such Transferred Employees, and such Buyer Company shall be responsible for
any liability or obligations arising out of or pertaining to the termination of
employment of, hiring of or failure or refusal to hire any Transferred Employee.
D.02 Labor Agreements. The Buyer Companies agree to recognize the
applicable labor unions, collective bargaining representative, trade unions or
work councils representing any employees of the HPG Business as the exclusive
collective bargaining representatives of such employees with respect to wages,
hours, fringe and other terms and conditions of employment to the extent so
recognized by Seller Companies for all such employees who are within the
appropriate bargaining unit as determined by Applicable Law. The Buyer Companies
shall become successor employers under any labor or collective bargaining
agreements and agree to honor the terms of and to assume all obligations of the
Seller Companies under applicable existing collective bargaining agreements in
respect of such unionized Transferred Employees from and after the Closing Date
and all legal obligations arising from such recognition or assumption.
D.03 Recalled or Rehired Employees. Buyer Companies confirm that any
employees of the HPG Business that are laid off or on leave as of the Closing
Date and who are recalled or rehired by a Buyer Company or return from leave on
or after the Closing Date will be recalled or rehired or returned to employment
in compliance with any applicable agreements, contracts or Applicable Law and
will be accorded the benefits otherwise provided to Transferred Employees by the
Buyer Companies.
D.04 Negotiations with Employees or Employee Representatives. If and to
the extent that any provisions of this Agreement are or may be subject to
negotiation with employees (including Transferred Employees), or applicable
labor unions, trade unions or work councils, by policy, contract, collective
agreement or Applicable Law, the Seller Companies and Buyer Companies shall
cooperate fully in such negotiations.
D.05 Termination and Plant Closing Notices; WARN. Seller shall provide
any notices to the Transferred Employees that may be required under any
Applicable Law, including but not limited to WARN or any similar state or local
law, with respect to events that occur prior to the Closing Date. Buyer shall
provide any such notices to Active Employees of the HPG Business with respect to
events that occur as a result of the Closing, and to Transferred Employees with
respect to events that occur on and after the Closing Date. Buyer shall not take
any action after the Closing that would cause any termination of employees by
the Seller Companies that occur on or before the Closing Date to constitute a
"plant closing" or "mass layoff" under WARN or any similar state or local law,
or create any liability to the Seller Companies for employment termination under
Applicable Law.
D.06 Immigration Matters. The Buyer Companies acknowledge that the
Contemplated Transactions may trigger certain obligations under the immigration
laws of the countries where the HPG Business operates. Buyer shall use
reasonable efforts to comply with all requirements of such immigration laws and
agrees to make any reasonable and necessary filings with the appropriate
Governmental Authority to attempt to ensure the continued employment eligibility
of the Transferred Employees, including Bruce Duncan, Rafael Diaz, David
O'Connor, Kaj Koft and Larry Baab.
II. United States Employee Benefit Matters.
D.07 Pension Plans.
(a) Seller and its Affiliates shall retain all liabilities and
obligations in respect of benefits accrued by employees of the HPG Business
(including Transferred Employees) as of the Closing Date under The Black &
Decker Pension Plan ("Seller's Pension Plan"). Accrued benefits of US
Transferred Employees under Seller's Pension Plan shall be fully vested as of
the Closing Date. Benefit accruals in respect of US Transferred Employees under
Seller's Pension Plan shall cease as of the Closing Date. US Transferred
Employees participating in Seller's Pension Plan shall not be entitled to
receive any such vested accrued benefits under Seller's Pension Plan unless and
until their employment with Buyer Companies terminates. No assets of Seller's
Pension Plan shall be transferred to Buyer Companies or to any employee benefit
plan of Buyer or any of its Affiliates.
(b) Except as otherwise provided in Section D.07(c), prior to
or as soon as practicable after the Closing Date, Buyer shall designate or
establish a defined benefit pension plan for the benefit of US Transferred
Employees who were participants in Seller's Pension Plan ("Buyer's Pension
Plan"). Buyer's Pension Plan shall cover all US Transferred Employees, each of
whom shall be eligible to participate therein for a period of at least one year
following the Closing Date on substantially the same terms and conditions as
provided to the US Transferred Employees under Seller's Pension Plan immediately
prior to the Closing Date; provided, however, that with respect to benefit
accrual, Buyer may offset the benefit under the Buyer's Pension Plan for the
benefit accrual of US Transferred Employees under the Seller's Pension Plan as
of the Closing Date.
(c) Buyer covenants and agrees that service with Seller or any
of its Affiliates (and, to the extent applicable, with General Electric Company
or any of its Affiliates) prior to the Closing Date that is recognized for any
purpose by Seller's Pension Plan will be recognized by Buyer's Pension Plan for
such purpose.
(d) In lieu of adopting Buyer's Pension Plan, Buyer may make a
contribution to an individual account plan maintained by the Buyer, and/or make
a cash payment, to or for the benefit of each US Transferred Employee in an
amount not less than the value of the benefit that the US Transferred Employee
would have accrued under the Buyer's Pension Plan, after the offset for benefits
under Seller's Pension Plan, for the one-year period beginning on the Closing
Date. The Buyer shall make any such contribution, or cash payment net of any
withholding taxes, within 120 days after the first anniversary of the Closing
Date.
(e) Seller shall provide Buyer with any information relating
to the accrued benefits of the US Transferred Employees under Seller's Pension
Plan as shall be reasonably requested by Buyer to enable it to calculate the
benefits to be provided under the Buyer's Pension Plan pursuant to paragraph (b)
of this Section D.07 or the contributions or payments otherwise required to be
made by the Buyer pursuant to this paragraph (d) of this Section D.07.
D.08 Savings Plans.
(a) Seller shall cause the trustee of The Black & Decker
Retirement Savings Plan ("Seller's Savings Plan") to transfer as of the transfer
date specified below, the full account balances of the US Transferred Employees
under Seller's Savings Plan, to the Successor Savings Plan (as hereinafter
defined). Such assets shall be transferred to the Successor Savings Plan in
cash, provided that assets consisting of notes or other instruments evidencing
loans made to participating US Transferred Employees shall be transferred in
such form to the Successor Savings Plan. Seller and Buyer shall make any and all
filings and submissions to the appropriate Governmental Authorities, and shall
make any necessary plan amendments arising in connection with the transfer of
assets from Seller's Savings Plan to the Successor Savings Plan.
(b) As soon as practicable after the Closing Date, Buyer shall
establish or designate an individual account plan for the benefit of US
Transferred Employees (the "Successor Savings Plan"), shall take all necessary
action, if any, to qualify the Successor Savings Plan under the applicable
provisions of the Code and shall make any and all filings and submissions to the
appropriate Governmental Authorities required to be made by it in connection
with the transfer of assets contemplated hereby. The Successor Savings Plan
shall provide that those US Transferred Employees and their beneficiaries
covered by Seller's Savings Plan shall receive credit for all service and
compensation with Seller or any of its Affiliates (and, to the extent
applicable, with General Electric Company or any of its Affiliates) prior to the
Closing Date for all purposes, to the same extent such service and compensation
are recognized under Seller's Savings Plan immediately prior to the Closing
Date. Buyer shall take all action required or appropriate to vest fully all such
US Transferred Employees in their entire account balances transferred to the
Successor Savings Plan and, to the extent required under Section 411(d)(6) of
the Code, to protect and preserve all benefits, rights and features relating to
those account balances transferred from Seller's Savings Plan. As soon as
practicable following the earlier of the delivery to Seller of a favorable
determination letter from the Internal Revenue Service regarding the qualified
status of the Successor Savings Plan or the issuance of indemnities satisfactory
to Seller in its sole discretion, Seller shall cause the trustee of Seller's
Savings Plan, subject to any election by a US Transferred Employee to withdraw
his or her account balance prior to the transfer date in respect of Seller's
Savings Plan, to transfer the full account balances of US Transferred Employees
under Seller's Savings Plan as of the transfer date to the appropriate trustee
designated by the Buyer under the trust agreement forming a part of the
Successor Savings Plan; provided, that assets consisting of notes or other
instruments evidencing loans made to participating US Transferred Employees
shall be transferred in such form to the Successor Savings Plan.
(c) Buyer, effective as of the date of the transfer of assets
contemplated by this Section D.08, assumes all of the liabilities and
obligations of Seller or any of its Affiliates in respect of the account
balances accumulated by US Transferred Employees under Seller's Savings Plan,
and the Successor Savings Plan assumes all liabilities and obligations of
Seller's Savings Plan with respect to all account balances under Seller's
Savings Plan of such US Transferred Employees. Neither Buyer nor any of its
Affiliates shall assume any other obligations or liabilities arising under or
attributable to Seller's Savings Plan and neither Seller nor any of its
Affiliates shall assume any liabilities or obligations under or attributable to
the Successor Savings Plan. Prior to the transfer of assets contemplated by this
Section D.08, Buyer Companies, if consented to by the applicable US Transferred
Employee, shall withhold from such US Transferred Employee's pay, loan
repayments relating to any outstanding loan to such US Transferred Employee
under Seller's Savings Plan and shall promptly forward those withholdings to
Seller's Savings Plan.
D.09 Health and Welfare Plans; Benefit Arrangements.
(a) For a period of one year following the Closing Date, Buyer
Companies shall ensure that the US Transferred Employees are provided benefits
that are comparable in the aggregate to the health, medical, dental, life,
disability and severance benefits in effect for the US Transferred Employees
immediately prior to the Closing Date.
(b) In furtherance and not in limitation of the provisions of
this Section D.09, as of the Closing Date, Buyer (i) shall, subject to the
provisions of Section 10.02(b)(iv), establish severance plans, agreements and
arrangements with substantially the same terms and conditions as those provided
under the applicable severance agreements, plans or arrangements listed on
Schedule B.18, (ii) agrees to maintain such severance agreements, plans and
arrangements for a period of at least one year following the Closing Date, and
(iii) agrees to pay any benefits to any US Transferred Employees that they may
be entitled to receive under such severance agreements, plans or arrangements.
In furtherance and not in limitation of the provisions of this Section D.09, as
of the Closing Date, Buyer or the applicable Buyer Company shall assume the
obligations of Seller Companies under the individual employee severance
agreements listed on Schedule B.18.
(c) With respect to any US Transferred Employee (including any
beneficiary or dependent thereof), except as expressly set forth herein, Seller
Companies shall retain (i) all liabilities and obligations arising under any
group life, accident, medical, dental or disability plan or similar arrangement
(whether or not insured) to the extent that such liability or obligation relates
to claims incurred (whether or not reported) on or prior to the Closing Date,
and (ii) all liabilities and obligations arising under any worker's compensation
laws to the extent such liability or obligation relates to the period prior to
the Closing Date.
(d) Any group health plan, disability plan or other plans
established or designated by the Buyer Companies for the benefit of US
Transferred Employees shall not contain any exclusion or limitation with respect
to any preexisting condition.
(e) Except as otherwise expressly provided in this Exhibit D,
effective as of the Closing, Buyer shall assume the liabilities and obligations
of Seller Companies in respect of all US Transferred Employees (and their
beneficiaries and dependents) under the Benefit Arrangements sponsored or
maintained by Seller Companies at any time prior to the Closing Date, if and
only to the extent that such liabilities and obligations are reflected on the
Opening Statement.
D.10 Post-Retirement Medical and Life Insurance.
(a) Seller Companies shall retain responsibility for providing
health, medical, dental, hospitalization, life insurance or similar benefits
(including, without limitation, reimbursement for Medicare premiums) to any
employee or former employee of the HPG Business (other than US Transferred
Employees) who retires or has retired on or before the Closing Date. Buyer
Companies shall be responsible for providing any post-retirement medical, life
or similar benefits to US Transferred Employees if and only to the extent that
Buyer, in its sole discretion, agrees to provide such post-retirement benefits.
(b) Notwithstanding the provisions of this Exhibit D,
including but not limited to the provisions of this Section D.10, Seller
Companies may amend, modify or terminate any plans or arrangements providing
post-retirement health, medical, dental, hospitalization, life insurance or
similar benefits (including, without limitation, reimbursement for Medicare
premiums) to any employee or former employee of the HPG Business, subject in
each case to the provisions of Applicable Law.
(c) Buyer shall not be obligated by this Agreement to provide
post-retirement, health, medical, dental, hospitalization, life insurance or
similar benefits (including, without limitation, reimbursement for Medicare
premiums), or any particular level of such benefits, to US Transferred
Employees.
III. Other Country Employee Benefit Matters.
D.11 General. For a period of one year following the Closing Date,
Buyer shall ensure that the Non-US Transferred Employees are provided benefits
that are comparable in the aggregate to those provided under the Non-U.S.
Benefit Arrangements as in effect for those Non-US Transferred Employees
immediately prior to the Closing Date, it being understood that each Non-US
Transferred Employee shall receive credit for all service and compensation with
Seller Companies and any of their predecessors or Affiliates prior to the
Closing Date for all purposes to the same extent that service and compensation
are recognized immediately prior to the Closing.
D.12 Severance/Termination Indemnities. In furtherance and not in
limitation of the provisions of Section D.11, for a period of at least one year,
Buyer shall provide severance programs and termination indemnities with
substantially the same terms and conditions as those provided by the Seller
Companies to the Non-US Transferred Employees immediately prior to the Closing
and agrees to pay any benefit to Non-US Transferred Employees to which they may
be entitled under such severance programs and/or termination indemnities with
respect to events that occur as a result of the Closing and on or after the
Closing Date.
D.13 Mexico Plan. In furtherance and not in limitation of the
provisions of Section D.11:
(a) Except as otherwise provided in paragraph (d) of this
Section D.13, prior to or as soon as practicable after the Closing Date, Buyer
shall designate or establish a defined benefit pension plan ("Buyer's Mexico
Plan") for the benefit of Non-US Transferred Employees who were participants in
the Black & Decker, S.A. de C.V. Pension and Seniority Premium Plans ("Seller's
Mexico Plan"). Buyer's Mexico Plan shall cover all Non-US Transferred Employees
who were participants in the Seller's Mexico Plan, each of whom shall be
eligible to participate therein for a period of at least one year following the
Closing Date on the same terms and conditions as provided to participants under
the Seller's Mexico Plan immediately prior to the Closing Date.
(b) Buyer covenants and agrees that service with the Seller or
any of its predecessors or Affiliates prior to the Closing Date that is
recognized for any purpose under the Seller's Mexico Plan will be recognized by
Buyer's Mexico Plan for such purpose.
(c) As of the Closing Date, Seller shall cause the Seller's
Mexico Plan to be amended to fully vest all Non-US Transferred Employees
participating in that plan in their entire accrued benefit determined as of the
Closing Date. The Seller shall cause assets of the Seller's Mexico Plan to be
transferred to the Buyer's Mexico Plan in an amount equal to the accrued benefit
of the Non-US Transferred Employees participating in the Seller's Mexico Plan,
calculated on a discontinuance basis as of the Closing Date (increased or
decreased by the rate of actual investment return realized with respect to such
assets under the Seller's Mexico Plan for the period between the Closing Date
and the date those assets are transferred to the Buyer's Mexico Plan). The
amount of the transferred assets shall be calculated in accordance with the
actuarial assumptions, used by the Seller's Mexico Plan actuary.
(d) In lieu of adopting Buyer's Mexico Plan, subject to the
provisions of Applicable Law, Buyer may make a contribution to an individual
account plan maintained by Buyer, and/or make a cash payment, to or for the
benefit of each Non-US Transferred Employee who was a participant in the
Seller's Mexico Plan in an amount not less than the value of the benefit that
the Non-US Transferred Employee would have accrued under the Buyer's Mexico
Plan, after the offset for benefits under the Buyer's Mexico Plan, for the
one-year period beginning on the Closing Date. The Buyer shall make any such
contribution, or cash payment net of any withholding taxes, within 120 days
after the first anniversary of the Closing Date.
(e) Seller shall provide Buyer with any information relating
to the accrued benefits of the Non-US Transferred Employees under the Buyer's
Mexico Plan as shall be reasonably requested by Buyer to enable it to calculate
the benefits to be provided under the Buyer's Mexico Plan pursuant to paragraph
(a) of this Section D.13.
D.14 Puerto Rico Plan. In furtherance and not in limitation of the
provisions of Section D.11:
(a) Seller shall cause the trustee of the Black & Decker
(Puerto Rico) Inc. 401(k)/165(e) Benefit Pension Plan ("Seller's Puerto Rico
Plan") to transfer, in cash, as of the transfer date specified below, the full
account balances of the Non-US Transferred Employees under the Seller's Puerto
Rico Plan to the Successor Puerto Rico Plan (as hereinafter defined). Seller and
Buyer shall make any and all filings and submissions to the appropriate
Governmental Authorities, and shall make any necessary plan amendments arising
in connection with the transfer of assets from Seller's Puerto Rico Plan to the
Successor Puerto Rico Plan.
(b) As soon as practicable after the Closing Date, Buyer shall
establish or designate an individual account plan for the benefit of Non-US
Transferred Employees who were participants in the Seller's Puerto Rico Plan
(the "Successor Puerto Plan"), shall take all necessary action, if any, to
qualify the Successor Puerto Rico Plan under Applicable Law and shall make any
and all filings and submissions to the appropriate Governmental Authorities
required to be made by it in connection with the transfer of assets contemplated
hereby. The Successor Puerto Rico Plan shall provide that those Non-US
Transferred Employees and their beneficiaries covered by Seller's Puerto Rico
Plan shall receive credit for all service and compensation with Seller or any of
its predecessors and Affiliates prior to the Closing Date for all purposes, to
the same extent such service and compensation is recognized under Seller's
Puerto Rico Plan immediately prior to the Closing Date. Buyer shall take all
action required or appropriate to vest fully all such Non-US Transferred
Employees in their entire account balances transferred to the Successor Puerto
Rico Plan and shall protect and preserve all benefits, rights and features
relating to those account balances transferred from Seller's Puerto Rico Plan.
As soon as practicable following the earlier of the delivery to Seller of
appropriate notification of the qualified status of the Successor Puerto Rico
Plan or the issuance of indemnities satisfactory to the Seller in its sole
discretion, Seller shall cause the trustee of Seller's Puerto Rico Plan, subject
to any election by a Non-US Transferred Employee to withdraw his or her account
balance prior to the transfer date in respect of Seller's Puerto Rico Plan, to
transfer the full account balances of Non-US Transferred Employees under
Seller's Puerto Rico Plan as of the transfer date to the appropriate trustee
designated by the Buyer under the trust deed forming part of the Successor
Puerto Rico Plan.
(c) Buyer, effective as of the date of the transfer of assets
contemplated by this Section D.14, assumes all of the liabilities and
obligations of Seller or any of its predecessors or Affiliates in respect of the
account balances accumulated by Non-US Transferred Employees under Seller's
Puerto Rico Plan and the Successor Puerto Rico Plan assumes all liabilities and
obligations of Seller's Puerto Rico Plan with respect to all account balances
under Seller's Puerto Rico Plan of such Non-US Transferred Employees. Neither
Buyer nor any of its Affiliates shall assume any other obligations or
liabilities arising under or attributable to Seller's Puerto Rico Plan and
neither Seller nor any of its predecessors or Affiliates shall assume any
liabilities or obligations under or attributable to the Successor Puerto Rico
Plan.
D.15 Canada Plan. In furtherance and not in limitation of the
provisions in Section D.11:
(a) Seller shall cause the trustee of the Black & Decker
Retirement Plan ("Seller's Canada Plan") to transfer, in cash, as of the
transfer date specified below, the full account balances of the Non-US
Transferred Employees under the Seller's Canada Plan to the Successor Canada
Plan (as hereinafter defined). Seller and Buyer shall make any and all filings
and submissions to appropriate Governmental Authorities, and shall make any
necessary plan amendments arising in connection with the transfer of assets from
Seller's Canada Plan to the Successor Canada Plan.
(b) As soon as practicable after the Closing Date, Buyer shall
establish or designate an individual account plan for the benefit of Non-US
Transferred Employees who were participants in the Seller's Canada Plan (the
"Successor Canada Plan"), shall take all necessary action, if any, to qualify
the Successor Canada Plan under Applicable Law and shall make any and all
filings and submissions to the appropriate Governmental Authorities required to
be made by it in connection with the transfer of assets contemplated hereby. The
Successor Canada Plan shall provide that those Non-US Transferred Employees and
their beneficiaries covered by Seller's Canada Plan shall receive credit for all
service and compensation with Seller or any of its predecessors and Affiliates
prior to the Closing Date for all purposes to the same extent such service and
compensation is recognized under Seller's Canada Plan immediately prior to the
Closing Date. Buyer shall take all action required or appropriate to vest fully
all such Non-US Transferred Employees in their entire account balances
transferred to the Successor Canada Plan and shall, to the extent required by
Applicable Law, protect and preserve all benefits, rights and features relating
to those account balances transferred from Seller's Canada Plan. As soon as
practicable following delivery to Seller of appropriate notification of the
qualified status of the Successor Canada Plan under Applicable Law or the
issuance of indemnities satisfactory to the Seller in its sole discretion,
Seller shall cause the trustee of Seller's Canada Plan to transfer the full
account balances of Non-US Transferred Employees under Seller's Canada Plan as
of the transfer date to the appropriate trustee designated by the Buyer under
the trust deed or other funding vehicle forming part of the Successor Canada
Plan.
(c) Buyer, effective as of the date of the transfer of assets
contemplated by this Section D.15, assumes all of the liabilities and
obligations of Seller or any of its predecessors or Affiliates in respect of the
account balances accumulated by Non-US Transferred Employees under Seller's
Canada Plan and the Successor Canada Plan assumes all liabilities and
obligations of Seller's Canada Plan with respect to all account balances under
Seller's Canada Plan of such Non-US Transferred Employees. Neither Buyer nor any
of its Affiliates shall assume any other obligations or liabilities arising
under or attributable to Seller's Canada Plan and neither Seller nor any of its
predecessors or Affiliates shall assume any liabilities or obligations under or
attributable to the Successor Canada Plan.
VII. General.
D.16 No Third Party Beneficiaries. No provision of this Exhibit D or
any other provision in the Transaction Documents shall create any third party
beneficiary or other rights in any employee or former employee (including any
beneficiary or dependent thereof) of Seller or of any of its Affiliates in
respect of continued employment (or resumption of employment) with Seller or
Buyer, or any of their Affiliates, and no provision of this Exhibit D shall
create any such rights in any such individuals in respect of any benefits that
may be provided, directly or indirectly, under any Employee Plan or Benefit
Arrangement, or any plan or arrangement which may be established by Buyer or any
of its Affiliates. Subject to Applicable Law, unless otherwise provided herein,
no provision of this Agreement shall constitute a limitation on rights to amend,
modify or terminate, either before or after Closing, any such Employee Plan or
Benefit Arrangement of the Seller or any of its Affiliates.
D.17 Indemnification by Buyer. Effective as of the Closing, except as
otherwise provided in Section D.18, Buyer hereby indemnifies Seller and its
Affiliates and their respective directors, officers, employees and agents
against, and agrees to hold them harmless from, any and all Damages arising out
of or pertaining to (i) the termination of employment of, hiring of or failure
or refusal to hire, any Transferred Employee on or after the Closing; (ii) in
relation to any Transferred Employee any modification of the pay, benefits or
other terms and conditions of employment of any Transferred Employee on or after
the Closing; and (iii) any breach of any covenants or agreements of the Buyer
contained in this Exhibit D.
D.18 Indemnification by Seller. Effective as of the Closing, Seller
hereby indemnifies Buyer and its Affiliates and their respective directors,
officers, employees and agents against, and agrees to hold them harmless from,
any liability for retrenchment benefits, notice pay, termination indemnities,
severance and other similar arrangements, as such arrangements exist on the
Closing Date, in respect of Non-US Transferred Employees who work in the HPG
Business at the Kuantan Facility notwithstanding that any termination of such
employees may occur after the Closing Date; provided, however, that Seller shall
have no liability under this Section D.18 for any increase in retrenchment
benefits, notice pay, termination indemnities, severance or other similar
benefits to the extent relating to actions taken by Buyer Companies following
Closing (other than the termination of such employees).
D.19 Miscellaneous. Except for the obligation to employ certain Active
Employees set forth in Section D.01 on the Closing Date, nothing in this Exhibit
D shall obligate Buyer or any Buyer Company to employ any Transferred Employee
for any specified period.
<PAGE>
EXHIBIT E
ADDITIONAL MATTERS RELATING TO PRODUCT LIABILITY ISSUES
Seller and Buyer acknowledge and agree that each has a continuing
interest in ensuring that claims involving alleged product defects and product
safety are handled by Seller Companies and Buyer Companies after the Closing in
a manner that minimizes liability of the parties and otherwise protects the
parties' interests. This Exhibit E sets forth certain additional procedures,
covenants and agreements relating to product liability and related matters in
respect of products sold and services provided by the HPG Business that, among
other things, are intended to enhance the parties' ability to achieve these
objectives.
E.01 With respect to liabilities and obligations relating to claims of
manufacturing or design defects, the parties have agreed that certain of these
liabilities and obligations will constitute Assumed Liabilities for which Buyer
Companies will be responsible and certain of these liabilities and obligations
will constitute Excluded Liabilities for which Seller Companies will be
responsible. Because (i) it is likely that Buyer Companies may receive the
initial notice or claim with respect to liabilities and obligations that
ultimately prove to be Seller Companies' responsibility and vice versa and (ii)
in many cases, particularly in the case of claims involving fire damage, it is
critical to the defense of such claims that products and the location in which
the alleged incident occurs be inspected as soon as practicable, each of Seller
and Buyer agree to give immediate notice to the other party in the event that
they receive notice of a claim involving or potentially involving claims of
manufacturing or design defects where the party first receiving such notice
reasonably believes that the responsibility for the liability or obligation, if
any, will be that of the other party or if there is any doubt as to which party
ultimately will be responsible for any related liabilities or obligations. Each
of Seller and Buyer also agree with respect to each claim of manufacturing or
design defect that they will perform a prompt, diligent and continuing
investigation to determine whether the claim is an Assumed Liability or an
Excluded Liability, and agree to give immediate notice to the other party at any
time the investigation reveals that the responsibility for the liability or
obligation, if any, will be that of the other party if there is any doubt as to
which party ultimately will be responsible for any related liabilities or
obligations. Each of Seller and Buyer agree that the party providing such notice
will thereafter cooperate with the other party to permit the other party to
conduct its own investigation, and the party providing such notice will provide
to the other party reports on the status of the claim and subject to the
provisions of Article X an opportunity to participate in the defense of the
claim, at its own cost and expense. To expedite the review of these issues and
ensure that both parties' rights and defenses are preserved, Seller and Buyer
shall provide such notice by telecopy as follows:
if to Seller:
The Black & Decker Corporation
701 East Joppa Road
Towson, Maryland 21286
Attention: Product Liability Counsel
Telecopy No.: (410) 716-2379
if to Buyer:
Windmere-Durable Holdings, Inc.
5980 Miami Lakes Drive
Miami Lakes, Florida 33014-2467
Attention: Harry D. Schulman
Telecopy: (305) 364-0635
E.02 To the extent that either Seller or Buyer (or any of their
directors, officers, advisors, attorneys, accountants, employees, insurers or
agents) conducts an investigation or other inquiry into any events or
circumstances that lead to a claim of manufacturing or design defects in respect
of a product or product line generally or a specific claim or allegation and the
results of such investigation or inquiry relate to or otherwise affect the
liabilities or obligations of the other party hereunder, Seller or Buyer, as the
case may be, agree to share any information obtained as a result of the
investigation or inquiry, in each case subject to the express provisions of
Section 7.07 of this Agreement.
E.03 To assist each of the parties to this Agreement with the defense
of claims involving allegations of manufacturing or design defects and with
compliance with each parties' respective legal obligations under this Agreement
and otherwise, Seller and Buyer each agree from time to time to designate
individuals within their respective organizations as an "Engineering/Safety
Assurance Liaison" and a "Claims Liaison" for the purpose of coordinating the
defense of claims involving products sold and services provided by the HPG
Business. The initial individuals serving in these capacities shall be
designated in writing by Seller and Buyer at Closing and, thereafter, may be
changed from time to time by notice to the other party.
E.04 To assist each of the parties to this Agreement with the defense
of claims involving allegations of manufacturing or design defects and with
compliance with each parties' respective legal obligations under this Agreement
and otherwise, Seller and Buyer each agree from time to time to provide the
other party access to all information as provided in Section 5.04 and Section
6.02. Without limiting the generality of those provisions, Seller and Buyer
acknowledge and agree that the aforementioned information and access includes
the existing databases relating to consumer complaints, claims and litigation,
whether maintained at the headquarters of the HPG Business or otherwise, access
to personnel and engineering and design drawings or documents and any other
relevant information.
E.05 Seller and Buyer acknowledge that in the course of the
investigation or defense of claims involving allegations of manufacturing or
design product defects, or investigations regarding product safety, product
corrective action plans, product recalls and related matters, Seller Companies
and Buyer Companies may require documents from Underwriters Laboratories Inc.
("UL") or the Canadian Standards Association ("CSA") relating to UL or CSA
testing, listing, analysis or otherwise referring to products manufactured by
Seller Companies or Buyer Companies. Buyer, on behalf of itself and the other
Buyer Companies, hereby consents, and grants to Seller Companies the right and
permission to request and obtain from UL or CSA, and consents and grants
permission to UL and CSA the right to provide to Seller Companies, any and all
documents relating to products or product lines designed or manufactured by
Seller Companies, whether or not Buyer Companies continue to manufacture said
products or product lines. Buyer agrees to provide to Seller Companies at
Seller's request such other documents as Seller reasonably requires to evidence
and confirm Buyer's consent herein.
E.06 With respect to claims involving liabilities and obligations in
respect of investigations regarding product safety, product corrective action
plans, product recall and related matters, Seller and Buyer acknowledge that
companies frequently are asked to satisfy, or prefer to satisfy, their
corrective action plan obligations with the exchange of products or the sale of
substitute or replacement products at a specified price, which may include a
discount from normal retail prices. Seller and Buyer agree that it is in the
best interests of each of them and the HPG Business that product be available to
satisfy such obligations whether the ultimate responsibility for the liabilities
and obligations are those of Seller, Buyer or Seller and Buyer. Because
following Closing Seller no longer will have an ability to provide products to
satisfy such obligations, Buyer agrees to consult with Seller in any
circumstances in which Seller desires to satisfy corrective action plan or
similar obligations with products of the HPG Business and to the extent
practicable from time to time to make available to Seller quantities of such
products reasonable under the circumstances at a price equal to the HPG
Business' standard costs of production plus specifically allocable manufacturing
variances. With respect to claims involving liabilities and obligations in
respect of investigations regarding product safety, product corrective action
plans and product recall and related matters which include both Assumed
Liabilities and Excluded Liabilities, Seller and Buyer agree to cooperate in the
defense of such claims.
EXHIBIT 2(a)(ii)
AMENDMENT NO. 1
Dated as of June 26, 1998
to
TRANSACTION AGREEMENT
Dated as of May 10, 1998
By and Between
THE BLACK & DECKER CORPORATION
and
WINDMERE-DURABLE HOLDINGS, INC.
<PAGE>
AMENDMENT NO. 1 TO TRANSACTION AGREEMENT
This Amendment No. 1 to Transaction Agreement (this "Amendment") is
made as of the 26th day of June 1998, by and between The Black & Decker
Corporation, a Maryland corporation ("Seller"), and Windmere-Durable Holdings,
Inc., a Florida corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller through certain of its direct and indirect Subsidiaries
is engaged in the HPG Business;
WHEREAS, Seller and Buyer have entered into a Transaction Agreement
dated as of May 10, 1998 (the "Agreement"), pursuant to which Seller has agreed
to transfer or to cause the Affiliated Transferors to transfer substantially all
of the assets held, owned by or used to conduct the HPG Business, and to assign
certain liabilities associated with the HPG Business, to Buyer or Buyer
Companies designated by Buyer, and Buyer has agreed to receive or to cause such
designated Buyer Companies to receive such assets and assume such liabilities
upon the terms and subject to the conditions set forth in the Agreement; and
WHEREAS, Seller and Buyer desire to amend the Agreement in accordance
with the terms of this Amendment;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, the parties agree as follows:
Section 1. Capitalized terms used but not defined herein have the
meanings given to them in the Agreement.
Section 2. The list of Attachments included on pages v and vi of the
Agreement is amended by deleting "Attachment IX Form of Assignment of Mexican
Trademarks, Trademark Registrations and Applications for Registration" and
inserting in its place and stead "Attachment IX [Intentionally Omitted]", and by
adding the following:
"Attachment XXX Form of Kuantan Transition Agreement
Attachment XXXI Form of Escrow Agreement
Attachment XXXII Form of Manufacturing Agreement"
Section 3. Section 2.01(ix) of the Agreement is deleted in its entirety
and the following is inserted in its place and stead:
"(ix) Seller and Buyer shall execute and
deliver a transition agreement for the Kuantan Facility
in the form contemplated by Attachment XXX to this
Agreement, and an agreement providing Buyer with a right
of first refusal in the sale by Seller Companies of any
excess manufacturing equipment at the Kuantan Facility
that Seller Companies decide not to use in their
businesses;"
Section 4. Section 2.01(xi) of the Agreement is deleted in its entirety
and the following is inserted in its place and stead:
"(xi) Buyer Companies shall (A) pay and deliver
to Seller, for its own account and as agent for the
Affiliated Transferors, $288,000,000 in immediately
available funds by wire transfer to an account or
accounts designated by Seller (which account or accounts
shall be designated by Seller by written notice to Buyer
at least two Business Days prior to the Closing Date, or
such shorter notice as Buyer shall agree to accept) and
(B) pay and deliver to the Escrow Agent under the Escrow
Agreement $27,000,000 in immediately available funds by
wire transfer to the account contemplated by the Escrow
Agreement; and"
Section 5. Section 2.01(xii) of the Agreement is deleted in its
entirety and the following is inserted in its place and stead:
"(xii) At Closing, Seller shall cause its
wholly owned subsidiary, Black & Decker S.A. de C.V.,
and Buyer shall cause its wholly owned subsidiary,
Household Products Limited de Mexico, S. de R.L. de
C.V., to execute and deliver a manufacturing agreement
for the Queretaro Property in the form contemplated by
Attachment XXXII."
Section 6. The following provision is added as Section 2.04(g) of the
Agreement:
"(g) Notwithstanding any other provisions of
this Agreement and notwithstanding the fact that title
to assets used at the Kuantan Facility and the Queretaro
Property and Inventory located in Colombia, Argentina,
Chile or Peru will not be transferred to Buyer or Buyer
Companies on the Closing Date, in calculating the
Proposed Final Net Tangible Asset Amount, the Proposed
Net Working Capital Change Amount, the Final Net
Tangible Asset Amount and the Final Net Working Capital
Change Amount, Seller and Buyer agree to take into
account those assets located at the Kuantan Facility and
the Queretaro Property and the Inventory located in
Colombia, Argentina, Chile or Peru that otherwise would
have been Transferred Assets as of the Closing Date had
title transferred at the Closing."
Section 7. The second sentence of Section 5.06(d) of the Agreement is
deleted in its entirety and the following sentence is inserted in its place and
stead:
"Notwithstanding any provisions of this Section
5.06 to the contrary, Seller Companies shall not be
deemed to be in violation of this Section 5.06 to the
extent that, following the Closing, Seller Companies
sell (i) Cleaning and Lighting Products in any of the
Designated Countries, (ii) corded or cordless vacuums
(and any related accessories or attachments) in any of
the Designated Countries (other than Chile), (iii)
corded Dustbuster and Floorbuster vacuums in Chile, or
(iv) any Excess Products that Buyer Companies do not
purchase pursuant to the right of first refusal
contemplated by the Manufacturing Agreement."
Section 8. Section 10.02(a)(ii) is amended by deleting the phrase
"Sections 10.02(b)(iv), 10.04(b)(ii) and D.18" and inserting in its place and
stead "Sections 10.02(b)(iv) and 10.04(b)(ii)".
Section 9. The definition of "Asheboro Closing Costs" set forth in
Exhibit A of the Agreement is amended by inserting the phrase "Property (other
than employees dedicated to the manufacturing of Cleaning and Lighting
Products)" in lieu of the word "property" in clause (a), and by inserting the
phrase "(other than costs associated with Cleaning and Lighting Products)" after
the word "costs" in clause (b).
Section 10. The definition of "Cleaning and Lighting Products" set
forth in Exhibit A of the Agreement is deleted in its entirety and the following
is inserted in its place and stead:
""Cleaning and Lighting Products" means hand
held vacuums, upright floor vacuums, battery powered
bathroom and outdoor cleaners sold under the
Scumbuster(R) name, flexible flashlights, flexible
lanterns, leashlights and rechargeable lights, together
in each case with any related accessories or
attachments, but excluding corded canister and corded
upright floor vacuums sold in Chile and any related
accessories or attachments."
Section 11. The definition of "Designated Countries" set forth in
Exhibit A of the Agreement is revised by deleting the phrase ", Paraguay and
Uruguay" following the word "Brazil".
Section 12. The definition of "Designated Products" set forth in
Exhibit A of the Agreement is deleted in its entirety and the following is
inserted in its place and stead:
""Designated Products" means coffeemakers,
espresso makers, cappuccino makers, coffee mills,
toasters, toaster ovens (including those with convection
features), steamers, rice cookers, choppers, can
openers, mixers, food processors, irons, breadmakers,
skillets, electric WOKs, electric griddles, slow
cookers, electric knives, blenders, juicers, grills,
kettles, wafflebakers and corded canister and corded
upright floor vacuums sold in Mexico, Central America,
South America (other than Brazil) and the Caribbean
together in each case with any related accessories or
attachments, and all products in the foregoing
categories under development in the HPG Business as of
the Closing Date or that have been under development in
the HPG Business at any time during the year prior to
the Closing Date, but excluding step stools, Cleaning
and Lighting Products, shop, construction and similar
vacuums, and VersaPak(R) rechargeable battery packs and
chargers, together in each case with related accessories
or attachments. It is expressly understood and agreed
that corded canister and corded upright floor vacuums
(and any related accessories or attachments) shall only
be "Designated Products" to the extent and only to the
extent sold in Mexico, Central America, South America
(other than Brazil) and the Caribbean."
Section 13. The definition of "Excluded Assets" set forth in Exhibit A
of the Agreement is amended by inserting the phrase "(other than Inventory
representing administrative returns located at the national disposition center
(i.e., Nashville facility))" after the first reference to "Canada".
Section 14. The definition of "Intellectual Property Assignment
Agreements" set forth in Exhibit A of the Agreement is amended by inserting the
word "and" before the phrase "the Assignment of US Copyrights," and by deleting
the phrase "and the Assignment of Mexican Trademarks, Trademark Registrations
and Applications for Registration," and by deleting the roman numeral "IX".
Section 15. Exhibit A of the Agreement is amended by adding the
following definitions:
"Escrow Agent" means the escrow agent acting as
such from time to time pursuant to the terms of the
Escrow Agreement.
"Escrow Agreement" means the Escrow Agreement
in the form contemplated by Attachment XXXI.
"Escrow Funds" means any funds held from time
to time by the Escrow Agent under the Escrow Agreement.
"Manufacturing Agreement" means the
Manufacturing Agreement in the form contemplated by
Attachment XXXII.
"Mexico Closing Date" means the Mexico Closing
Date as defined in the Manufacturing Agreement.
Section 16. The definition of "Transaction Documents" set forth in
Exhibit A of the Agreement is deleted in its entirety and the following is
inserted in its place and stead:
""Transaction Documents" means this Agreement,
the Assignment and Assumption Agreements, the Services
Agreements, the Intellectual Property Assignment
Agreements, the Cross License Agreement, the Trademark
License Agreement, the Kuantan Transition Agreement, the
Manufacturing Agreement, the Escrow Agreement, the
Supply Agreement contemplated by Section 2.01(viii), the
Distribution Services Agreement (United States), and the
Distribution Services Agreement (Latin America), and any
exhibits or attachments to any of the foregoing, as the
same may be amended from time to time."
Section 17. The definition of "Transferred Assets" set forth in Exhibit
A of the Agreement is amended by inserting "or the Mexico Closing Date, as the
case may be," following the phrase "Closing Date" throughout the lead-in
language in such definition, by deleting the word "and" following the semi-colon
in clause (xiv), by deleting the "." at the end of clause (xv) and inserting in
its place and stead ";" and by adding the following proviso at the end of the
definition of "Transferred Assets":
"provided, however, that assets, properties,
rights, licenses, permits, Contracts, or causes of
actions located at or relating to the Queretaro Property
shall only be "Transferred Assets" on and as of the
Mexico Closing Date."
Section 18. The first sentence of Section D.01 of Exhibit D of the
Agreement is deleted in its entirety and the following is inserted in its place
and stead:
"On the Closing Date, the employment of all
Active Employees of the HPG Business, including
employees based in the HPG Business' headquarters in
Shelton, Connecticut, employees based in the Asheboro
Property, and the employees listed on Attachment XV, but
excluding the employees based at the Kuantan Facility
and the Queretaro Property, shall be transferred to
Buyer Companies. On the Mexico Closing Date, the
employment of all Active Employees of the HPG Business
based in the Queretaro Property shall be transferred to
Buyer Companies. Buyer and Buyer Companies shall ensure
that the transfer of employment of all such persons
shall be considered continuous employment under
Applicable Law."
Section 19. The third sentence of the original draft of Section D.01 of
Exhibit D of the Agreement is amended by inserting "(or with regard to Active
Employees of the HPG Business at the Queretaro Property, on or after the Mexico
Closing Date)" after the phrase "Closing Date".
Section 20. The last sentence of Section D.02 of Exhibit D of the
Agreement is amended by inserting "(or with regard to Active Employees of the
HPG Business at the Queretaro Property, on or after the Mexico Closing Date)"
after the phrase "Closing Date".
Section 21. The first sentence of Section D.03 of Exhibit D of the
Agreement is amended by inserting the word "applicable" before each of the
references to "Closing Date".
Section 22. The first sentence of Section D.05 of Exhibit D of the
Agreement is amended by inserting "(or with regard to Active Employees of the
HPG Business at the Queretaro Property, on or after the Mexico Closing Date)"
after the phrase "Closing Date".
Section 23. The second sentence of Section D.05 of Exhibit D of the
Agreement is amended by inserting "or the closing of the transactions
contemplated by Section 7 of the Manufacturing Agreement" after the word
"Closing" and before the "," and by inserting "(or with regard to Active
Employees of the HPG Business at the Queretaro Property, on or after the Mexico
Closing Date)" after the phrase "Closing Date".
Section 24. The third sentence of Section D.05 of Exhibit D of the
Agreement is amended by inserting "(or with regard to Active Employees of the
HPG Business at the Queretaro Property, on or after the Mexico Closing Date)"
after the phrase "Closing Date".
Section 25. The second sentence of Section D.06 of Exhibit D of the
Agreement is revised by deleting the phrase ", David O'Connor, Kaj Koft"
following the name Rafael Diaz.
Section 26. Section D.11 of Exhibit D of the Agreement is deleted in
its entirety and the following is inserted in its place and stead:
"D.11 General. For a period of one year
following the Closing Date (or with regard to Active
Employees of the HPG Business at the Queretaro Property,
the Mexico Closing Date), Buyer shall ensure that the
Non-US Transferred Employees are provided benefits that
are comparable in the aggregate to those provided under
the Non-US Benefit Arrangements as in effect for those
Non-US Transferred Employees immediately prior to the
Closing Date (or the Mexico Closing Date, as the case
may be), it being understood that each Non-US
Transferred Employee shall receive credit for all
service and compensation with Seller Companies and any
of their predecessors or Affiliates prior to the Closing
Date (or the Mexico Closing Date, as the case may be)
for all purposes to the same extent that service and
compensation are recognized immediately prior to such
date."
Section 27. Section D.12 of Exhibit D of the Agreement is deleted in
its entirety and the following is inserted in its place and stead:
"D.12 Severance/Termination Indemnities. In
furtherance and not in limitation of the provisions of
Section D.11, for a period of at least one year from the
Closing Date (or with regard to Active Employees of the
HPG Business at the Queretaro Property, the Mexico
Closing Date), Buyer shall provide severance programs
and termination indemnities with substantially the same
terms and conditions as those provided by Seller
Companies to the Non-US Transferred Employees
immediately prior to the Closing Date (or with regard to
Active Employees of the HPG Business at the Queretaro
Property, the Mexico Closing Date) and agrees to pay any
benefit to Non-US Transferred Employees to which they
may be entitled under such severance programs and/or
termination indemnities with respect to events that
occur as a result of the Closing or the closing of the
transactions contemplated by Section 7 of the
Manufacturing Agreement, and on or after such date."
Section 28. Section D.13 of Exhibit D of the Agreement is deleted in
its entirety and the following is inserted in its place and stead:
"D.13 Mexico Plan. In furtherance and not in
limitation of the provisions of Section D.11:
(a) Prior to or as soon as practicable after
the Mexico Closing Date, Buyer shall designate or
establish a plan ("Buyer's Mexico Plan"), providing
pension and seniority premiums to Non-US Transferred
Employees who were participants in the Black & Decker
S.A. de C.V. Pension and Seniority Premium Plan
("Seller's Mexico Plan"). Buyer's Mexico Plan shall
cover all Non-US Transferred Employees who were
participants in the Seller's Mexico Plan, each of whom
shall be eligible to participate therein on
substantially the same terms and conditions as provided
to the Non-US Transferred Employees under Seller's
Mexico Plan immediately prior to the Mexico Closing
Date. Buyer covenants and agrees that service with the
Seller or any of its predecessors or Affiliates prior to
the Mexico Closing Date that is recognized for any
purpose under the Seller's Mexico Plan will be
recognized by Buyer's Mexico Plan for such purpose.
(b) As soon as practicable after the Mexico
Closing Date, the Seller shall cause assets of the
Seller's Mexico Plan to be transferred to the Buyer's
Mexico Plan in an amount that is equal to the sum of (i)
the accrued current liability ("ABO") as reported on the
funding valuation report of Watson Wyatt Worldwide for
Seller's Mexico Plan as of January 1, 1998 plus (ii) 50%
of the difference between the actuarial accrued
liability ("PBO") as reported on such funding valuation
report under Seller's Mexico Plan and ABO as reported on
such funding valuation report. For purposes of making
this determination, the assets and liabilities of each
component of Seller's Mexico Plan shall be aggregated
and the calculations of ABO and PBO shall relate solely
to the Non-US Transferred Employees and will be updated
through the Mexico Closing Date.
(c) Upon the transfer of assets from Seller's
Mexico Plan to Buyer's Mexico Plan as contemplated
herein, Buyer and its Affiliates shall assume all of the
liabilities and obligations of Black & Decker or any of
its Affiliates in respect of the benefit obligations of
all Non-US Transferred Employees and their beneficiaries
under Seller's Mexico Plan.
Section 29. Section D.17 of Exhibit D of the Agreement is amended by
inserting "(or in the case of Active Employees of the HPG Business in Mexico, on
or after the Mexico Closing Date)" after the word "Closing" in clauses (i) and
(ii).
Section 30. Section D.18 of Exhibit D of the Agreement is deleted in
its entirety.
Section 31. Section D.19 of Exhibit D of the Agreement is renumbered
Section D.18.
Section 32. Section D.19 of Exhibit D of the Agreement (which is being
renumbered pursuant to Section 30 above as Section D.18) is amended by inserting
"(or in the case of Active Employees of the HPG Business in Mexico, on or after
the Mexico Closing Date)" after the phrase "Closing Date".
Section 33. Attachment IV is deleted in its entirety and the Assignment
of Foreign Trademarks, Trademark Registrations and Applications for Registration
attached to this Amendment as Exhibit A is inserted in its place and stead.
Section 34. Attachment VII is deleted in its entirety and the Trademark
License Agreement attached to this Amendment as Exhibit B is inserted in its
place and stead.
Section 35. Attachment X is deleted in its entirety and the Cross
License Agreement attached to this Amendment as Exhibit C is inserted in its
place and stead.
Section 36. Table 1 and Table 2 of Attachment XII are deleted in their
entirety and Table 1 and Table 2 attached to this Amendment as Exhibit D are
inserted in their place and stead.
Section 37. Item I.D. of Schedule B.18 to the Agreement titled "United
States Severance Programs" is amended by inserting "(covers all salaried exempt
employees)" following the reference in number 2 to "The Black & Decker Exempt
Employees Severance Pay Plan," inserting "(covers all salaried and hourly
nonexempt employees)" following the reference in number 3 to "The Black & Decker
Nonexempt Employees Severance Pay Plan," and adding a new number 5 in Item I.D.
as follows: "For all employees at the Asheboro Property employed prior to April
27, 1984, severance benefits consisting of two weeks pay for each of the
employee's full years of continuous service, plus one-half week's pay for each
additional three months of continuous service at the time of termination, and
related Education & Retraining Assistance of up to $1,800 in accordance with the
Asheboro Property Employee Handbook."
Section 38. The list of Licensed Software in Schedule B.19 to the
Agreement is amended by adding the following:
Licensor Description
Intemec Bar coding for plant and D.C. operations
Section 39. For purposes of the Agreement, Seller and Buyer agree that
sales by the HPG Business to agencies of the United States Armed Forces for sale
in Armed Forces owned outlets and stores on Armed Forces bases, whether or not
such outlets or stores are located in Designated Countries, shall be considered
sales in the United States.
Section 40. Attachment A-2 to Schedule A to the Agreement is deleted in
its entirety and Attachment A-2 attached to this Amendment as Exhibit E is
inserted in its place and stead.
<PAGE>
IN WITNESS WHEREOF, the parties hereto caused this Amendment to be duly
executed by their respective authorized officers on the day and year first above
written.
THE BLACK & DECKER CORPORATION
By: /s/ MARK M. ROTHLEITNER
Vice President and Treasurer
WINDMERE-DURABLE HOLDINGS, INC.
By: /s/ DAVID M. FRIEDSON
Chairman, President and Chief
Executive Officer
EXHIBIT 2(b)(i)
REORGANIZATION,
RECAPITALIZATION AND STOCK PURCHASE AGREEMENT
Dated as of June 29, 1998
By and Between
THE BLACK & DECKER CORPORATION,
TRUE TEMPER SPORTS, INC.
AND
TTSI LLC
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 Definitions....................................... 2
ARTICLE II
TRANSACTIONS AND CLOSING
Section 2.01 Reorganization of TTS Business.................... 2
Section 2.02 Recapitalization of TTSI.......................... 3
Section 2.03 Closing Transactions.............................. 3
Section 2.04 Section 338(h)(10) Election; Exchange
Consideration..................................... 5
Section 2.05 Closing........................................... 5
Section 2.06 Estimation and Adjustment of Exchange
Consideration..................................... 6
Section 2.07 Contingent Purchase Price......................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 3.01 Representations and Warranties of Parent.......... 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.01 Representations and Warranties of Buyer........... 9
ARTICLE V
COVENANTS AND AGREEMENTS OF PARENT
Section 5.01 Conduct of Business............................... 9
Section 5.02 Access to Information; Confidentiality............ 12
Section 5.03 Change of Lockbox Accounts........................ 13
Section 5.04 Access to Information; Cooperation After Closing.. 13
Section 5.05 Maintenance of Insurance Policies................. 14
Section 5.06 Noncompetition.................................... 14
<PAGE>
Section 5.07 Debt Financing.................................... 15
Section 5.08 Advice of Changes................................. 15
Section 5.09 No Hire........................................... 15
ARTICLE VI
COVENANTS AND AGREEMENTS OF BUYER
Section 6.01 Confidentiality................................... 15
Section 6.02 Provision and Preservation of and Access to
Certain Information; Cooperation...................16
Section 6.03 Insurance; Financial Support Arrangements......... 17
Section 6.04 Use of Intellectual Property...................... 18
Section 6.05 Conduct of TTS Business After Closing............. 19
Section 6.06 Debt Financing.................................... 19
Section 6.07 Certain Environmental Investigations.............. 19
ARTICLE VII
COVENANTS AND AGREEMENTS OF THE PARTIES
Section 7.01 Further Assurances................................ 20
Section 7.02 Certain Filings; Consents......................... 20
Section 7.03 Public Announcements.............................. 20
Section 7.04 Intellectual Property............................. 20
Section 7.05 HSR Act........................................... 21
Section 7.06 Certain Environmental Insurance Matters........... 21
Section 7.07 Legal Privileges.................................. 21
Section 7.08 Tax Matters....................................... 21
Section 7.09 Limitations on Confidentiality Restrictions....... 24
ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFIT MATTERS
Section 8.01 Employees and Employee Benefit Matters............ 24
<PAGE>
ARTICLE IX
CONDITIONS TO CLOSING
Section 9.01 Conditions to the Obligations of Each Party....... 24
Section 9.02 Conditions to Obligations of Buyer................ 25
Section 9.03 Conditions to Obligation of Parent and TTSI....... 26
Section 9.04 Updated Disclosure Schedules...................... 26
Section 9.05 Effect of Waiver.................................. 26
ARTICLE X
SURVIVAL; INDEMNIFICATION
Section 10.01 Survival.......................................... 26
Section 10.02 Indemnification................................... 28
Section 10.03 Procedures........................................ 29
Section 10.04 Limitations....................................... 32
ARTICLE XI
TERMINATION
Section 11.01 Termination....................................... 32
Section 11.02 Effect of Termination............................. 33
ARTICLE XII
MISCELLANEOUS
Section 12.01 Notices........................................... 33
Section 12.02 Amendments; Waivers............................... 35
Section 12.03 Expenses.......................................... 35
Section 12.04 Successors and Assigns............................ 35
Section 12.05 Disclosure........................................ 35
Section 12.06 Construction...................................... 36
Section 12.07 Entire Agreement.................................. 36
Section 12.08 Governing Law..................................... 37
Section 12.09 Counterparts; Effectiveness....................... 37
Section 12.10 Jurisdiction...................................... 37
Section 12.11 Severability...................................... 37
Section 12.12 Captions.......................................... 37
Section 12.13 Bulk Sales........................................ 37
<PAGE>
EXHIBITS
EXHIBIT A Definitions
EXHIBIT B Representations and Warranties of Parent
EXHIBIT C Representations and Warranties of Buyer
EXHIBIT D Employees and Employee Benefit Matters
EXHIBIT E Additional Matters Relating to Product Liability
Issues
<PAGE>
ATTACHMENTS
Attachment I Opening Statement
Attachment II Assignment and Assumption Agreement
Attachment III Assignment of United States Trademarks, Trademark
Registrations and Applications for Registration
Attachment IV Assignment of Foreign Trademarks, Trademark
Registrations and Applications for Registration
Attachment V Assignment of United States Patents and Patent
Applications
Attachment VI Assignment of Foreign Patents and Applications for
Patents
Attachment VII Services Agreement
Attachment VIII Reserved
Attachment IX Exchange Consideration Allocation Schedule
Attachment X Intellectual Property (Registrations and Applications
Therefor)
Attachment XI Consents and Approvals Required Prior to Closing
Attachment XII TTSI Financial Statements
Attachment XIII Certain Active Employees
Attachment XIV Terms of Stockholders' and Registration Rights
Agreements
Attachment XV Assignment of U.S. Copyright Registration
<PAGE>
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REORGANIZATION, RECAPITALIZATION AND
STOCK PURCHASE AGREEMENT
This Reorganization, Recapitalization and Stock Purchase Agreement
(together with the Exhibits, Schedules and Attachments hereto, this "Agreement")
is made as of the 29th day of June 1998, by and among The Black & Decker
Corporation, a Maryland corporation ("Parent"), True Temper Sports, Inc., a
Delaware corporation ("TTSI"), and TTSI LLC, a Delaware limited liability
company ("Buyer").
W I T N E S E T H:
WHEREAS, Parent, through certain of its direct and indirect
Subsidiaries, is engaged in the TTS Business and indirectly beneficially owns
all of the issued and outstanding capital stock of TTSI;
WHEREAS, subsequent to the execution and delivery of this Agreement but
prior to the Closing, Parent desires to cause Emhart Industries, Inc., a
Connecticut corporation and an indirect, wholly-owned subsidiary of Parent
("EII"), to make a capital contribution of all of the assets and liabilities of
EII which are used exclusively in or relate exclusively to the TTS Business to
TTSI in exchange for newly issued shares of TTSI Common Stock and TTSI Preferred
Stock and TTSI desires to accept such capital contribution, to issue such shares
of TTSI Common Stock and TTSI Preferred Stock and to assume and agree to pay,
satisfy and discharge such liabilities, all as more fully set forth herein;
WHEREAS, subsequent to the execution and delivery of this Agreement but
prior to the Closing, TTSI desires to acquire from Emhart Inc., a Delaware
corporation and an indirect, wholly-owned subsidiary of Parent ("Emhart"), and
Parent desires to cause Emhart to sell and transfer to TTSI, certain
Intellectual Property used in connection with the TTS Business in exchange for
newly issued shares of TTSI Common Stock and TTSI Preferred Stock, all as more
fully set forth herein;
WHEREAS, subsequent to the execution and delivery of this Agreement but
prior to the Closing, Parent desires to cause certain of its other Subsidiaries
to contribute certain assets used exclusively in the TTS Business to TTSI in
exchange for promissory notes from TTSI payable at Closing and TTSI's assumption
of related liabilities;
WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement, following the reorganization of the TTS Business contemplated by the
preceding recitals, Parent desires to cause TTSI to incur indebtedness to
facilitate the recapitalization of TTSI, and Buyer desires to assist TTSI to
incur such indebtedness, all as more fully set forth herein;
WHEREAS, Parent desires to cause TTSI, and Buyer desires to assist
TTSI, to use the proceeds of such borrowings to redeem 100% of the TTSI Common
Stock and 100% of the TTSI Preferred Stock then owned by Emhart for an aggregate
consideration of $161,484,126 and 50%
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of the TTSI Common Stock and 50% of the TTSI Preferred Stock then owned by EII
for an aggregate consideration of $26,914,021;
WHEREAS, following such redemption, Buyer desires to purchase, buy and
acquire from EII and Parent desires to cause EII to sell, transfer and convey to
Buyer the Acquired Shares, and Parent and Buyer desire to enter into certain
agreements and arrangements ancillary to such transactions; and
WHEREAS, upon consummation of the transactions contemplated by this
Agreement, (i) Buyer and Buyer's Permitted Assigns will own TTSI Common Stock
representing, in the aggregate, not less than 94.18% of all of the issued and
outstanding shares of TTSI Common Stock and TTSI Preferred Stock representing,
in the aggregate, 94.0% of all of the issued and outstanding shares of TTSI
Preferred Stock, (ii) EII will own 5.82% of all of the issued and outstanding
shares of TTSI Common Stock and 6.0% of all of the issued and outstanding shares
of TTSI Preferred Stock, and (iii) management of the TTSI Business designated by
Buyer will own any remaining shares of TTSI Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Capitalized terms used in this Agreement
shall have the meanings specified in this Agreement or in Exhibit A.
ARTICLE II
TRANSACTIONS AND CLOSING
Section 2.01 Reorganization of TTS Business. Upon the terms and subject
to the conditions set forth in this Agreement, the parties agree that following
the execution of this Agreement and prior to consummation of the transactions
contemplated by Sections 2.02 and 2.03, among other things:
(a) TTSI will file an Amended and Restated Certificate of Incorporation
consistent with the terms of this Agreement as agreed to by Buyer and Parent;
(b) Parent will cause EII to contribute the Contributed Assets to TTSI,
free and clear of all Liens (other than Permitted Liens), and TTSI will assume
and agree to pay, satisfy and discharge all of the Assumed Liabilities, all as
contemplated by the Assignment and Assumption Agreement;
<PAGE>
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(c) In exchange for the capital contribution contemplated by Section
2.01(b), TTSI will issue 1,000 shares of TTSI Common Stock and 250 shares of
TTSI Preferred Stock to EII, which upon such issuance shall be duly authorized,
fully paid and non-assessable shares of capital stock of TTSI;
(d) Parent shall and will cause Emhart and, to the extent applicable,
EII to sell, transfer and convey to TTSI the Transferred Intellectual Property,
all as contemplated by the Intellectual Property Assignment Agreements;
(e) In exchange for the transfer of the Transferred Intellectual
Property contemplated by Section 2.01(d), TTSI will issue 6,000 shares of TTSI
Common Stock and 750 shares of TTSI Preferred Stock to Emhart, which upon such
issuance shall be duly authorized, fully paid and non-assessable shares of
capital stock of TTSI;
(f) Parent (i) will cause TTSI to establish a branch in each of the
United Kingdom, Australia and Japan and (ii) will cause each of Tucker Fasteners
Limited ("Tucker"), Black & Decker (Australasia) Pty. Limited ("B&D
Australasia") and Nippon Pop Rivets & Fasteners, Ltd. ("Nippon") to contribute
the assets and liabilities relating exclusively to the TTS Business operations
in the United Kingdom, Australia and Japan, respectively, to TTSI; and
(g) In exchange for the contributions contemplated by Section 2.01(f),
TTSI will issue and deliver to each of Tucker, B&D Australasia and Nippon a
promissory note payable in full at Closing with an initial principal amount
equal to the net book value of the respective contributed assets with a fixed
interest rate equal to 7.5% per annum.
Section 2.02 Recapitalization of TTSI. (a) Upon the terms and subject
to the conditions set forth in this Agreement, the parties agree that following
the execution of this Agreement and immediately prior to Closing, among other
things, Buyer will use commercially reasonable best efforts to assist TTSI in
obtaining debt financing in an aggregate amount of not less than $155,000,000,
together with a revolving credit facility in the amount of $20,000,000, in the
manner contemplated by the Commitment Letters or on other terms reasonably
acceptable to Buyer, the proceeds of which will be used to consummate the
Redemptions and to pay off the promissory notes contemplated by Section 2.01(g).
(b) Buyer may elect at its option to pursue an alternative financing
structure, provided that such structure does not result in any incremental
increase in costs to TTSI.
Section 2.03 Closing Transactions.
(a) Redemption of TTSI Shares. On and subject to the terms and
conditions set forth in this Agreement, at the Closing, TTSI shall:
(i) Redeem all of the issued and outstanding TTSI Common Stock
and TTSI Preferred Stock owned by Emhart by making a cash payment equal
to $161,484,126 by wire transfer of immediately available funds to an
account or
<PAGE>
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accounts of Emhart designated by Parent at least two Business Days
prior to Closing; and
(ii) Redeem 1,000 shares of the issued and outstanding TTSI
Common Stock and 125 shares of the issued and outstanding TTSI
Preferred Stock owned by EII by making a cash payment equal to
$26,914,021 by wire transfer of immediately available funds to such
account or accounts of EII designated by Parent at least two Business
Days prior to Closing;
such that, immediately following the consummation of the transactions
contemplated by this Section 2.03(a), EII will own 1,000 shares of TTSI Common
Stock and 125 shares of TTSI Preferred Stock which shares, in the aggregate,
will constitute 100% of the issued and outstanding capital stock of TTSI.
(b) Acquisition of Acquired Shares. On and subject to the terms and
conditions set forth in this Agreement, at the Closing:
(i) Parent shall cause EII to sell, transfer and convey to
Buyer and Buyer's Permitted Assignees, free and clear of all Liens
(other than Permitted Liens) an aggregate of 941.8 shares of TTSI
Common Stock and an aggregate of 117.5 shares of TTSI Preferred Stock;
and
(ii) In consideration for the transfer of the Acquired Shares,
Buyer shall make cash payments equalling, in the aggregate, $14,301,853
by wire transfer of immediately available funds to an account or
accounts of EII designated by Parent at least two Business Days prior
to Closing;
such that, immediately following consummation of the transactions contemplated
by this Section 2.03(b), EII will own 58.2 shares of TTSI Common Stock
representing 5.82% of all the issued and outstanding shares of TTSI Common Stock
and 7.5 shares of TTSI Preferred Stock representing 6.0% of all the issued and
outstanding shares of TTSI Preferred Stock and Buyer and Buyer's Permitted
Assignees will own, in the aggregate, 941.8 shares of TTSI Common Stock
representing 94.18% of all the issued and outstanding shares of TTSI Common
Stock and 117.5 shares of TTSI Preferred Stock representing 94.0% of all the
issued and outstanding shares of TTSI Preferred Stock.
(c) Consent and Waiver by Buyer. By execution and delivery of this
Agreement, Buyer hereby consents to and waives any rights in respect of the
redemption of TTSI Common Stock owned by EII or Emhart contemplated by Section
2.03(a).
(d) Additional Closing Transactions. Upon the terms and subject to the
conditions set forth in this Agreement, the parties agree that at the Closing,
among other things:
<PAGE>
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(i) Parent or its Affiliates, as the case may be, and TTSI
shall execute and deliver the Services Agreement with such additions,
deletions and changes as may be agreed to by Buyer and Parent; and
(ii) TTSI, Buyer, Buyer's Permitted Assigns and EII shall
execute and deliver a Stockholders' and a Registration Rights
Agreements containing the provisions contemplated by Attachment XIV.
Section 2.04 Section 338(h)(10) Election; Exchange Consideration.
(a) The parties agree to make an election under Section 338(h)(10) of
the Code (and any corresponding elections under any applicable state, local, or
foreign tax law) with respect to the sale of the Acquired Shares by EII to
Buyer.
(b) The consideration to be paid to Parent and its Affiliates in
connection with the Contemplated Transaction (the "Exchange Consideration")
shall consist of the following:
(i) the aggregate amounts paid by TTSI to redeem shares of
TTSI Common Stock and TTSI Preferred Stock pursuant to Section 2.03(a);
and
(ii) the aggregate amount paid by Buyer to EII in exchange for
the Acquired Shares pursuant to Section 2.03(b); and
(iii) the aggregate amounts payable to Tucker, B&D Australasia
and Nippon pursuant to the promissory notes to be delivered in
accordance with Section 2.01(g) (as so adjusted and together with the
amount contemplated by Section 2.04(b)(i) and 2.04(b)(ii) above, the
"Adjusted Purchase Price"); and
(iv) the assumption by TTSI of the Assumed Liabilities in
accordance with the Transaction Documents.
(c) The Exchange Consideration and each Annual Thiokol Payment shall be
allocated to and among the respective Contributed Assets and Transferred
Intellectual Property as set forth in Attachment IX to this Agreement. Parent,
TTSI and Buyer agree that the allocation of the Exchange Consideration has been
negotiated by them and is consistent with the value of the Contributed Assets
and the principles of Section 1060 of the Code and the regulations promulgated
by the Internal Revenue Service thereunder. Parent, TTSI and Buyer agree that
they shall use the allocation of the Exchange Consideration reflected in
Attachment IX to this Agreement in any Tax Returns or other reports that deal
with the Contemplated Transactions and are filed with any Tax Authority and
shall promptly prepare and timely file such reports and information as may be
required to report the allocation contemplated by this Section 2.04(c).
Section 2.05 Closing. The closing (the "Closing") of the Contemplated
Transactions (other than the transactions contemplated by Section 2.01, which
may occur on an earlier date) shall take place at the offices of Kirkland &
Ellis, 153 East 53rd Street, New York, New York
<PAGE>
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10022, on September 24, 1998; provided, however, that if all of the conditions
to Closing set forth in Article IX have not been satisfied (or waived) as of
that date and if closing on that date therefore would be impractical, the
Closing shall take place on the fifth Business Day following the satisfaction or
waiver (by the party entitled to waive the condition) of all conditions to the
Closing set forth in Article IX, or at such other time and place as the parties
to this Agreement may agree. The Closing will occur at 10:00 a.m. on the Closing
Date.
Section 2.06 Estimation and Adjustment of Exchange Consideration.
(a) Not later than two Business Days and not more than five Business
Days prior to the Closing Date, Parent shall deliver to Buyer a statement of net
working capital setting forth, in reasonable detail, Parent's reasonable good
faith calculation of the estimated Net Working Capital of TTSI as of the close
of business on the day prior to the scheduled Closing Date (the "Estimated Net
Working Capital"). To the extent that the Estimated Net Working Capital is less
than $11,600,000, Parent shall contribute, or cause to be contributed, to TTSI
an amount, in cash, equal to such deficiency. To the extent that the Estimated
Net Working Capital exceeds $11,600,000, Parent shall have the right to cause
TTSI to distribute to its shareholders at or immediately prior to the Closing an
amount, in cash, equal to such excess.
(b) Promptly following the Closing Date, but in no event later than 60
days after the Closing Date, Parent shall, at its expense, with the assistance
of Buyer and TTSI prepare and submit to Buyer a statement of net working capital
setting forth, in reasonable detail, Parent's calculation of the actual Net
Working Capital of TTSI as of the close of business on the day prior to the
Closing Date after giving effect to any distribution or contribution made
pursuant to Section 2.06(a) above (the "Proposed Final Net Working Capital
Amount"). In the event Buyer disputes the correctness of the Proposed Final Net
Working Capital Amount, Buyer shall notify Parent of its objections within 45
days after receipt of Parent's calculation of the Proposed Final Net Working
Capital Amount and shall set forth, in writing and reasonable detail, the
reasons for Buyer's objections. If Buyer fails to deliver such notice of
objections within such time, Buyer shall be deemed to have accepted Parent's
calculation. To the extent Buyer does not object, in writing and in reasonable
detail, as required and within the time period contemplated by this Section
2.06(a) to a matter in the statement of net working capital prepared and
submitted by Parent, Buyer shall be deemed to have accepted Parent's calculation
and presentation in respect of the matter and the matter shall not be considered
to be in dispute. Parent and Buyer shall endeavor in good faith to resolve any
disputed matters within 20 days after Parent's receipt of Buyer's notice of
objections. If they are unable to do so, Parent and Buyer shall select a
nationally known independent accounting firm (other than Ernst & Young LLP or
KPMG Peat Marwick LLP to resolve the matters in dispute (in a manner consistent
with Section 2.06(b) and with any matters not in dispute), and the determination
of such firm in respect of the correctness of each matter remaining in dispute
shall be conclusive and binding on Parent and Buyer. The independent
accountant's determination of Net Working Capital of TTSI as of the close of
business on the day prior to the Closing Date shall be within the range
established by Parent and Buyer. The Net Working Capital of TTSI as of the close
of business on the day prior to the Closing Date, as finally determined pursuant
to this Section 2.06(a) (whether by failure of Buyer to deliver notice of
objection, by agreement of Parent and Buyer or by determination of the
<PAGE>
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independent accountants selected as set forth above), is referred to herein as
the "Final Net Working Capital Amount."
(c) The Proposed Final Net Working Capital Amount and the Final Net
Working Capital Amount shall be determined in accordance with the accounting
principles, policies, practices and methods utilized in the preparation of the
Opening Statement, as disclosed in the notes to the Opening Statement, except as
otherwise set forth in Note 8 to the Opening Statement.
(d) If the Final Net Working Capital Amount is greater than
$11,600,000, the difference shall be paid to Parent by TTSI with simple interest
thereon from the Closing Date to the date of payment at a floating rate per
annum equal to the per annum interest rate announced from time to time by
Citibank, N.A. as its prime rate in effect. If the Final Net Working Capital
Amount is less than $11,600,000, the difference shall be paid to TTSI by Parent
with simple interest thereon from the Closing Date to the date of payment at a
floating rate per annum equal to the per annum interest rate announced from time
to time by Citibank, N.A. as its prime rate in effect. Such payment shall be
made in immediately available funds not later than five Business Days after the
determination of the Final Net Working Capital Amount by wire transfer to a bank
account designated in writing by the party entitled to receive the payment. Any
payment contemplated by this Section 2.06(d) shall be treated as an increase or
decrease, as the case may be, in the amount paid pursuant to Section 2.03(a) on
a pro rata basis between Emhart and EII.
(e) Parent shall make available and shall cause Ernst & Young LLP to
make available, in accordance with reasonable and customary practices and
professional standards and subject to such reasonable conditions as Ernst &
Young LLP shall impose, the books, records, documents and work papers underlying
the preparation and review of the Opening Statement and the calculation of the
Proposed Final Net Working Capital Amount. TTSI shall make available and shall
cause KPMG Peat Marwick LLP to make available, in accordance with reasonable and
customary practices and professional standards and subject to such reasonable
conditions as KPMG Peat Marwick LLP shall impose, the books, records, documents
and work papers created or prepared by or for TTSI in connection with the review
of the Proposed Final Net Working Capital Amount and the other matters
contemplated by Section 2.06(a).
(f) The fees and expenses, if any, of the accounting firm selected to
resolve any disputes between Parent and TTSI in accordance with Section 2.06(b)
shall be paid one-half by Parent and one-half by TTSI.
Section 2.07 Contingent Purchase Price.
(a) Promptly following the last day of each fiscal year of TTSI after
the Closing Date, but in no event later than 90 days thereafter, TTSI shall
prepare and submit to Parent a statement of TTSI's estimate of the Thiokol
Payment for the preceding fiscal year, setting forth, in reasonable detail,
TTSI's calculation of the Thiokol Payment for that year together with detailed
support for such calculation (the "Proposed Annual Thiokol Payment") and a
certificate of the president of TTSI to the effect that the Proposed Annual
Thiokol Payment was determined in accordance with the provisions of this Section
2.07. In the event that Parent disputes the correctness of the
<PAGE>
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Proposed Annual Thiokol Payment, Parent shall notify TTSI of its objections
within 45 days of receipt of TTSI's calculation of the Proposed Annual Thiokol
Payment and shall set forth, in reasonable detail, the reasons for Parent's
objections. If Parent fails to deliver such notice of objections within such
time, Parent shall be deemed to have accepted TTSI's calculation. Parent and
TTSI shall, and Buyer shall cooperate with Parent and TTSI to, endeavor in good
faith to resolve any disputed matters within 20 days after TTSI's receipt of a
notice of objections. If they are unable to do so, Parent and TTSI shall select
a nationally known independent accounting firm (other than Ernst & Young LLP,
KPMG Peat Marwick LLP or TTSI's independent accountants) to resolve the matters
in dispute (in a manner consistent with Section 2.07(b) and with any matters not
in dispute), and the determination of such firm in respect of the correctness of
each matter remaining in dispute shall be conclusive and binding on the parties.
The independent accountants determination of the Thiokol Payment for that year
shall be within the range established by TTSI and Parent. The Thiokol Payment
for that year, as finally determined pursuant to this Section 2.07(a) (whether
by failure of Parent to deliver notice of objections, by agreement of Parent and
TTSI or by determination of the independent accountants selected as set forth
above), is referred to herein as the "Annual Thiokol Payment."
(b) The Annual Thiokol Payment for each fiscal year of TTSI
shall be paid by TTSI to Parent with simple interest thereon from the last date
of the applicable fiscal year to the date of payment at a floating rate per
annum equal to the per annum interest rate announced from time to time by
Citibank, N.A. (or its successors) as its prime rate. Such payment shall be made
within 5 Business Days after the determination of the Annual Thiokol Payment for
the respective fiscal year of TTSI by wire transfer to a bank account designated
by Parent.
(c) TTSI shall make available and shall cause TTSI's
independent accountants to make available, in accordance with reasonable and
customary practices and professional standards and subject to such reasonable
conditions as TTSI's independent accountants shall impose, the books, records,
documents and work papers underlying the preparation and review of the Proposed
Annual Thiokol Payment.
(d) The fees and expenses, if any, of the accounting firm
selected to resolve any dispute between Parent and TTSI in accordance with
Section 2.07(a) shall be borne by Parent if the Annual Thiokol Payment
determined by the accounting firm selected is closer to the end of the range
established by TTSI or by TTSI if the Annual Thiokol Payment is closer to the
end of the range established by Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 3.01 Representations and Warranties of Parent. Parent
represents and warrants to Buyer as set forth in Exhibit B.
<PAGE>
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.01 Representations and Warranties of Buyer. Buyer represents
and warrants to Parent as set forth in Exhibit C.
ARTICLE V
COVENANTS AND AGREEMENTS OF PARENT
Section 5.01 Conduct of Business. Except with the written consent of
Buyer, as otherwise provided in this Agreement, as set forth in Schedule 5.01 or
required by Applicable Law, or as required by the terms and conditions of
Contracts either disclosed on or not required to be disclosed on Schedule B.12
("Existing Contracts"), from the date of this Agreement until the Closing Date,
Parent shall cause Seller Companies and TTSI to conduct the TTS Business in all
material respects in accordance with the historical and customary operating
practices relating to the conduct of the TTS Business and shall use commercially
reasonable best efforts to preserve intact the TTS Business and the
relationships of Seller Companies and TTSI with third parties in connection with
the TTS Business, and Seller Companies and TTSI shall not:
(i) make any capital expenditure, or group of related capital
expenditures relating to the TTS Business in excess of $100,000 (other
than capital expenditures contemplated by the 1998 capital plan
previously provided to Buyer);
(ii) sell or dispose of more than an aggregate of $250,000 of
assets that would constitute Contributed Assets or Transferred
Intellectual Property if owned, held or used by TTSI on the Closing
Date (other than the sale of Inventory (including obsolete Inventory
whether or not in the ordinary course of business), and any sale made
in the ordinary course of business);
(iii) notwithstanding Section 5.01(ii), sell, transfer,
license or otherwise dispose of, any Transferred Intellectual Property
(except for certain Intellectual Property with registrations that will
expire in the normal course that will not constitute Transferred
Intellectual Property, the license or sale of Intellectual Property in
connection with the Shaft Lab product line or other licenses of
Intellectual Property granted in the ordinary course of business which
do not materially deplete the value of such Intellectual Property prior
to Closing);
(iv) except as contemplated by this Agreement, amend, modify
or supplement TTSI's Certificate of Incorporation or bylaws;
(v) issue any shares of capital stock of TTSI or any options,
warrants or other rights to acquire any shares of capital stock of TTSI
or securities convertible into or exchangeable for shares of TTSI
capital stock, except as contemplated by Section 2.01;
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(vi) incur any indebtedness for money borrowed, other than the
debt financing contemplated by Section 2.02 or intercompany
indebtedness with another Seller Company cancelled at or prior to
Closing;
(vii) terminate or materially reduce the coverage of any
policies of title, liability, fire, workers' compensation, property and
any other form of insurance covering the operations of TTSI or the TTS
Business other than any termination or reduction of any insurance
covering Parent's businesses generally or where such policies are
replaced by policies that are substantially similar in all material
respects to the terminated policies;
(viii) settle any material lawsuit, claim or other material
dispute nor settle any other lawsuit, claim or other dispute if such
settlement imposes a material continuing non-monetary obligation on
TTSI or the TTS Business or any of the Contributed Assets or
Transferred Intellectual Property or any material monetary obligation
that will not be satisfied prior to the Closing or due and payable on
or before the one year anniversary of the Closing Date;
(ix) except as would not otherwise be prohibited by Section
5.01(x) below and except as would not constitute an Assumed Liability,
grant or implement any new or modified severance, termination or other
employee benefit or compensation arrangement or increase or accelerate
any benefits payable under the severance or termination pay policies or
other employee benefit or compensation arrangement with respect to any
Transferred Employee; or
(x) except as otherwise may be permitted or required by this
Agreement or Applicable Law and except as would not constitute an
Assumed Liability, adopt or amend in any material respect any Employee
Plan or Benefit Arrangement in respect of any Transferred Employee or,
other than compensation increases in the ordinary course of business,
with respect to any Transferred Employee whose base compensation is
$75,000 or above of TTSI or the TTS Business, as the case may be,
increase the compensation or fringe benefits of any such Transferred
Employee or pay any benefit not required by any Employee Plan or
Benefit Arrangement with respect to such Transferred Employee as in
effect on the date hereof.
(xi) fail to keep the equipment, machinery and systems used in
the TTS Business in compliance, in all material respects, with all
Applicable Laws and with all licenses and permits, and reasonably
maintain all such assets and replace any thereof which shall be worn
out, lost, stolen, or destroyed, in accordance with past practices
(other than assets that are no longer necessary for the operation of
the TTS Business);
(xii) fail to maintain the files and records of the TTS
Business in the usual, regular and ordinary manner, consistent with
past practices;
(xiii) fail to manage or cause to be managed the collection
and payment of the accounts receivable and accounts payable of the TTS
Business and otherwise maintain and
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manage their respective inventories and other current assets and
current liabilities in the ordinary course of business and consistent
with past practice, including making payment with respect to all of
their respective accounts payable, current maturities of long term debt
and other current payables in a timely manner and in accordance with
the terms of such payable or such indebtedness, as the case may be,
provided that no such indebtedness (other than intercompany
indebtedness) shall be prepaid or otherwise retired in whole or in part
prior to the date on which such indebtedness or portion thereof is due
to be repaid, it being understood that the covenant set forth in this
Section 5.01(xiii) shall not prohibit Parent or the Seller Companies
from disputing any accounts payable in good faith, in the ordinary
course of business and consistent with past practice or require Parent
or the Seller Companies to generally change its practices with respect
to the collection and payment of accounts receivable and accounts
payable;
(xiv) fail to take commercially reasonable steps consistent
with current practices, and to cause any relevant Seller Company to
take commercially reasonable steps consistent with current practices,
to protect all Transferred Intellectual Property and take commercially
reasonable best efforts to prevent any of it from falling into the
public domain;
(xv) enter into any agreement, contract, lease, license,
commitment or instrument (or series of related agreements, contracts,
leases, licenses, commitments or instruments) that would be required to
be listed on Schedule B.12 or accelerate, terminate, modify or cancel
in a manner materially adverse to the TTS Business any agreement,
contract, lease, license, commitment or instrument (or series of
related agreements, contracts, leases, licenses, commitments or
instruments) that is required to be listed on Schedule B.12;
(xvi) impose any material Lien (other than any Lien of the
type that would constitute a Permitted Lien if in existence on the date
hereof) upon any of the Contributed Assets or Transferred Intellectual
Property;
(xvii) make any investment in, any loan to, or any acquisition
of the securities of, other than in the ordinary course of business,
assets of, any other Person (or series of related investments, loans,
and acquisitions) either involving more than $100,000 or outside the
ordinary course of business;
(xviii) make any loan to, or enter into any other transaction
with, any of its directors, officers, or employees, other than in their
capacity as such in connection with employee benefits or compensation
arrangements and in the ordinary course of business consistent with
past practices;
(xix) implement any layoffs of any employee who would
otherwise be a Transferred Employee other than the termination of any
employee in the ordinary course of business;
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(xx) make or pledge to make any charitable or other capital
contribution that would be payable following the closing and not
reflected in the Final Net Working Capital Amount or otherwise
exceeding $50,000; and
(xxi) commit to any of the foregoing.
Section 5.02 Access to Information; Confidentiality.
(a) Except as may be necessary to comply with any Applicable Laws and
subject to any applicable privileges (including, without limitation, the
attorney-client and work-product privileges; provided that Parent and the Seller
Companies shall use commercially reasonable efforts to provide access to Buyer
in a manner that does not violate any applicable privileges), from the date of
this Agreement until the Closing Date, Parent, TTSI and Seller Companies shall
(i) give Buyer and its Representatives reasonable access to the records of TTSI
and Seller Companies relating to the TTS Business during normal business hours
and upon reasonable prior notice, (ii) give Buyer and its Representatives
reasonable access to any facilities the possession of which will be transferred
to Buyer at Closing during normal business hours and upon reasonable prior
notice for the purpose of Buyer's conduct of an environmental audit of such
facilities or documentary diligence, (iii) furnish to Buyer and its
Representatives such financial and operating data and other information relating
to TTSI and the TTS Business as Buyer may reasonably request and (iv) instruct
the employees and Representatives of TTSI and Seller Companies to provide
reasonable cooperation to Buyer in its investigation of the TTS Business.
Without limiting the generality of the foregoing, subject to the limitations set
forth in the first sentence of this Section 5.02(a), from the date of this
Agreement to the Closing Date Parent shall (i) use reasonable commercial efforts
to enable Buyer and its Representatives to conduct, at Buyer's expense, business
and financial reviews, investigations and studies as to the operation of TTSI
and the TTS Business, including any tax, operating or other efficiencies that
may be achieved and (ii) give Buyer and its Representatives access upon
reasonable request to information relating to TTSI and the TTS Business of the
type and with the same level of detail as in the ordinary course of business
currently is being made available to the president or chief financial officer,
or other senior management of the TTS Business. Notwithstanding the foregoing,
neither Buyer nor its Representatives shall have access to personnel records of
any Seller Companies or TTSI relating to individual performance or evaluation
records, medical histories or other information that in Parent's good faith
opinion is sensitive or the disclosure of which could subject TTSI or any Seller
Companies to risk of liability.
(b) For a period of two years after the Closing Date and, with respect
to any confidential information provided to Parent or any Seller Companies
pursuant to Section 2.07, for a period of two years thereafter, Parent and the
Seller Companies will treat and hold as confidential, any confidential
information relating primarily to the operations or affairs of TTSI or the TTS
Business. In the event Parent or any Seller Companies are requested or required
(by oral or written request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand or similar
process or by Applicable Law) to disclose any such confidential information,
then Parent shall notify Buyer promptly of the request or requirement so that
Buyer, at its expense, may seek an appropriate protective order or waive
<PAGE>
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compliance with this Section 5.02(b). If, in the absence of a protective order
or receipt of a waiver hereunder, any Seller Companies are, on the advice of
counsel, compelled to disclose such confidential information Parent or Seller
Companies may so disclose the confidential information, provided that Parent or
Seller Companies, as the case may be, shall use reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded to such
confidential information. The provisions of this Section 5.02(b) shall not be
deemed to prohibit the disclosure of confidential information relating to the
operations or affairs of TTSI or the TTS Business by Parent or any Seller
Companies to the extent reasonably required (i) to prepare or complete any
required Tax Returns or financial statements, (ii) in connection with audits or
other proceedings by or on behalf of a Governmental Authority, (iii) in
connection with any insurance or benefits claims, (iv) to the extent necessary
to comply with any Applicable Laws, (v) to provide services to TTSI in
accordance with the terms and conditions of any of the Transaction Documents or
(vi) as Parent reasonably determines to be necessary and not materially
inconsistent with the intentions of this Section 5.02(b) in connection with any
other similar administrative functions in the ordinary course of business. In
addition, the provisions of this Section 5.02(b) shall not apply to information
that (i) is or becomes publicly available other than as a result of a disclosure
by any Seller Company, (ii) is or becomes available to a Seller Company on a
non-confidential basis from a source that, to Parent's knowledge, is not
prohibited from disclosing such information by a legal, contractual or fiduciary
obligation or (iii) is or has been independently developed by a Seller Company
(other than primarily for the TTS Business). This Section 5.02(b) shall not
apply to the use, license or sale of Intellectual Property not constituting
Transferred Intellectual Property.
Section 5.03 Change of Lockbox Accounts. Prior to or immediately after
the Closing, Parent shall take such steps as Buyer may reasonably request to
cause TTSI to be substituted as the sole party having control over any lockbox
or similar bank account maintained exclusively by the TTS Business to which
customers of the TTS Business directly make payments in respect of the TTS
Business or to direct the bank at which any such lockbox or similar account is
maintained to transfer any payments made thereto to an account established by
TTSI. To the extent that TTSI is not substituted as the sole party having
control over any such lockbox account prior to Closing, Parent or the applicable
Seller Company shall pay to TTSI any amount paid to such account following the
Closing with respect to any account receivable constituting part of the
Contributed Assets.
Section 5.04 Access to Information; Cooperation After Closing. On and
after the Closing Date and subject to any applicable privileges (including,
without limitation, the attorney-client and work-product privileges; provided
that Parent and the Seller Companies shall use commercially reasonable efforts
to provide access to Buyer in a manner that does not violate any applicable
privileges), Parent shall, and shall cause each of the other Seller Companies
to, at their expense (i) afford Buyer and its Representatives reasonable access
upon reasonable prior notice during normal business hours, to all employees,
offices, properties, agreements, records, books and affairs of Seller Companies
to the extent relating to the conduct of the TTS Business prior to the Closing
and (ii) cooperate fully with Buyer with respect to matters relating to the
conduct of the TTS Business prior to the Closing, including, without limitation,
in the defense or pursuit
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of any Contributed Asset, Transferred Intellectual Property or Assumed Liability
or any claim or action that relates to occurrences involving the TTS Business
prior to the Closing Date.
Section 5.05 Maintenance of Insurance Policies. Except as otherwise
provided in Exhibit D, on and after the date of this Agreement and until the
Closing Date, Parent shall not take or fail to take any action if such action or
inaction, as the case may be, would adversely affect the applicability of any
insurance (including reinsurance) in effect on the date of this Agreement that
covers all or any part of the assets that would constitute Contributed Assets,
or Transferred Intellectual Property if owned, held or used by any Seller
Companies on the Closing Date, TTSI, the TTS Business or the Transferred
Employees. Except as otherwise provided in Exhibit D or as may otherwise be
agreed in writing by the parties, Parent and its Affiliates shall not have any
obligation to maintain the effectiveness of any such insurance policy after the
Closing Date or to make any monetary payment in connection with any such policy.
Section 5.06 Noncompetition.
(a) Parent covenants and agrees, as an inducement to Buyer to enter
into this Agreement and to consummate the Contemplated Transactions, that for a
period of five years following the Closing Date no Seller Company (for so long
but only for so long as it remains a Seller Company) will, directly or
indirectly, carry on or participate in the ownership, management or control of,
or license Intellectual Property to be used in a manner competitive with the TTS
Business by, any business enterprise (other than the Seller Companies' ownership
interest in TTSI following Closing) that competes anywhere in the world with the
TTS Business as it is being conducted on the Closing Date (a "Competing
Business").
(b) Nothing contained in this Section 5.06 shall limit or restrict the
right of any Seller Company to hold and make investments in securities of any
Person that has securities listed on a national securities exchange or admitted
to trading privileges thereon or actively traded in a generally recognized
over-the-counter market, provided that the aggregate equity interest therein of
Seller Companies does not exceed five percent of the outstanding shares or
interests in such Person at the time of Seller Companies' investment therein.
Notwithstanding any provisions of this Section 5.06 to the contrary, if Parent
or any other Seller Company acquires securities of any Person that is engaged in
a Competing Business, Seller Companies shall not be deemed to be in violation of
this Section 5.06, provided that (A) (i) at the time of acquisition the
Competing Business represents less than one-third of the gross revenues of the
acquired Person for the acquired Person's most recently completed fiscal year
and (ii) Seller Companies use reasonable commercial efforts to divest the
operations of such Competing Business subsequent to such acquisition, or (B) at
the time of acquisition the Competing Business represents less than five percent
of the gross revenues of the acquired Person for the acquired Person's most
recently completed fiscal year.
(c) Parent recognizes and agrees that a breach by Seller Companies of
any of the covenants and agreements in this Section 5.06 could cause irreparable
harm to Buyer, that Buyer's remedies at law in the event of such breach would be
inadequate, and that, accordingly, in the event of such breach a restraining
order or injunction or both may be issued against Seller
<PAGE>
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Companies, in addition to any other rights and remedies that may be available to
Buyer under Applicable Law. If this Section 5.06 is more restrictive than
permitted by the Applicable Laws of the jurisdiction in which Buyer seeks
enforcement hereof, this Section 5.06 shall be limited to the extent required to
permit enforcement under such Applicable Laws.
Section 5.07 Debt Financing. Parent shall, and shall cause the Seller
Companies and TTSI to, cooperate in a commercially reasonable manner with Buyer
to assist Buyer to assist TTSI in obtaining the debt financing for TTSI
contemplated by Section 2.02. In no event, however, shall Parent or any Seller
Companies be required to guaranty or otherwise provide any Financial Support
Arrangement in connection with TTSI obtaining the debt financing contemplated by
Section 2.02. Notwithstanding the foregoing sentence, in the event that Parent
elects to cause TTSI to obtain the bridge financing contemplated by the
Commitment Letters in order to satisfy the financing conditions contained in
Article IX, Parent agrees to reimburse TTSI for additional fees payable to the
bridge lenders for the take down of such financing in the amount of up to
$1,875,000 at Closing.
Section 5.08 Advice of Changes. Parent shall advise Buyer promptly in
writing after Parent obtains knowledge of any fact that, if known as of the date
of this Agreement, would have been required to be set forth or disclosed in or
pursuant to this Agreement or the Schedules hereto, or which would result in the
breach by the Parent or any Seller Company of any of its representations,
warranties, covenants or agreements hereunder or which could reasonably be
expected to result in or cause a Material Adverse Effect.
Section 5.09 No Hire. For a period of 12 months following the Closing
Date, no Seller Company shall hire for employment or offer employment to Scott
C. Hennessy.
ARTICLE VI
COVENANTS AND AGREEMENTS OF BUYER
Section 6.01 Confidentiality. Buyer agrees that all non-public
information provided or otherwise made available in connection with the
Contemplated Transactions to Buyer or any of its Representatives shall be
treated as if provided under the Confidentiality Agreement (whether or not the
Confidentiality Agreement is in effect or has been terminated). The
Confidentiality Agreement shall continue to apply in accordance with its terms
following the Closing to any confidential information of Parent or any Seller
Company that does not relate to the TTS Business or TTSI. In the event that
Buyer or TTSI is requested or required (by oral or written request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process or by Applicable Law) to disclose any
such confidential information, then Buyer and TTSI shall notify Parent promptly
of their request or requirement so that Parent, at its expense, may seek an
appropriate protective order or waive compliance with this Section 6.01. If, in
the absence of a protective order or receipt of a waiver hereunder, Buyer or
TTSI is, on the advice of counsel, compelled to disclose such confidential
information, Buyer or TTSI may so disclose the confidential information,
provided that Buyer or TTSI, as the case
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may be, shall use reasonable commercial efforts to obtain reliable assurance
that confidential treatment shall be accorded to such confidential information.
The provisions of this Section 6.01 shall not be deemed to prohibit the
disclosure of confidential information relating to the operations or affairs of
TTSI or the TTS Business by Buyer to the extent reasonably required (i) to
prepare or complete any required Tax Returns or financial statements, (ii) in
connection with audits or other proceedings by or on behalf of a Governmental
Authority, (iii) in connection with any insurance or benefits claims, or (iv) to
the extent necessary to comply with any Applicable Laws. In addition, the
provisions of this Section 6.01 shall not apply to information that (i) is or
becomes publicly available other than as a result of a disclosure by TTSI or
Buyer, (ii) is or becomes available to TTSI or Buyer on a non-confidential basis
from a source that, to TTSI's and Buyer's knowledge, is not prohibited from
disclosing such information by legal, contractual or fiduciary obligation, or
(iii) is or has been independently developed by TTSI. Nothing in this Section
6.01, however, shall limit or otherwise restrict the applicability of any other
confidentiality or similar provisions included in the Transaction Documents.
Section 6.02 Provision and Preservation of and Access to Certain
Information; Cooperation.
(a) Prior to the Closing Date, Buyer shall provide to Parent promptly
upon its receipt thereof copies of all environmental audit and similar reports
with respect to facilities the possession of which will be transferred to TTSI
in accordance with this Agreement. Buyer shall provide to Parent a copy of all
sampling results, boring logs, analysis and other data and reports regarding any
environmental review conducted by Buyer immediately upon obtaining them.
(b) On and after the Closing Date, TTSI or any successor to the TTS
Business shall preserve all books and records of the TTS Business for a period
of six years commencing on the Closing Date (or in the case of books and records
relating to Tax, employment and employee benefits matters, until such time as
Parent notifies TTSI in writing that all statutes of limitations to which such
records relate have expired), and thereafter, not to destroy or dispose of such
records without giving notice to Parent of such pending disposal and offering
Parent such records. In the event Parent has not requested such materials within
90 days following the receipt of notice from TTSI, TTSI may proceed to destroy
or dispose of such materials without any liability.
(c) From and after the Closing Date and subject to any applicable
privileges (including, without limitation, the attorney-client and work-product
privileges; provided that Buyer and TTSI shall use commercially reasonable
efforts to provide access to Parent in a manner that does not violate any
applicable privileges), Buyer shall at its expense (i) afford Parent and its
Representatives reasonable access upon reasonable prior notice during normal
business hours, to all employees, offices, properties, agreements, records,
books and affairs of Buyer, and provide copies of such information, including,
without limitation, manifests regarding pre-closing disposal of Hazardous
Materials, concerning TTSI and the TTS Business as Parent may reasonably request
for any proper purpose, including, without limitation, in connection with the
matters contemplated by Section 2.06, the preparation of any Tax Returns, in
connection with any judicial, quasi-judicial, administrative, Tax, audit or
arbitration proceeding, in connection
<PAGE>
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with the preparation of any financial statements or reports and in connection
with the defense or prosecution of any claims or allegations that relate to or
may relate to Excluded Assets or Excluded Liabilities and (ii) cooperate fully
with Parent as reasonably requested for any proper purpose, including, without
limitation, the defense of or pursuit of any Excluded Liability, Excluded Asset
or Indemnified Claim, or any claim or action that relates to an Excluded
Liability, Excluded Asset or Indemnified Claim.
Section 6.03 Insurance; Financial Support Arrangements.
(a) Buyer acknowledges and agrees that as of the Closing Date, neither
TTSI, the TTS Business, any property owned or leased by any of the foregoing nor
any of the directors, officers, employees (including, without limitation, the
Transferred Employees) or agents of any of the foregoing will be insured under
any insurance policies maintained by Parent or any of its Affiliates, except (i)
in the case of certain claims made policies, to the extent that a claim has been
reported as of the Closing Date, (ii) in the case of a policy that is an
occurrence policy, to the extent the accident, event or occurrence that results
in an insurable loss occurs prior to the Closing Date and has been, is or will
be reported or noticed to the respective carrier by Buyer, TTSI or any Seller
Company in accordance with the requirements of such policies (which claims
Parent shall, at TTSI's cost and expense, pursue diligently on TTSI's behalf and
the net proceeds of which claims (except to the extent they relate to Excluded
Liabilities) shall be remitted promptly to TTSI upon receipt thereof), and (iii)
as otherwise provided in Exhibit D or agreed to in writing by the parties.
Except as otherwise provided in Exhibit D or as otherwise may be agreed to in
writing by the parties, from and after the Closing Date, Parent and its
Affiliates shall have no obligation of any kind to maintain any form of
insurance covering TTSI or all or any part of the Contributed Assets, the
Transferred Intellectual Property, the TTS Business or the Transferred
Employees.
(b) From and after the Closing Date, TTSI agrees to reimburse Parent
within 30 days of receipt of an invoice for any self insurance, retention,
deductible, retrospective premium, cash payment for reserves calculated or
charged on an incurred loss basis and similar items, including but not limited
to associated administrative expenses and allocated loss adjustment or similar
expenses (collectively, "Insurance Liabilities") allocated to TTSI or the TTS
Business by Parent on a basis consistent with past practices resulting from or
arising under any and all current or former insurance policies maintained by
Parent or any of its Affiliates to the extent that such Insurance Liabilities
relate to or arise out of Assumed Liabilities, but only to the extent that the
underlying claim was that of a third party and not a Seller Company. TTSI agrees
that, to the extent any of the insurers under the insurance policies, in
accordance with the terms of the insurance policies, requests or requires
collateral, deposits or other security to be provided with respect to claims
made against such insurance policies relating to or arising from TTSI or the TTS
Business, TTSI shall provide the collateral, deposits or other security or, upon
request of Parent, will replace any collateral, deposits or other security
provided by Parent or any of its Affiliates.
(c) TTSI agrees that, for a period of six years commencing on the
Closing Date, to the extent TTSI maintains product liability or similar
insurance coverage, TTSI will (at Parent's
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cost to the extent of any additional cost therefor, provided that, in the event
there will be such a cost, TTSI will give Parent a reasonable period of time to
determine whether it desires to incur such cost before TTSI commits to such
coverage with respect to Parent) include Parent and its Affiliates as an
additional insured/loss payee on any such policies in respect of which Parent or
its Affiliates has or may have an insurable interest with respect to TTSI or the
TTS Business, the Contributed Assets, Transferred Intellectual Property, any of
the Assumed Liabilities or any facilities the possession of which will be
transferred to TTSI in accordance with this Agreement prior to Closing.
(d) Parent, TTSI and, prior to Closing, Buyer agree that they shall in
good faith seek to obtain the release of Parent and its Affiliates from all
obligations under all Financial Support Arrangements maintained by Parent or any
of its Affiliates in connection with TTSI or the TTS Business.
(e) If, at any time after the Closing Date, (i) any amounts are drawn
on or paid under any Financial Support Arrangement where Parent or any of its
Affiliates is obligated to reimburse the Person making such payment or (ii)
Parent or any of its Affiliates pays any amounts under, or any fees, costs or
expenses relating to, any Financial Support Arrangement, TTSI shall indemnify
and hold Parent and its Affiliates harmless and pay Parent such amounts promptly
after receipt from Parent of notice thereof accompanied by written evidence of
the underlying payment obligation.
Section 6.04 Use of Intellectual Property. Each of Buyer and TTSI
acknowledge and agrees that except as otherwise specifically contemplated by the
Transaction Documents neither TTSI nor Buyer is obtaining any rights in or to
use any Intellectual Property. Buyer and TTSI further acknowledge and agree that
notwithstanding any provision to the contrary in the Transaction Documents,
Buyer and TTSI shall not use, and each shall cause their respective Affiliates
not to use, any trademark, logo or tradename of Parent or any Affiliate of
Parent (other than those listed on Attachment X as Transferred Intellectual
Property and transferred to Buyer under the terms of this Agreement) or any
trademarks, logos or trade names that are confusingly similar thereto or that
are a translation or transliteration thereof into any language or alphabet.
Without limiting the generality of the foregoing, Buyer and TTSI shall not use,
and shall cause their respective Affiliates not to use (i) the words "The Black
& Decker Corporation," "Emhart Inc.," "Emhart Industries, Inc.," "Black &
Decker," "Emhart" or any derivatives, translations or transliterations of any of
the foregoing or (ii) the words "True Temper" or any derivative, translation or
transliteration thereof in violation of the Huffy Trademark Agreement; provided,
however, that with respect to any work-in-progress, preprinted stationery,
invoices, receipts, forms, advertising and promotional materials, training and
source literature, packaging material or other supplies that TTSI has in
inventory after the Closing which bears the name "The Black & Decker
Corporation," "Black & Decker," "Emhart Inc.," "Emhart Industries, Inc." or
"Emhart," Parent hereby grants to TTSI a paid-up license to use such names on
such inventory; provided, further, that TTSI agrees to use its reasonable best
efforts to exhaust such inventory in the ordinary course of business as soon as
is reasonably practicable after the Closing. The provisions of this Section 6.04
shall survive the Closing indefinitely.
<PAGE>
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Section 6.05 Conduct of TTS Business After Closing. From and after the
Closing, TTSI shall, and Buyer shall cause TTSI (and any successor or assign in
respect of the TTS Business) to, conduct the TTS Business in all respects in
accordance with each of the 1959 TTSI Consent Decree and the 1961 TTSI Consent
Decree for so long as either such decree is in force and binding upon the TTS
Business. The provisions of this Section 6.05 shall survive the Closing
indefinitely.
Section 6.06 Debt Financing. Buyer shall use its commercially
reasonable best efforts to assist TTSI to obtain the debt financing contemplated
by Section 2.02. In this regard, and without limiting the generality of the
foregoing, Buyer shall take all action within its control which is necessary or
appropriate and consistent with commercially reasonable best efforts to secure
the debt financing contemplated by the Commitment Letters or other financing
satisfactory to Buyer. Buyer shall not amend or otherwise modify the Commitment
Letters (or any term or condition thereof) in any respect that would materially
and adversely affect the ability of TTSI to obtain such financing without the
prior written consent of Parent.
Section 6.07 Certain Environmental Investigations.
(a) Buyer agrees that, if Buyer decides to conduct prior to
Closing an environmental audit or similar review of the TTS Business that
involves testing, drilling or sampling at any facility, possession of which is
contemplated to be transferred to TTSI, Buyer shall be permitted to do so,
provided Buyer will so advise Parent and will give Parent sufficient prior
written notice to enable Parent's Representatives to be present during any such
testing, drilling or sampling and to review and comment on any work plans
related to such audit or review. Buyer further agrees to arrange for split
samples to be taken in connection with any such auditor review. Buyer agrees
that it will conduct such testing, drilling, or sampling, including disposal of
all materials associated with such activities, such as drill cuttings, waste
water, and sampling equipment, at Buyer's sole cost and expenses and in
accordance with all Applicable Laws, including Environmental Laws. If the
Closing contemplated by the Transaction Documents is not consummated for any
reason, Buyer agrees to restore each facility at which any such testing,
drilling or sampling was conducted to its condition prior to the commencement of
Buyer's environmental audit or similar review.
(b) All information obtained from Buyer's environmental review
shall be kept confidential and Buyer shall not provide it to any Person other
than Parent. In the event that Buyer's environmental review discloses conditions
at any of Seller Companies' facilities that may require notice to a Governmental
Authority prior to Closing, Parent shall determine what reporting, if any, is
necessary and shall conduct such reporting.
<PAGE>
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ARTICLE VII
COVENANTS AND AGREEMENTS OF THE PARTIES
Section 7.01 Further Assurances. Subject to the terms and conditions of
this Agreement, each party shall use commercially reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary or desirable under Applicable Laws to consummate the
Contemplated Transactions. Parent and Buyer shall execute and deliver, and shall
cause Seller Companies and TTSI, as appropriate or required and as the case may
be, to execute and deliver such other documents, certificates, agreements and
other writings and to take such other actions as may be necessary or desirable
to consummate or implement the Contemplated Transactions. Except as otherwise
expressly set forth in the Transaction Documents, nothing in this Section 7.01
shall require any Seller Companies, TTSI or Buyer to make any payments in order
to obtain any consents or approvals necessary or desirable in connection with
the consummation of the Contemplated Transactions (other than any payments
specifically required by the term of any Contract).
Section 7.02 Certain Filings; Consents. Parent and Buyer shall
cooperate with one another and use their respective commercially reasonable best
efforts (i) in determining whether any action by or in respect of, or filing
with, any Governmental Authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to any material
Contracts, in connection with the consummation of the Contemplated Transactions
and (ii) subject to the terms and conditions of this Agreement, in taking such
actions or making any such filings, furnishing information required in
connection therewith and seeking timely to obtain any such actions, consents,
approvals or waivers.
Section 7.03 Public Announcements. Prior to the Closing, Parent and
Buyer shall consult with each other before issuing any press release or making
any public statement with respect to this Agreement or the Contemplated
Transactions and, except as may be required by Applicable Law or any listing
agreement with any national or international securities exchange, shall not
issue any such press release or make any such public statement prior to such
consultation. Notwithstanding the foregoing, no provision of this Agreement
shall relieve Buyer from any of its obligations under the Confidentiality
Agreement, or terminate any of the restrictions imposed upon Buyer under Section
6.01.
Section 7.04 Intellectual Property.
(a) Buyer and TTSI acknowledge and agree that TTSI shall hold all
Transferred Intellectual Property constituting part of the Contributed Assets
subject to any licenses thereof granted by Seller Companies prior to the Closing
Date that have been disclosed to Buyer in writing or that are immaterial in the
aggregate, are granted in connection with the license or sale of Intellectual
Property in connection with the Shaft Lab product line or are incurred in the
ordinary course of business after the date of this Agreement and prior to
Closing and do not materially deplete the value of such Intellectual Property.
<PAGE>
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(b) Buyer and TTSI further acknowledge and agree that the transfer of
Transferred Intellectual Property to TTSI shall not affect the right of Seller
Companies to use, disclose or otherwise freely deal with any know-how, trade
secrets and other technical information not constituting Transferred
Intellectual Property or Contributed Assets; provided, however, that the
foregoing shall not constitute a license to the Seller Companies under any
patents included among the Transferred Intellectual Property.
Section 7.05 HSR Act. Parent and Buyer shall use their respective
commercially reasonable best efforts to cause the prompt expiration or
termination of any applicable waiting period under the HSR Act in respect of the
Contemplated Transactions, including, without limitation, complying as promptly
as practicable with any requests for additional information.
Section 7.06 Certain Environmental Insurance Matters. Notwithstanding
any provision to the contrary in this Agreement, this Section 7.06 shall
constitute Parent's and Buyer's agreement regarding the allocation of insurance
proceeds with respect to matters that arise under or relate to Environmental
Laws that are comprised, in whole or in part, of Environmental Liabilities that
constitute Assumed Liabilities (the "Environmental Insurance Claims"). Each of
Buyer and TTSI acknowledges and agrees that, notwithstanding any other
provisions of the Transaction Documents, Parent shall control the Environmental
Insurance Claims and shall have the right to compromise or settle any
Environmental Insurance Claims; provided, however, that without the prior
written consent of Buyer, Parent shall not have the right to enter into any
compromise or settlement of any Environmental Insurance Claim that (i) imposes
any liability, obligation or responsibility on TTSI or (ii) imposes any
condition, restriction or limitation on the operation or conduct of the TTS
Business. Parent agrees to act in good faith and with reasonable prudence to
maximize recovery (after costs and Taxes) with respect to the Environmental
Insurance Claims and shall allocate any recovery received with respect to such
Environmental Insurance Claims, first, to the costs incurred to collect such
recovery (whether incurred before or after Closing) and, second, to all net Tax
costs related to such recovery. Any recovery remaining shall be apportioned
equitably between Parent and TTSI. Any obligations assumed in any such
compromise or settlement of the Environmental Insurance Claims shall be
apportioned between Parent or the applicable Seller Company and TTSI in the same
proportion as a recovery would be allocated pursuant to this Section 7.06.
Section 7.07 Legal Privileges. Parent, Buyer and TTSI acknowledge and
agree that all attorney-client, work product and other legal privileges that may
exist with respect to TTSI and the TTS Business (including, without limitation,
with respect to the Contributed Assets, Transferred Intellectual Property,
Excluded Assets, Assumed Liabilities and Excluded Liabilities) shall, from and
after the Closing Date, be deemed joint privileges of Seller Companies, Buyer
and TTSI. Each of Seller Companies, TTSI and Buyer shall use all commercially
reasonable efforts after the Closing Date to preserve all such privileges and
none of Seller Companies, TTSI nor Buyer shall knowingly waive any such
privilege without the prior written consent of the other party (which consent
shall not be unreasonably withheld or delayed).
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Section 7.08 Tax Matters.
(a) The parties hereto recognize that the transactions that are
contemplated by this Agreement constitute a fully taxable sale for all Tax
purposes of all of the assets of the TTS Business to TTSI. Except as provided
below, it is the intention of the parties that Seller Companies will accept
liability for and pay any and all Taxes based on the income of TTSI due for or
attributable to Tax periods ending on or before the Closing Date and that
portion related to the operation of the Business on or prior to the Closing Date
for any Tax period ending after the Closing Date. Seller Companies will accept
liability for and pay any and all Taxes attributable to the transfer of assets
to TTSI. Seller Companies will accept liability for and pay all Taxes
attributable to the deemed sale of assets pursuant to the Section 338(h)(10)
election; provided, however, for those state jurisdictions which do not respect
or allow the Section 338(h)(10) election contemplated by Section 2.05, Seller
Companies will pay Taxes on the sale of stock of TTSI, but their respective
obligations to pay Taxes on the deemed asset sale under the Section 338(h)(10)
election will be reduced correspondingly, thereby causing the Contemplated
Transactions to be subject to Tax only once for any state or local purposes.
Accordingly, the Buyer will indemnify Seller Companies to the extent of any
double Tax imposed by such states.
(b) (i) Parent will file with the appropriate Tax Authorities all Tax
Returns required to be filed on its behalf and on behalf of TTSI for any taxable
period ending on or before the Closing Date, and Parent will include the taxable
income of TTSI (to the extent permitted by Applicable Law) for each such period
in its consolidated federal income Tax Return and in any consolidated, combined
or unitary Tax Return (including Tax Returns based on or measured by net income)
filed by Parent or any Affiliate thereof in which such income can be included
under Applicable Law. TTSI will furnish Tax information to Parent for inclusion
in such consolidated, combined or unitary Tax Returns filed by Parent or an
Affiliate thereof for the period which includes the Closing Date. Parent and its
Affiliates agree that they will take commercially reasonable efforts to treat
the transactions contemplated by this Agreement as being a fully taxable sale of
all of the assets of the TTS Business pursuant to a taxable transfer under the
Code and the Section 338(h)(10) election of the Code at the time of the transfer
of Contributed Assets and Transferred Intellectual Property to TTSI. As a
result, all Contributed Assets and Transferred Intellectual Property will have a
basis equal to their fair market value for purposes of determining any gain
under the deemed sale resulting from the 338(h)(10) election.
(ii) TTSI will, and Buyer will cause TTSI to, file with the
appropriate Tax Authorities all Tax Returns required to be filed by TTSI or any
of its Affiliates for any taxable period ending after the Closing Date and will
remit any Taxes due in respect of such Tax Returns. Parent will pay to TTSI the
Taxes for which Parent or any Seller Company is liable pursuant to Section
7.08(b)(i) and 7.08(c) hereof, but which are payable in respect of Tax Returns
to be filed by TTSI pursuant to this Section 7.08(b)(ii) within 10 Business Days
prior to the due date (taking account of any extensions of time for filing) for
the filing of such Tax Returns but no earlier than 20 Business Days after such
Tax Returns and the tax allocation calculations have been submitted to Parent
for review and approval.
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(c) Parent will be liable for and will pay, and hereby indemnifies,
TTSI for all Taxes, resulting from TTSI ceasing to be a member of any affiliated
group (as defined in Section 1504(a) of the Code without regard to the
limitations contained in Section 1504(d) of the Code) that includes Parent or
any of its predecessors; Taxes imposed on any member of Parent's affiliated
group for any taxable year (i) under Treas. Reg. Section 1.1502-6 (or any
similar provision of state, local or foreign law), (ii) as a transferee or
successor of a member of Parent's affiliated group, or (iii) by contract or
otherwise; amounts pursuant to any guaranty, indemnification, tax sharing, or
similar agreement made on or before the Closing Date relating to the sharing of
liability for payment of Taxes; and any real estate transfer Taxes or charges
resulting from transactions described in Section 2.01 hereof, for any taxable
year ending on or prior to the Closing Date and for the portions of such taxable
year or period ending on or prior to the Closing Date (or, in the case of
consolidated, combined or unitary Tax Returns, including Parent, any period
including the Closing Date) and any costs and expenses (including, without
limitation, costs of collection and attorneys' fees) arising out of or resulting
from Parent's liability and indemnity for Taxes hereunder. Parent will be
entitled to retain any refund of Taxes with respect to TTSI or the TTS Business
relating to any such periods. To apportion appropriately any income Taxes
relating to any taxable year or period that begins before and ends after the
Closing Date, the parties hereto will, to the extent permitted by Applicable
Law, elect with the relevant Tax Authority to terminate the taxable year as of
the Closing Date (provided, however, that any Taxes related to the transfer of
assets or the Section 338(h)(10) election will be determined as provided in
Section 7.08(a) hereof). In any case where Applicable Law does not permit any
company to treat the Closing Date as the end of a taxable year of such
corporation, then whenever it is necessary to calculate the liability for income
or franchise Taxes of such company for a portion of a taxable year, such
determination will (unless otherwise agreed to in writing by Buyer and Parent)
be determined by a closing of such corporation's books at the close of business
on the Closing Date, except that exemptions, allowances or deductions that are
calculated on an annual basis, such as the deduction for depreciation, will be
apportioned on a daily basis. To apportion appropriately any Taxes, other than
income or franchise Taxes, relating to any taxable year or period that begins
before and ends after the Closing Date, (i) ad valorem Taxes (including, without
limitation, real and personal property Taxes) will be accrued on a daily basis
over the period for which the Taxes are levied, or if it cannot be determined
over what period the Taxes are being levied, over the fiscal period of the
relevant Tax Authority, in each case irrespective of the lien or assessment date
of such Taxes, and (ii) franchise and other privilege Taxes not measured by
income will be accrued on a daily basis over the period to which the privilege
relates.
(d) (i) Parent will be entitled to control the defense of any
audits of or administrative or court proceedings relating to Parent's or any of
its Affiliate's consolidated, combined or unitary Tax Returns which relate to
the operations of the TTS Business for periods ending prior to the Closing Date.
(ii) Buyer and TTSI will give notice to Parent of any Tax
claim relating to any taxable year or period that includes the Closing Date, and
will keep Parent and its counsel informed of the progress of, and the issues
involved in, the same, in each case which may be the subject of indemnification
by Parent pursuant to this Agreement. Buyer and TTSI will be entitled
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to control the defense and resolution of any such audits or proceedings,
provided, however, that if Buyer, TTSI or any of their Affiliates settles any
Tax claim for the portion of a taxable year or period ending on or prior to or
after the Closing Date or including the Closing Date which may be the subject of
indemnification by Parent pursuant to this Agreement without the prior written
consent of Parent, which consent will not be unreasonably withheld, Parent will
be released from any indemnification or other obligations hereunder in respect
of such matter.
(e) The parties hereto will provide such necessary information as any
other party hereto may reasonably request in connection with the preparation of
such party's Tax Returns, or to respond to or contest any audit, prosecute any
claim for refund or credit or otherwise satisfy the provisions of Applicable Law
relating to Taxes of each party hereto or their respective Affiliates.
(f) The obligations of the parties set forth in this Section 7.08
relating to Taxes will, except as otherwise agreed in writing, be unconditional
and absolute and will remain in effect without limitation as to time or amount
of recovery by any party hereto until thirty (30) days after the expiration of
the applicable statute of limitations governing the Tax to which such
obligations relate (after giving effect to any agreement extending or tolling
such statute of limitations).
Section 7.09 Limitations on Confidentiality Restrictions. The parties
hereby agree that the provisions relating to confidentiality contained in
Sections 5.02 and 6.01 and the provisions of the Confidentiality Agreement shall
not apply to the disclosure of any information relating primarily to TTSI or the
TTS Business in a registration statement, offering memorandum, offering circular
or similar or related document, which is created and used in connection with the
placement of any debt or equity financing by TTSI.
ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFIT MATTERS
Section 8.01 Employees and Employee Benefit Matters. The parties agree
as to employee and employee benefit matters as set forth in Exhibit D.
ARTICLE IX
CONDITIONS TO CLOSING
Section 9.01 Conditions to the Obligations of Each Party. The
obligations of Parent and Buyer to consummate the Closing are subject to the
satisfaction (or waiver) of the following conditions:
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(a) any applicable waiting period under the HSR Act relating to the
Contemplated Transactions shall have expired or been terminated;
(b) no provision of any Applicable Law and no judgment, injunction,
order or decree shall prohibit the Closing, and no action or proceeding shall be
pending before any court, arbitrator or Governmental Authority with respect to
which counsel reasonably satisfactory to Parent and Buyer shall have rendered a
written opinion that there is a substantial likelihood of a determination that
would materially restrain or prohibit the Closing or otherwise have a material
adverse effect on the transactions contemplated hereby or Buyer's right to own
or exercise rights with respect to any capital stock of TTSI;
(c) all actions by or in respect of or filings with any Governmental
Authority required to permit the consummation of the Closing shall have been
obtained; and
(d) Parent or TTSI, as the case may be, shall have obtained the
consents, approvals or permits contemplated by Attachment XI.
Section 9.02 Conditions to Obligations of Buyer. The obligations of
Buyer to consummate the Closing are subject to the satisfaction (or waiver by
Buyer) of the following further conditions:
(a) (i) Each of Parent and TTSI shall have performed in all material
respects all of its obligations under the Transaction Documents required to be
performed by it on or prior to the Closing Date, (ii) the representations and
warranties of Parent contained in the Transaction Documents shall be true and
correct at and as of the date of this Agreement and as of the Closing Date, as
if made at and as of each such date, except that those representations and
warranties which are by their express terms made as of a specific date shall be
true and correct only as of such date, in each case except for inaccuracies that
could not reasonably be expected to have a Material Adverse Effect on the TTS
Business, and (iii) Buyer shall have received a certificate signed by an
executive officer of Parent to the foregoing effect;
(b) the transactions contemplated by Section 2.01 shall have occurred
in accordance with the terms of this Agreement;
(c) Parent or the applicable Seller Company shall have executed and
delivered, on or before the Closing Date, the Transaction Documents that are
required to be signed by a Seller Company;
(d) there shall not have occurred from March 29, 1998 to the Closing a
material adverse effect on the assets, properties, business, financial
condition, results of operations or prospects of the TTS Business taken as a
whole;
(e) TTSI shall have obtained the financing contemplated by the
Commitment Letters or on other terms satisfactory to Buyer; and
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(f) TTSI shall not be obligated for any indebtedness for borrowed money
other than as contemplated by Section 2.02.
Section 9.03 Conditions to Obligation of Parent and TTSI. The
obligation of Parent and TTSI to consummate the Closing is subject to the
satisfaction (or waiver by Parent) of the following further conditions:
(a) (i) Buyer shall have performed in all material respects all of its
obligations under the Transaction Documents required to be performed by it at or
prior to the Closing Date, (ii) the representations and warranties of Buyer
contained in the Transaction Documents shall be true and correct at and as of
the date of this Agreement and as of the Closing Date, as if made at and as of
each such date, except that those representations and warranties which are by
their express terms made as of a specific date shall be true and correct only as
of such date, in each case except for inaccuracies that could not reasonably be
expected to have a Material Adverse Effect on Buyer, and (iii) Parent shall have
received a certificate signed by an executive officer of Buyer to the foregoing
effect;
(b) The transactions contemplated by Section 2.02 and Section 2.03(a)
shall have been consummated in accordance with the terms of this Agreement; and
(c) Buyer shall have executed and delivered, on or before the Closing
Date, the Transaction Documents that are required to be signed by Buyer.
Section 9.04 Updated Disclosure Schedules. At any time prior to the
Closing, Parent shall be entitled to deliver to Buyer updates to or
substitutions of the Disclosure Schedules provided that such updates or
substitutions are clearly marked as such and are addressed to Buyer at the
address listed in Section 12.01. In the event that Parent delivers updated or
substitute Disclosure Schedules on or after the third day before any scheduled
closing date, Buyer shall be entitled to extend the scheduled closing date to
the third day after it receives the updated or substitute Disclosure Schedules,
or if such day is not a Business Day, to the next Business Day. The delivery by
Parent of updated or substitute Disclosure Schedules shall not prejudice any
rights of Buyer under this Agreement, including but not limited to the right to
claim that the representations and warranties of Parent, when made on the date
of this Agreement, were untrue.
Section 9.05 Effect of Waiver. Any waiver by Buyer of the conditions
specified in clause (ii) of Section 9.02(a), and any waiver by Parent of the
conditions specified in clause (ii) of Section 9.03(a), if made knowingly and in
writing, shall also be deemed a waiver of any claim for Damages as the result of
the matters waived.
<PAGE>
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ARTICLE X
SURVIVAL; INDEMNIFICATION
Section 10.01 Survival.
(a) None of the representations, warranties, covenants or agreements of
the parties contained in any Transaction Document or in any certificate or other
writing delivered pursuant to any Transaction Document or in connection with any
Transaction Document shall survive the Closing, except for:
(i) the representations and warranties in Sections B.01, B.02
B.05, B.09(b) and B.14 shall survive indefinitely;
(ii) the representations and warranties in Section B.15 shall
not survive the Closing Date;
(iii) the representations and warranties in Sections B.18 and
B.20 shall survive until 30 days after the expiration of the applicable
statute of limitations (or extensions or waivers thereof);
(iv) the representations and warranties in Exhibit B (other
than those Sections of Exhibit B referenced in the preceding clauses
(i), (ii) and (iii)), shall survive for a period that is the earlier to
occur of the date on which audited financial statements for TTSI are
delivered to the Company by its independent auditors for TTSI's year
ended December 31, 1999 or 18 months following the Closing Date;
(v) the representations and warranties in Sections C.01, C.02,
C.09 and C.10 shall survive indefinitely;
(vi) the representations and warranties in Exhibit C (other
than those Sections of Exhibit C referenced in the preceding clause
(v)) shall survive for a period of one year from the Closing Date;
(vii) the covenants and agreements set forth in Section 2.07
shall survive until payment of the final Annual Thiokol Payment
contemplated thereby; and
(viii) those covenants and agreements set forth in the
Transaction Documents that, by their terms, are to have effect after
the Closing Date shall survive for the period contemplated by the
covenants and agreements, or if no period is expressly set forth,
indefinitely.
The representations, warranties, covenants and agreements referenced in the
preceding clauses (i) and (iii) through (vii) are referred to herein as the
"Surviving Representations or Covenants." It is understood and agreed that, (i)
before the Closing the remedies expressly set
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forth in Article XI are the sole and exclusive remedies for any breach of any
representation, warranty, covenant or agreement and (ii) following the Closing
the sole and exclusive remedy with respect to any breach of any representation,
warranty, covenant or agreement (other than (1) with respect to a breach of the
terms of a covenant or agreement, as to which Buyer or Parent, as the case may
be, shall be entitled to seek specific performance or other equitable relief and
(2) with respect to claims for fraud) shall be a claim for Damages (whether by
contract, in tort or otherwise, and whether in law, in equity or both) made
pursuant to this Article X.
(b) Except as otherwise provided in this Agreement, Parent, its
Affiliates and their respective Representatives and successors on the one hand,
and TTSI and Buyer for itself, its Affiliates, TTSI and their respective
Representatives and successors, on the other hand, effective as of the Closing,
release and discharge one another from any and all Damages (whether by contract,
in tort or both, and whether in law, in equity or both), rights of subrogation
and contribution and remedies of any nature whatsoever, known or unknown,
relating to or arising out of Environmental Liabilities or Environmental Laws,
in either case, arising in connection with or in any way relating to TTSI or the
TTS Business.
Section 10.02 Indemnification.
(a) Effective as of the Closing and subject to the limitations set
forth in Section 10.04(a), Buyer hereby indemnifies Parent and its Affiliates
and their respective directors, officers, employees and agents against, and
agrees to hold them harmless from any and all Damages incurred or suffered by
any of them, arising out of or related in any way to any misrepresentation or
breach of any Surviving Representation or Covenant made or to be performed by
Buyer pursuant to any of the Transaction Documents. Effective as of the Closing
and subject to the limitations set forth in Section 10.04(a), TTSI hereby
indemnifies Parent and its Affiliates and their respective directors, officers,
employees and agents against, and agrees to hold them harmless from any and all
Damages incurred or suffered by any of them arising out of or related in any way
to (i) any misrepresentation or breach of any Surviving Representation or
Covenant made or to be performed by Buyer or TTSI pursuant to any of the
Transaction Documents, (ii) except as otherwise contemplated by Sections
10.02(b)(iii), 10.04(b)(ii) and Exhibit D, any Assumed Liabilities (including,
without limitation, TTSI's failure to perform or in due course pay or discharge
any Assumed Liability), (iii) any Financial Support Arrangement, (iv) any
matters for which indemnification is provided under Exhibit D (it being
understood that the terms of such indemnification shall be governed by and
subject to the terms of Exhibit D) or (v) any liabilities or obligations arising
in connection with or in any way relating to TTSI or the TTS Business (but only
where and to the extent conducted on or after the Closing Date), or a facility
the possession of which is transferred to TTSI after the date of this Agreement
and at or prior to the Closing (but only during a period in which TTSI or any of
its Affiliates or successors owns or leases such facility), or the use,
ownership or operation of such facilities by TTSI or an Affiliate of TTSI, or a
successor of TTSI or such Affiliate, whether vested or unvested, contingent or
fixed, actual or potential, which arise under or relate to Environmental Laws to
the extent conditions underlying such liabilities arise out of, relate to, are
based on or result from any action taken by any Person other than a Seller
Company or a willful or intentional failure by any such person to take action on
or after the Closing Date, including,
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without limitation, (A) Remedial Actions, (B) personal injury, wrongful death,
economic loss or property damage claims, (C) claims for natural resource
damages, (D) violations of Applicable Law or (E) any other Damages with respect
to such Environmental Laws. Buyer hereby indemnifies Parent and its Affiliates
and their respective directors, officers, employees and agents against, and
agrees to hold them harmless from any and all Damages incurred or suffered by
any of them and caused by any actions taken or failure to act by Buyer or any of
its Representatives in connection with any environmental audit or similar review
of the TTS Business that involves testing, drilling or sampling at any facility
possession of which is contemplated to be transferred to TTSI, including,
without limitation, (A) Remedial Actions, (B) personal injury, wrongful death,
economic loss or property damage claims, (C) claims for natural resource
damages, (D) violations of Applicable Law, or (E) any other Damages with respect
to such Environmental Laws excluding any such Damages arising from pre-existing
conditions of contamination which are identified but are not exacerbated by such
audit or review.
(b) Effective as of the Closing and subject to the limitations set
forth in Section 10.04(b), Parent hereby indemnifies Buyer, TTSI and their
Affiliates and their respective directors, officers, employees and agents
against, and agrees to hold them harmless from any and all Damages incurred or
suffered by any of them arising out of or related in any way to (i) any
misrepresentation or breach of any Surviving Representation or Covenant made or
to be performed by the Seller Companies pursuant to any Transaction Document,
(ii) any Excluded Liabilities (including, without limitation, Parent's (or any
other Seller Company's) failure to perform or in due course pay or discharge any
Excluded Liability), (iii) any Environmental Liabilities to the extent the
conditions underlying arise out of, relate to, are based on or result from
actions taken (or failures to take action), conditions existing or events
occurring prior to the Closing, (iv) any matters for which indemnification is
provided under Exhibit D (it being understood that the terms of such
indemnification shall be governed by and subject to the terms of Exhibit D) or
(v) any indemnification paid by TTSI to any of its directors as a result of a
claim by any Person (other than Buyer, TTSI or any of their respective
Affiliates, any Permitted Assigns or any other Person (other than a Seller
Company) who purchases shares of capital stock of TTSI) against such directors
that is a result of any action taken by such directors on or prior to Closing.
Section 10.03 Procedures.
(a) If Parent or any of its Affiliates or any of their directors,
officers, employees and agents, shall seek indemnification pursuant to Section
10.02(a), or if Buyer or any of its Affiliates or any of their directors,
officers, employees and agents, shall seek indemnification pursuant to Section
10.02(b), the Person seeking indemnification (the "Indemnified Party") shall
give written notice to the party from whom such indemnification is sought (the
"Indemnifying Party") promptly (and in any event within 30 days) after the
Indemnified Party (or, if the Indemnified Party is a corporation, any officer or
employee of the Indemnified Party) becomes aware of the facts giving rise to
such claim for indemnification (an "Indemnified Claim") specifying in reasonable
detail the factual basis of the Indemnified Claim, stating the amount of the
Damages, if known, the method of computation thereof, containing a reference to
the provision of the Transaction Documents in respect of which such Indemnified
Claim arises and demanding
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indemnification therefor. The failure of an Indemnified Party to provide notice
in accordance with this Section 10.03 shall not constitute a waiver of that
party's claims to indemnification pursuant to Section 10.02, except to the
extent that (i) any such failure or delay in giving notice causes the amounts
paid by the Indemnifying Party to be greater than they otherwise would have been
or otherwise results in prejudice to the Indemnifying Party or (ii) such notice
is not delivered to the Indemnifying Party prior to the expiration of the
applicable survival period set forth in Section 10.01. If the Indemnified Claim
arises from the assertion of any claim, or the commencement of any suit, action,
proceeding or Remedial Action brought by a Person that is not a party hereto (a
"Third Party Claim"), any such notice to the Indemnifying Party shall be
accompanied by a copy of any papers theretofore served on or delivered to the
Indemnified Party in connection with such Third Party Claim.
(b) (i) Upon receipt of notice of a Third Party Claim from an
Indemnified Party pursuant to Section 10.03(a), the Indemnifying Party will be
entitled to assume the defense and control of such Third Party Claim subject to
the provisions of this Section 10.03. After written notice by the Indemnifying
Party to the Indemnified Party of its election to assume the defense and control
of a Third Party Claim, the Indemnifying Party shall not be liable to such
Indemnified Party for any legal fees or expenses subsequently incurred by such
Indemnified Party in connection therewith. Notwithstanding anything in this
Section 10.3 to the contrary, if the Indemnifying Party does not assume defense
and control of a Third Party Claim as provided in this Section 10.3, the
Indemnified Party shall have the right to defend such Third Party Claim, subject
to the limitations set forth in this Section 10.03, in such manner as it may
deem appropriate. Whether the Indemnifying Party or the Indemnified Party is
defending and controlling any such Third Party Claim, they shall select counsel,
contractors, experts and consultants of recognized standing and competence,
shall take all steps necessary in the investigation, defense or settlement
thereof, and shall at all times diligently and promptly pursue the resolution
thereof. The party conducting the defense thereof shall at all times act as if
all Damages relating to the Third Party Claim were for its own account and shall
act in good faith and with reasonable prudence to minimize Damages therefrom.
The Indemnified Party shall, and shall cause each of its Affiliates, directors,
officers, employees, and agents to, cooperate fully with the Indemnifying Party
in connection with any Third Party Claim.
(ii) Subject to the provisions of Section 10.03(b)(iii) and
Section 10.03(b)(iv), the Indemnifying Party shall be authorized to consent to a
settlement of, or the entry of any judgment arising from, any Third Party
Claims, and the Indemnified Party shall consent to a settlement of, or the entry
of any judgment arising from, such Third Party Claims; provided, that the
Indemnifying Party shall (1) pay or cause to be paid all amounts arising out of
such settlement or judgment concurrently with the effectiveness thereof; (2)
shall not encumber any of the assets of any Indemnified Party or agree to any
restriction or condition that would apply to such Indemnified Party or to the
conduct of that party's business; and (3) shall obtain, as a condition of any
settlement or other resolution, a complete release of each Indemnified Party.
Except to the extent of the foregoing, no settlement or entry of judgment in
respect of any Third Party Claim shall be consented to by any Indemnifying Party
or Indemnified Party without the express written consent of the other party.
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(iii) Notwithstanding the provisions of Section 10.03(b)(i),
Buyer shall manage all Remedial Actions conducted with respect to facilities
which constitute Contributed Assets, provided that Parent and its
Representatives shall have the right, consistent with Buyer's right to manage
such Remedial Actions as aforesaid, to participate fully in all decisions
regarding any Remedial Action, including reasonable access to sites where any
Remedial Action is being conducted, reasonable access to all documents,
correspondence, data, reports or information regarding the Remedial Action,
reasonable access to employees and consultants of Buyer with knowledge of
relevant facts about the Remedial Action and the right to attend all meetings
and participate in any telephone or other conferences with any Government
Authority or other third party regarding the Remedial Action.
(iv) In the case of the indemnification contemplated by
Section 10.02(b)(iii), in the event that the Indemnifying Party desires to
settle the matters referenced therein or consent to the entry of any judgment
arising thereunder and the Indemnified Party does not wish to consent to such
settlement or entry of judgment, the Indemnified Party shall have no obligation
to consent to the settlement or entry of judgment provided that it agrees in
writing to pay and be responsible for 100% of any Damages; provided that the
Indemnified Party shall not be required to consent to any settlement or agree to
be responsible for the payment of Damages thereafter incurred with respect to
any matter the settlement or entry of judgment of which would require the
consent of such Indemnified Party pursuant to Section 10.03(b)(ii). The
obligation of an Indemnified Party that rejects any proposed settlement offer or
entry of any such judgment to pay and be responsible for 100% of any Damages in
accordance with this Section 10.03(b)(iv) shall be conditioned upon and subject
to the payment by the Indemnifying Party, within five Business Days of the date
such Indemnified Party provides the written agreement contemplated by the
preceding sentence, of an amount, in immediately available funds, equal to the
portion of the total settlement that would have been payable by the Indemnifying
Party according to the percentage sharing arrangement contemplated by Section
10.04(b)(ii). Thereafter, the Indemnified Party shall be solely responsible for
any Damages and for the defense of the matter that is the subject of the
proposed settlement or entry of judgment. Notwithstanding the foregoing, an
Indemnifying Party may, at its option and expense, participate in the defense of
any Indemnified Claim.
(v) In furtherance of and not in limitation of the provisions
of this Section 10.03, with respect to product liability matters and other
matters contemplated by Exhibit E, Parent and Buyer covenant and agree as set
forth in Exhibit E.
(c) If the Indemnifying Party and the Indemnified Party are unable to
agree with respect to a procedural matter arising under Section 10.03(b)(iii),
the Indemnifying Party and the Indemnified Party shall, within 10 days after
notice of disagreement given by either party, agree upon a third-party referee
("Referee"), who shall be an environmental attorney or environmental consultant
as appropriate under the circumstances and who shall have the authority to
review and resolve the disputed matter. The parties shall present their
differences in writing (each party simultaneously providing to the other a copy
of all documents submitted) to the Referee and shall cause the Referee promptly
to review any facts, law or arguments either the Indemnifying Party or the
Indemnified Party may present. The Referee shall be retained to resolve specific
differences between the parties within the range of such differences. Either
party may request
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that all discussions with the Referee by either party be in each other's
presence. The decision of the Referee shall be final and binding unless both the
Indemnifying Party and the Indemnified Party agree. The parties shall share
equally all costs and fees of the Referee.
(d) If an Indemnifying Party makes any payment on an Indemnified Claim,
the Indemnifying Party shall be subrogated, to the extent of such payment, to
all rights and remedies of the Indemnified Party to any insurance benefits or
other claims or benefits of the Indemnified Party with respect to such claim.
Section 10.04 Limitations. Notwithstanding anything to the contrary in
this Agreement or in any of the Transaction Documents (other than in Section
7.08, but, except to the extent of Assumed Liabilities):
(a) Buyer and TTSI shall only have liability to Parent or any other
Person hereunder with respect to the representations and warranties described in
clause (i) of Section 10.02(a) if such matters were the subject of a written
notice given by the Indemnified Party pursuant to Section 10.03(a) within the
period following the Closing Date specified for each respective matter in
Section 10.01. Effective as of the Closing, and subject to the limitations set
forth in Section 10.04(a), Buyer hereby indemnifies Parent and its Affiliates
and their respective directors, officers, employees and agents against, and
agrees to hold them harmless from any and all Damages incurred or suffered by
any of them, arising out of or related in any way to any misrepresentation or
breach of any Surviving Representation or Covenant made or to be performed by
Buyer pursuant to any of the Transaction Documents.
(b) Parent shall only have liability to Buyer, TTSI or any other Person
hereunder:
(i) with respect to the representations and
warranties described in clause (i) of Section 10.02(b), (y) to the
extent that the aggregate Damages of all Indemnified Parties as the
result thereof exceed $5,000,000 but are not greater than an amount
equal to $5,000,000 plus 25% of the Adjusted Purchase Price (it being
understood that Parent's maximum liability under Section 10.02(b)(i)
with respect to representations and warranties and this Section
10.04(b)(i) shall be an amount equal to 25% of the Adjusted Purchase
Price), and (z) if such matters were the subject of a written notice
given by the Indemnified Party pursuant to Section 10.03(a) within the
period following the Closing Date specified for each respective matter
in Section 10.01; and
(ii) with respect to the matters described in clause
(iii) of Section 10.02(b), to the extent of (x) 50% of the first
$10,000,000 and (y) 80% of all amounts over $10,000,000 of the
aggregate Damages incurred and paid within five years following the
Closing Date by all Indemnified Parties as the result thereof based on
the use of the facilities constituting Contributed Assets.
<PAGE>
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ARTICLE XI
TERMINATION
Section 11.01 Termination. The Transaction Documents may be terminated
at any time prior to the Closing:
(i) by mutual written agreement of Parent and Buyer;
(ii) by Parent or Buyer if the Closing shall not have been
consummated on or before September 30, 1998; provided, however, that
neither Parent nor Buyer may terminate the Transaction Documents
pursuant to this clause (ii) if the Closing shall not have been
consummated on or before September 30, 1998, by reason of the failure
of such party or any of its Affiliates to perform in all material
respects any of its or their respective covenants or agreements
contained in the Transaction Documents;
(iii) by either Parent or Buyer if there shall be any
Applicable Law that makes consummation of the Contemplated Transactions
illegal or otherwise prohibited or if consummation of the Contemplated
Transactions would violate any order, decree or judgment of any
Governmental Authority having competent jurisdiction;
(iv) by Buyer if there shall have occurred following March 29,
1998 a material adverse effect on the assets, properties, business,
financial condition, results of operations or prospects of the TTS
Business taken as a whole; and
(v) by Buyer or Parent if the other party shall have
materially breached any representation or warranty or any covenant
hereunder and such breach prevents or renders impossible the
satisfaction of any of the conditions to Closing set forth herein;
provided, that as a condition to the right of a party to elect to
terminate this Agreement pursuant to the immediately preceding proviso,
the parties shall first provide 10 Business Days prior written notice
to the other party specifying in reasonable detail the nature of the
condition that such party has concluded will not be satisfied, and the
other party shall be entitled during such 10 Business Day period to
take any actions it may elect consistent with the terms of this
Agreement such that the condition reasonably could be expected to be
satisfied prior to the expiration of such time period.
Any party desiring to terminate this Agreement pursuant to this Section 11.01
shall give written notice of such termination to the other parties to this
Agreement.
Section 11.02 Effect of Termination. If this Agreement is terminated as
permitted by Section 11.01, such termination shall be without liability of any
party (or any Affiliate, stockholder, director, officer, employee, agent,
consultant or Representative of such party) to any other party to this
Agreement; provided, however, that if the Contemplated Transactions fail to
close as a result of a breach of the provisions of any Transaction Document by
Parent or Buyer, such party shall be fully liable for any and all losses and
other damages incurred or suffered by
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the other party as a result of all such breaches if the other party is ready,
willing and able to otherwise satisfy in all material respects its obligations
under the Transaction Documents. Notwithstanding the foregoing, the provisions
of Sections 6.01 and 12.03 and this Section 11.02 shall survive any termination
hereof pursuant to Section 11.01.
ARTICLE XII
MISCELLANEOUS
Section 12.01 Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
if to Parent (or TTSI prior to Closing):
c/o The Black & Decker Corporation
701 East Joppa Road
Towson, Maryland 21286
Attention: Senior Vice President and
Chief Financial Officer
Telecopy: (410) 716-3318
with a copy to:
The Black & Decker Corporation
701 East Joppa Road
Towson, Maryland 21286
Attention: Senior Vice President and
General Counsel
Telecopy: (410) 716-2660
and
Miles & Stockbridge P.C.
10 Light Street
Baltimore, Maryland 21202
Attention: Glenn C. Campbell
David A. Gibbons
Telecopy: (410) 385-3700
<PAGE>
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if to Buyer (or TTSI after Closing):
TTSI LLC
c/o Cornerstone Equity Investors, LLC
717 5th Avenue
Suite 1100
New York, New York 10022
Attention: Mr. Mark Rossi
Telecopy: (212) 826-6798
with a copy to:
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022
Attention: Frederick Tanne, Esquire
Telecopy: (212) 446-4900
or to such other address or telecopy number and with such other copies, as such
party may hereafter specify by notice to the other parties. Each such notice,
request or other communication shall be effective (i) if given by telecopy, when
such telecopy is transmitted to the telecopy number specified in this Section
12.01 and evidence of receipt is received or (ii) if given by any other means,
upon delivery or refusal of delivery at the address specified in this Section
12.01.
Section 12.02 Amendments; Waivers.
(a) Subject to the provisions of Section 9.04, any provision of the
Transaction Documents may be amended or waived prior to the Closing Date if, and
only if, such amendment or waiver is in writing and signed, in the case of an
amendment, by Parent and Buyer, or in the case of a waiver, by the party against
whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege under any Transaction Document shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 12.03 Expenses. Except as otherwise provided in the Transaction
Documents, all costs and expenses incurred in connection with the Transaction
Documents shall be paid by the party incurring such cost or expense; provided
that TTSI shall not incur any material costs or expenses on behalf of Parent or
any Seller Company in connection with the transactions contemplated hereby
(except for any costs, expenses or fees associated with the transfer of the
Japanese country club membership to TTSI under the terms of that membership).
Notwithstanding the foregoing, after Closing, TTSI may pay reasonable costs,
expenses and fees incurred by Buyer, Cornerstone Equity Investors IV, LP, or
Cornerstone Equity Investors, LLC
<PAGE>
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in connection with the Contemplated Transactions, including a closing fee to
Cornerstone Equity Investors LLC or one of its Affiliates.
Section 12.04 Successors and Assigns. The provisions of the Transaction
Documents shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other party, provided the Buyer may assign
its or TTSI's rights hereunder to an agent for the financing sources in
connection with the Contemplated Transactions, as collateral security for TTSI's
obligations, and Buyer may assign its rights to purchase Acquired Shares to
Permitted Assignees.
Section 12.05 Disclosure. Certain information set forth in the
Disclosure Schedules has been included and disclosed solely for informational
purposes and may not be required to be disclosed pursuant to the terms and
conditions of the Transaction Documents. The disclosure of any such information
shall not be deemed to constitute an acknowledgement or agreement that the
information is required to be disclosed in connection with the representations
and warranties made in the Transaction Documents or that the information is
material, nor shall any information so included and disclosed be deemed to
establish a standard of materiality or otherwise used to determine whether any
other information is material.
Section 12.06 Construction. As used in the Transaction Documents, any
reference to the masculine, feminine or neuter gender shall include all genders,
the plural shall include the singular, and the singular shall include the
plural. With regard to each and every term and condition of the Transaction
Documents, the parties understand and agree that the same have or has been
mutually negotiated, prepared and drafted, and that if at any time the parties
desire or are required to interpret or construe any such term or condition or
any agreement or instrument subject hereto, no consideration shall be given to
the issue of which party actually prepared, drafted or requested any term or
condition of the Transaction Documents.
Section 12.07 Entire Agreement.
(a) The Transaction Documents and any other agreements contemplated
thereby (including, to the extent contemplated herein, the Confidentiality
Agreement) constitute the entire agreement among the parties with respect to the
subject matter of such documents and supersede all prior agreements,
understandings and negotiations, both written and oral, between the parties with
respect to the subject matter thereof.
(b) The parties hereto acknowledge and agree that no representation,
warranty, promise, inducement, understanding, covenant or agreement has been
made or relied upon by any party hereto other than those expressly set forth in
the Transaction Documents. Without limiting the generality of the disclaimer set
forth in the preceding sentence, (i) neither Parent nor any of its Affiliates
has made or shall be deemed to have made any representations or warranties, in
any presentation or written information relating to TTSI or the TTS Business
given or to be given in connection with the Contemplated Transactions, in any
filing made or to be made by or on behalf of Parent or any of its Affiliates
with any Governmental Authority, and no statement,
<PAGE>
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made in any such presentation or written materials, made in any such filing or
contained in any such other information shall be deemed a representation or
warranty hereunder or otherwise, (ii) neither Parent nor any of its Affiliates
has made or shall be deemed to have made any representations or warranties in
respect of the accounting or tax treatment to be afforded Buyer, TTSI or the TTS
Business in respect of the Contemplated Transactions, and (iii) Parent, on its
own behalf and on behalf of the other Seller Companies, expressly disclaims any
implied warranties, including but not limited to warranties of fitness for a
particular purpose and warranties of merchantability. Buyer acknowledges that
Parent has informed it that no Person has been authorized by Parent or any of
its Affiliates to make any representation or warranty in respect of TTSI or the
TTS Business or in connection with the Contemplated Transactions, unless in
writing and contained in this Agreement or in any of the Transaction Documents
to which they are a party.
(c) Except as expressly provided herein or in any other Transaction
Document, no Transaction Document or any provision thereof is intended to confer
upon any Person other than the parties hereto any rights or remedies hereunder.
Section 12.08 Governing Law. Except as otherwise provided in any of the
Transaction Documents, this Agreement and the other Transaction Documents shall
be construed in accordance with and governed by the law of the State of Delaware
(without regard to the choice of law provisions thereof).
Section 12.09 Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by the other party hereto.
Section 12.10 Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, any of the Transaction Documents or the Contemplated Transactions shall be
brought in the United States District Court for the District of Delaware (or, if
subject matter jurisdiction is unavailable, any of the state courts of the State
of Delaware), and each of the parties hereby consents to the exclusive
jurisdiction of such court (and of the appropriate appellate court) in any such
suit, action or proceeding and waives any objection to venue laid therein.
Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the State of Delaware. Without
limiting the foregoing, Parent, TTSI and Buyer agree that service of process
upon such party at the address referred to in Section 12.01, together with
written notice of such service to such party, shall be deemed effective service
of process upon such party.
Section 12.11 Severability. Any provision of the Transaction Documents
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of the
Transaction Documents or affecting the validity or enforceability of such
provision in any other jurisdiction. To the extent any provision of the
Transaction Documents is determined to be prohibited or unenforceable in any
jurisdiction Parent and Buyer agree to use reasonable
<PAGE>
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commercial efforts, and agree to cause the other Seller Companies and TTSI, as
the case may be, to use reasonable commercial efforts, to substitute one or more
valid, legal and enforceable provisions that, insofar as practicable implement
the purposes and intent of the prohibited or unenforceable provision.
Section 12.12 Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
Section 12.13 Bulk Sales. Buyer and TTSI hereby waive compliance by
Parent and each Seller Company, in connection with the Contemplated
Transactions, with the provisions of Article 6 of the Uniform Commercial Code as
adopted in the States of Tennessee, California, Maryland and Mississippi, and as
adopted in any other states or jurisdictions where any of the Contributed Assets
or Transferred Intellectual Property are located, and any other applicable bulk
sales or similar laws with respect to or requiring notice to Parent's (or any
Seller Company) creditors, as the same may be in effect on the date of such
contribution or transfer, as the case may be. Parent shall indemnify and hold
harmless TTSI against any and all liabilities (other than liabilities in respect
of Assumed Liabilities) which may be asserted by third parties against TTSI as a
result of noncompliance with any such bulk sales or similar law.
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be duly
executed by their respective authorized officers on the day and year first above
written.
THE BLACK & DECKER CORPORATION
By: /s/ STEPHEN F. REEVES
Stephen F. Reeves
Vice President and Controller
TRUE TEMPER SPORTS, INC.
By: /s/ STEPHEN F. REEVES
Stephen F. Reeves
Vice President
TTSI LLC
By: /s/ TYLER J. WOLFRAM
Tyler J. Wolfram
<PAGE>
EXHIBIT A
DEFINITIONS
(a) The following terms have the following meanings:
"Acquired Shares" means the shares of capital stock of TTSI to be
acquired by Buyer from EII, all as contemplated by Section 2.03(b).
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with such other
Person. For purposes of determining whether a Person is an Affiliate, the term
"control" shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of securities, contract or otherwise. For purposes of
this Agreement, TTSI shall not be deemed to be an Affiliate of Parent or any
other Seller Companies after Closing.
"Amory Facility" means the TTS Business' steel shaft manufacturing
facility located in Amory, Mississippi.
"Applicable Law" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, decree or other requirement
of any Governmental Authority (including any Environmental Law) applicable to
such Person or any of their respective properties, assets, officers, directors,
employees, consultants or agents (in connection with such officer's, director's,
employee's, consultant's or agent's activities on behalf of such Person).
"Assignment and Assumption Agreement" means the Assignment and
Assumption Agreement to be entered into by EII and TTSI, in the form
contemplated by Attachment II (with such changes as may be required to satisfy
any requirements of Applicable Law in any country or jurisdiction where
Contributed Assets are located) and any other similar agreements contemplated by
this Agreement executed and delivered by EII and TTSI in connection with the
sale, assignment and transfer by EII or a Seller Company of Contributed Assets
and the assumption by EII And TTSI of Assumed Liabilities, as the same may be
amended from time to time.
"Assumed Liabilities" means all debts, liabilities and obligations of
Seller Companies, to the extent relating to or arising out of the operation,
affairs and conduct of the TTS Business, the Contributed Assets or the TTSI
Leases, of any kind, character or description, whether liquidated or
unliquidated, known or unknown, fixed or contingent, accrued or unaccrued,
absolute, determined, determinable or indeterminable or otherwise, whether or
not reflected or reserved against in the Opening Statement or in the calculation
of the Final Net Working Capital Amount and whether presently in existence or
arising hereafter, except for Excluded Liabilities, including but not limited to
the following:
(i) all debts, liabilities and obligations relating to the TTS
Business, the Contributed Assets or the Transferred Intellectual Property,
whether accrued, liquidated, contingent, matured or unmatured, at or prior to
the date the transactions contemplated by Section 2.01 are consummated, that (a)
are set forth on, reflected or referred to in the Opening Statement, (b) are
disclosed in any of the Disclosure Schedules delivered hereunder, (c) would be
subject to disclosure in any of the Disclosure Schedules delivered in connection
with any of Parent's representations and warranties but for the materiality
standards contained in such representation and warranty, (d) are reflected in
the Final Net Working Capital Amount as determined in accordance with Section
2.06 herein (including without limitation accounts payable and reserves
reflected as contra-asset accounts) or (e) are otherwise a liability or
obligation that TTSI is expressly assuming in accordance with this Agreement;
(ii) all liabilities and obligations arising under Contracts,
whether or not the Contracts have been completed or terminated prior to the
Closing Date, including, without limitation, any such liabilities and
obligations arising from or relating to the performance or non-performance of
the Contracts by TTSI, Buyer or any other Person, whether arising prior to, on
or after the Closing Date, except to the extent they constitute Excluded
Liabilities and except to the extent that a claim of non-performance, breach or
other violation has been asserted prior to Closing and is not otherwise included
within clause (xi);
(iii) all liabilities and obligations in respect of employees
and former employees of TTSI or the TTS Business, and beneficiaries of employees
and former employees of TTSI or the TTS Business, including, without limitation,
liabilities and obligations under or relating to WARN or any similar state or
local law to the extent relating to or arising out of any actions taken by TTSI
or Buyer or any Affiliate of either of the foregoing on or after the Closing
Date, except to the extent otherwise required by Exhibit D to be retained by
Parent or Seller Companies;
(iv) all liabilities and obligations in respect of Transferred
Employees and dependents and beneficiaries of Transferred Employees under (A)
Employee Plans to the extent listed or referred to in Schedule B.20, (B) post
employment medical, dental, or life insurance benefits, and (C) Benefit
Arrangements to the extent such Benefit Arrangements are listed on or referred
to in Schedule B.20, but in the case of the foregoing clause (C) limited to an
amount equal to the extent that such liabilities or obligations are reflected in
the Final Net Working Capital Amount or cash equal to such liabilities or
obligations is transferred to TTSI on the Closing Date, plus $100,000, except to
the extent otherwise required by Exhibit D to be retained by Parent or Seller
Companies;
(v) all liabilities and obligations relating to claims of
manufacturing or design defects with respect to any product sold or service
provided by TTSI prior to, on or after the Closing Date, including liabilities
and obligations in respect of investigations regarding product safety, product
recall and related matters, except to the extent they constitute Excluded
Liabilities;
(vi) all liabilities and obligations relating to warranty
obligations or services with respect to any product manufactured or sold or
service provided by TTSI or the TTS Business prior to, on or after the Closing
Date;
(vii) all Environmental Liabilities, whether arising prior to,
on or after the Closing Date, to the extent relating to or arising out of
conditions at, or the current or former operations of TTSI or the TTS Business
at, the facilities owned or leased by TTSI or the TTS Business as of the date
the transactions contemplated by Section 2.01(ii) of this Agreement are
consummated and included in the Contributed Assets (whether by fee ownership or
leasehold interest), except to the extent they constitute Excluded Liabilities;
(viii) all liabilities and obligations relating to the TTSI
Leases, whether arising prior to, on or after the Closing Date;
(ix) all Tax liabilities and obligations relating to sales and
use taxes, gross receipts taxes, property taxes, licenses, employee and employer
withholding and unemployment taxes and other non-income Taxes relating
exclusively to TTSI or the TTS Business;
(x) all liabilities and obligations arising from or relating
to governmental, judicial or adversarial proceedings (public or private),
litigation, suits, arbitration, disputes, claims, causes of action or
investigations (collectively, "Proceedings") arising from or directly or
indirectly relating to the TTS Business, any Contributed Assets or any
Transferred Intellectual Property, whether or not accrued, liquidated,
contingent, matured, unmatured, or known or unknown to Parent or Buyer at or
prior to the Closing, except for liabilities and obligations of a type
contemplated by the foregoing clause (v), which shall be governed by such
clause; and
(xi) all liabilities and obligations relating to the ownership
by TTSI or any of its successors of the Contributed Assets, directly or
indirectly relating to the Transferred Employees, the lease of properties under
the TTSI Leases or otherwise, or the conduct of the TTS Business or any other
business, in each case, arising from actions occurring after the Closing Date,
including, without limitation, any and all Proceedings in respect thereof.
"Benefit Arrangements" means all life and health insurance,
hospitalization, retirement, savings, bonus, deferred compensation, incentive
compensation, severance pay, disability and fringe benefit plans, holiday or
vacation pay, profit sharing, seniority, and other policies, practices,
agreements or statements of terms and conditions providing employee or executive
compensation or benefits to employees of the TTS Business or any of their
dependents, which are maintained by Seller Companies and constitute Assumed
Liabilities, other than an Employee Plan.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to close.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment Letters" means the following letters expressing the
commitment of reputable third parties relating to the debt financing
contemplated by Section 2.02: (i) that certain letter, dated June 28, 1998
(including the Annexes attached thereto) from DLJ Capital Funding, Inc. and
Donaldson, Lufkin & Jenrette Securities Corporation to Cornerstone Equity
Investors IV, L.P. regarding the commitment to provide certain senior secured
financing and (ii) that certain letter dated June 28, 1998 (including the
Annexes attached thereto) from DLJ Bridge Financing, Inc. to Cornerstone Equity
Investors IV, L.P. regarding the commitment to provide certain bridge financing.
"Confidentiality Agreement" means the letter agreement dated March 13,
1998, by and between Parent and Buyer, as the same has been or may be amended
from time to time.
"Contemplated Transactions" means the transactions contemplated by the
Transaction Documents.
"Contracts" means all contracts, agreements, leases (including leases
of real property), licenses, commitments, sales and purchase orders, and other
undertakings of any kind, whether written or oral, relating exclusively to the
TTS Business other than Employee Plans and Benefit Arrangements.
"Contributed Assets" means, other than Excluded Assets and Transferred
Intellectual Property, all of the assets, properties, rights, licenses, permits,
Contracts, causes of action and business of every kind and description as the
same shall exist on the date of the contributions contemplated by Section
2.01(ii) of this Agreement, wherever located, real, personal or mixed, tangible
or intangible, owned by, leased by or in the possession of Parent or any Seller
Company, whether or not reflected in the books and records thereof, and held or
used exclusively in the conduct of the TTS Business as the same shall exist on
the date of the capital contribution of EII contemplated by Section 2.01 of this
Agreement, and including, without limitation, except as otherwise specified
herein, all direct or indirect right, title and interest of Parent or any Seller
Company in, to and under:
(i) the Olive Branch Property, together with all buildings,
fixtures, easements, rights of way, and improvements thereon and appurtenances
thereto to the extent relating to the TTS Business;
(ii) the rights and interests of Seller Companies under the
TTSI Leases;
(iii) all personal property and interests therein (other than
Intellectual Property), including machinery, equipment, furniture, office
equipment, communications equipment, vehicles, storage tanks, spare and
replacement parts, fuel and other tangible property (and interests in any of the
foregoing) owned by any Seller Company that are used exclusively in connection
with the TTS Business;
(iv) all Inventory that is owned by Seller Companies and held
for sale, use or consumption exclusively in the TTS Business;
(v) all Contracts;
(vi) all accounts, accounts receivable and notes receivable
whether or not billed, accrued or otherwise recognized in the Opening Statement
or taken into account in the determination of the Final Net Working Capital
Amount, together with any unpaid interest or fees accrued thereon or other
amounts due with respect thereto of Seller Companies that relate exclusively to
the TTS Business, and any security or collateral for any of the foregoing;
(vii) all expenses that have been prepaid by Seller Companies
relating exclusively to the operation of the TTS Business, including but not
limited to ad valorem Taxes, lease and rental payments;
(viii) all of Parent's or any of Seller Companies' rights,
claims, credits, causes of action or rights of set-off against Persons other
than Seller Companies relating exclusively to the TTS Business or the
Contributed Assets, including, without limitation, unliquidated rights under
manufacturers' and vendors' warranties;
(ix) all transferable franchises, licenses, permits or other
governmental authorizations owned by, or granted to, or held or used by, Seller
Companies and exclusively related to the TTS Business;
(x) except to the extent a Seller Company is required to
retain the originals pursuant to any Applicable Law (in which case copies will
be provided to TTSI upon request), all business books, records, files and
papers, whether in hard copy or computer format, of a Seller Company used
exclusively in the TTS Business, including, without limitation, books of
account, invoices, engineering information, sales and promotional literature,
manuals and data, sales and purchase correspondence, lists of present and former
suppliers, lists of present and former distributors, lists of present and former
customers, personnel and employment records of present or former employees,
documentation developed or used for accounting, marketing, engineering,
manufacturing, or any other purpose relating to the conduct of the TTS Business
at any time prior to the Closing;
(xi) the right to represent to third parties that TTSI is the
successor to the TTS Business; and
(xii) all insurance proceeds (except to the extent relating to
Excluded Assets or Excluded Liabilities or to the extent relating to or arising
out of Environmental Insurance Claims), net of any retrospective premiums,
deductibles, retention or similar amounts, arising out of or related to damage,
destruction or loss of any property or asset of or used exclusively in
connection with the TTS Business to the extent of any damage or destruction that
remains unrepaired, or to the extent any property or asset remains unreplaced at
the Closing Date.
"Damages" means all demands, claims, actions or causes of action,
assessments, losses, damages, costs, expenses, liabilities, judgments, awards,
fines, sanctions, penalties, charges and amounts paid in settlement, including,
without limitation, reasonable costs, fees and expenses of attorneys, experts,
accountants, appraisers, consultants, witnesses, investigators and any other
agents or representatives of such Person (with such amounts to be determined net
of any resulting Tax benefit actually received or realized and net of any refund
or reimbursement of any portion of such amounts actually received or realized,
including, without limitation, reimbursement by way of insurance or third party
indemnification), but specifically excluding (i) any costs incurred by or
allocated to an Indemnified Party with respect to time spent by employees of the
Indemnified Party or any of its Affiliates, (ii) any lost profits or opportunity
costs or exemplary or punitive damages (except to the extent assessed in
connection with a third-party claim with respect to which the Person against
which such damages are assessed is entitled to indemnification hereunder) and
(iii) the decrease in the value of any Contributed Asset to the extent that such
valuation is based on any use of the Contributed Asset other than its use as of
the Closing Date.
"Disclosure Schedules" means the Disclosure Schedules dated the date of
this Agreement relating to this Agreement, as amended from time to time in
accordance with this Agreement.
"EBIT Contribution" means revenues derived from the Thiokol Contract,
less (i) cost of sales of the Thiokol Contract, (ii) direct selling, general and
administrative costs of the Thiokol Contract, and (iii) an amount equal to
indirect non-promotional selling, general and administrative costs of TTSI times
the ratio of revenues derived from the Thiokol Contract to total revenues of
TTSI.
"EII" means Emhart Industries, Inc., a Delaware corporation.
"Emhart" means Emhart Inc., a Delaware corporation.
"Employee Plans" means each "employee benefit plan" as defined in
Section 3(3) of ERISA, maintained or contributed to by Parent or any of its
Affiliates which provides benefits to employees of TTSI or the TTS Business or
their dependents.
"Encumbrances" means Liens, title defects, encumbrances, easements and
restrictions, invalidities of leasehold interests.
"Environmental Claim" means any written or oral notice, claim, demand,
action, suit, complaint, proceeding or other communication by any third Person
alleging liability or potential liability (including without limitation
liability or potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages, property damage, personal
injury, fines or penalties) arising out of, relating to, based on or resulting
from (i) the presence, discharge, emission, release or threatened release of any
Hazardous Substances at any location, (ii) circumstances forming the basis of
any violation or alleged violation of any Environmental Laws, or (iii) otherwise
relating to obligations or liabilities under any Environmental Laws.
"Environmental Laws" means any and all past, present or future federal,
state, local and foreign statutes, laws, regulations, ordinances, judgments,
orders, permits, codes, or injunctions, and all common law, which (i) impose
liability for or standards of conduct concerning the manufacture, processing,
generation, distribution, use, treatment, storage, disposal, cleanup, transport
or handling of Hazardous Substances including, The Resource Conservation and
Recovery Act of 1976, as amended, The Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, The Superfund Amendment and
Reauthorization Act of 1984, as amended, The Toxic Substances Control Act, as
amended, the Occupational Safety and Health Act of 1970, as amended, to the
extent it relates to the handling of and exposure to hazardous or toxic
materials or similar substances, and any other so-called "Superfund" or
"Superlien" law or (ii) otherwise relate to the protection of human health or
the environment.
"Environmental Liabilities" means all liabilities to the extent arising
in connection with or in any way relating to the TTS Business or Parent's or any
of its Affiliates' use or ownership thereof, whether vested or unvested,
contingent or fixed, actual or potential, which arise under or relate to
Environmental Laws including, without limitation, (i) Remedial Actions, (ii)
personal injury, wrongful death, economic loss or property damage claims, (iii)
claims for natural resource damages, (iv) violations of law or (v) any Damages
with respect thereto. Notwithstanding the foregoing, Environmental Liabilities
shall not include any increased liabilities resulting from or arising out of a
use of a facility constituting a Contributed Asset other than an industrial use.
"ERISA" means the Employee Retirement Income Security act of 1974, as
amended.
"Excluded Assets" means:
(i) all cash and cash equivalents of Seller Companies,
including, without limitation, cash and cash equivalents used as collateral for
letters of credit, advance payments, deposits with utilities, insurance
companies and other Persons, except to the extent taken into account in the
determination of the Final Net Working Capital Amount;
(ii) all original books and records that Seller Companies
shall be required to retain pursuant to any Applicable Law (in which case copies
of such books and records to the extent relating to the TTS Business shall be
provided to TTSI upon request), or that contain information relating to any
business or activity of Seller Companies not forming a part of the TTS Business,
or any employee of a Seller Company that is not a Transferred Employee;
(iii) all Tax assets of any Seller Companies, other than Tax
assets relating to sales and use taxes, gross receipts taxes, property taxes,
licenses, employee and employer withholding and unemployment taxes and other
non-income related taxes relating exclusively to the TTS Business;
(iv) all assets of Seller Companies not held or owned by or
used exclusively in connection with the TTS Business;
(v) all rights and claims of Seller Companies under any of the
Transaction Documents and the agreements and instruments delivered to Seller
Companies by Buyer pursuant to any of the Transaction Documents;
(vi) all accounts receivable, notes receivable or similar
claims or rights (whether or not billed or accrued) of the TTS Business from any
Seller Companies;
(vii) all capital stock or any other securities of any Seller
Companies or any other Person;
(viii) all Intellectual Property not used or held for use
exclusively in the TTS Business;
(ix) all assets related to Excluded Liabilities, including,
without limitation, any reserve on the books of Parent or TTSI relating to any
labor grievances filed by employees prior to Closing;
(x) all ownership and leasehold interests of Seller Companies
in respect of the facility, real property, fixtures and equipment located at or
constituting the Seneca and Wheatley Facilities; and
(xi) all accounts receivable, notes receivable or similar
claims or rights of Seller Companies arising out of or relating to any judgments
entered by a court or arbitrator prior to the Closing Date in favor of Seller
Companies, except to the extent taken into account in the determination of the
Final Net Working Capital Amount.
"Excluded Liabilities" means the following liabilities and obligations:
(i) all liabilities and obligations of Seller Companies not
arising out of the conduct of the TTS Business, except as otherwise specifically
provided in the Transaction Documents;
(ii) except as otherwise specifically provided in the
Transaction Documents, all liabilities or obligations for any Tax arising from
or with respect to the Contributed Assets or the operations of the TTS Business
prior to the date on which the transactions contemplated by Section 2.01 of this
Agreement are consummated, other than Tax liabilities or obligations relating to
sales and use taxes, gross receipts taxes, property taxes, licenses, employee
and employer withholding and unemployment taxes and other non-income related
taxes;
(iii) all liabilities or obligations, whether presently in
existence or arising after the date of this Agreement, in respect of accounts
payable, notes payable (including intercompany promissory notes and similar
financing arrangements) or similar obligations (whether or not billed or
accrued) to Seller Companies, except for amounts accrued by the TTS Business and
not billed by Seller Companies to the TTS Business as of the date on which the
transaction contemplated by Section 2.01 of this Agreement are consummated in
respect of accounts payable, notes payable or similar obligations relating to
specific services provided to and specific expenses paid on behalf of the TTS
Business by Seller Companies;
(iv) all liabilities or obligations, whether presently in
existence or arising after the date of the Agreement, relating to fees,
commissions or expenses owed to any broker, finder, investment banker,
accountant, attorney or other intermediary or advisor employed by Seller
Companies in connection with the Contemplated Transactions;
(v) all liabilities or obligations retained by Parent pursuant
to Exhibit D;
(vi) except to the extent otherwise covered by Exhibit D, all
liabilities or obligations related to Excluded Assets;
(vii) all liabilities or obligations related to claims of
manufacturer or design defects with respect to any products sold or services
provided by the TTS Business prior to, on or after the Closing Date, including
liabilities and obligations in respect of investigations regarding product
safety, product recall and related matters, to the extent but only to the extent
relating to products manufactured or sold prior to the Closing Date;
(viii) all Environmental Liabilities, whether arising prior
to, on or after the date on which the transactions contemplated by Section 2.01
are consummated, (1) relating to the disposal prior to the date on which the
transactions contemplated by Section 2.01(ii) are consummated of Hazardous
Substances at locations that at the time of such disposal were not owned or
leased by a Seller Company or any of its predecessors, it being understood and
agreed that the migration of Hazardous Substances in soil or groundwater from a
facility included in the Contributed Assets to surrounding properties shall not
be considered a disposal of Hazardous Substances, or (2) relating to or arising
out of conditions at, or the current or former operations at, any facilities not
included in the Contributed Assets (whether by fee ownership or leasehold
interest) (including any predecessors to such facilities);
(ix) all Environmental Liabilities, whether arising prior to,
on or after the Closing Date, relating to the operations at the Seneca and
Wheatley Facilities; and
(x) all liabilities or obligations of Seller Companies
relating to worker's compensation and labor grievances filed against Seller
Companies on or prior to Closing.
"Financial Support Arrangements" means any obligations, contingent or
otherwise, of a Person in respect of any indebtedness, obligation or liability
(including assumed indebtedness, obligations or liabilities) of another Person,
including but not limited to remaining obligations or liabilities associated
with indebtedness, obligations or liabilities that are assigned, transferred or
otherwise delegated to another Person, if any, letters of credit and standby
letters of credit (including any related reimbursement or indemnity agreements),
direct or indirect guarantees, endorsements (except for collection or deposit in
the ordinary course of business), notes co-made or discounted, recourse
agreements, take-or-pay agreements, keep-well agreements, agreements to purchase
or repurchase such indebtedness, obligation or liability or any security
therefor or to provide funds for the payment or discharge thereof, agreements to
maintain solvency, assets, level of income or other financial condition,
agreements to make payment other than for value received and any other financial
accommodations.
"GAAP" means Generally Accepted Accounting Principles in the United
States as in effect on the date of the Agreement consistently applied.
"Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.
"Hazardous Substances" means (i) substances defined as "hazardous
substances," "hazardous materials" or "hazardous waste" pursuant to The
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or The Resource Conservation and Recovery Act of 1976, as amended, (ii)
substances defined as "hazardous wastes" in the regulations adopted and
publications promulgated pursuant to any of said laws, (iii) substances defined
as "toxic substances" in The Toxic Substances Control Act, as amended, and (iv)
petroleum, its derivatives and petroleum products, and asbestos and asbestos
containing materials.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Huffy Trademark Agreement" means the Trademark Agreement
dated as of November 7, 1990, by and between Emhart Industries, Inc. and H.C.A.,
Inc. regarding the assignment of rights with respect to the True Temper
trademarks.
"Intellectual Property" means all patents, copyrights, technology,
know-how, processes, trade secrets, inventions, proprietary data, formulae,
specifications, research and development data and computer software programs;
all trademarks, trade names, trade dress, service marks and service names; all
registrations, applications, recordings, licenses whether as licensee or
licensor and common-law rights relating thereto, all rights to sue at law or in
equity for any infringement or other impairment thereto, including the right to
receive all proceeds and damages therefrom, and all rights to obtain renewals,
continuations, continuations in a part, reissues, reexaminations, divisions or
other extensions of legal protections pertaining thereto; and all other United
States, state and foreign intellectual property.
"Intellectual Property Assignment Agreements" means the Assignment of
United States Trademarks, Trademark Registrations and Applications for
Registration, the Assignment of Foreign Trademarks, Trademark Registrations and
Applications for Registration, the Assignment of United States Patents and
Patent Applications, the Assignment of Foreign Patents and Application for
Patents and the Assignment of U.S. Copyright Registrations, in the forms
contemplated by Attachments III, IV, V, VI and XV to this Agreement.
"Inventory" means all items of inventory notwithstanding how classified
in the financial records of Seller Companies, including all raw materials,
work-in-process and finished goods.
"Lien" means, with respect to any asset, any mortgage, lien, claim,
pledge, charge, security interest or other encumbrance of any kind in respect of
such asset.
"Material Adverse Effect" means (i) with respect to TTSI or the TTS
Business, a material adverse effect on the assets, properties, business,
financial condition or results of operations of the TTS Business taken as a
whole, or (ii) with respect to any other Person, a material adverse effect on
the assets, properties, business, financial condition or results of operations
of such Person and its Subsidiaries taken as a whole.
"Net Working Capital" means (i) all Contributed Assets that are current
assets of the TTS Business, minus (ii) all Assumed Liabilities that are current
liabilities of the TTS Business, in each case calculated in accordance with the
practices and policies that were employed in the preparation of the Opening
Statement, determined consistent with the Opening Statement and the notes
thereto.
"1959 TTSI Consent Decree" means the Final Judgment dated August 20,
1959 in connection with Civil Action No. 58 C 1158 in the United States District
Court for the Northern District of Illinois, Eastern Division.
"1961 TTSI Consent Decree" means the Final Judgment dated August 1,
1961, in connection with Civil Action No. 58 C 1159 in the United States
District Court for the Northern District of Illinois, Eastern Division.
"Non US Benefit Arrangements" means Benefit Arrangements in respect of
Non US Transferred Employees.
"Non US Transferred Employees" means Transferred Employees who are not
US Transferred Employees.
"Olive Branch Property" means the real property owned by Seller
Companies located at 8706 Deerfield Drive, Olive Branch, Mississippi 38654.
"Opening Statement" means the special purpose statement of net assets
of the TTS Business at March 29, 1998, together with the notes thereto, as
attached in Attachment I to this Agreement.
"Permitted Assigns" means any Person to which Buyer assigns its right
to purchase Acquired Shares hereunder, provided that (i) such assignment will
not jeopardize the exemption or exemptions from registration under applicable
securities and blue sky laws pursuant to which the Acquired Shares are being
transferred, and (ii) such Person delivers to Parent evidence satisfactory to
Parent that such Person has agreed to be bound by the provisions of Section
2.03(b) and such Person makes the representations and warranties contained in
Sections C.8 and C.9 of Exhibit C for the benefit of the Seller Companies and
agrees to indemnify, defend and hold harmless Parent and its Affiliates and
their respective directors, officers, employees and agents for any breach of
such representations and warranties.
"Permitted Liens" means any of the following:
(i) Liens for Taxes that (x) are not yet due or delinquent or
(y) are being contested in good faith by appropriate proceedings and for which
appropriate reserves have been made or are not required under GAAP;
(ii) statutory Liens or landlords', carriers', warehousemen's,
mechanic's, suppliers', materialmen's or other like Liens arising in the
ordinary course of business with respect to amounts not yet overdue or amounts
being contested in good faith by appropriate proceedings and for which
appropriate reserves have been made or are not required under GAAP;
(iii) easements, rights of way, restrictions and other similar
charges or encumbrances on real property interests, that, individually or in the
aggregate, do not materially interfere with the ordinary course of operation of
the TTS Business or the use of any such real property for its current uses;
(iv) with respect to real property, title defects or
irregularities that do not in the aggregate materially impair the use of such
real property for its current use;
(v) rights and licenses granted to others in Intellectual
Property prior to the date of this Agreement or, prior to Closing, the license
or sale of Intellectual Property in connection with the Shaft Lab product line
or other licenses of Intellectual Property granted in the ordinary course of
business which do not materially deplete the value of such Intellectual Property
prior to Closing;
(vi) with respect to any of the TTSI Leases where any Seller
Company is a lessee, any Lien affecting the interest of the landlord thereunder;
and
(vii) Encumbrances disclosed in the Disclosure Schedules or
taken into account in the Opening Statement.
"Person" means an individual, a corporation, a general partnership, a
limited partnership, a limited liability company, limited liability partnership,
an association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Redemptions" shall mean the purchase by TTSI of shares of TTSI Common
Stock from EII and Emhart as contemplated by Section 2.03(a).
"Remedial Action(s)" means the investigation, clean-up or remediation
of contamination or environmental or damage caused by, related to or arising
from the generation, use, handling, treatment, storage, transportation,
disposal, discharge, release, or emission of Hazardous Substances, including,
without limitation, investigations, response, removal and remedial actions under
The Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, corrective action under The Resource Conservation and Recovery
Act of 1976, as amended, and clean-up requirements under similar state
Environmental Laws.
"Representatives" means (i) with respect to Buyer, any of the
"Representatives" as defined in the Confidentiality Agreement and (ii) with
respect to Parent, each of its respective directors, officers, advisors,
attorneys, accountants, employees or agents.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller Companies" means Parent and its Subsidiaries, other than TTSI.
"Seneca and Wheatley Facilities" means those former manufacturing
facilities of the TTS Business located in Seneca, South Carolina and Wheatley,
Arkansas.
"Services Agreement" means the Services Agreement in the form
contemplated by Attachment VII to this Agreement, as amended from time to time.
"Stockholders' and Registration Rights Agreements" means the
Stockholders' Agreement and Registration Rights Agreement in the forms to be
entered into in accordance with Section 2.03(d)(ii), as amended from time to
time.
"Subsidiary" as it relates to any Person, shall mean with respect to
any Person, any corporation, partnership, joint venture or other legal entity of
which such Person, either directly or through or together with any other
Subsidiary of such Person, owns more than 50% of the voting power in the
election of directors or their equivalents, other than as affected by events of
default.
"Tax Authority" shall mean a foreign or United States federal, state or
local Governmental Authority having jurisdiction over the assessment,
determination, collection or imposition of any Tax, as the context requires.
"Tax Returns" means all returns (including information returns),
declarations, reports, estimates and statements regarding Taxes, required to be
filed with any Tax Authority, including any claims for refund and any amendments
to any of the foregoing.
"Taxes" means all taxes, charges, fees, levies or other assessments,
including without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, excise, estimated, severance, stamp, occupation, property
or other taxes, customs, duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any Tax Authority.
"Thiokol Contract" means the Teaming Agreement between Thiokol
Corporation and True Temper Sports dated January 13, 1997-March 9, 1997,
Purchase Order No. 41125 dated March 9, 1997, Purchase Order No. 36986, dated
March 14, 1997, renewed December 2, 1997, together with the initial production
contract relating thereto.
"Thiokol Payment" means 25% of EBIT Contribution derived from TTSI's
sales to Thiokol pursuant to the Thiokol Contract.
"Transaction Documents" means this Agreement, the Assignment and
Assumption Agreement, the Services Agreement, the Stockholders' and Registration
Rights Agreements, the Intellectual Property Assignment Agreements and any
exhibits or attachments to any of the foregoing, as the same may be amended from
time to time.
"Transferred Intellectual Property" shall mean all Intellectual
Property owned by or licensed to any of the Seller Companies and used or held
for use exclusively in the TTS Business, including the goodwill of the TTS
Business symbolized thereby, it being understood and agreed that the
Intellectual Property used or held for use exclusively in the TTS Business that
is patented, registered or as to which an application for patent or registration
is pending, along with all material unregistered trademarks, servicemarks, trade
names and copyrights used or held for use exclusively in the TTS Business, is
listed as "Transferred Intellectual Property" on Attachment X.
"TTS Business" means the True Temper Sports business as presently
conducted by Seller Companies involving the development, manufacturing,
marketing or sale of steel and composite golf club shafts, tubular steel and
composite components for the bicycle, automotive and recreational sports
industries and high performance, lightweight, low-cost composite cylinders for
rocket motor cases, ordnance, and space structure applications.
"TTSI Common Stock" means the shares of common stock, $1.00 par value
per share, of TTSI.
"TTSI Financial Statements" means the (i) Unaudited Balance Sheet of
TTSI as of March 29, 1998, (ii) Unaudited Statements of Earnings for each of the
three month periods ended March 29, 1998 and March 30, 1997, (iii) the Balance
Sheets of TTSI at December 31, 1997 and 1996, and (iv) the Statements of
Earnings of TTSI for each of the three years ended December 31, 1997, 1996 and
1995, including in each case all notes thereto, all as set forth in Attachment
XII to this Agreement.
"TTSI Leases" means the real property leases relating to the facilities
used exclusively by the TTS Business, as the same may be amended and
supplemented from time to time, including the interests of Seller Companies in
any related fixtures, improvements and personal property located therein.
"TTSI Preferred Stock" means shares of preferred stock of TTSI with
such voting powers, full or limited, or no voting powers, and such designations,
preferences and relative, participating, optional or other special rates, and
qualifications, limitations or restrictions thereof, as shall be agreed to by
Buyer and Parent and expressed in the Amended and Restated Certificate of
Incorporation.
"US Benefit Arrangements" means Benefit Arrangements in respect of US
Transferred Employees.
"US Transferred Employees" means Transferred Employees employed by the
TTS Business in the United States.
"WARN" means the Worker Adjustment Retraining and Notification Act, as
amended.
"West Coast Technical Center" means the TTS Business facility located
in Carlsbad, California.
(b) "To the knowledge," "known by" or "known" (and any similar phrase) means (i)
with respect to Parent, to the actual knowledge of any of the Senior Vice
President and Chief Financial Officer, the Senior Vice President and General
Counsel, the Treasurer or the Controller of Parent, and shall be deemed to
include a representation that a reasonable investigation or inquiry of the
subject matter thereof has been made by such individuals, (ii) with respect to
Buyer, to the actual knowledge of the Chief Financial Officer, the General
Counsel, the Treasurer or the Controller of Buyer, and shall be deemed to
include a representation that a reasonable investigation or inquiry of the
subject matter thereof has been made by such individuals or (iii) with respect
to TTSI, Scott C. Hennessy and Fred H. Geyer.
<PAGE>
(c) Each of the following terms is defined in the Section set forth opposite
such term:
Term Section
Active Employee....................................................D.01
Adjusted Purchase Price............................................2.04
Agreement......................................................Preamble
Annual Thiokol Payment.............................................2.07
B&D Australasia....................................................2.01
Buyer..........................................................Preamble
Closing............................................................2.05
Competing Business.................................................5.06
Controlled Group...................................................B.20
EII............................................................Recitals
Emhart.........................................................Recitals
Encumbrances....................................................... A
Environmental Insurance Claims.....................................7.06
Estimated Net Working Capital......................................2.06
Exchange Consideration.............................................2.04
Existing Contracts.................................................5.01
Final Net Working Capital Amount...................................2.06
Indemnified Claim.................................................10.03
Indemnified Party.................................................10.03
Indemnifying Party................................................10.03
Insurance Liabilities..............................................6.03
Leased Real Property...............................................B.07
Nippon.............................................................2.01
Owned Real Property................................................B.07
PBGC...............................................................B.20
Proceedings....................................................... A
Prohibited Transaction............................................ B.20
Proposed Final Net Working Capital Amount..........................2.06
Referee...........................................................10.03
Remaining Recovery.................................................7.06
Reportable Events..................................................B.20
Parent.........................................................Preamble
Parent's Hourly Pension Plan.......................................D.08
Parent's Salaried Pension Plan.....................................D.07
Parent's Savings Plan..............................................D.09
Proposed Annual Thiokol Payment....................................2.07
Successor Hourly Pension Plan......................................D.08
Successor Salaried Pension Plan....................................D.07
Successor Savings Plan.............................................D.09
Surviving Representations or Covenants............................10.01
Third Party Claim.................................................10.03
Transferred Employees..............................................D.01
TTSI...........................................................Preamble
Tucker.............................................................2.01
<PAGE>
EXHIBIT B
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Buyer, that:
B.01 Corporate Existence and Power. Each of Parent, Emhart, EII and
TTSI is a corporation duly incorporated, validly existing and in good standing
under the laws of the state or jurisdiction of its incorporation and has all
corporate powers and all governmental licenses, authorizations, consents and
approvals required to carry on the TTS Business as now conducted and as
contemplated to be conducted upon consummation of the transactions contemplated
by Section 2.01, except where the failure to have such licenses, authorizations,
consents and approvals does not have a Material Adverse Effect on the TTS
Business. Each of Parent, Emhart, EII and TTSI, as the case may be, is duly
qualified to do business as a foreign corporation in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
make such qualification necessary to carry on the TTS Business as now conducted
and as contemplated to be conducted upon consummation of the transactions
contemplated by Section 2.01, except where the failure to be so qualified does
not have a Material Adverse Effect on the TTS Business.
B.02 Corporate Authorization. The execution, delivery and
performance by Parent and TTSI of each of the Transaction Documents to which it
is a party and the consummation by Parent and TTSI of the Contemplated
Transactions are within their respective corporate powers and have been duly
authorized by all necessary corporate action on their respective parts. The
execution, delivery and performance by Seller Companies other than Parent and
TTSI of the Transaction Documents to which a Seller Company other than Parent is
a party and the consummation by such Seller Company of the Contemplated
Transactions are within such Seller Company's corporate powers and, as of the
respective date of execution thereof, will have been duly authorized by all
necessary corporate action on its part. Each of the Transaction Documents to
which it is a party constitutes or will constitute as of the respective date of
execution thereof a legal, valid and binding agreement of the applicable Seller
Company, enforceable against it in accordance with its terms (i) except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally, including the effect of
statutory and other laws regarding fraudulent conveyances and preferential
transfers and (ii) subject to the limitations imposed by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
B.03 Governmental Authorization. The execution, delivery and
performance by each Seller Company of the Transaction Documents to which it is a
party require no action by or in respect of, or consent or approval of, or
filing with, any Governmental Authority other than:
(i) compliance with any applicable requirements of
the HSR Act;
(ii) filing of an amendment to the Certificate of
Incorporation of TTSI to increase authorized capital;
(iii) compliance with the terms and conditions under
which any industrial revenue or other bonds were issued (or leases
related thereto) in connection with financing the acquisition, lease,
development or improvement of any Owned Real Property, Leased Real
Property or any machinery or equipment used in connection with the TTS
Business;
(iv) compliance with the terms and conditions of the
1959 TTSI Consent Decree and the 1961 TTSI Consent Decree;
(v) the filing of applicable documentation with
Governmental Authorities in each of the United Kingdom, Japan and
Australia for the establishment of branches in those countries as
contemplated by Section 2.01(f);
(vi) actions, consents, approvals or filings set
forth in Schedule B.03 or otherwise expressly referred to in this
Agreement; and
(vii) such other consents, approvals, authorizations,
permits and filings the failure to obtain or make would not have, in
the aggregate, a Material Adverse Effect on TTSI or the TTS Business
after giving effect to or as the result of the transactions
contemplated by Section 2.01.
B.04 Non-Contravention. Except as set forth in Schedule B.04, assuming
compliance with the matters referred to in Section B.03, the execution, delivery
and performance by Parent or any Seller Company of the Transaction Documents do
not and will not (i)(A) contravene or conflict with the charter or bylaws of
Parent or any Seller Company, (B) contravene or conflict with or constitute a
violation of any provisions of any Applicable Law binding upon Parent or any
Seller Company that is applicable to the TTS Business; (C) constitute a default
under or give rise to any right of termination, cancellation or acceleration of,
or to a loss of any benefit relating exclusively to the TTS Business to which
Parent or any Seller Company is entitled under, any Contract binding upon Parent
or any Seller Company and relating exclusively to the TTS Business or by which
any of the Contributed Assets is or may be bound or any license, franchise,
permit or similar authorization held by Parent or any Seller Company relating
exclusively to the TTS Business except, in the case of clauses (B) and (C), for
any such contravention, conflict, violation, default, termination, cancellation,
acceleration or loss that could not reasonably be expected to have a Material
Adverse Effect on the TTS Business or (ii) result in the creation or imposition
of any Lien on any Contributed Asset, other than Permitted Liens.
B.05 Capitalization of TTSI. As of the date hereof, the authorized
capital stock of TTSI consists of 1,000 shares, all of one class called Common
Stock, par value $1.00 per share. As of the date hereof, EII owns 1,000 shares
of TTSI Common Stock representing 100% of all of the issued and outstanding
shares of TTSI Common Stock. Following the consummation of the transactions
contemplated by Section 2.01 and prior to the Closing, (i) the authorized
capital stock of TTSI will consist of 8,000 shares of TTSI Common Stock and
1,000 shares of TTSI Preferred Stock, (ii) EII will own 2,000 shares of TTSI
Common Stock and 250 shares of TTSI Preferred Stock, (iii) Emhart will own 6,000
shares of TTSI Common Stock and 750 shares of TTSI Preferred Stock, and (iv) the
shares of TTSI Common Stock and TTSI Preferred Stock owned by EII and Emhart, in
the aggregate, will constitute 100% of the issued and outstanding capital stock
of TTSI. Other than as contemplated by this Agreement, there are not now, and as
of Closing there will not be, any options, warrants or other rights to acquire
or securities convertible into or exchangeable for shares of capital stock or
any stock appreciation, phantom stock or similar rights of TTSI outstanding.
Each outstanding share of capital stock of TTSI has been duly authorized and is
validly issued, fully paid and nonassessable. In addition, (i) there are no
rights of first refusal, rights of first offer, or other similar rights
affecting TTSI's outstanding or unissued capital stock, and (ii) there are no
Liens affecting any of the outstanding shares of TTSI capital stock.
B.06 Organizational Instruments; Subsidiaries. Parent has made
available to Buyer complete and accurate copies of the Certificate of
Incorporation and Bylaws of TTSI, in each case as amended to date. TTSI is not
in violation of any provision of its Certificate of Incorporation or Bylaws.
TTSI does not have any Subsidiaries nor does TTSI directly or indirectly own or
have the power to vote shares of capital stock or other ownership interests of
any Person.
B.07 Financial Statements.
(a) Except as set forth in the notes to the Opening Statement,
the Opening Statement has been prepared in conformity with GAAP applied on a
consistent basis and presents fairly, in all material respects, the net assets
of the TTS Business as of March 29, 1998.
(b) Subject to the provisions of B.07(c) below, the TTSI
Financial Statements present fairly in all material respects the financial
position and results of operations of TTSI at the dates and for the periods set
forth therein, in conformity with (i) GAAP applied on a consistent basis other
than as described therein or in the notes thereto and (ii) the principles and
procedures set forth in the notes thereto.
(c) Notwithstanding anything contained herein or in the TTSI
Financial Statements to the contrary, neither Seller Companies nor TTSI make any
representation or warranty as to (i) goodwill reflected in the TTSI Financial
Statements or (ii) any accounting treatment which may or may not be available to
TTSI or Buyer upon consummation of the Contemplated Transactions or in
connection with the debt financing contemplated by Section 2.02, including,
without limitation, the availability of leveraged recapitalization accounting
treatment and the existence of goodwill (or the amount thereof) that is or may
be required to be reflected in the TTSI Financial Statements or any financial
statements of TTSI covering periods after the TTSI Financial Statements.
B.08 Absence of Certain Changes. Except for matters that would be
permitted in accordance with Section 5.01 if they occurred after the date of
this Agreement or as set forth in Schedule B.08, from March 29, 1998 to the date
of this Agreement, there has not been any material adverse change in the
business, financial condition or results of operations of the TTS Business taken
as a whole and there has not been:
(a) any event or occurrence that has had a Material Adverse
Effect on the TTS Business, other than those resulting from changes, whether
actual or prospective, in general conditions applicable to the industries in
which the TTS Business is involved or general economic conditions;
(b) any damage, destruction or other casualty loss affecting
the TTS Business or any assets that would constitute Contributed Assets or
Transferred Intellectual Property if owned, held or used by Parent or any of the
Seller Companies on the date on which the transactions contemplated by Section
2.01 are consummated that has a value in excess of $250,000;
(c) other than this Agreement, any transaction or commitment
made, or any Contract entered into, by Parent or any Seller Company relating
primarily to the TTS Business or any assets that would constitute Contributed
Assets or Transferred Intellectual Property if owned, held or used by Parent or
any of the Seller Companies on the date on which the transactions contemplated
by Section 2.01 are consummated (including the acquisition or disposition of any
assets) or any termination or amendment by Parent or any Seller Company of any
Contract or other right relating primarily to the TTS Business, in either case,
which would be prohibited by the provisions of Section 5.01 of the Agreement if
it were so made, entered, amended or modified;
(d) any sale or other disposition, other than as contemplated
by this Agreement, of more than $50,000 individually or $250,000 in the
aggregate of assets (other than the sale of Inventory (including obsolete
Inventory whether or not made in the ordinary course of business) in the
ordinary course of business) that would constitute Contributed Assets or
Transferred Intellectual Property if owned, held or used by any Seller Companies
on the date on which the transactions contemplated by Section 2.01 are
consummated;
(e) any increase in the compensation of any current employee
of the TTS Business other than as would be permitted under Section 5.01 and
other than nondiscretionary increases pursuant to Employee Plans or Benefit
Arrangements disclosed in Schedule B.20 or referenced in Exhibit D; and
(f) any cancellation, compromise, waiver or release by Parent
or any Seller Company of any claim or right (or a series of related rights and
claims) related to the TTS Business, other than cancellations, compromises,
waivers or releases in the ordinary course of business.
B.09 Sufficiency of and Title to the Contributed Assets.
(a) Except as set forth in Schedule B.09, the Contributed
Assets and the Transferred Intellectual Property, together with the services to
be provided to TTSI after Closing pursuant to the Services Agreement,
constitute, and on the Closing Date will constitute, all of the tangible and
intangible assets and services that are necessary for TTSI to operate the TTS
Business in the same manner in all material respects as such operations have
heretofore been conducted.
(b) Except as set forth in Schedule B.09, subject to the
receipt of any consents or approvals of any other Person, upon consummation of
the Contemplated Transactions, TTSI will have acquired good and marketable title
in and to, or a valid leasehold interest in, each of the Contributed Assets and
Transferred Intellectual Property that were used in the TTS Business to generate
the financial and operating results that are reflected in the Opening Statement
and the TTSI Financial Statements (other than any such Contributed Assets that
are consumed in the ordinary conduct of the TTS Business prior to Closing and in
a manner consistent with Section 5.01), free and clear of all Liens, except for
Permitted Liens.
(c) Schedule B.09 includes a true and complete list of all
real property owned by Seller Companies (or real property which Seller Companies
have a right to acquire in connection with the operation of the TTS Business)
which is included in the Contributed Assets (collectively, the "Owned Real
Property"). Schedule B.09 sets forth (i) the address of each parcel of Owned
Real Property and (ii) the owner of such Owned Real Property.
(d) Schedule B.09 includes a true and complete list of all
agreements (together with any amendments thereof) pursuant to which Seller
Companies lease, sublease or otherwise occupy (whether as landlord, tenant,
subtenant or other occupancy arrangement) any real property used in, or relating
to, the TTS Business (collectively, the "Leased Real Property"). Schedule B.09
sets forth (i) the address or location of each parcel of Leased Real Property
and (ii) the owner of the leasehold, subleasehold or occupancy interest for each
Leased Real Property.
B.10 No Undisclosed Liabilities. There are no liabilities (including
indebtedness for borrowed money) of Parent or any Seller Company relating to the
TTS Business that will constitute Assumed Liabilities of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
other than:
(a) liabilities disclosed in or provided for in the Opening
Statement or the TTSI Financial Statements and liabilities for matters reflected
in the determination of the Final Net Working Capital Amount;
(b) liabilities (i) disclosed in Schedule B.10, (ii) related
to any contract, agreement, lease, license, commitment, sales or purchase order
or other undertaking disclosed in the Disclosure Schedules or (iii) related to
any Employee Plan or Benefit Arrangements identified in Exhibit D or disclosed
in Schedule B.20, other than, with respect to clause (iii) those arising from
any breach, non-performance or other violation of any of the foregoing or any
fiduciary duty relating thereto;
(c) liabilities incurred in the ordinary course of business
consistent with past practice since March 29, 1998;
(d) liabilities which in the aggregate are not in excess of
$100,000 not required to be accrued for or reserved against in accordance with
GAAP as of March 29, 1998; and
(e) with respect to the bring down of this representation and
warranty as of the Closing Date, liabilities which in the aggregate are not in
excess of $100,000 not required to be accrued for or reserved against in
accordance with GAAP (or the other policies and procedures set forth in the
notes to the Opening Statement) as of the Closing Date.
B.11 Litigation. Except as set forth in Schedule B.11 or reserved
against or described in the Opening Statement, there is no action, suit,
investigation or proceeding pending against, or to the knowledge of Parent,
threatened against or affecting, the TTS Business or any Contributed Asset or
Transferred Intellectual Property before any Governmental Authority that could
reasonably be expected to result in damages, in the aggregate, in excess of
$100,000.
B.12 Material Contracts.
(a) Except as set forth in Schedule B.12 and except for
Contracts that do not constitute Assumed Liabilities, no Seller Company, with
respect to the TTS Business, is, and as of Closing TTSI will not be, party to or
otherwise bound by or subject to:
(i) any written employment, severance, consulting or
sales representative Contract which contains an obligation (excluding
commissions) to pay more than $100,000 per year and constitutes an
Assumed Liability;
(ii) any Contract containing any covenant limiting
the freedom of Seller Companies, with respect of the TTS Business or
the operations of the TTS Business, to engage in any line of business
or compete with any Person in any geographic area if such Contract will
be binding on TTSI after the Closing;
(iii) any Contract in effect on the date of this
Agreement relating to the disposition or acquisition of the assets of,
or any interest in, any business enterprise which relates to the TTS
Business other than the purchase and sale of inventory or the license
or sale of Intellectual Property in connection with the Shaft Lab
product line or other licenses of Intellectual Property granted in the
ordinary course of business which do not materially deplete the value
of such Intellectual Property prior to Closing;
(iv) any Financial Support Arrangements;
(v) any indebtedness for borrowed money of the TTS
Business (other than intercompany indebtedness that will be paid or
otherwise cancelled at or prior to Closing) that will constitute an
Assumed Liability if in existence on the date on which the transactions
contemplated by Section 2.01 are consummated;
(vi) any offset agreement entered into in connection
with an international sales transaction and relating to any Contract
that imposes on the TTS Business an obligation to perform that will
continue in effect on or after the Closing Date;
(vii) any agreement that places any Lien (other than
a Permitted Lien) on the Contributed Asset or any of the Transferred
Intellectual Property;
(viii) any agreements regarding leasing of any
material property (real or personal) as lessor or lessee;
(ix) any license or other grant of any rights or
interest in any Transferred Intellectual Property (other than any such
license or grant that would not be prohibited under Section 5.01);
(x) any warranty or indemnification agreement with
respect to the sale or distribution of its products;
(xi) any material agreement or contract with a
distributor, broker, sales agent or the like; and
(xii) any other agreement of any type involving
payments of more than $250,000 annually.
(b) Except as disclosed in Schedule B.12, each Contract
disclosed in Schedule B.12 is a legal, valid and binding obligation of Parent
(or the applicable Seller Company) enforceable against Parent (or the applicable
Seller Company) in accordance with its terms (except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally,
including the effect of statutory and other laws regarding fraudulent
conveyances and preferential transfers, and subject to the limitations imposed
by general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity), and Parent (or the applicable
Seller Company) is not in material default and has not failed to perform any
material obligation thereunder, and, to the knowledge of Parent, there does not
exist any event, condition or omission which would constitute a material breach
or default (whether by lapse of time or notice or both) by any other Person.
B.13 Licenses and Permits. To the knowledge of Parent, except as set
forth in Schedule B.13, Parent (or the appropriate Seller Company) has and
immediately following the Closing TTSI will have all licenses, franchises,
permits and other similar authorizations affecting, or relating in any way to,
the TTS Business required by law to be obtained by Parent (or the appropriate
Seller Company) or, following the Closing, TTSI to permit Parent or TTSI to
conduct the TTS Business in substantially the same manner as the TTS Business
has heretofore been conducted. As of Closing, except as set forth in Schedule
B.13, TTSI will have all licenses, franchises, permits and other similar
authorizations necessary for the conduct of the TTS Business, except where the
failure to have any such license, franchise, permit or other similar
authorization could not reasonably be expected to have a Material Adverse Effect
on the TTS Business.
B.14 Finders' Fees. Except for Donaldson, Lufkin & Jenrette Securities
Corporation, whose fees and expenses relating exclusively to the sale of the TTS
Business by Parent will be paid by Parent, there is no investment banker,
broker, finder or other intermediary that has been retained by or is authorized
to act on behalf of Parent or any Seller Company or TTSI who might be entitled
to any fee or commission from Parent or Buyer or any of their Affiliates upon
consummation of the Contemplated Transactions.
B.15 Environmental Compliance. Except as disclosed in Schedule B.15 and
except as reserved against or specifically identified in the Opening Statement,
Parent the TTS Business is and has been in material compliance with all
applicable Environmental Laws, and has obtained all material permits, licenses
and other authorizations that are required under applicable Environmental Laws.
Except as set forth in Schedule B.15 and except as reserved against or
specifically identified in the Opening Statement, (i) the TTS Business is and
has been in material compliance with the terms and conditions under which the
permits, licenses and other authorizations referenced in the preceding sentence
were issued or granted, (ii) Seller Companies hold all permits required by
Environmental Laws that are appropriate to conduct the TTS Business as presently
conducted in all material respects and to operate the Contributed Assets in all
material respects as they are presently operated; (iii) no suspension,
cancellation or termination of any permit referred to in clause (ii) is pending
or threatened; (iv) Parent has not received written notice of any material
Environmental Claim relating to or affecting the TTS Business or the Contributed
Assets, and there is no such threatened Environmental Claim; (v) no Hazardous
Substance is present at the facilities constituting Contributed Assets in a
manner to give rise to a material Environmental Liability; and (vi) Parent, in
connection with the TTS Business or the Contributed Assets, has not entered
into, agreed in writing to, or is subject to any judgment, decree, order or
other similar requirement of any Governmental Authority under any Environmental
Laws.
B.16 Compliance with Laws. Except as set forth in Schedule B.16, for
violations or infringements of Environmental Laws, the operation of the TTS
Business and condition of the Contributed Assets and the Transferred
Intellectual Property have not violated or infringed, and do not violate or
infringe, in any material respect any material Applicable Law or any material
order, writ, injunction or decree of any Governmental Authority.
B.17 Intellectual Property. Except as set forth in Schedule B.17:
(a) Parent (or a Seller Company) owns, free and clear of all
Liens other than Permitted Liens, and subject to any licenses granted by Seller
Companies prior to the date of this Agreement, or after the date of this
Agreement and prior to Closing in accordance with Section 5.01, all right, title
and interest in the Transferred Intellectual Property;
(b) The operation of the TTS Business as heretofore conducted
does not conflict with, infringe upon or violate the Intellectual Property
rights of any other Persons and none of the Seller Companies have received any
written notices or claims with respect to the TTS Business alleging infringement
or misappropriation of any Intellectual Property of any third party or
contesting the validity, enforceability, use or ownership of the Transferred
Intellectual Property (including, without limitation, any demands or offers to
license any Intellectual Property from any third party, except as previously
disclosed to Buyer, except to the extent that such conflict, infringement or
violation has not had, and cannot reasonably be expected to have, a Material
Adverse Effect on the TTS Business;
(c) Parent (or a Seller Company) has the right to use all
Intellectual Property used by the TTS Business and necessary for the continued
operation of the TTS Business in substantially the same manner as its operations
have heretofore been conducted;
(d) Upon the consummation of the Closing hereunder, (i) TTSI
will be vested with all of Parent's (or the Seller Company's) rights, title and
interest in, and Parent's (or the Seller Company's) rights and authority to use
in connection with the TTS Business, all of the Transferred Intellectual
Property and (ii) the Transferred Intellectual Property, and any other interests
in Intellectual Property transferred hereunder collectively constitute all
rights and interests in Intellectual Property which are necessary for the
continued operation of the TTS Business as a whole in substantially the same
manner as its operations have heretofore been conducted;
(e) Neither Parent nor any of the Seller Companies has
received any written notice of any infringement or misappropriation by any third
party with respect to the Transferred Intellectual Property;
(f) To the knowledge of Parent and each of the Seller
Companies, all of the desktop software and all of the Oracle financial software
necessary for the conduct of the TTS Business will operate without interruption
and/or malfunction due to the recognition and processing of dates on and beyond
January 1, 2000, except to the extent that a failure to do so could not
reasonably be expected to have a Material Adverse Effect on the TTS Business.
The TTS Business has commenced review of its CNC manufacturing computer software
located at the Amory Facility and the Olive Branch Facility. This review is in
its early stages and no year 2000 remediation plans have been finalized. To the
knowledge of Parent and TTSI, there exists sufficient time to remediate any
material non-compliance issues that may arise with respect to the CNC
manufacturing computer software such that the CNC manufacturing computer
software will operate without interruption and/or malfunction due to the
recognition and processing of dates on and beyond January 1, 2000 except to the
extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect on the TTS Business.
(g) Notwithstanding the provisions of this Section B.17,
Parent makes no representation or warranty, and no such representation or
warranty shall be implied, that any of such Intellectual Property is valid or
enforceable.
B.18 Taxes.
(a) Except as set forth in Schedule B.18, Parent and each
Seller Company has exercised reasonable care in the preparation of, and has duly
and timely filed, all applicable material Tax Returns with respect to all Taxes
required to be filed prior to the date hereof and, as of the Closing Date will
have exercised reasonable care in the preparation of, and will have timely
filed, all applicable Tax Returns with respect to Taxes required to have been
filed prior to the Closing Date, except where the failure to exercise reasonable
care or to file such Tax Returns could not reasonably be expected to have a
Material Adverse Effect on the TTS Business. Except as set forth in Schedule
B.18, all Taxes shown on the Tax Returns or pursuant to any declarations or
assessments received by Parent and each Seller Company (including estimated
Taxes), have been duly and timely paid, except when the failure to make payment
could not reasonably be expected to have a Material Adverse Effect on the TTS
Business, and no such Taxes have created a Lien (other than a Permitted Lien)
against or impair the ability to transfer the Contributed Assets to TTSI free
and clear of any Lien (other than a Permitted Lien) in accordance with the terms
of this Agreement. Except as set forth in Schedule B.18, all such Tax Returns
are true, correct and complete in all material respects, except where the
failure to be true, correct and complete could not reasonably be expected to
have a Material Adverse Effect on the TTS Business. Except as set forth in
Schedule B.18, there exists no Tax deficiency or unpaid Tax assessed by any
Governmental Authority against Parent or any Seller Company, except where such
deficiency or assessment could not reasonably be expected to have a Material
Adverse Effect on the TTS Business.
(b) As of the date of this Agreement, Schedule B.18 contains a
list of all states and other jurisdictions where Seller Companies have filed Tax
Returns during the past three years with respect to Contributed Assets or
Transferred Intellectual Property.
(c) (i) TTSI has filed all material Tax Returns that it
was required to file. All such Tax Returns were correct and complete in all
material respects. All Taxes owed by TTSI (whether or not shown on any Tax
Return) have been paid. TTSI is not currently the beneficiary of any extension
of time within which to file any Tax Return, other than as disclosed on Schedule
B.18 or as a result of being a member of a combined or a consolidated group for
Tax purposes. There are no Liens on any of the assets of TTSI that arose in
connection with any failure (or alleged failure) to pay any Tax.
(ii) TTSI has withheld and paid all material Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholders, or other third
party.
(iii) Neither Parent nor any Seller Company expects
any authority to assess any additional Taxes for any period for which Tax
Returns have been filed for TTSI, other than as disclosed on Schedule B.18 or as
a result of being a member of a combined or a consolidated group for Tax
purposes. There is no dispute or claim concerning any Tax Liability of TTSI
either (A) claimed or raised by any authority in writing or (B) as to which any
of the Parent or any Seller Company has knowledge based upon personal contact
with any agent of such authority, other than as disclosed on Schedule B.18 or as
a result of being a member of a combined or a consolidated group for Tax
purposes. Schedule B.18 lists all federal, state, local, and foreign income Tax
Returns filed with respect to TTSI for taxable periods ended on or after
December 31, 1993, indicates those Tax Returns that have been audited, and
indicates those Tax Returns that currently are the subject of audit.
(iv) TTSI has not waived any statute of limitations
in respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency, other than as disclosed on Schedule B.18 or as a
result of being a member of a combined or a consolidated group for Tax purposes.
(v) TTSI has not filed a consent under Code Section
341(f) concerning collapsible corporations. TTSI has not made any payments, is
not obligated to make any payments, and is not a party to any agreement that
under certain circumstances could obligate it to make any payments that will not
be deductible under Code Section 280G. TTSI has not been a United States real
property holding corporation within the meaning of Code Section 897(c)(2) during
the applicable period specified in Code Section 897(c)(1)(A)(ii).
B.19 Insurance. Schedule B.19 contains a correct and complete list of
all material policies of insurance held by any Seller Companies that are in
effect on the date of this Agreement and that are applicable to the TTS
Business. None of the insurance carriers listed in Schedule B.19 are related to
or affiliated with Parent, other than Shenandoah Insurance, Inc., and Parent has
not received notice or any other indication from any insurer or agent (other
than Shenandoah Insurance, Inc.) of any intent to cancel or not to renew any of
the insurance policies listed in Schedule B.19, except for cancellations or
failures to renew that will occur as a result of the Closing.
B.20 Employee Benefit Matters.
(a) Schedule B.20 lists each Employee Plan and material
Benefit Arrangement which covers Transferred Employees and each collective
bargaining agreement covering Transferred Employees.
(b) Except as set forth in Schedule B.20, with respect to the
TTS Business:
(i) neither Parent nor any member of its "Controlled
Group" (defined as any organization which is a member of a controlled
group of organizations within the meaning of Code Sections 414(b), (c),
(m) or (o)) has ever contributed to or had any liability to a
multi-employer plan, as defined in Section 3(37) of ERISA;
(ii) no fiduciary of any funded Employee Plan has
engaged in a nonexempt "prohibited transaction" (as that term is
defined in Section 4975 of the Code and Section 406 of ERISA) which
could subject Buyer to a penalty tax imposed by Section 4975 of the
Code;
(iii) no Employee Plan that is subject to Section 412
of the Code has incurred an "accumulated funding deficiency" within the
meaning of Section 412 of the Code, whether or not waived;
(iv) each Employee Plan and Benefit Arrangement has
been established and administered in all material respects in
accordance with its terms, the terms of any applicable collective
bargaining agreements and in compliance with Applicable Law;
(v) TTSI has not incurred and Parent is not aware of
any facts which would result in TTSI incurring any liability under
Title IV of ERISA other than for the payment of premiums to the Pension
Benefit Guaranty Corporation ("PBGC"), all of which, to the knowledge
of Parent, have been paid when due with respect to any plan that TTSI
or any member of its controlled group (within the meaning of Code
Section 414) maintains or ever has maintained or to which any of them
contributes or ever has been required to contribute;
(vi) no defined benefit Employee Plan has been
terminated; nor have there been any "reportable events" (as that term
is defined in Section 4043 of ERISA and the regulations thereunder),
other than reportable events arising directly from the Contemplated
Transactions, which would present a risk that an Employee Plan would be
terminated by the PBGC in a distress termination;
(vii) each Employee Plan intended to qualify under
Section 401 of the Code has received a determination letter that it is
so qualified and to the knowledge of Parent, no event has occurred with
respect to any such Employee Plan which could cause the loss of such
qualification or exemption;
(viii) with respect to each Employee Plan listed in
Schedule B.20, Parent has made available to Buyer the most recent true
and complete copy (where applicable) of (A) the plan document; (B) the
most recent determination letter; (C) any summary plan description; (D)
Form 5500; (E) the most recent actuarial report; and (6) a complete
copy of any collective bargaining agreement pursuant to which any
Employee Plan or Benefit Arrangement is maintained;
(ix) with respect to the Transferred Employees, there
are no post-retirement medical or health plans in effect (other than as
required under Section 4980B of the Code);
(x) there are no actions, claims or investigations
pending or, to the knowledge of Parent threatened, against any Employee
Plan, Benefit Arrangement, or any administrator, fiduciary or sponsor
thereof with respect to the TTS Business, other than benefit claims
arising in the normal course of operation of such Employee Plan or
Benefit Arrangement;
(xi) none of the Employee Plans or Benefit
Arrangements obligates TTSI to pay any separation, severance,
termination or similar benefit solely as a result of any transaction
contemplated by this Agreement or solely as a result of a change in
control or ownership;
(xii) none of the Employee Plans or Benefit
Arrangements has unfunded liabilities that are Assumed Liabilities
(other than those relating to post employment medical, dental and life
insurance benefits);
(xiii) the post-retirement medical benefits liability
set forth in the TTSI audited December 31, 1997 financial statements
was calculated in accordance with Financial Accounting Statement 106
based on claim experience which is reasonably representative of that
historically incurred by the Parent Company and its Affiliates in the
aggregate and such claim experience is not materially different from
that which was historically incurred by the TTS Business;
(xiv) assets under the Parent's Hourly Pension Plan
(as such term is defined in Section D.08) may be transferred to the
Successor Hourly Pension Plan (as such term is defined in Section D.08)
in accordance with Section D.08 of this Agreement without violating the
collective bargaining agreement or other Applicable Law;
(xv) all Employee Plans and material Benefit
Arrangements required under any collective bargaining agreement or
Applicable Law relating to the bargaining unit employees of the TTS
Business are listed or referred to on Schedule B.20; and
(xvi) to the knowledge of Parent no organizational
effort is presently being made or threatened by or on behalf of any
labor union with respect to employees of any of the nonunionized TTS
Business locations. Except for the matters referenced in Items 1 and 19
of Schedule B.11 of the Disclosure Schedule, with respect to the TTS
Business, no labor strike, work stoppage or slowdown, or other material
labor dispute is underway or, to the knowledge of Parent, threatened.
Section B.21. No Material Shared Assets/Liabilities. Except to the
extent contemplated by the services to be provided under the Services Agreement,
there is no material asset, tangible or intangible, necessary for the conduct of
the TTS Business as it has historically been conducted the use of which is
shared by the TTS Business and any business of Parent or any of the Seller
Companies other than the TTS Business. There is no material Assumed Liability
the obligation for which is shared by the TTS Business and any business of
Parent or any of the Seller Companies other than the TTS Business.
<PAGE>
EXHIBIT C
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Parent that:
C.01 Organization and Existence. Buyer is a limited liability company
duly formed, validly existing and in good standing under the laws of the state
of its formation and has all powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted and as contemplated to be conducted in connection with the
transactions contemplated hereby, except where the failure to have such
licenses, authorizations, consents and approvals has not had and may not
reasonably be expected to have, a Material Adverse Effect on Buyer. As of the
Closing Date, Buyer will be duly qualified to do business as a foreign
corporation in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities (after giving effect to the
Contemplated Transactions) make such qualification necessary to carry on its
business as now conducted, except, in the case of Buyer, for those jurisdictions
where failure to be so qualified has not had, and may not reasonably be expected
to have, a Material Adverse Effect on Buyer.
C.02 Corporate Authorization. The execution, delivery and performance
by Buyer of the Transaction Documents and the consummation by each of Buyer of
the Contemplated Transactions are within the powers of Buyer and have been (or,
prior to the Closing, will have been) duly authorized by all necessary action on
the part of Buyer. Each of the Transaction Documents to which Buyer is party
constitutes a legal, valid and binding agreement of Buyer, enforceable against
Buyer in accordance with its terms (i) except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting creditors'
rights generally, including the effect of statutory and other laws regarding
fraudulent conveyances and preferential transfers and (ii) subject to the
limitations imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
C.03 Governmental Authorization. Except as set forth on Schedule C.03,
the execution, delivery and performance by Buyer of the Transaction Documents
require no action by or in respect of, consents or approvals of, or filing with,
any governmental body, agency, official or authority other than compliance with
any applicable requirements of the HSR Act.
C.04 Non-Contravention. The execution, delivery and performance by
Buyer of the Transaction Documents do not and will not (i) contravene or
conflict with the articles of organization or limited liability company
agreement of Buyer, (ii) assuming compliance with the matters referred to in
Section C.03, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to Buyer, or (iii) constitute a default under or give rise to
any right of termination, cancellation or acceleration of any right or
obligation of Buyer or to a loss of any benefit to which Buyer is entitled under
any provision of any agreement, contract or other instrument binding upon Buyer
or any license, franchise, permit or other similar authorization held by Buyer,
except, in the case of clauses (ii) and (iii), for any such contravention,
conflict, violation, default, termination, cancellation, acceleration or loss
that could not reasonably be expected to have a Material Adverse Effect on Buyer
taken as a whole.
C.05 Finders' Fees. There is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of Buyer who might be entitled to any fee or commission from Parent or Buyer (or
any of their Affiliates) upon consummation of the Contemplated Transactions.
C.06 Litigation. There is no action, suit, investigation or proceeding
pending against, or to the knowledge of Buyer, threatened against or affecting,
Buyer before any court or arbitrator or any Governmental Authority that in any
manner challenges or seeks to prevent, enjoin, alter or materially delay the
Contemplated Transactions.
C.07 Financing. Buyer has or will have prior to Closing available to it
cash, marketable securities or other investments, or presently available sources
of credit, to enable it to purchase the Acquired Shares as contemplated by
Section 2.03(b) and Buyer will use its commercially reasonable best efforts to
assist TTSI to have available to it prior to Closing borrowings sufficient to
consummate the Redemptions and to pay off the promissory notes to be delivered
to Tucker, B&D Australasia and Nippon pursuant to Section 2.01(g). As of the
date hereof, Buyer has delivered true, correct and complete copies of the
Commitment Letters to Parent. The copies of the Commitment Letters delivered to
Parent include all of the terms and conditions of the financings contemplated
therein, including but not limited to the conditions to any such financings, and
there are no other terms or conditions applicable to such financings.
C.8 Investment Representations. The Buyer is acquiring the Acquired
Shares for its own account and not with a view to or for sale in connection with
any distribution other than in accordance with federal and state securities
laws. The Buyer has received from Parent all information that is requested and
considers necessary or appropriate for deciding whether to purchase the Acquired
Shares. The Buyer further represents that it has had an opportunity to ask
questions and receive answers from Parent, the Seller Companies and TTSI
regarding the terms and conditions of its acquisition of the Acquired Shares.
The Buyer has experience as an investor in securities of companies and
acknowledges that it can bear the economic risk of its investment in the
Acquired Shares. The Buyer has (i) by reason of its business or financial
experience or the business or financial experience of its professional advisers
who are unaffiliated with, and who are not compensated by, Parent or the Seller
Companies or any affiliate thereof, directly or indirectly, has the capacity to
protect is own interest in connection with its purchase of the Acquired Shares.
The Buyer has the financial capacity to bear the risk of this investment and has
received from Parent, TTSI and the Seller Companies all information that it
requested and considers necessary or appropriate for deciding whether to
purchase the Acquired Shares. The Buyer is an "Accredited Investor" within the
meaning of Rule 501(a) of Regulation D under the Securities Act.
C.9 Restrictive Legends. The Buyer understands that the Acquired Shares
will be "restricted securities" under the Securities Act, in as much as they are
being acquired from an affiliate of TTSI in a transaction not involving a public
offering, and that, under the Securities Act, and applicable regulations
thereunder, such securities may be resold without registration under the
Securities Act, only in certain limited circumstances. The Buyer understands
that the certificates evidencing the Acquired Shares will bear the legend set
forth below, together with any other legends required by the applicable state
securities laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE AND THE RIGHTS OF HOLDERS THEREOF ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OTHER
RESTRICTIONS, AND THE HOLDER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE, INCLUDING ANY FUTURE
HOLDERS IS BOUND BY THE TERMS OF THE STOCKHOLDERS'
AND REGISTRATION RIGHTS AGREEMENTS BETWEEN THE
ORIGINAL PURCHASER, THE COMPANY AND CERTAIN OTHER
STOCKHOLDERS (COPIES OF WHICH MAY BE OBTAINED FROM
THE COMPANY).
<PAGE>
EXHIBIT D
EMPLOYEES AND EMPLOYEE BENEFIT MATTERS
I. Employees and Employment.
D.01 General. In connection with the Contemplated Transactions, and on
or before the Closing Date, the employment of all Active Employees of the TTS
Business including, without limitation, employees based in the TTS Business
headquarters in Memphis, Tennessee, employees based in the Olive Branch
Facility, the Amory Facility and the West Coast Technical Center and the
employees listed on Attachment XIII, shall be transferred to TTSI such that the
employment of such persons shall be considered continuous employment under
Applicable Law. "Active Employee" shall mean any individual who is actively
employed by TTSI or any Seller Company in connection with the TTS Business or is
on authorized leave of absence, military service (without restriction) or
lay-off with recall rights (without restriction) with respect to the TTS
Business and where applicable shall include independent contractors. The Active
Employees who are employed at any time on or after the Closing Date with Buyer
or TTSI are herein collectively referred to as "Transferred Employees." Buyer
shall ensure that such employment shall be at the same workplace and on the same
terms and conditions as those under which such employees are currently employed
by Seller Companies and the employment of each Transferred Employee shall be
continued by Buyer or TTSI for the maximum applicable termination notice period
to which the Seller Companies may be subject under Applicable Law as a result of
the Contemplated Transactions. From and after the Closing Date, except as
otherwise provided herein, Buyer and TTSI shall assume all obligations under any
agreements, contracts or Applicable Law relating to the terms and conditions of
employment of all Active Employees of the TTS Business, and Buyer and TTSI shall
be responsible for any liability or obligations arising out of or pertaining to
the termination of employment of, hiring of or failure or refusal to hire any
Active Employee of the TTS Business on and after the Closing Date.
No later than three days prior to Closing, Parent shall provide buyer
with a listing of each Active Employee and the status of each such Active
Employee, including whether such Active Employee is actively employed, on leave
of absence (and the reason for such leave of absence) or on lay-off with recall
rights.
D.02 Labor Agreements. TTSI shall recognize the applicable labor
unions, collective bargaining representative, trade unions or work councils
representing any employees of the TTS Business as the exclusive collective
bargaining representatives of such employees with respect to wages, hours,
fringe benefits and other terms and conditions of employment to the extent so
recognized by Seller Companies for all such employees who are within the
appropriate bargaining unit as determined by Applicable Law. TTSI shall become a
successor employer under any labor or collective bargaining agreements and Buyer
and TTSI agree to honor the terms of and to assume all obligations of the Seller
Companies under existing collective bargaining agreements in respect of such
unionized employees from and after the Closing Date and all legal obligations
arising from such recognition or assumption.
D.03 Recalled or Rehired Employees. Buyer and TTSI confirm that any
employees of the TTS Business that are laid off or on leave as of the Closing
Date and who are recalled or rehired by Buyer or TTSI or return from leave on or
after the Closing Date will be recalled or rehired by Buyer or TTSI or returned
to employment in compliance with any applicable agreements, contracts or
Applicable Law and will be accorded the benefits otherwise provided to
Transferred Employees by Buyer or TTSI. Buyer further agrees that during the
term of such leave or layoff, Buyer, in accordance with the terms of such plans
and arrangements and Applicable Law, shall credit such employee with service and
shall provide benefits under TTSI's plans.
D.04 Negotiations with Employees or Employee Representatives. If and to
the extent that any provisions of this Agreement are or may be subject to
negotiation with employees, or applicable labor unions, trade unions or work
councils, by policy, contract, collective agreement or Applicable Law, the
Seller Companies, Buyer and TTSI shall cooperate fully in such negotiations.
D.05 Termination and Plant Closing Notices; WARN. Parent shall provide
or cause to be provided any notices to the employees of the TTS Business that
may be required under any Applicable Law, including but not limited to WARN or
any similar state or local law, with respect to events that occur prior to the
reorganization of the TTS Business. Buyer shall provide any such notices to
Active Employees with respect to events that occur as a result of the
Contemplated Transactions, and to Transferred Employees with respect to events
that occur on and after the Closing Date. Buyer shall not take, and shall cause
TTSI not to take, any action after the Closing that would cause any termination
of employees by Seller Companies that occur on or before the Closing Date to
constitute a "plant closing" or "mass layoff" under WARN or any similar state or
local law, or create any liability to the Seller Companies for employment
termination under Applicable Law. Seller shall provide Buyer, upon request, with
a list of employees terminated prior to Closing who may be affectd under WARN or
similar state or local law.
D.06 Immigration Matters. Buyer acknowledges that the Contemplated
Transactions may trigger certain obligations under the immigration laws of the
countries where the TTS Business operates. Buyer shall be solely responsible for
compliance with all requirements of such immigration laws and agrees to make any
necessary filings with the appropriate Governmental Authority to ensure the
continued employment eligibility of the Transferred Employees.
II. United States Employee Benefit Matters.
D.07 Salaried Employee Pension Plans.
(a) As soon as practicable after the Closing Date, with effect
as of the Closing Date, TTSI shall establish a defined benefit plan ("Successor
Salaried Pension Plan"). As soon as practicable following the earlier of
delivery to Parent of a favorable determination letter from the Internal Revenue
Service regarding the qualified status of the Successor Salaried Pension Plan or
the issuance of indemnities satisfactory to the Parent in its sole discretion,
Parent shall cause the transfer from The Black & Decker Pension Plan ("Parent's
Salaried Pension Plan") to the Successor Salaried Pension Plan of assets (in
accordance with paragraphs (c) and (d) below) and liabilities which are
attributable to the Active Employees who are participants in the Parent's
Salaried Pension Plan as of the Closing Date.
(b) The Active Employees shall be eligible to participate
under the Successor Salaried Pension Plan for a period of at least one year
following the Closing Date on the same terms and conditions as provided to the
Active Employees under Parent's Salaried Pension Plan immediately prior to the
Closing Date. Service with Parent or any of its Affiliates prior to the Closing
Date which was recognized under Parent's Salaried Pension Plan shall be
recognized for the same purposes under the Successor Salaried Pension Plan.
(c) The amount of assets to be transferred from the Parent's
Salaried Pension Plan shall be equal to the Projected Benefit Obligation ("PBO")
as determined in accordance with the Financial Accounting Standards Board
Statement 87 ("FAS 87") and which is attributable to the Active Employees who
are participants in Parent's Salaried Pension Plan as of the Closing Date (the
"Transfer Amount"). Determination of the PBO shall be in accordance with the
actuarial demographic assumptions used by the Seller's actuary in preparing the
January 1, 1996 actuarial report for Parent's Salaried Pension Plan and the
economic assumptions used by Parent for its December 31, 1997 FAS 87 year end
disclosures. The above-described calculation of the amount to be transferred
from the Parent's Salaried Pension Plan to the Successor Salaried Pension Plan
shall be made by Seller's actuary and reviewed by Buyer's actuary.
(d) All assets transferred under this Section D.07 shall be
made in cash. The transfer contemplated herein shall comply with all
requirements of Sections 414(l) and 401(a)(12) of the Code and in no event shall
the Transfer Amount be less than the amount determined pursuant to Section
414(l) of the Code, using an interest rate of 5.75%. Pending completion of the
transfers contemplated by this Section D.07, any benefits that are payable to
Active Employees under the Parent's Salaried Pension Plan shall be paid or
continue to be paid out of such plan. The Transfer Amount will be adjusted on a
pro-rata basis (based on the ratio of the PBO calculated under this Section D.07
versus the total PBO for Parent's Salaried Pension Plan, calculated as of the
Closing Date) to reflect the actual asset performance of the Parent's Salaried
Pension Plan from the Closing Date to the first day of the month prior to the
date of transfer and credited with interest from that date until the date of
transfer at the rate of 7.5% per year, and adjusted to reflect benefit payments
and expenses paid after the Closing Date by the Parent's Salaried Pension Plan
which are related to the obligations being transferred to the Successor Salaried
Pension Plan. Pending the completion of such transfers, Parent will cooperate
with Buyer with respect to plan administration, disbursement of benefits and
other pertinent information.
(e) The Successor Salaried Pension Plan and TTSI shall be
liable for benefits with respect to Active Employees accrued under the Parent's
Salaried Pension Plan prior to the Closing Date to the extent of the assets
transferred in accordance with this Section D.07. The Buyer agrees that neither
Parent nor Parent's Salaried Pension Plan shall have any further responsibility
with respect to the assets and liabilities so transferred.
D.08 Hourly Paid Employee Pension Plans.
(a) As soon as practicable after the Closing Date, with effect
as of the Closing Date, TTSI shall establish a defined benefit plan ("Successor
Hourly Pension Plan"). As soon as practicable following the earlier of delivery
to Parent of a favorable determination letter from the Internal Revenue Service
regarding the qualified status of the Successor Hourly Pension Plan, or the
issuance of indemnities satisfactory to the Parent, in its sole discretion
Parent shall cause the transfer from the Pension Plan for Hourly Employees of
the True Temper Sports Division represented by the United Steelworkers of
America ("Parent's Hourly Pension Plan") to the Successor Hourly Pension Plan of
assets (in accordance with paragraph (c) and (d) below) and liabilities which
are attributable to the Active Employees who are participants in the Parent's
Hourly Pension Plan as of the Closing Date.
(b) The Active Employees shall be eligible to participate
under the Successor Hourly Pension Plan in accordance with any applicable
collective bargaining agreement and Applicable Law. Service with Parent or any
of its Affiliates prior to the Closing Date which was recognized under Parent's
Hourly Pension Plan shall be recognized for the same purposes under the
Successor Hourly Pension Plan.
(c) The amount of assets to be transferred from the Parent's
Hourly Pension Plan shall be equal to the Projected Benefit Obligation ("PBO")
as determined in accordance with the Financial Accounting Standards Board
Statement 87 ("FAS 87") and which is attributable to the Active Employees who
are participants in Parent's Hourly Pension Plan as of the Closing Date (the
"Transfer Amount"). Determination of the PBO shall be in accordance with the
actuarial demographic assumptions used by Seller's actuary in preparing the
January 1, 1996 actuarial report for Parent's Hourly Pension Plan and the
economic assumptions used by Parent for its December 31, 1997 FAS 87 year end
disclosures. The above-described calculation of the amount to be transferred
from the Parent's Hourly Pension Plan to the Successor Hourly Pension Plan shall
be made by Seller's actuary and reviewed by Buyer's actuary.
(d) All assets transferred under this Section D.08 shall be
made in cash. The transfer contemplated herein shall comply with all
requirements of Sections 414(l) and 401(a)(12) of the Code and in no event shall
the Transfer Amount be less than the amount determined pursuant to Section
414(l) of the Code, using an interest rate of 5.75%. Pending completion of the
transfers contemplated by this Section D.08, any benefits that are payable to
Active Employees under the Parent's Hourly Pension Plan shall be paid or
continue to be paid out of such plan. The Transfer Amount will be adjusted on a
pro-rata basis (based on the ratio of the PBO calculated under this Section D.08
versus the total PBO for Parent's Hourly Pension Plan, calculated as of the
Closing Date) reflect the actual asset performance of the Parent's Hourly
Pension Plan from the Closing Date to the first day of the month prior to the
date of transfer and credited with interest from that date until the date of
transfer at the rate of 7.5% per year, and adjusted to reflect benefit payments
and expenses paid after the Closing Date by the Parent's Hourly Pension Plan
which are related to the obligations being transferred to the Successor Hourly
Pension Plan. Pending the completion of such transfers, Parent will cooperate
with Buyer with respect to plan administration, disbursement of benefits and
other pertinent information.
(d) The Successor Hourly Pension Plan shall be liable for
benefits with respect to Active Employees accrued under the Parent's Hourly
Pension Plan prior to the Closing Date to the extent of the assets transferred
in accordance with this Section D.08. The Buyer agrees that neither Parent nor
Parent's Salaried Pension Plan shall have any further responsibility with
respect to the assets and liabilities so transferred.
D.09 Savings Plans.
(a) Parent shall cause the trustee of The Black & Decker
Retirement Savings Plan ("Parent's Savings Plan") to transfer, as of the
transfer date specified below, the full account balances of the Active Employees
under Parent's Savings Plan, to the Successor Savings Plan (as hereinafter
defined). To the extent permissible under Parent's Savings Plan and to the
extent participants' account balances are invested in Parent's stock, such
assets shall be transferred to the Successor's Savings Plan in kind. Parent,
Buyer and TTSI shall make any and all filings and submissions to the appropriate
Governmental Authorities, and shall make any necessary plan amendments arising
in connection with the transfer of assets from Parent's Savings Plan to the
Successor Savings Plan.
(b) As soon as practicable after the Closing Date, TTSI shall,
and Buyer shall cause TTSI to, establish or designate an individual account plan
for the benefit of Active Employees who were participants in Parent's Savings
Plan (the "Successor Savings Plan"), shall take all necessary action, if any, to
qualify the Successor Savings Plan under the applicable provisions of the Code
and shall make any and all filings and submissions to the appropriate
Governmental Authorities required to be made by it in connection with the
transfer of assets contemplated hereby. The Successor Savings Plan shall provide
that those Transferred Employees and their beneficiaries who were participants
in Parent's Savings Plan shall receive credit for all service and compensation
with Parent or any of its Affiliates prior to the Closing Date for all purposes,
to the same extent as such service and compensation are recognized under
Parent's Savings Plan immediately prior to the Closing Date. TTSI shall, and
Buyer shall cause TTSI to, take all action required or appropriate to vest fully
all such Transferred Employees in their entire account balances transferred to
the Successor Savings Plan and, to the extent required under Section 411(d)(6)
of the Code, to protect and preserve all benefits, rights and features relating
to those account balances transferred from Parent's Savings Plan. As soon as
practicable following the earlier of the delivery to Parent of a favorable
determination letter from the Internal Revenue Service regarding the qualified
status of the Successor Savings Plan or the issuance of indemnities satisfactory
to Parent in its sole discretion, Parent shall cause the trustee of Parent's
Savings Plan, to transfer the full account balances of Transferred Employees
under Parent's Savings Plan as of the transfer date to the appropriate trustee
designated by TTSI and Buyer under the trust agreement forming a part of the
Successor Savings Plan; provided, that assets consisting of notes or other
instruments evidencing loans made to participating Transferred Employees shall
be transferred in such form to the Successor Savings Plan.
(c) Effective as of the date of the transfer of assets
contemplated by this Section D.09, TTSI shall assume all of the liabilities and
obligations of Parent or any of its Affiliates in respect of the account
balances accumulated by Transferred Employees under Parent's Savings Plan (to
the extent that assets relating to such account balances have been transferred
to the Successor Savings Plan), and the Successor Savings Plan assumes all
liabilities and obligations of Parent's Savings Plan with respect to all account
balances under Parent's Savings Plan of such US Transferred Employees (to the
extent that assets relating to such account balances have been transferred to
the Successor Savings Plan). Neither Buyer, TTSI nor any of their respective
Affiliates shall assume any other obligations or liabilities arising under or
attributable to Parent's Savings Plan and neither Parent nor any of its
Affiliates shall assume any liabilities or obligations under or attributable to
the Successor Savings Plan. Prior to the transfer of assets contemplated by this
Section D.09, TTSI, if consented to by the applicable Transferred Employee,
shall withhold from such Transferred Employee's pay, loan repayments relating to
any outstanding loan to such Transferred Employee under Parent's Savings Plan
and shall promptly forward those withholdings to Parent's Savings Plan.
D.10 Health and Welfare Plans; Benefit Arrangements.
(a) For a period of one year following the Closing Date, TTSI
shall ensure, and Buyer shall cause TTSI to ensure, that the US Transferred
Employees are provided benefits that are substantially equivalent on an
aggregate basis (and "substantially identical" with respect to health benefit
coverage for purposes of satisfying Section 4980B of the Code) to those provided
under the Employee Plans and Benefit Arrangements as in effect for those US
Transferred Employees immediately prior to the Closing Date, it being understood
and agreed that such benefits provided by TTSI shall include health, medical,
dental, life, disability and severance benefits. Notwithstanding anything to the
contrary in the preceding sentence, Buyer shall take commercially reasonable
steps for purposes of TTSI providing health benefit coverage to US Transferred
Employees on the Closing Date through CIGNA and agrees that such health benefit
coverage will be "substantially identical" to that provided under Parent's group
health plan as in effect immediately prior to the Closing Date for purposes of
satisfying Section 4980B of the Code; provided, however, that if such health
benefit coverage is not in place as of the Closing Date, Parent agrees to
provide continuation coverage to US Transferred Employees (and their covered
dependents) to the extent required by Section 4980B of the Code. Parent, at its
option, may provide and administer continuation coverage and benefit claims
under its group health plan and in such event TTSI shall reimburse Parent for
the reasonable and customary cost of the provision and administration of
benefits thereunder for the TTSI employees and covered dependents. Parent agrees
to cooperate and assist Buyer and TTSI as is reasonably necessary to put such
TTSI's health benefit coverage in place.
(b) In furtherance and not in limitation of the provisions of
this Section D.10, as of the Closing Date, TTSI shall, and Buyer shall cause
TTSI to, (i) establish severance plans, agreements and arrangements with the
same terms and conditions as those provided under the applicable severance
agreements, plans or arrangements listed on Schedule B.20, (ii) maintain such
severance agreements, plans and arrangements for a period of at least one year
following the Closing Date, and (iii) pay any benefits to any US Transferred
Employees that they may be entitled to receive under such severance agreements,
plans or arrangements. In furtherance and not in limitation of the provisions of
this Section D.10, as of the Closing Date, TTSI shall assume the obligations of
Seller Companies under the individual employee severance agreements listed on
Schedule B.20.
(c) With respect to any US Transferred Employee (including any
beneficiary or dependent thereof), except as expressly set forth herein, Seller
Companies shall retain (i) all liabilities and obligations arising under any
group life, accident, medical, dental or disability plan or similar arrangement
(whether or not insured) to the extent that such liability or obligation relates
to claims incurred (whether or not reported) on or prior to the Closing Date,
and (ii) all liabilities and obligations arising under any worker's compensation
laws to the extent such liability or obligation relates to the period prior to
the Closing Date.
(d) Any group health plan, disability plan or other plans
established or designated by TTSI after closing for the benefit of US
Transferred Employees shall not contain any exclusion or limitation with respect
to any preexisting condition.
(e) In furtherance and not in limitation of the provisions of
this Section D.10, TTSI covenants and agrees that in 1998 it shall continue the
annual incentive plan arrangements in effect for the individuals listed in
Attachment B.20-A to Schedule B.20 on the basis set forth in Attachment B.20-A
and shall not amend or otherwise modify such arrangements. Buyer covenants and
agrees to take all actions necessary or appropriate after the Closing to cause
TTSI to satisfy its obligations under this Section D.10(e).
D.11 Post-Retirement Medical and Life Insurance.
(a) Seller Companies shall retain responsibility for providing
health, medical, dental, hospitalization, life insurance or similar benefits
(including, without limitation, reimbursement for Medicare premiums) to any
employee or former employee of the TTS Business (other than US Transferred
Employees) who retires or has retired on or before the Closing Date. TTSI and
Buyer shall be responsible for providing any post-retirement medical, life or
similar benefits to US Transferred Employees.
(b) Notwithstanding the provisions of this Exhibit D,
including but not limited to the provisions of this Section D.11, Seller
Companies may amend, modify or terminate any plans or arrangements providing
post-retirement health, medical, dental, hospitalization, life insurance or
similar benefits (including, without limitation, reimbursement for Medicare
premiums) to any employee or former employee of the TTS Business, subject in
each case to the provisions of Applicable Law.
(c) Except as may be required by Applicable Law, Buyer shall
not be obligated by this Agreement to provide post-retirement, health, medical,
dental, hospitalization, life insurance or similar benefits (including, without
limitation, reimbursement for Medicare premiums), or any particular level of
such benefits, to US Transferred Employees.
D.12 Supplemental Plans. Parent shall retain all liability and
obligation with respect to Active Employees under the Black & Decker Executive
Deferred Compensation Plan, the Black & Decker Supplemental Executive Retirement
Plan, the Black & Decker Supplemental Pension Plan and the Black & Decker
Supplemental Retirement Savings Plan.
III. Other Country Employee Benefit Matters.
D.13 General. For a period of one year following the Closing Date,
Buyer and TTSI shall ensure that the Non-US Transferred Employees are provided
benefits that are substantially similar to those provided under the Non-U.S.
Benefit Arrangements as in effect for those Non-US Transferred Employees
immediately prior to the Closing Date, it being understood that each Non-US
Transferred Employee shall receive credit for all service and compensation with
Seller Companies and any of their predecessors or Affiliates prior to the
Closing Date for all purposes other than Benefit Service to the same extent that
service and compensation are recognized immediately prior to the Closing.
D.14 Severance/Termination Indemnities. In furtherance and not in
limitation of the provisions of Section D.12, for a period of at least one year,
TTSI shall provide severance programs and termination indemnities with the same
terms and conditions as those provided by the Seller Companies or TTSI to the
Non-US Transferred Employees immediately prior to the Closing and agrees to pay
any benefit to Non-US Transferred Employees to which they may be entitled under
such severance programs and/or termination indemnities applicable to Buyer and
its Affiliates with respect to events that occur on or after the Closing Date or
as a result of the Contemplated Transactions, or applicable to Parent and its
Affiliates as a result of the Contemplated Transactions.
VII. General.
D.15 No Third Party Beneficiaries. No provision of this Exhibit D or
any other provision in the Transaction Documents shall create any third party
beneficiary or other rights in any employee or former employee (including any
beneficiary or dependent thereof) of Parent or of any of its Affiliates in
respect of continued employment (or resumption of employment) with Parent,
Buyer, TTSI or any of their Affiliates, and no provision of this Exhibit D shall
create any such rights in any such individuals in respect of any benefits that
may be provided, directly or indirectly, under any Employee Plan or Benefit
Arrangement, or any plan or arrangement which may be established by Buyer, TTSI
or any of their Affiliates. Subject to Applicable Law, unless otherwise provided
herein, no provision of this Agreement shall constitute a limitation on rights
to amend, modify or terminate, either before or after Closing, any such Employee
Plan or Benefit Arrangement of the Parent or any of its Affiliates.
D.16 Indemnification by Buyer. Effective as of the Closing, Buyer
hereby indemnifies Parent and its Affiliates and their respective directors,
officers, employees and agents against, and agrees to hold them harmless from,
any and all Damages arising out of or pertaining to (i) the termination of
employment of, hiring of or failure or refusal to hire, any Active Employee of
the TTS Business on or after the Closing; (ii) in relation to any Active
Employee any modification of the pay, benefits or other terms and conditions of
employment of any Active Employee on or after the Closing; and (iii) any breach
of any covenants of the Buyer contained in this Exhibit D.
D.17 Indemnification by Parent. Effective as of the Closing, Parent
hereby indemnifies Buyer and TTSI and agrees to hold each harmless from any and
all Damages arising out of or pertaining to any breach of any covenants of the
Parent or its Affiliates contained in this Exhibit D.
<PAGE>
EXHIBIT E
ADDITIONAL MATTERS RELATING TO PRODUCT LIABILITY ISSUES
Parent and Buyer acknowledge and agree that each has a continuing
interest in ensuring that claims involving alleged product defects and product
safety are handled by TTSI after the Closing in a manner that minimizes
liability of the parties and otherwise protects the parties' interests. This
Exhibit E sets forth certain additional procedures, covenants and agreements
relating to product liability and related matters in respect of products sold
and services provided by TTSI or the TTS Business that, among other things, are
intended to enhance the parties' ability to achieve these objectives.
E.01 With respect to liabilities and obligations relating to claims of
manufacturing or design defects, the parties have agreed that certain of these
liabilities and obligations will constitute Assumed Liabilities for which TTSI
will be responsible and certain of these liabilities and obligations will
constitute Excluded Liabilities for which Seller Companies will be responsible.
Because (i) it is likely that TTSI may receive the initial notice or claim with
respect to liabilities and obligations that ultimately prove to be Seller
Companies' responsibility and vice versa and (ii) in many cases it is critical
to the defense of such claims that products and the location in which the
alleged incident occurs be inspected as soon as practicable, each of Parent,
TTSI and Buyer agree to give immediate notice to the other party in the event
that they receive notice of a claim involving or potentially involving claims of
manufacturing or design defects where the party first receiving such notice
reasonably believes that the responsibility for the liability or obligation, if
any, will be that of the other party or if there is any doubt as to which party
ultimately will be responsible for any related liabilities or obligations. Each
of Parent, TTSI and Buyer also agree with respect to each claim of manufacturing
or design defects that they will perform a prompt, diligent and continuing
investigation to determine whether the claim is an Assumed Liability or an
Excluded Liability, and agree to give immediate notice to the other parties at
any time if the investigation reveals that the responsibility for the liability
or obligation, if any, will be that of the other party if there is any doubt as
to which party ultimately will be responsible for any related liabilities or
obligations. Each of Parent, TTSI and Buyer agree that the party providing such
notice will thereafter cooperate with the other party to permit the other party
to conduct its own investigation, and the party providing such notice will
provide to the other party reports on the status of the claim and subject to the
provisions of Article X an opportunity to participate in the defense of the
claim, at its own cost and expense. To expedite the review of these issues and
ensure that both parties' rights and defenses are preserved, Parent, TTSI and
Buyer shall provide such notice as follows:
<PAGE>
if to Parent, or TTSI prior to Closing:
The Black & Decker Corporation
701 East Joppa Road
Towson, Maryland 21286
Attention: Product Liability Counsel
if to Buyer, or TTSI after Closing:
True Temper Sports, Inc.
8275 Tournament Drive, Suite 200
Memphis, Tennessee 38125
Attention: President
E.02 To the extent that either Parent, TTSI or Buyer (or any of their
directors, officers, advisors, attorneys, accountants, employees, insurers or
agents) conducts an investigation or other inquiry into any events or
circumstances that lead to a claim of manufacturing or design defects in respect
of a product or product line generally or a specific claim or allegation and the
results of such investigation or inquiry relate to or otherwise affect the
liabilities or obligations of the other party hereunder, Parent, TTSI or Buyer,
as the case may be, agree to share any information obtained as a result of the
investigation or inquiry, in each case subject to the express provisions of
Section 7.07 of this Agreement.
E.03 To assist each of the parties to this Agreement with the defense
of claims involving allegations of manufacturing or design defects and with
compliance with each parties' respective legal obligations under this Agreement
and otherwise, Parent, TTSI and Buyer each agree from time to time to designate
individuals within their respective organizations as an "Engineering/Safety
Assurance Liaison" and a "Claims Liaison" for the purpose of coordinating the
defense of claims involving products sold and services provided by TTSI or the
TTS Business. The initial individuals serving in these capacities shall be
designated in writing by Parent, TTSI and Buyer at Closing and, thereafter, may
be changed from time to time by notice to the other party.
E.04 To assist each of the parties to this Agreement with the defense
of claims involving allegations of manufacturing or design defects and with
compliance with each parties' respective legal obligations under this Agreement
and otherwise, Parent, TTSI and Buyer each agree from time to time to provide
the other party access to all information as provided in Section 5.04 and
Section 6.02. Without limiting the generality of those provisions, Parent, TTSI
and Buyer acknowledge and agree that the aforementioned information and access
includes the existing databases relating to consumer complaints, claims and
litigation, whether maintained at the headquarters of the TTS Business or
otherwise, access to personnel and engineering and design drawings or documents
and any other relevant information.
EXHIBIT 2(b)(ii)
AMENDMENT NO. 1
Dated August 1, 1998
to
REORGANIZATION,
RECAPITALIZATION AND STOCK PURCHASE AGREEMENT
Dated as of June 29, 1998
By and Between
THE BLACK & DECKER CORPORATION,
TRUE TEMPER SPORTS, INC.
AND
TTSI LLC
<PAGE>
AMENDMENT NO. 1 to
REORGANIZATION, RECAPITALIZATION AND
STOCK PURCHASE AGREEMENT
This Amendment No. 1 (this "Amendment") to Reorganization,
Recapitalization and Stock Purchase Agreement (together with the Exhibits,
Schedules and Attachments thereto, the "Agreement") is made as of the 1st day of
August 1998, by and among The Black & Decker Corporation, a Maryland corporation
("Parent"), True Temper Sports, Inc., a Delaware corporation ("TTSI"), and TTSI
LLC, a Delaware limited liability company ("Buyer").
W I T N E S E T H:
WHEREAS, Parent, TTSI and Buyer entered into the Agreement as of June
29, 1998; and
WHEREAS, Parent, TTSI and Buyer desire to amend and clarify certain
terms contained in the Agreement, all as more fully set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, the parties agree as follows:
Section 1. Definitions. Capitalized terms used in but not defined in
this Amendment shall have the meanings specified in the Agreement.
Section 2. Amendment to Recitals. The sixth and seventh "WHEREAS"
clauses contained in the Agreement are hereby amended by deleting those clauses
in their entirety and replacing them with the following:
"WHEREAS, upon the terms and subject to the conditions set
forth in this Agreement, Parent desires to cause TTSI, and Buyer
desires to assist TTSI, to redeem a portion of the TTSI Common Stock
then owned by Emhart and a portion of the TTSI Common Stock then owned
by EII with promissory notes to be paid at Closing with the proceeds of
such borrowings;
WHEREAS, following such redemption, Buyer desires to purchase,
buy and acquire from EII and Emhart and Parent desires to cause EII and
Emhart to sell, transfer and convey to Buyer the Acquired Shares, and
Parent and Buyer desire to enter into certain agreements and
arrangements ancillary to such transactions; and"
Section 3. Amendment to ARTICLE II. Sections 2.01 through 2.04 of
ARTICLE II - TRANSACTIONS AND CLOSING of the Agreement are hereby amended by
deleting Section 2.01 through and including Section 2.04 in their entirety and
replacing them with the following:
<PAGE>
"Section 2.01 Reorganization of TTS Business. Upon the terms
and subject to the conditions set forth in this Agreement, the parties
agree that following the execution of this Agreement and prior to
consummation of the transactions contemplated by Sections 2.02 and
2.03, among other things:
(a) TTSI will file an Amended and Restated Certificate of
Incorporation consistent with the terms of this Agreement as agreed to
by Buyer and Parent;
(b) Parent will cause EII to contribute the Contributed Assets
to TTSI, free and clear of all Liens (other than Permitted Liens), and
TTSI will assume and agree to pay, satisfy and discharge all of the
Assumed Liabilities, all as contemplated by the Assignment and
Assumption Agreement;
(c) In exchange for the capital contribution contemplated by
Section 2.01(b), TTSI will issue 1,011.21 shares of TTSI Common Stock
and 368.75 shares of TTSI Preferred Stock to EII, which upon such
issuance shall be duly authorized, fully paid and non-assessable shares
of capital stock of TTSI;
(d) Parent will cause Emhart to sell, transfer and convey to
TTSI the Transferred Intellectual Property, all as contemplated by the
Intellectual Property Assignment Agreements;
(e) In exchange for the transfer of the Transferred
Intellectual Property contemplated by Section 2.01(d), TTSI will issue
6,000 shares of TTSI Common Stock and 881.25 shares of TTSI Preferred
Stock to Emhart, which upon such issuance shall be duly authorized,
fully paid and non-assessable shares of capital stock of TTSI;
(f) Parent (i) will cause TTSI to establish a branch or, at
the expense of TTSI, a subsidiary in each of the United Kingdom,
Australia and Japan and (ii) will cause each of Tucker Fasteners
Limited ("Tucker"), Black & Decker (Australasia) Pty. Limited ("B&D
Australasia") and Nippon Pop Rivets & Fasteners, Ltd. ("Nippon") to
contribute the assets and liabilities relating exclusively to the TTS
Business operations in the United Kingdom, Australia and Japan,
respectively, to TTSI; and
<PAGE>
(g) In exchange for the contributions contemplated by Section
2.01(f), TTSI will issue and deliver to each of Tucker, B&D Australasia
and Nippon a promissory note with a fixed interest rate equal to 7.5%
per annum payable in full at Closing with principal amounts equal to
(A) $3,860,000, (B) $1,936,024.05 and (C) $406,000, respectively, which
the parties agree is the net book value of the respective Contributed
Assets.
Section 2.02 Recapitalization of TTSI.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, the parties agree that following the execution of this
Agreement and immediately prior to Closing, among other things, Buyer
will use commercially reasonable best efforts to assist TTSI in
obtaining debt financing in an aggregate amount of not less than
$155,000,000, together with a revolving credit facility in the amount
of $20,000,000, in the manner contemplated by the Commitment Letters or
on other terms reasonably acceptable to Buyer, the proceeds of which
will be used to consummate the Redemptions and to pay off the
promissory notes contemplated by Section 2.01(g).
(b) Buyer may elect at its option to pursue an alternative
financing structure, provided that such structure does not result in
any incremental increase in costs to TTSI.
Section 2.03 Closing Transactions.
(a) Redemption of TTSI Shares. On and subject to the terms and
conditions set forth in this Agreement, immediately following the
consummation of the transactions contemplated by Section 2.02 and prior
to the Closing, TTSI shall:
(i) Redeem 5,818.60 shares of the issued and
outstanding TTSI Common Stock owned by Emhart by issuing a
promissory note to Emhart, on terms reasonably satisfactory to
Parent and Buyer, with a principal amount equal to
$112,747,535.88 to be paid at Closing with the proceeds of the
borrowings contemplated by Section 2.02; and
(ii) Redeem 1,274 shares of the issued and
outstanding TTSI Common Stock owned by EII by issuing a
promissory note to EII, on terms reasonably satisfactory to
Parent and Buyer, with a principal amount equal to
$24,686,412.66 to be paid at Closing with the proceeds of the
borrowings contemplated by Section 2.02.
such that, immediately following the consummation of the transactions
contemplated by this Section 2.03(a), EII will own 737.21 shares of
TTSI Common Stock and 368.75 shares of TTSI Preferred Stock and Emhart
will own 181.40 shares of TTSI Common Stock and 881.25 shares of TTSI
Preferred Stock, which shares, in the aggregate, will constitute 100%
of the issued and outstanding capital stock of TTSI.
(b) Acquisition of Acquired Shares. On and subject to the
terms and conditions set forth in this Agreement, at the Closing:
(i) Parent shall cause (A) EII to sell, transfer and
convey to Buyer and Buyer's Permitted Assignees, free and
clear of all Liens (other than Permitted Liens) an aggregate
of 683.7468 shares of TTSI Common Stock and an aggregate of
293.75 shares of TTSI Preferred Stock and (B) Emhart to sell,
transfer and convey to Buyer and Buyer's Permitted Assignees,
free and clear of all Liens (other than Permitted Liens) an
aggregate of 181.40 shares of TTSI Common Stock and an
aggregate of 881.25 shares of TTSI Preferred Stock; and
(ii) In consideration for the transfer of the
Acquired Shares, Buyer and Buyer's Permitted Assignees shall
make cash payments (A) to EII equalling $23,824,023.29 in the
aggregate, which constitutes $13,249,023.29 in respect of the
TTSI Common Stock and $10,575,000 in respect of the TTSI
Preferred Stock, by wire transfer of immediately available
funds to an account or accounts of EII designated by Parent at
least two Business Days prior to Closing and (B) to Emhart
equalling $35,240,004.13 in the aggregate, which constitutes
$3,515,004.13 in respect of the TTSI Common Stock and
$31,725,000 in respect of the TTSI Preferred Stock, by wire
transfer of immediately available funds to an account or
accounts of Emhart designated by Parent at least two Business
Days prior to Closing;
such that, immediately following consummation of the transactions
contemplated by this Section 2.03(b), EII will own 53.4632 shares of
TTSI Common Stock representing 5.82% of all the issued and outstanding
shares of TTSI Common Stock and 75 shares of TTSI Preferred Stock
representing 6.0% of all the issued and outstanding shares of TTSI
Preferred Stock and Buyer and Buyer's Permitted Assignees will own, in
the aggregate, 865.1468 shares of TTSI Common Stock representing 94.18%
of all the issued and outstanding shares of TTSI Common Stock and 1175
shares of TTSI Preferred Stock representing 94.0% of all the issued and
outstanding shares of TTSI Preferred Stock.
<PAGE>
(c) Consent and Waiver by Buyer. By execution and delivery of
this Agreement, Buyer hereby consents to and waives any rights in
respect of the redemption of TTSI Common Stock owned by EII or Emhart
contemplated by Section 2.03(a).
(d) Additional Closing Transactions. Upon the terms and
subject to the conditions set forth in this Agreement, the parties
agree that at the Closing, among other things:
(i) Parent or its Affiliates, as the case may be, and
TTSI shall execute and deliver the Services Agreement with
such additions, deletions and changes as may be agreed to by
Buyer and Parent;
(ii) TTSI, Buyer, Buyer's Permitted Assigns and EII
shall execute and deliver a Stockholders' and a Registration
Rights Agreements containing the provisions contemplated by
Attachment XIV;
(iii) TTSI shall pay off the promissory notes issued
to Tucker, B&D Australasia and Nippon pursuant to Section
2.01(g);
(iv) TTSI shall pay off the promissory notes issued
to each of EII and Emhart pursuant to Section 2.03(a).
Section 2.04 Section 338(h)(10) Election; Exchange
Consideration.
(a) The parties agree to make an election under
Section 338(h)(10) of the Code (and any corresponding
elections under any applicable state, local, or foreign tax
law) with respect to the sale of the Acquired Shares by EII to
Buyer.
(b) The consideration to be paid to Parent and its
Affiliates in connection with the Contemplated Transaction
(the "Exchange Consideration") shall consist of the following:
(i) the aggregate amounts paid by TTSI to
pay off the promissory notes issued to redeem shares
of TTSI Common Stock and TTSI Preferred Stock
pursuant to Section 2.03(a);
<PAGE>
(ii) the aggregate amount paid by Buyer to
EII and Emhart in exchange for the Acquired Shares
pursuant to Section 2.03(b);
(iii) the aggregate amounts payable to
Tucker, B&D Australasia and Nippon pursuant to the
promissory notes to be delivered in accordance with
Section 2.01(g) (as so adjusted and together with the
amount contemplated by Section 2.04(b)(i) and
2.04(b)(ii) above, the "Adjusted Purchase Price");
and
(iv) the assumption by TTSI of the Assumed
Liabilities in accordance with the Transaction
Documents.
(c) The Exchange Consideration and each Annual Thiokol Payment
shall be allocated to and among the respective Contributed Assets and
Transferred Intellectual Property as set forth in Attachment IX to this
Agreement. Parent, TTSI and Buyer agree that the allocation of the
Exchange Consideration has been negotiated by them and is consistent
with the value of the Contributed Assets and the principles of Section
1060 of the Code and the regulations promulgated by the Internal
Revenue Service thereunder. Parent, TTSI and Buyer agree that they
shall use the allocation of the Exchange Consideration reflected in
Attachment IX to this Agreement in any Tax Returns or other reports
that deal with the Contemplated Transactions and are filed with any Tax
Authority and shall promptly prepare and timely file such reports and
information as may be required to report the allocation contemplated by
this Section 2.04(c)."
Section 4. Limited Amendment. Except as amended by this Amendment and
as the context may otherwise require to give effect to the intent and purposes
of this Amendment, the Agreement shall remain in full force and effect without
any other amendments or modifications.
Section 5. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including telecopy or similar writing)
and shall be given,
<PAGE>
if to Parent (or TTSI prior to Closing):
c/o The Black & Decker Corporation
701 East Joppa Road
Towson, Maryland 21286
Attention: Senior Vice President and
Chief Financial Officer
Telecopy: (410) 716-3318
with a copy to:
The Black & Decker Corporation
701 East Joppa Road
Towson, Maryland 21286
Attention: Senior Vice President and
General Counsel
Telecopy: (410) 716-2660
and
Miles & Stockbridge P.C.
10 Light Street
Baltimore, Maryland 21202
Attention: Glenn C. Campbell
David A. Gibbons
Telecopy: (410) 385-3700
if to Buyer (or TTSI after Closing):
TTSI LLC
c/o Cornerstone Equity Investors, LLC
717 5th Avenue
Suite 1100
New York, New York 10022
Attention: Mr. Mark Rossi
Telecopy: (212) 826-6798
<PAGE>
with a copy to:
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022
Attention: Frederick Tanne, Esquire
Telecopy: (212) 446-4900
or to such other address or telecopy number and with such other copies, as such
party may hereafter specify by notice to the other parties. Each such notice,
request or other communication shall be effective (i) if given by telecopy, when
such telecopy is transmitted to the telecopy number specified in this Section 5
and evidence of receipt is received or (ii) if given by any other means, upon
delivery or refusal of delivery at the address specified in this Section 5.
Section 6. Amendments; Waivers. Subject to the provisions of Section
9.04 of the Agreement, any provision of this Amendment may be amended or waived
prior to the Closing Date if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by Parent and Buyer, or in the
case of a waiver, by the party against whom the waiver is to be effective.
Section 7. Successors and Assigns. The provisions of this Amendment
shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other party, provided the Buyer may assign its or
TTSI's rights hereunder to an agent for the financing sources in connection with
the Contemplated Transactions, as collateral security for TTSI's obligations,
and Buyer may assign its rights to purchase Acquired Shares to Permitted
Assignees.
Section 8. Entire Agreement. The Transaction Documents and any other
agreements contemplated thereby (including, to the extent contemplated herein,
the Confidentiality Agreement) as amended by this Amendment constitute the
entire agreement among the parties with respect to the subject matter of such
documents and supersede all prior agreements, understandings and negotiations,
both written and oral, between the parties with respect to the subject matter
thereof.
Section 9. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Amendment or the Contemplated Transactions shall be brought in the
United States District Court for the District of Delaware (or, if subject matter
jurisdiction is unavailable, any of the state courts of the State of Delaware),
and each of the parties hereby consents to the exclusive jurisdiction of such
court (and of the appropriate appellate court) in any such suit, action or
proceeding and waives any objection to venue laid therein. Process in any such
suit, action or proceeding may be served on any party anywhere in the world,
whether within or without the State of Delaware. Without limiting the foregoing,
Parent, TTSI and Buyer agree that service of process upon such party at the
address referred to in Section 4 together with written notice of such service to
such party, shall be deemed effective service of process upon such party.
Section 10. Severability. Any provision of this Amendment that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of the this Amendment or affecting the
validity or enforceability of such provision in any other jurisdiction. To the
extent any provision of this Amendment is determined to be prohibited or
unenforceable in any jurisdiction Parent and Buyer agree to use reasonable
commercial efforts, and agree to cause the other Seller Companies and TTSI, as
the case may be, to use reasonable commercial efforts, to substitute one or more
valid, legal and enforceable provisions that, insofar as practicable implement
the purposes and intent of the prohibited or unenforceable provision.
Section 11. Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
IN WITNESS WHEREOF, the parties hereto caused this Amendment to be duly
executed by their respective authorized officers on the day and year first above
written.
THE BLACK & DECKER CORPORATION
By:/s/STEPHEN F. REEVES
Name: Steven F. Reeves
Title:Vice President and
Controller
TRUE TEMPER SPORTS, INC.
By:/s/STEPHEN F. REEVES
Name: Steven F. Reeves
Title:Vice President
TTSI LLC
By:/s/TYLER J. WOLFRAM
Name: Tyler J. Wolfram
Title:Managing Director
EXHIBIT 2(c)
TRANSACTION AGREEMENT
Dated as of July 12, 1998
By and Between
THE BLACK & DECKER CORPORATION
and
BUCHER HOLDING AG
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.........................................1
ARTICLE II
TRANSACTIONS AND CLOSING
Section 2.01 Closing Transactions................................1
Section 2.02 Exchange Consideration..............................3
Section 2.03 Closing.............................................3
Section 2.04 Adjustments of Exchange Consideration...............4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BLACK & DECKER
Section 3.01 Representations and Warranties of Black & Decker....5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.01 Representations and Warranties of Buyer.............5
ARTICLE V
COVENANTS AND AGREEMENTS OF BLACK & DECKER
Section 5.01 Conduct of Business.................................6
Section 5.02 Access to Information; Confidentiality..............7
Section 5.03 Change of Lockbox Accounts..........................8
Section 5.04 Access to Information; Cooperation After Closing....8
Section 5.05 Maintenance of Insurance Policies...................9
Section 5.06 Noncompetition......................................9
Section 5.07 Third Party's Consent and Notification to Third
Parties............................................10
<PAGE>
ARTICLE VI
COVENANTS AND AGREEMENTS OF BUYER
Section 6.01 Confidentiality....................................10
Section 6.02 Provision and Preservation of and Access to
Certain Information; Cooperation...................10
Section 6.03 Insurance; Financial Support Arrangements..........11
Section 6.04 Use of Intellectual Property.......................13
Section 6.05 Certain Environmental Investigations...............13
ARTICLE VII
COVENANTS AND AGREEMENTS OF THE PARTIES
Section 7.01 Further Assurances.................................14
Section 7.02 Certain Filings; Consents..........................14
Section 7.03 Public Announcements...............................14
Section 7.04 Intellectual Property..............................14
Section 7.05 Filings............................................15
Section 7.06 Legal Privileges...................................15
Section 7.07 Taxes..............................................15
Section 7.08 Currency Hedge Contracts...........................18
Section 7.09 Restructuring Costs................................20
ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFIT MATTERS
Section 8.01 Employees and Employee Benefit Matters.............20
ARTICLE IX
CONDITIONS TO CLOSING
Section 9.01 Conditions to the Obligations of Each Party........20
Section 9.02 Conditions to Obligation of Buyer..................21
Section 9.03 Conditions to Obligation of Black & Decker.........21
Section 9.04 Updated Disclosure Schedules.......................22
Section 9.05 Effect of Waiver...................................22
<PAGE>
ARTICLE X
SURVIVAL; INDEMNIFICATION
Section 10.01 Survival...........................................22
Section 10.02 Indemnification....................................23
Section 10.03 Procedures.........................................25
Section 10.04 Limitations........................................27
ARTICLE XI
TERMINATION
Section 11.01 Termination........................................28
Section 11.02 Effect of Termination..............................29
ARTICLE XII
MISCELLANEOUS
Section 12.01 Notices............................................29
Section 12.02 Amendments; Waivers................................30
Section 12.03 Expenses; Taxes....................................31
Section 12.04 Successors and Assigns.............................31
Section 12.05 Disclosure.........................................31
Section 12.06 Construction.......................................32
Section 12.07 Entire Agreement...................................32
Section 12.08 Governing Law......................................32
Section 12.09 Counterparts; Effectiveness........................32
Section 12.10 Jurisdiction.......................................33
Section 12.11 Severability.......................................34
Section 12.12 Bulk Sales.........................................34
<PAGE>
EXHIBITS
EXHIBIT A Definitions
EXHIBIT B Representations and Warranties of Black & Decker
EXHIBIT C Representations and Warranties of Buyer
EXHIBIT D Employees and Employee Benefit Matters
<PAGE>
ATTACHMENTS
Attachment I Glass Machinery Units, Methods of Sale and Sellers
Attachment II Form of Supplemental Agreements
Attachment III Form of Trademark Agreement
Attachment IV Exchange Consideration Allocation Schedule
Attachment V Conduct of Business Pending Closing
Attachment VI List of Hedge Contracts
Attachment VII Consents and Approvals Required Prior to Closing
Attachment VIII Form of Assignment of United States Trademarks,
Trademark Registrations and Applications for
Registration
Attachment IX Glass Machinery Financial Statements
Attachment X Form of Assignment of Foreign Trademarks, Trademark
Registrations and Applications for Registration
Attachment XI Form of Assignment of United States Patents and
Patent Applications
Attachment XII Form of Assignment of Foreign Patents and
Applications for Patents
Attachment XIII Special Purpose Financial Statements (3/22/98)
Attachment XIV Form of Services Agreement
Attachment XV List of Glass Machinery Business Intellectual
Property that is Registered or Subject to an
Application for Registration
Attachment XVI List of Certain Active Employees
Attachment XVII Opinion of Counsel
Attachment XVIII Agreements Relating to the Determination of the
Proposed Net Tangible Asset Amount and the Final Net
Tangible Asset Amount
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TRANSACTION AGREEMENT
This Transaction Agreement (together with the Exhibits, Schedules and
Attachments hereto, this "Agreement") is made as of the 12th day of July, 1998,
by and among The Black & Decker Corporation, a Maryland corporation ("Black &
Decker"), and Bucher Holding AG, a Swiss corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Black & Decker, through certain of its direct and indirect
Subsidiaries, is engaged in the Glass Machinery Business;
WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement, Black & Decker desires to cause each Seller of Transferred Assets to
transfer substantially all of the assets held, owned or used by it to conduct
the Glass Machinery Business and to assign certain liabilities associated with
the Glass Machinery Business, to a Buyer Company, and to cause each Seller of
Shares to transfer such Shares to a Buyer Company;
WHEREAS, Buyer desires to receive or to cause a Buyer Company to
receive such assets and shares and to assume such liabilities; and
WHEREAS, in connection with the sale of the Glass Machinery Business by
Black & Decker to Buyer, Black & Decker and Buyer desire to enter into certain
agreements and arrangements ancillary to such sale;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Capitalized terms used in this Agreement
shall have the meanings specified in this Agreement or in Exhibit A.
ARTICLE II
TRANSACTIONS AND CLOSING
Section 2.01 Closing Transactions. Upon the terms and subject to the
conditions set forth in this Agreement, the parties agree that at the Closing,
among other things:
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(i) Black & Decker will cause each Seller of Transferred
Assets as listed on Attachment I to transfer to a Buyer Company
designated by Buyer all Transferred Assets of such Seller and such
Buyer Company will assume all Assumed Liabilities of such Seller in
accordance with this Agreement;
(ii) to effect the transfer of the Transferred Assets and the
assumption of the Assumed Liabilities contemplated by the foregoing
clause (i), each Seller of Transferred Assets and a Buyer Company shall
execute and deliver (a) a Supplemental Asset Sale Agreement and all
exhibits, schedules and attachments thereto, substantially in the form
attached hereto as Attachment II and modified to the extent necessary
to comply with the laws of, and to ensure its enforceability in, the
nation in which each Glass Machinery Unit to which such Supplemental
Asset Sale Agreement relates is located, in a manner which as closely
comports with the intent of the provisions of this Agreement, the
Supplemental Asset Sale Agreement and all exhibits, schedules and
attachments thereto as is permitted by such laws and (b) the
Intellectual Property Assignment Agreements;
(iii) Black & Decker will cause each Seller of Shares as
listed on Attachment I to transfer to Buyer or a Buyer Company
designated by Buyer all Shares of such Seller;
(iv) to effect the transfer of the Shares contemplated by the
foregoing clause (iii) and the transfer and assignment of Excluded
Assets and Excluded Liabilities from a Glass Machinery Share Company to
the Seller of the Shares thereof, each Seller of Shares and a Buyer
Company shall execute and deliver a Supplemental Share Sale Agreement
and all exhibits, schedules and attachments thereto, substantially in
the form attached hereto as Attachment II and modified to the extent
necessary to comply with the laws of, and to ensure its enforceability
in, the nation in which each Glass Machinery Company to which such
Supplemental Share Sale Agreement relates is organized, in a manner
which as closely comports with the intent of the provisions of this
Agreement, the Supplemental Share Sale Agreement and all exhibits,
schedules and attachments thereto as is permitted by such laws;
(v) to effect the license of certain rights in respect of
certain Intellectual Property, Black & Decker and Buyer shall execute
the Trademark Agreement substantially in the form contemplated by
Attachment III to this Agreement;
(vi) Black & Decker and Buyer shall execute and deliver the
Services Agreement substantially in the form contemplated by Attachment
XIV of this Agreement;
(vii) Buyer shall pay and deliver to Black & Decker, for its
own account and as agent for the Sellers on account of the Adjusted
Purchase Price, the amount of $178,656,000 in immediately available
funds by wire transfer to one single account designated by Black &
Decker (which account shall be designated by Black & Decker by written
notice to Buyer at least two Business Days prior to the Closing Date,
or such shorter notice as Buyer shall agree to accept);
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(viii) Black & Decker shall deliver resignation letters of the
members of the boards of directors or the manager board (in case of the
S.r.l.) of the Glass Machinery Share Companies in accordance with the
instructions of Buyer provided that Black & Decker shall not be
required to take such action with respect to any such individual who is
an Active Employee of a Glass Machinery Unit;
(ix) Black & Decker shall deliver to Buyer a legal opinion
substantially in the form of Attachment XVII; and
(x) Except as otherwise provided in the Transaction Documents,
Black & Decker and its Affiliate and each of the Glass Machinery Units
shall mutually terminate all agreements between Black & Decker or any
of its Affiliates, on the one hand, and a Glass Machinery Unit, on the
other hand, except that Black & Decker and its Affiliates shall assign
to Buyer Companies designated by Buyer the following agreements:
License Agreement For Patents and Technical Information dated September
30, 1991; Management Services and Technical Assistance Agreement dated
January 1, 1993; General Agency Agreement dated November 1, 1964; and
Technical Assistance and License Agreement dated August 31, 1968, in
each case as amended through the Closing Date.
Section 2.02 Exchange Consideration.
(a) The consideration to be paid to Black & Decker and the Sellers for
the Transferred Assets and the Shares (the "Exchange Consideration") shall
consist of the following:
(i) subject to adjustment in accordance with Section 2.04,
$194,000,000 in cash (as so adjusted, the "Adjusted Purchase Price");
and
(ii) the assumption by Buyer Companies of the Assumed
Liabilities in accordance with the Transaction Documents.
(b) The Exchange Consideration shall be allocated to and among the
respective Transferred Assets and the Shares as set forth in Attachment IV to
this Agreement. Black & Decker and Buyer agree that the allocation of the
Exchange Consideration has been negotiated by them and is consistent with the
value of the Transferred Assets and the Shares and in accordance with the
principles of Section 1060 of the Code and the regulations thereunder. Black &
Decker and Buyer agree that they shall use the allocation of the Exchange
Consideration reflected in Attachment IV to this Agreement in any Tax Returns
filed with any U.S. Tax Authority or other reports that deal with the
Contemplated Transactions and are filed with any U.S. Tax Authority.
Section 2.03 Closing. The closing (the "Closing") of the Contemplated
Transactions shall take place at the offices of Homburger Rechtsanwaelte,
Weinbergstrasse 56/58, 8006 Zurich, Switzerland, on the tenth Business Day
following the satisfaction or waiver (by the party entitled
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to waive the condition) of all conditions to the Closing set forth in Article
IX, or at such other time and place as the parties to this Agreement may agree,
but no later than December 31, 1998. The Closing will occur at 3:00 p.m. on the
Closing Date.
Section 2.04 Adjustments of Exchange Consideration.
(a) Promptly following the Closing Date, but in no event later than 60
days after the Closing Date, Black & Decker shall, at its expense, with the
assistance of Buyer prepare and submit to Buyer a combined statement of net
tangible assets setting forth, in reasonable detail, Black & Decker's
calculation of the Net Tangible Assets consistent with the Opening Statement and
in accordance with Note 12 thereto of the Glass Machinery Business as of the
close of business on the day prior to the Closing Date (the "Proposed Final Net
Tangible Asset Amount"). In the event Buyer disputes the correctness of the
Proposed Final Net Tangible Asset Amount, Buyer shall notify Black & Decker of
its objections within 45 days after receipt of Black & Decker's calculation of
the Proposed Final Net Tangible Asset Amount and shall set forth, in writing and
reasonable detail, the reasons for Buyer's objections. If Buyer fails to deliver
such notice of objections within such time, Buyer shall be deemed to have
accepted Black & Decker's calculation. To the extent Buyer does not object, in
writing and in reasonable detail as required and within the time period
contemplated by this Section 2.04(a) to a matter in the combined statement of
net tangible assets prepared and submitted by Black & Decker, Buyer shall be
deemed to have accepted Black & Decker's calculation and presentation in respect
of the matter and the matter shall not be considered to be in dispute. Black &
Decker and Buyer shall endeavor in good faith to resolve any disputed matters
within 20 days after Black & Decker's receipt of Buyer's notice of objections.
If they are unable to do so, Black & Decker and Buyer shall select an
independent "big five" accounting firm (other than Ernst & Young LLP or
PricewaterhouseCoopers) to resolve the matters in dispute (in a manner
consistent with Section 2.04(b) and with any matters not in dispute), and the
determination of such firm in respect of the correctness of each matter
remaining in dispute shall be conclusive and binding on Black & Decker and
Buyer. The Net Tangible Assets of the Glass Machinery Business as of the close
of business on the day prior to the Closing Date, as finally determined pursuant
to this Section 2.04(a) (whether by failure of Buyer to deliver notice of
objection, by agreement of Black & Decker and Buyer or by determination of the
independent accountants selected as set forth above), is referred to herein as
the "Final Net Tangible Asset Amount."
(b) The Proposed Final Net Tangible Asset Amount and the Final Net
Tangible Asset Amount shall be determined in accordance with the accounting
principles, policies, practices and methods utilized in the preparation of the
Opening Statement, as disclosed in the notes to the Opening Statement, except as
otherwise set forth in Note 12 to the Opening Statement and in Attachment XVIII
hereto.
(c) If the Final Net Tangible Asset Amount is greater than
$72,665,000], the difference shall be paid to Black & Decker by Buyer with
simple interest thereon from the Closing Date to the date of payment at a
floating rate per annum equal to the per annum interest rate announced from time
to time by Citibank, N.A. as its prime rate in effect. If the Final Net Tangible
Asset Amount is less than $72,665,000, the difference shall be paid to Buyer by
Black & Decker with
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simple interest thereon from the Closing Date to the date of payment at a
floating rate per annum equal to the per annum interest rate announced from time
to time by Citibank, N.A. as its prime rate in effect. Such payment shall be
made in immediately available funds in U.S. dollars not later than five Business
Days after the determination of the Final Net Tangible Asset Amount by wire
transfer to a bank account designated in writing by the party entitled to
receive the payment.
(d) Black & Decker shall make available and shall cause Ernst & Young
LLP to make available, in accordance with reasonable and customary practices and
professional standards and subject to such reasonable conditions as Ernst &
Young LLP shall impose, the books, records, documents and work papers underlying
the preparation and review of the Opening Statement and the calculation of the
Proposed Final Net Tangible Asset Amount. Buyer shall make available and shall
cause PricewaterhouseCoopers to make available, in accordance with reasonable
and customary practices and professional standards and subject to such
reasonable conditions as PricewaterhouseCoopers shall impose, the books,
records, documents and work papers created or prepared by or for Buyer in
connection with the review of the Proposed Final Net Tangible Asset Amount and
the other matters contemplated by Section 2.04(a).
(e) The fees and expenses, if any, of the accounting firm selected to
resolve any disputes between Black & Decker and Buyer in accordance with Section
2.04(a) shall be paid one-half by Black & Decker and one-half by Buyer.
(f) On the date that the payment due under Section 2.04(c) is due,
Buyer shall pay to Black & Decker the sum of $15,344,000 with simple interest
thereon from the Closing Date to the date of payment at a floating rate per
annum equal to the per annum interest rate announced from time to time by
Citibank, N.A. as its prime rate in effect. Such payment shall be made in
immediately available funds in U.S. dollars not later than five (5) Business
Days after the determination of the Final Net Tangible Asset Amount by wire
transfer to a bank account designated in writing by Black & Decker.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BLACK & DECKER
Section 3.01 Representations and Warranties of Black & Decker. Black &
Decker represents and warrants to Buyer as set forth in Exhibit B.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.01 Representations and Warranties of Buyer. Buyer represents
and warrants to Black & Decker as set forth in Exhibit C.
<PAGE>
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ARTICLE V
COVENANTS AND AGREEMENTS OF BLACK & DECKER
Section 5.01 Conduct of Business. Except (a) with the written consent
of Buyer (which consent shall not be unreasonably withheld or delayed), (b) as
set forth in Attachment V, (c) as permitted below or required by Applicable Law,
(d) in accordance with the terms and conditions of Contracts in existence on the
date of this Agreement, (e) in accordance with the terms of this Agreement, or
(f) with respect to Excluded Assets and Excluded Liabilities, from the date of
this Agreement until the Closing Date, the Glass Machinery Units shall conduct
the Glass Machinery Business in all material respects in accordance with the
historical and customary operating practices relating to the conduct of the
Glass Machinery Business (to the extent such practices are reasonable commercial
practices) and shall use reasonable efforts to preserve intact the Glass
Machinery Business and the relationships of the Glass Machinery Units with third
parties in connection with the Glass Machinery Business, and the Glass Machinery
Units shall not:
(i) make any capital expenditure, or group of related capital
expenditures relating to the Glass Machinery Business in excess of
$500,000;
(ii) sell or dispose of more than an aggregate of $500,000 of
assets that (1) would constitute Transferred Assets if owned, held or
used by any Seller of Transferred Assets on the Closing Date or (2) are
owned on the date of this Agreement by a Glass Machinery Share Company
(in either case, other than the sale of Inventory (including obsolete
Inventory whether or not in the ordinary course of business), and any
sale made in the ordinary course of business);
(iii) sell, transfer, license or otherwise dispose of, any
Intellectual Property used exclusively in the Glass Machinery Business
other than implied licenses of Intellectual Property in connection with
the sale of products of the Glass Machinery Business;
(iv) terminate the coverage of any policies of title,
liability, fire, workers' compensation, property and any other form of
insurance covering the operations of the Glass Machinery Business,
except where the termination could not reasonably be expected to have a
Material Adverse Effect on the Glass Machinery Business;
(v) settle any lawsuit or claim if such settlement imposes a
material continuing non-monetary obligation on the Glass Machinery
Business, any of the Transferred Assets or any Glass Machinery Share
Company;
(vi) grant any new or modified severance or termination
arrangement or increase or accelerate in any material respect any
payable under the severance or termination pay policies in effect on
the date of this Agreement with respect to any Transferred Employee;
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(vii) except as otherwise may be permitted or required by this
Agreement or Applicable Law, adopt or amend in any material respect any
Employee Plan or Benefit Arrangement in respect of any Transferred
Employee or, other than compensation increases in the ordinary course
of business, with respect to any Transferred Employee at a level of
Vice President or above increase the compensation or fringe of such
Transferred Employee or pay any benefit not required by any Employee
Plan or Benefit Arrangement with respect to such Transferred Employee;
or
(viii) enter into any new collective bargaining agreements or
extend any existing collective bargaining agreement except that Emhart
Glass Machinery (U.S.) Inc. may enter into a new collective bargaining
agreement with the union that represents the unionized employees of the
Hartford Division substantially on the terms set forth on Attachment V.
Section 5.02 Access to Information; Confidentiality.
(a) Except as may be necessary to comply with any Applicable Laws and
subject to any reasonably applicable privileges (including, without limitation,
the attorney-client privilege), from the date of this Agreement until the
Closing Date, the Glass Machinery Units shall (i) give Buyer and its
Representatives reasonable access to the records of the Glass Machinery Units
relating to the Glass Machinery Business during normal business hours and upon
reasonable prior notice, (ii) give Buyer and its Representatives reasonable
access to any facilities the possession of which will be transferred, directly
or indirectly, to Buyer at Closing during normal business hours and upon
reasonable prior notice for the purpose of Buyer's conduct of an environmental
audit of such facilities or documentary due diligence, (iii) furnish to Buyer
and its Representatives such financial and operating data and other information
relating to the Glass Machinery Business as Buyer may reasonably request and
(iv) instruct the employees and Representatives of the Glass Machinery Units to
provide reasonable cooperation to Buyer in its investigation of the Glass
Machinery Business. Without limiting the generality of the foregoing, subject to
the limitations set forth in the first sentence of this Section 5.02(a), from
the date of this Agreement to the Closing Date Black & Decker shall (i) use
reasonable commercial efforts to enable Buyer and its Representatives to
conduct, at Buyer's expense, business and financial reviews, investigations and
studies as to the operation of the Glass Machinery Business, including any tax,
operating or other efficiencies that may be achieved and (ii) give Buyer and its
Representatives access upon reasonable request to information relating to the
Glass Machinery Business of the type and with the same level of detail as in the
ordinary course of business currently is being made available to the president
or chief financial officer of the Glass Machinery Business. Notwithstanding the
foregoing, neither Buyer nor its Representatives shall have access to personnel
records of any the Glass Machinery Units relating to individual performance or
evaluation records, medical histories or other information that in Black &
Decker's good faith opinion is sensitive or the disclosure of which could
subject any the Glass Machinery Units to risk of liability.
(b) For a period of two years after the Closing Date, Black & Decker
and its Subsidiaries will treat and hold as confidential, any confidential
information relating primarily to the operations or affairs of the Glass
Machinery Business. For a period of five years after the Closing Date, Black &
Decker and its Subsidiaries will not disclose any confidential information
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that includes technical (including without limitation Intellectual Property) or
marketing information to a Competing Business for a period of five (5) years
after the Closing Date. In the event any such Person is requested or required
(by oral or written request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand or similar
process or by Applicable Law) to disclose any such confidential information,
then Black & Decker shall notify Buyer promptly of the request or requirement so
that Buyer, at its expense, may seek an appropriate protective order or waive
compliance with this Section 5.02(b). If, in the absence of a protective order
or receipt of a waiver hereunder, any such Person is, on the advice of counsel,
compelled to disclose such confidential information such Person may so disclose
the confidential information, provided that such Person shall use its reasonable
efforts to obtain reliable assurance that confidential treatment will be
accorded to such confidential information. The provisions of this Section
5.02(b) shall not be deemed to prohibit the disclosure of confidential
information relating to the operations or affairs of the Glass Machinery
Business by Black & Decker or any of its Subsidiaries to the extent reasonably
required (i) to prepare or complete any required Tax Returns or financial
statements, (ii) in connection with audits or other proceedings by or on behalf
of a Governmental Authority, (iii) in connection with any insurance or claims,
(iv) to the extent necessary to comply with any Applicable Laws, (v) to provide
services to any Buyer Company in accordance with the terms and conditions of any
of the Transaction Documents or (vi) in connection with any other similar
administrative functions in the ordinary course of business. Notwithstanding the
foregoing, the provisions of this Section 5.02(b) shall not apply to information
that (i) is or becomes publicly available other than as a result of a disclosure
by Black & Decker or any of its Subsidiaries, (ii) is or becomes available to
Black & Decker or any of its Subsidiaries on a non-confidential basis from a
source that, to Black & Decker's knowledge, is not prohibited from disclosing
such information by a legal, contractual or fiduciary obligation or (iii) is or
has been independently developed by a Black & Decker or any of its Subsidiaries
(other than solely for the Glass Machinery Business) after the Closing Date.
Section 5.03 Change of Lockbox Accounts. Immediately after the Closing,
Black & Decker shall take such steps as Buyer may reasonably request to cause
Buyer to be substituted as the sole party having control over any lockbox or
similar bank account maintained exclusively by the Glass Machinery Business to
which customers of the Glass Machinery Business directly make payments in
respect of the Glass Machinery Business or to direct the bank at which any such
lockbox or similar account is maintained to transfer any payments made thereto
to an account established by Buyer.
Section 5.04 Access to Information; Cooperation After Closing. On and
after the Closing Date and subject to any applicable privileges (including,
without limitation, the attorney-client privilege), Black & Decker shall, and
shall cause each of its Subsidiaries to, at their expense (i) afford Buyer and
its Representatives reasonable access upon reasonable prior notice during normal
business hours, to all employees, offices, properties, agreements, records and
books retained by Black & Decker and its Subsidiaries to the extent relating to
the conduct of the Glass Machinery Business prior to the Closing and (ii)
cooperate fully with Buyer with respect to matters relating to the conduct of
the Glass Machinery Business prior to the Closing, including, without
limitation, in the defense or pursuit of any Transferred Asset or Assumed
Liability or any
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claim or action that relates to occurrences involving the Glass Machinery
Business prior to the Closing Date.
Section 5.05 Maintenance of Insurance Policies. Except as otherwise
provided in Exhibit D, on and after the date of this Agreement and until the
Closing Date, Black & Decker shall not take or fail to take any action if such
action or inaction, as the case may be, would adversely affect the applicability
of any insurance (including reinsurance) in effect on the date of this Agreement
that covers all or any part of (i) the assets that would constitute Transferred
Assets if owned, held or used by any Seller of Transferred Assets on the Closing
Date, (ii) the assets (other than Excluded Assets) of a Glass Machinery Share
Company, (iii) the Glass Machinery Business or (iv) the Transferred Employees.
Except as otherwise provided in Exhibit D or as may otherwise be agreed in
writing by the parties, Black & Decker shall not have any obligation to maintain
the effectiveness of any such insurance policy after the Closing Date or to make
any monetary payment in connection with any such policy.
Section 5.06 Noncompetition.
(a) Black & Decker covenants and agrees, as an inducement to Buyer to
enter into this Agreement and to consummate the Contemplated Transactions, that
for a period of five years following the Closing Date neither Black & Decker nor
any of its Subsidiaries (for so long but only for so long as it remains a
Subsidiary of Black & Decker) will, directly or indirectly, carry on or
participate in the ownership, management or control of any business enterprise
that is engaged in the Glass Machinery Business (a "Competing Business").
(b) Nothing contained in this Section 5.06 shall limit or restrict the
right of Black & Decker or any of its subsidiaries to hold and make investments
in securities of any Person that has securities listed on a national securities
exchange or admitted to trading privileges thereon or actively traded in a
generally recognized over-the-counter market, provided that the aggregate equity
interest therein of Black & Decker and any of its Subsidiaries does not exceed
five percent of the outstanding shares or interests in such Person at the time
of their investment therein.
(c) Notwithstanding any provisions of this Section 5.06 to the
contrary, if Black & Decker or any of its Subsidiaries acquires the assets or
securities of any Person that is engaged in a Competing Business, such
acquisition shall not be deemed to be in violation of this Section 5.06,
provided that (A) (i) at the time of acquisition the Competing Business
represents less than one-third of the gross revenues of the acquired Person for
the acquired Person's most recently completed fiscal year and (ii) Black &
Decker and its Subsidiaries use reasonable commercial efforts to divest the
operations of such Competing Business subsequent to such acquisition, or (B) at
the time of acquisition the Competing Business represents less than five percent
of the gross revenues of the acquired Person for the acquired Person's most
recently completed fiscal year.
(d) Black & Decker recognizes and agrees that a breach by it or any of
its Subsidiaries of any of the covenants and agreements in this Section 5.06
could cause irreparable harm to Buyer, that Buyer's remedies at law in the event
of such breach would be inadequate, and that, accordingly, in the event of such
breach a restraining order or injunction or both may be issued
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against Black & Decker or any of its Subsidiaries in addition to any other
rights and remedies that may be available to Buyer under Applicable Law. If this
Section 5.06 is more restrictive than permitted by the Applicable Laws of the
jurisdiction in which Buyer seeks enforcement hereof, this Section 5.06 shall be
limited to the extent required to permit enforcement under such Applicable Laws.
Section 5.07 Third Party's Consent and Notification to Third Parties.
Black & Decker shall undertake all actions which are reasonably required to
obtain the consents from, or to make the notifications to be made to, third
parties which are listed in Schedule B.06.
ARTICLE VI
COVENANTS AND AGREEMENTS OF BUYER
Section 6.01 Confidentiality. Buyer agrees that all information
provided or otherwise made available in connection with the Contemplated
Transactions, to Buyer or any of its Representatives shall be treated as if
provided under the Confidentiality Agreement which shall continue in effect for
such purpose following the signing of this Agreement. This confidentiality
undertaking shall terminate (a) upon Closing with respect to all information
regarding the Glass Machinery Business and (b) on the second anniversary of the
Closing with respect to all other information provided or otherwise made
available in connection with the Contemplated Transactions to Buyer or any of
its Representatives. Nothing in this Section 6.01, however, shall limit or
otherwise restrict the applicability of any other confidentiality or similar
provisions included in the Transaction Documents.
Section 6.02 Provision and Preservation of and Access to Certain
Information; Cooperation.
(a) Prior to the Closing Date, Buyer shall provide to Black & Decker
promptly upon its receipt thereof copies of all environmental audit and similar
reports with respect to facilities the possession of which will be transferred,
directly or indirectly, to Buyer at the Closing. Buyer shall provide to Black &
Decker a copy of all sampling results, boring logs, analyses and other data and
reports regarding any environmental review conducted by Buyer immediately upon
obtaining them.
(b) On and after the Closing Date, Buyer shall preserve all books and
records of the Glass Machinery Business for a period of six years commencing on
the Closing Date (or in the case of books and records relating to Tax,
employment and employee matters, for so long as required by Applicable Law), and
thereafter for an additional four years, not destroy or dispose of such records
without giving notice to Black & Decker of such pending disposal and offering
Black & Decker such records. In the event Black & Decker has not requested such
materials within 90 days following the receipt of notice from Buyer, Buyer may
proceed to destroy or dispose of such materials without any liability.
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(c) From and after the Closing Date and subject to any applicable
privileges (including, without limitation, the attorney-client privilege), Buyer
shall at its expense (i) afford Black & Decker and its Representatives
reasonable access upon reasonable prior notice during normal business hours, to
all employees, offices, properties, agreements, records, books and affairs of
Buyer, and provide copies of such information concerning the Glass Machinery
Business as Black & Decker may reasonably request for any proper purpose,
including, without limitation, in connection with the matters contemplated by
Section 2.04, pre-closing hazardous waste manifests, the preparation of any Tax
Returns, in connection with any judicial, quasi-judicial, administrative, Tax,
audit or arbitration proceeding, in connection with the preparation of any
financial statements or reports and in connection with the defense of any claims
or allegations that relate to or may relate to Excluded Liabilities and (ii)
cooperate fully with Black & Decker for any proper purpose, including, without
limitation, the defense of or pursuit of any Excluded Liability, Excluded Asset
or Indemnified Claim, or any claim or action that relates to an Excluded
Liability, Excluded Asset or Indemnified Claim.
Section 6.03 Insurance; Financial Support Arrangements.
(a) Buyer acknowledges and agrees that as of the Closing Date, neither
the Buyer Companies, the Glass Machinery Share Companies, the Glass Machinery
Business, any property owned or leased by any of the foregoing nor any of the
directors, officers, employees (including, without limitation, the Transferred
Employees) or agents of any of the foregoing will be insured under any insurance
policies maintained by Black & Decker or any of its Affiliates, except (i) in
the case of certain claims made policies, to the extent that a claim has been
reported as of the Closing Date, (ii) in the case of a policy that is an
occurrence policy, to the extent the accident, event or occurrence that results
in an insurable loss occurs prior to the Closing Date and has been, is or will
be reported or noticed to the respective carrier by a Glass Machinery Unit or
Buyer in accordance with the requirements of such policies (which claims Black &
Decker shall, at Buyer's cost and expense, pursue diligently on Buyer's behalf
and the net proceeds of which claims (except to the extent they relate to
Excluded Liabilities) shall be remitted promptly to Buyer upon receipt thereof),
and (iii) as otherwise provided in Exhibit D or agreed to in writing by the
parties. Except as otherwise provided in Exhibit D or as otherwise may be agreed
to in writing by the parties, from and after the Closing Date, Black & Decker
shall have no obligation of any kind to maintain any form of insurance covering
any of the Glass Machinery Units or all or any part of the Transferred Assets,
the Glass Machinery Business or the Transferred Employees, provided that Black &
Decker shall reasonably cooperate with the Buyer to permit the Glass Machinery
Business to have the benefit of reasonable uninterrupted insurance coverage.
(b) From and after the Closing Date, Buyer agrees to reimburse Black &
Decker within 30 days of receipt of an invoice for any self insurance,
retention, deductible, retrospective premium, cash payment for reserves
calculated or charged on an incurred loss basis and similar items, including but
not limited to associated administrative expenses and allocated loss adjustment
or similar expenses (collectively, "Insurance Liabilities") allocated to the
Glass Machinery Business by Black & Decker and Black & Decker agrees to pay to
Buyer any refunds or credits with respect to such items on a basis consistent
with past practices resulting from or arising under any and all current or
former insurance policies maintained by Black & Decker or
<PAGE>
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any of its Affiliates to the extent that (i) such Insurance Liabilities relate
to or arise out of Assumed Liabilities, liabilities (other than Excluded
Liabilities) of a Glass Machinery Share Company or any activities of Buyer, (ii)
relate to a period prior to the Closing and (iii) the past practices reasonably
conform with arms' length principles. Buyer agrees that, to the extent any of
the insurers under the insurance policies, in accordance with the terms of the
insurance policies, requests or requires collateral, deposits or other security
to be provided with respect to claims made against such insurance policies
relating to or arising from such Insurance Liabilities, Buyer shall provide the
collateral, deposits or other security or, upon request of Black & Decker, will
replace any collateral, deposits or other security provided by Black & Decker or
any of its Affiliates.
(c) Buyer agrees that, for a period of six years commencing on the
Closing Date, to the extent it maintains product liability or similar insurance
coverage, Buyer will (at Black & Decker's cost to the extent of any additional
cost therefor, provided that, in the event there will be such a cost, Buyer will
give Black & Decker a reasonable period of time to determine whether it desires
to incur such cost before Buyer commits to such coverage with respect to Black &
Decker) include Black & Decker and its Affiliates as additional insureds/loss
payees on any such policies in respect of which Black & Decker or its Affiliates
has or may have an insurable interest with respect to the Glass Machinery
Business, the Transferred Assets, any of the Assumed Liabilities or any
facilities the possession of which will be transferred, directly or indirectly,
to Buyer at the Closing.
(d) Buyer agrees that, not later than December 31, 1998, and in a
manner reasonably satisfactory to Black & Decker, Buyer shall in good faith seek
to release Black & Decker and its Affiliates from all obligations under all
Financial Support Arrangements maintained by Black & Decker or any of its
Affiliates in connection with the Glass Machinery Business; provided that this
obligation to release shall extend only to Financial Support Arrangements which
are listed in paragraph (a)(v) of Schedule B.12.
(e) If, at any time after the Closing Date, (i) any amounts are drawn
on or paid under any Financial Support Arrangement referred to in Section
6.03(d) where Black & Decker or any of its Affiliates is obligated to reimburse
the Person making such payment or (ii) Black & Decker or any of its Affiliates
pays any amounts under, or any fees, costs or expenses relating to, any such
Financial Support Arrangement, Buyer shall pay Black & Decker such amounts
promptly after receipt from Black & Decker of notice thereof accompanied by
written evidence of the underlying payment obligation.
(f) In the event that Buyer fails to ensure that Black & Decker and its
Affiliates are unconditionally released from all obligations under the Financial
Support Arrangements referred to in Section 6.03(d) not later than December 31,
1998, Buyer shall either (i) promptly deposit with Black & Decker cash in an
amount equal to the aggregate principal or stated amount, as may be applicable,
of such Financial Support Arrangements not so released or (ii) provide back-up
letters of credit issued by one or more commercial banks reasonably satisfactory
to Black & Decker, payable to Black & Decker in such aggregate principal or
stated amount and otherwise in form and substance reasonably satisfactory to
Black & Decker with respect to such Financial
<PAGE>
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Support Arrangements. Any cash deposited with Black & Decker in accordance with
clause (i) shall be held by Black & Decker in a segregated interest-bearing
account and shall be used by Black & Decker solely to satisfy its payment
obligations in respect of such Financial Support Arrangements, and the unused
portion of any cash (including interest) relating to a Financial Support
Arrangement shall be returned to Buyer promptly following the release of Black &
Decker and its Affiliates with respect to, or any other termination of, the
Financial Support Arrangement.
Section 6.04 Use of Intellectual Property. Buyer acknowledges and
agrees that except as permitted by the Transaction Documents, Buyer shall not
use, and Buyer shall cause its Affiliates not to use, any trademark, logo or
tradename of Black & Decker or any Affiliate of Black & Decker (other than those
(i) transferred to Buyer under the terms of the Intellectual Property Assignment
Agreements or (ii) owned by a Glass Machinery Share Company that do not
constitute an Excluded Asset) or any trademarks, logos or trade names that are
confusingly similar thereto or that are a translation or transliteration thereof
into any language or alphabet.
Section 6.05 Certain Environmental Investigations.
(a) Buyer agrees that, if Buyer decides to conduct prior to Closing an
environmental audit or similar review of the Glass Machinery Business that
involves testing, drilling or sampling at any facility the possession of which
is contemplated to be transferred, directly or indirectly, to a Buyer Company at
Closing, Buyer will so advise Black & Decker and will give Black & Decker
sufficient prior written notice to enable Black & Decker's Representatives to be
present during any such testing, drilling or sampling, and to review and comment
on any work plans related to such audit or review. Except as specifically
provided in this Section 6.05(a), the scope of such audit shall be at the sole
discretion of Buyer. Buyer further agrees to arrange for split samples to be
taken in connection with any such audit or review. Buyer agrees that it will
conduct such testing, drilling, or sampling, including disposal of all materials
associated with such activities, such as drill cuttings, wastewater, and
sampling equipment, at Buyer's sole cost and expense and in accordance with all
Applicable Laws, including Environmental Laws. If the Closing contemplated by
the Transaction Documents is not consummated for any reason, Buyer agrees to
restore each facility at which any such testing, drilling or sampling was
conducted to its condition prior to the commencement of Buyer's environmental
audit or similar review.
(b) All information obtained from Buyer's environmental review
(including, but not limited to, environmental Phase I, II or other reports,
analytical/sampling data and reports) (i) shall be kept confidential pursuant to
Section 6.01; (ii) shall not be provided to any Person other than Black &
Decker; and (iii) shall be provided to Black & Decker prior to Closing. In the
event that Buyer's environmental review discloses conditions at any of Black &
Decker's facilities that may require notice to a Governmental Authority prior to
Closing, Black & Decker shall determine what reporting, if any, is necessary and
shall conduct any such reporting.
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ARTICLE VII
COVENANTS AND AGREEMENTS OF THE PARTIES
Section 7.01 Further Assurances. Subject to the terms and conditions of
this Agreement, each party shall use reasonable commercial efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary or desirable under Applicable Laws to consummate the Contemplated
Transactions. Black & Decker and Buyer shall execute and deliver, and shall
cause the Sellers and Buyer Companies, as appropriate or required and as the
case may be, to execute and deliver such other documents, certificates,
agreements and other writings and to take such other actions as may be necessary
or desirable to consummate or implement the Contemplated Transactions. Except as
otherwise expressly set forth in the Transaction Documents, nothing in this
Agreement shall require Black & Decker, any of its Affiliates, any of the Buyer
Companies to make any payments in order to (i) obtain any consents or approvals
necessary or desirable in connection with the consummation of the Contemplated
Transactions, or (ii) cure any breach of a representation or warranty by Black &
Decker prior to the Closing.
Section 7.02 Certain Filings; Consents. Black & Decker and Buyer shall
cooperate with one another (i) in determining whether any action by or in
respect of, or filing with, any Governmental Authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material Contracts, in connection with the consummation of the
Contemplated Transactions and (ii) subject to the terms and conditions of this
Agreement, in taking such actions or making any such filings, furnishing
information required in connection therewith and seeking timely to obtain any
such actions, consents, approvals or waivers.
Section 7.03 Public Announcements. Prior to the Closing, Black & Decker
and Buyer shall consult with each other before issuing any press release or
making any public statement with respect to this Agreement or the Contemplated
Transactions and, except as may be required by Applicable Law or any listing
agreement with, or any listing rules of, any national or international
securities exchange, shall not issue any such press release or make any such
public statement prior to such consultation.
Section 7.04 Intellectual Property.
(a) Buyer acknowledges and agrees that Buyer Companies and the Glass
Machinery Share Companies shall hold all Intellectual Property constituting part
of the Transferred Assets or assets (other than the Excluded Assets) of the
Glass Machinery Companies, as the case may be, subject to any licenses thereof
granted by the Glass Machinery Units prior to the date of this Agreement or
other than implied licenses of Intellectual Property in connection with the sale
of products of the Glass Machinery Business or with the written consent of Buyer
prior to the Closing Date.
(b) Buyer further acknowledges and agrees that the transfer of
Intellectual Property constituting Transferred Assets to Buyer Companies shall
not affect the right of the Sellers to use,
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disclose or otherwise freely deal with any know-how, trade secrets and other
technical information not constituting Transferred Assets.
Section 7.05 Filings. Black & Decker and Buyer shall take all actions
necessary (without payment of money, commencement of litigation, the assumption
of any material obligation or the entering of any agreement to divest or hold
separate any assets) or appropriate to cause the prompt expiration or
termination of any applicable waiting period under the HSR Act or similar filing
requirements in respect of the Contemplated Transactions, including, without
limitation, complying as promptly as practicable with any requests for
additional information.
Section 7.06 Legal Privileges. Black & Decker and Buyer acknowledge and
agree that all attorney-client, work product and other legal privileges that may
exist with respect to the Glass Machinery Business, the Transferred Assets,
Excluded Assets, Assumed Liabilities or Excluded Liabilities shall, from and
after the Closing Date, be deemed joint privileges of Black & Decker and Buyer.
Both Black & Decker and Buyer shall use all reasonable efforts after the Closing
Date to preserve all such privileges and neither Black & Decker nor Buyer shall
knowingly waive any such privilege without the prior written consent of the
other party (which consent shall not be unreasonably withheld or delayed).
Section 7.07 Taxes.
(a) Except as provided in Section 7.07(d), Black & Decker and its
Affiliates shall pay and be responsible for, and shall be entitled to all
refunds and credits of, (i) Income Taxes with respect to the Glass Machinery
Companies and Glass Machinery Business for any Pre-Closing Period, including any
liability for Income Taxes arising out of the inclusion of any of the Glass
Machinery Companies in any Consolidated Returns, (ii) all Taxes with respect to
an Affiliated Group for all taxable periods whatsoever, and (iii) Taxes imposed
on any Seller with respect to gain or other income from its sale of Transferred
Assets or Shares hereunder. Black & Decker shall be responsible for the timely
preparation and filing of all Tax Returns for the Taxes described in the
immediately preceding sentence. In the event that a reserve with respect to any
Taxes for which Black & Decker is responsible under this Section 7.07(a) is
included in or taken into account in the calculation or determination of the
Final Net Tangible Asset Amount, Buyer shall reimburse Black & Decker for the
amount of such reserve promptly upon presentation of an invoice therefor.
(b) Except as provided in Section 7.07(d), Buyer shall pay and be
responsible for, and shall be entitled to all refunds and credits of, all Taxes
with respect to the Glass Machinery Share Companies and the Glass Machinery
Business for any Post-Closing Period. Buyer shall be responsible for the timely
preparation and filing of all Tax Returns of the Glass Machinery Share Companies
and the Glass Machinery Business (i) for any Post-Closing Period, and (ii)
required to be filed by any of the Glass Machinery Share Companies (except as a
member of an Affiliated Group) and the Glass Machinery Business after the
Closing Date.
(c) The parties hereto will, to the extent permitted by Applicable Law,
elect or otherwise agree with the relevant Tax Authority to treat the portion of
each Bridge Period before the Closing Date (a "Seller Period") for all purposes
as a short taxable period ending as of the
<PAGE>
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close of business on the day before the Closing Date and such short taxable
period shall be treated as a Pre-Closing Period for purposes of this Agreement
and the portion of the Bridge Period on and after the Closing Date (the "Buyer
Period") shall be treated as a Post-Closing Period for purposes of this
Agreement.
(d) In any case where Applicable Law does not permit the election or
agreement described in Section 7.07(c) to be made, then, for purposes of this
Agreement and subject to Section 7.07(f), Income Taxes for the Bridge Period
shall be allocated between the Seller Period and the Buyer Period using an
interim-closing-of-the-books method assuming that such taxable period ended at
the close of business on the Closing Date, except that exemptions, allowances or
deductions that are calculated on an annual basis (such as the deduction for
depreciation) shall be apportioned on a per diem basis. Buyer shall be
responsible for the timely preparation and filing of all Tax Returns and the
payment of all Income Taxes due, if any, of the Glass Machinery Share Companies
for any Bridge Period that does not terminate on the Closing Date, pursuant to
Section 7.07(c). Within thirty (30) days of Buyer providing Black & Decker with
a copy of any such Tax Return and a copy of Buyer's detailed calculation of the
Income Taxes attributable to the Seller Period determined in accordance with the
first sentence of this Section 7.07(d), Black & Decker shall pay to Buyer such
Income Taxes attributable to the Seller Period by wire transfer of immediately
available funds to the account designated by Buyer.
(e) Other than as provided in Section 7.07(f), Black & Decker shall be
entitled to the benefit of any refunds or credits of any Taxes for which Black &
Decker is responsible under Section 7.07(a) or 7.07(d) and Buyer shall, promptly
after the receipt thereof, remit to Black & Decker any such Tax refund received
by any Buyer Company or any Glass Machinery Share Company after the Closing. If
any adjustment shall be made to any Income Tax Return relating to a Glass
Machinery Share Company for any Pre-Closing Period which results in any Tax
benefit to Buyer or a Glass Machinery Share Company for any Post-Closing Period,
Black & Decker shall be entitled to the benefit of such Income Tax benefit and
Buyer shall pay to Black & Decker the amount of such Income Tax benefit at such
time or times as and to the extent that Buyer or a Glass Machinery Shares
Company realizes such benefit through a refund of Tax or reduction in the amount
of Taxes which such Person would otherwise have had to pay if such adjustment
had not been made. Buyer shall be entitled to the benefit of any refunds or
credits of Taxes for which Buyer is responsible under Section 7.07(b) or 7.07(d)
and Black & Decker shall, promptly after the receipt thereof, remit to Buyer any
such Tax refund received by Black & Decker or any of its Affiliates after the
Closing. If any adjustment shall be made to any Tax Return relating to a Glass
Machinery Share Company for any Post-Closing Period which results in any Income
Tax benefit to Black & Decker or any Affiliate of Black & Decker for any
Pre-Closing Period, such Glass Machinery Share Company shall be entitled to the
benefit of such Income Tax benefit, and Black & Decker shall pay to Buyer on
behalf of such Glass Machinery Share Company the amount of such Income Tax
benefit at such time or times as and to the extent that Black & Decker or any
Affiliate of Black & Decker realizes such benefit through a refund of Income Tax
or reduction in the amount of Income Taxes which Black & Decker or any such
Affiliate would otherwise have had to pay if such adjustment had not been made.
<PAGE>
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(f) Any loss or credit of any Glass Machinery Share Company arising in
any Post-Closing Period that is available as a carryback to a Pre-Closing Period
("Buyer's Carryback") shall be for the benefit of the appropriate Glass
Machinery Share Company (provided, however, that any loss or credit of a Glass
Machinery Share Company arising in any Post-Closing Period that may be either
carried back or carried forward at the Glass Machinery Share Company's option,
may, in Buyer's sole discretion and judgment, be carried back (and be subject to
the provisions of this subsection) or be carried forward). Any loss or credit of
any Glass Machinery Share Company arising in any Pre-Closing Period that is
available as a carryforward to a Post-Closing Period ("Seller's Carryforward")
shall be for the benefit of Black & Decker. Black & Decker shall pay to the
appropriate Glass Machinery Share Company or to Buyer on behalf of such Glass
Machinery Share Company the amount of any Income Tax benefit realized with
respect to any Buyer's Carryback at such time or times and to the extent that
Black & Decker or any Affiliate of Black & Decker realizes such benefit through
a refund of Income Taxes or reduction in the amount of Income Taxes which Black
& Decker or any such Affiliate would otherwise have had to pay but for such
carryback. Buyer or the appropriate Glass Machinery Share Company shall pay to
Black & Decker the amount of any Income Tax benefit realized with respect to any
Seller's Carryforward at such time or times and to the extent of the amount of
Income Taxes that the Glass Machinery Share Company, Buyer or any Affiliate
thereof would otherwise have had to pay but for such carryforward. In the event
that, pursuant to this Section 7.07(f), Black & Decker pays to Buyer, a Glass
Machinery Share Company or an Affiliate thereof, the amount of any such Income
Tax benefit, Buyer shall indemnify and hold Black & Decker harmless from any
subsequent increase in Black & Decker's or any of Black & Decker's Affiliates'
Income Tax liability arising out of a subsequent reduction of the amount of any
Buyer's Carryback arising from audit, adjustment or otherwise. In the event
that, pursuant to this Section 7.07(f), Buyer or a Glass Machinery Share Company
pays to Black & Decker or an Affiliate of Black & Decker, the amount of any such
Income Tax benefit, Black & Decker shall indemnify and hold Buyer harmless from
any subsequent increase in Buyer's, any of a Glass Machinery Company's or any of
their Affiliates' Income Tax liability arising out of a subsequent reduction in
the amount of any Seller's Carryforward arising from audit, adjustment or
otherwise.
(g) Buyer shall have exclusive control over and responsibility to
conduct any Contest for a Post-Closing Period and for a Bridge Period if the
Contest for a Bridge Period relates solely to the Buyer; provided, however, that
Buyer shall not enter into any agreement in compromise or settlement of such
Contest which could affect a Pre-Closing Period or a Seller Period without the
written consent of Seller. Black & Decker shall have exclusive control over and
responsibility to conduct any Contest for a Pre-Closing Period and for a Bridge
Period if the Contest for a Bridge Period relates solely to the Seller Period;
provided, however, that Black & Decker shall not enter into any agreement in
compromise or settlement of such Contest which could affect a Post-Closing
Period or a Buyer Period without the written consent of Buyer. In any Contest
controlled by Black & Decker, Buyer will take, and will cause its Affiliates to
take, such action as Black & Decker may by written notice reasonably request in
connection with such Contest (including the payment of a Tax preparatory to
filing a claim for refund of such Tax; provided, that Black & Decker shall first
pay the amount of such Tax to Buyer). Buyer and Seller agree to jointly control
and conduct any Contest for a Bridge Period that relates to both the Seller
Period and the Buyer Period. Seller, Seller's Parent and Buyer agree to
cooperate fully
<PAGE>
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with each other with respect to defending or answering any such Contest and to
provide each other with all materials, information and documents as reasonably
requested by the other. Neither Buyer, Seller, nor Seller's Parent shall be
liable for any portion of any settlement of any Contest for a Bridge Period that
relates to both the Seller Period and the Buyer Period effected without its
written consent, provided such consent was not unreasonably withheld.
(h) Buyer shall notify Black & Decker in writing promptly upon receipt
by any Glass Machinery Share Company of notice of any Contest or assessment
relating thereto for a Pre-Closing Period or a Bridge Period. Failure of Buyer
to so notify Black & Decker shall not relieve Black & Decker from any liability
under this Section 7.07, except to the extent it is proven that Black & Decker
suffered actual prejudice in connection with or in defending against a Contest.
Black & Decker shall notify Buyer in writing promptly upon receipt by Black &
Decker of notice of any Contest or assessment relating to a Post-Closing Period
or a Bridge Period. Failure of Black & Decker to so notify Buyer shall not
relieve Buyer from any liability under this Section 7.07, except to the extent
it is proven that Buyer suffered actual prejudice in connection with or in
defending against a Contest.
Section 7.08 Currency Hedge Contracts.
(a) In the ordinary course of their business certain of the Glass
Machinery Units enter into forward currency exchange contracts ("Hedge
Contracts") with Black & Decker to hedge the currency exchange risk of such
Glass Machinery Unit transacting business in a currency other than the currency
of its primary operations (i.e., its functional currency). As of June 26, 1998,
the Glass Machinery Units have Hedge Contracts with Black & Decker as listed on
Attachment VI.
(b) From the date hereof to the Closing Date, Black & Decker, as agent
for the Glass Machinery Units, will enter into Hedge Contracts on behalf of the
Glass Machinery Units with a third party financial institution in the ordinary
course of business and in accordance with past practice to cover trade
exposures, provided that any roll forward of a closed Hedge Contract may occur
only with the prior consent of the Buyer which consent, in the case of such a
roll forward of a Hedge Contract that covers a bona fide trade, will not be
withheld unreasonably.
(c) All Hedge Contracts between Black & Decker and a Glass Machinery
Unit, other than a Glass Machinery Share Company, will be assigned by the Glass
Machinery Units to and assumed by a Buyer Company at the Closing. No gain or
loss on Hedge Contracts of the Glass Machinery Units will be recognized in the
determination of the Proposed Final Net Tangible Asset Amount or the Final Net
Tangible Asset Amount other than those recognized in the books of account of the
Glass Machinery Units in accordance with the current accounting policies
followed by the Glass Machinery Units.
(d) All Hedge Contracts between a Glass Machinery Unit and Black &
Decker will be closed effective as of the Closing Date. Each such Hedge Contract
shall be closed at the rates of exchange for the forward purchase of and with
the relevant currencies for the period of time remaining on each such Hedge
Contract as quoted by Bank of America as of 10:00 a.m. local
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New York time on the Closing Date. The amount due each Buyer Company that
assumed a Hedge Contract and each Glass Machinery Share Company that is a party
to a Hedge Contract, or Black & Decker, as the case may be, under each such
Hedge Contract that is not in U.S. dollars shall be converted to U.S. dollars at
the rate of exchange for the spot purchase of U.S. dollars with the relevant
foreign currency as quoted by the Bank of America as of 10:00 a.m. local New
York time on the Closing Date.
(e) Black & Decker shall prepare a schedule of the gain or loss on each
of such Hedge Contracts and the aggregate gain or loss realized by each of (i)
Black & Decker and (ii) all Buyer Companies that assumed a Hedge Contract and
all Glass Machinery Share Companies that are parties to a Hedge Contract,
expressed in U.S. dollars, calculated using the rates of exchange referred to in
Section 7.08(d) and shall provide such schedule, together with the quotations
from the Bank of America to Buyer by the close of business on the second
Business Day following the Closing Date. Such schedule and the calculations
thereon shall be conclusive absent manifest error. If such schedule reflects
that there is aggregate gain realized by the Glass Machinery Units upon the
closure of all such Hedge Contracts the amount of such aggregate gain shall be
paid by Black & Decker to Buyer on the second Business Day following the
delivery of such schedule. If such schedule reflects that there is aggregate
loss realized by the Glass Machinery Units upon the closure of such Hedge
Contracts the amount of such aggregate loss shall be paid by Buyer to Black &
Decker on the second Business Day following the delivery of such schedule. Such
payment shall be made in immediately available funds in U.S. dollars by wire
transfer to a bank account designated in writing by the party entitled to
receive such payment. The making or receipt of any such payment to or by Buyer
shall be as agent for each Buyer Company that assumed a Hedge Contract and each
Glass Machinery Share Company that is a party to a Hedge Contract. Within five
(5) Business Days of the Closing Date, Black & Decker shall deliver to Buyer two
(2) copies of a Foreign Exchange Compensating Contract Confirmation (each a
"Hedge Closure Confirmation") signed by Black & Decker confirming the closure of
each such Hedge Contract. Within five (5) Business Days of its receipt of such
Hedge Closure Confirmations, Buyer shall cause each Buyer Company that assumed a
Hedge Contract and each Glass Machinery Share Company that is a party to a Hedge
Contract to sign such Hedge Closure Confirmations and return one fully signed
copy of each such Hedge Closure Confirmation to Black & Decker.
(f) In the event that any of the Hedge Contracts assumed by Buyer are
with third party financial institutions and Black & Decker has provided a
Financial Support Arrangement with respect to such Hedge Contracts, the
provisions of Sections 6.03(d), 6.03(e) and 6.03(f) shall, subject to the
proviso at the end of Section 6.03(d), apply to such Financial Support
Arrangements.
(g) All costs, taxes and fees associated with the transfer and closing
of the Hedge Contracts (other than the gains and losses referred to in Sections
7.08(c) or 7.08(e) above and Income Taxes on any gain recognized by a Glass
Machinery Share Company or a Buyer Company on the closing of such Hedge
Contracts) shall be borne by Black & Decker.
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Section 7.09 Restructuring Costs. Promptly upon receipt of one or more
certifications from Buyer's chief financial officer that Buyer has made actual
cash expenditures prior to December 31, 2000 in connection with the
restructuring of the Glass Machinery Business and specifying the amount of such
expenditures and the Glass Machinery Unit that made such expenditure, Black &
Decker will cause each Seller of such Glass Machinery Unit to reimburse Buyer
for an aggregate of up to $7,000,000 of such expenditures.
ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFIT MATTERS
Section 8.01 Employees and Employee Benefit Matters. The parties agree
that (i) the allocation of obligations with respect to employees of the Glass
Machinery Business accrued prior to the Closing shall be pursuant to Exhibit D
and (ii) subject to mandatory Applicable Law and existing agreements that
preclude implementation of the provisions of Exhibit D, the obligations of Buyer
to offer terms and conditions of employment to Transferred Employees shall
principally be as set forth in Exhibit D.
ARTICLE IX
CONDITIONS TO CLOSING
Section 9.01 Conditions to the Obligations of Each Party. The
obligations of Black & Decker and Buyer to consummate the Closing are subject to
the satisfaction (or waiver) of the following conditions:
(a) any applicable waiting period under the HSR Act relating to the
Contemplated Transactions shall have expired or been terminated;
(b) no provision of any Applicable Law and no judgment, injunction,
order or decree shall prohibit the Closing, and no action or proceeding shall be
pending before any court, arbitrator or Governmental Authority with respect to
which counsel reasonably satisfactory to Black & Decker and Buyer shall have
rendered a written opinion that there is a substantial likelihood of a
determination that would prohibit the Closing;
(c) the actions by or in respect of or filings with any Governmental
Authority listed on Attachment VII shall have been obtained or made and any
waiting period connected therewith shall have expired or been terminated; and
(d) Black & Decker or the applicable Seller or Glass Machinery Unit, as
the case may be, shall have obtained the consents, approvals or permits or taken
the actions contemplated by Attachment VII.
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Section 9.02 Conditions to Obligation of Buyer. The obligations of
Buyer to consummate the Closing are subject to the satisfaction (or waiver by
Buyer) of the following further conditions:
(a) (i) Black & Decker shall have performed in all material respects
all of its obligations under the Transaction Documents required to be performed
by it on or prior to the Closing Date, (ii) the representations and warranties
of Black & Decker contained in the Transaction Documents shall be true and
correct at and as of the date of this Agreement and as of the Closing Date, as
if made at and as of each such date, except that those representations and
warranties which are by their express terms made as of a specific date shall be
true and correct only as of such date, in each case except for inaccuracies that
in the aggregate could not reasonably be expected to have a Material Adverse
Effect on the Glass Machinery Business, and (iii) Buyer shall have received a
certificate signed by an executive officer of Black & Decker to the foregoing
effect;
(b) since March 22, 1998, no event has occurred that has had a Material
Adverse Effect on the Glass Machinery Business, other than those resulting from
changes, whether actual or prospective, in general conditions applicable to the
business in which the Glass Machinery Business is involved or general economic
conditions; and
(c) Black & Decker or the applicable Affiliated Transferor shall have
executed and delivered, on or before the Closing Date, the Transaction Documents
that are required to be signed by a Black & Decker Company.
(d) The environmental conditions of the facilities included in the
Transferred Assets or owned or leased by a Glass Machinery Share Company as
ascertained through investigations conducted by Buyer pursuant to Section 6.02
do not in the aggregate constitute conditions that could reasonably be expected
to have a Material Adverse Effect on the Glass Machinery Business.
Section 9.03 Conditions to Obligation of Black & Decker. The obligation
of Black & Decker to consummate the Closing is subject to the satisfaction (or
waiver by Black & Decker) of the following further conditions:
(a) (i) Buyer shall have performed in all material respects all of
their respective obligations under the Transaction Documents required to be
performed by them at or prior to the Closing Date, (ii) the representations and
warranties of Buyer contained in the Transaction Documents shall be true and
correct at and as of the date of this Agreement and as of the Closing Date, as
if made at and as of each such date, except that those representations and
warranties which are by their express terms made as of a specific date shall be
true and correct only as of such date, in each case except for inaccuracies that
could not reasonably be expected to have a Material Adverse Effect on the Glass
Machinery Business, and (iii) Black & Decker shall have received a certificate
signed by an executive officer of Buyer to the foregoing effect; and
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(b) Buyer or the applicable Buyer Company shall have executed and
delivered, on or before the Closing Date, the Transaction Documents that are
required to be signed by a Buyer Company.
Section 9.04 Updated Disclosure Schedules. At any time prior to the
Closing Black & Decker shall be entitled to deliver to Buyer updates to or
substitutions of the Disclosure Schedules provided that such updates or
substitutions are clearly marked as such and are addressed to Buyer at the
address listed in Section 12.01. In the event that Black & Decker delivers
updated or substitute Disclosure Schedules on or after the third day before any
scheduled closing date, Buyer shall be entitled to extend the scheduled closing
date to the third day after it receives the updated or substitute Disclosure
Schedules, or if such day is not a Business Day, to the next Business Day. The
delivery by Black & Decker of updated or substitute Disclosure Schedules shall
not prejudice any rights of Buyer under this Agreement, including but not
limited to the right to claim that the representations and warranties of Black &
Decker, when made on the date of this Agreement, were untrue or that a Material
Adverse Effect on the Glass Machinery Business has occurred; provided, however,
that if Buyer decides not to assert any such claim and consummates the Closing,
the updated or substitute Disclosure Schedules shall replace, in whole or in
part as the case may be, the Disclosure Schedules previously delivered hereunder
for all purposes.
Section 9.05 Effect of Waiver. Any waiver by Buyer of the conditions
specified in clause (ii) of Section 9.02(a), and any waiver by Black & Decker of
the conditions specified in clause (ii) of Section 9.03, if made knowingly,
shall also be deemed a waiver of any claim for Damages as the result of the
matters waived.
ARTICLE X
SURVIVAL; INDEMNIFICATION
Section 10.01 Survival.
None of the representations, warranties, covenants or agreements of the
parties contained in any Transaction Document or in any certificate or other
writing delivered pursuant to any Transaction Document or in connection with any
Transaction Document shall survive the Closing, except for:
(i) the representations and warranties in Sections B.01
through B.04 shall survive indefinitely;
(ii) the representations and warranties in Section B.15 shall
not survive the Closing Date;
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(iii) the representations and warranties in Sections B.18 and
B.20 shall survive until 30 days after the expiration of the applicable
statute of limitations (or extensions or waivers thereof);
(iv) the representations and warranties in Section B.21 shall
survive for a period of two years from the Closing Date;
(v) the representations and warranties in Exhibit B (other
than those Sections of Exhibit B referenced in the preceding clauses
(i), (ii) and (iii)), shall survive for a period of one year from the
Closing Date;
(vi) the representations and warranties in Sections C.01 and
C.02 shall survive indefinitely;
(vii) the representations and warranties in Exhibit C (other
than those Sections of Exhibit C referenced in the preceding clause
(v)) shall survive for a period of one year from the Closing Date; and
(viii) those covenants and agreements set forth in the
Transaction Documents that, by their terms, are to have effect after
the Closing Date shall survive for the period contemplated by such
covenants and agreements, or if no period is expressly set forth,
indefinitely.
The representations, warranties, covenants and agreements referenced in the
preceding clauses (i) and (iii) through (vii) are referred to herein as the
"Surviving Representations or Covenants." It is understood and agreed that, (i)
before the Closing the remedies expressly set forth in Article XI are the sole
and exclusive remedies for any breach of any representation, warranty, covenant
or agreement and (ii) following the Closing the sole and exclusive remedy with
respect to any breach of any representation, warranty, covenant or agreement
(other than (1) with respect to a breach of the terms of a covenant or
agreement, as to which Buyer or Black & Decker, as the case may be, shall be
entitled to seek specific performance or other equitable relief and (2) with
respect to claims for fraud) shall be a claim for Damages (whether by contract,
in tort or otherwise, and whether in law, in equity or both) made pursuant to
this Article X.
Section 10.02 Indemnification.
(a) Effective as of the Closing and subject to the limitations set
forth in Section 10.04(a), Buyer hereby indemnifies Black & Decker and its
Affiliates and their respective directors, officers, employees and agents
against, and agrees to hold them harmless from any and all Damages incurred or
suffered by any of them arising out of or related in any way to (i) any
misrepresentation or breach of any Surviving Representation or Covenant made or
to be performed by Buyer Companies pursuant to any of the Transaction Documents,
(ii) except as otherwise contemplated by Sections 10.02(b)(iii) and
10.04(b)(ii), (A) any Assumed Liabilities (including, without limitation, any
Buyer Company's failure to perform or in due course pay or discharge any Assumed
Liability) and (B) any liability of a Glass Machinery Share Company
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other than an Excluded Liability, (iii) subject to the proviso contained in the
last sentence of Section 6.03(d) any Financial Support Arrangement described in
Section 6.03(d), (iv) any matters for which indemnification is provided to Black
& Decker or any of its Affiliates under Exhibit D (it being understood that the
terms of such indemnification shall be governed by and subject to the terms of
Exhibit D), (v) the first One Million Dollars ($1,000,000) in Damages (other
than legal fees or similar costs) that arise following Closing in respect of the
Arbitration Cases, or (vi) any liabilities or obligations arising in connection
with or in any way relating to the Glass Machinery Business (but only to the
extent conducted after the Closing Date), or a facility the possession of which
is transferred, directly or indirectly, to a Buyer Company at Closing (but only
during a period in which such Buyer Company or any of its Affiliates or any of
their successors owns or leases such facility), to the extent such liabilities
arise out of, relate to, are based on or result from any action taken (or a
failure to take action) or any event occurring after the Closing Date. Buyer
hereby indemnifies Black & Decker and its Affiliates and their respective
directors, officers, employees and agents against, and agrees to hold them
harmless from any and all Damages incurred or suffered by any of them directly
arising out of actions taken by Buyer Companies or any of their Representatives
in connection with any environmental audit or similar review of the Glass
Machinery Business that involves testing, drilling or sampling at any facility
possession of which is contemplated to be transferred to a Buyer Company at
Closing. The indemnity contained in the immediately preceding sentence is
explicitly limited to not include any costs related to any (A) Remedial Actions,
(B) personal injury, wrongful death, economic loss or property damage claims,
(C) claims for natural resource damages, (D) violations of Applicable Law, (E)
reporting requirements, or (F) any other Damages with respect to Environmental
Laws which, in each case, may be identified in said audit or similar review but
are not directly caused by said audit or similar review.
(b) Effective as of the Closing and subject to the limitations set
forth in Section 10.04(b), Black & Decker hereby indemnifies Buyer and its
Affiliates and their respective directors, officers, employees and agents
against, and agrees to hold them harmless from any and all Damages incurred or
suffered by any of them arising out of or related in any way to (i) any
misrepresentation or breach of any Surviving Representation or Covenant made or
to be performed by Black & Decker pursuant to any Transaction Document, (ii) any
Excluded Liabilities (including, without limitation, Black & Decker's or any of
its Affiliates' failure to perform or in due course pay or discharge any
Excluded Liability), (iii) any Environmental Liabilities, whether or not the
subject of a claim by any Governmental Authority or any other third party,
incurred by reason of any violation of any Environmental Law or the presence of
any Hazardous Substances to the extent that the event or condition causing any
such Loss (a) exists as of or prior to the Closing Date, whether or not caused
by Black & Decker or contributed to by Black & Decker, (b) arises out of,
relates to, is based on or results from actions taken (or the failure to take
action), or events occurring prior to the Closing Date, or (c) Environmental
Liabilities that are Excluded Liabilities including, without limitation, those
that relate to or stem from the actual or alleged shipment of, or arrangement
for the shipment of, Hazardous Substances prior to the Closing Date, for offsite
treatment, storage, processing, recycling, reuse or disposal at any facility or
location not included in the Transferred Assets (whether by fee ownership or
leasehold interest) or not owned or leased on the Closing Date by a Glass
Machinery Share Company, or (iv) any matters for which indemnification is
provided under Exhibit D (it being
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understood that the terms of such indemnification shall be governed by and
subject to the terms of Exhibit D).
Section 10.03 Procedures.
(a) If Black & Decker or any of its Affiliates or any of their
directors, officers, employees and agents, shall seek indemnification pursuant
to Section 10.02(a), or if Buyer or any of its Affiliates or any of their
directors, officers, employees and agents, shall seek indemnification pursuant
to Section 10.02(b), the Person seeking indemnification (the "Indemnified
Party") shall give written notice to the party from whom such indemnification is
sought (the "Indemnifying Party") promptly (and in any event within 30 days)
after the Indemnified Party (or, if the Indemnified Party is a corporation, any
officer or employee of the Indemnified Party) becomes aware of the facts giving
rise to such claim for indemnification (an "Indemnified Claim") specifying in
reasonable detail the factual basis of the Indemnified Claim, stating the amount
of the Damages, if known, the method of computation thereof, containing a
reference to the provision of the Transaction Documents in respect of which such
Indemnified Claim arises and demanding indemnification therefor. The failure of
an Indemnified Party to provide notice in accordance with this Section 10.03
shall not constitute a waiver of that party's claims to indemnification pursuant
to Section 10.02, except to the extent that (i) any such failure or delay in
giving notice causes the amounts paid by the Indemnifying Party to be greater
than they otherwise would have been or otherwise results in prejudice to the
Indemnifying Party or (ii) such notice is not delivered to the Indemnifying
Party prior to the expiration of the applicable survival period set forth in
Section 10.01. If the Indemnified Claim arises from the assertion of any claim,
or the commencement of any suit, action, proceeding or Remedial Action brought
by a Person that is not a party hereto (a "Third Party Claim"), any such notice
to the Indemnifying Party shall be accompanied by a copy of any papers
theretofore served on or delivered to the Indemnified Party in connection with
such Third Party Claim. With respect to any Third Party Claim asserted or
brought prior to the Closing Date, notice of such Third Party Claim shall be
deemed to have been delivered on the Closing Date.
(b) (i) Upon receipt of notice of a Third Party Claim from an
Indemnified Party pursuant to Section 10.03(a), the Indemnifying Party
will be entitled to assume the defense and control of such Third Party
Claim subject to the provisions of this Section 10.03. After written
notice by the Indemnifying Party to the Indemnified Party of its
election to assume the defense and control of a Third Party Claim, the
Indemnifying Party shall not be liable to such Indemnified Party for
any legal fees or expenses subsequently incurred by such Indemnified
Party in connection therewith, (except that the Indemnifying Party
shall be responsible for fees and expenses of counsel to the
Indemnified Party to the extent it is advised by counsel that either
(x) the Indemnifying Party's counsel has a conflict of interest or (y)
there are legal defenses available to the Indemnifying Party that are
different from or in addition to those that are available to the
Indemnifying Party and counsel provided by the Indemnifying Party is
not in a position to assert such defenses). Notwithstanding anything in
this Section 10.3 to the contrary, if the Indemnifying Party does not
assume defense and control of a Third Party Claim as provided in this
Section 10.3, the Indemnified Party shall have the right to defend such
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Third Party Claim, subject to the limitations set forth in this Section
10.03, in such manner as it may deem appropriate. Whether the
Indemnifying Party or the Indemnified Party is defending and
controlling any such Third Party Claim, they shall select counsel,
contractors, experts and consultants of recognized standing and
competence, shall take all steps necessary in the investigation,
defense or settlement thereof, and shall at all times diligently and
promptly pursue the resolution thereof. The party conducting the
defense thereof shall at all times act as if all Damages relating to
the Third Party Claim were for its own account and shall act in good
faith and with reasonable prudence to minimize Damages therefrom. The
Indemnified Party shall, and shall cause each of its Affiliates,
directors, officers, employees, and agents to, cooperate fully with the
Indemnifying Party in connection with any Third Party Claim.
(ii) Subject to the provisions of Section 10.03(b)(iii) and
Section 10.03(b)(iv), the Indemnifying Party shall be authorized to
consent to a settlement of, or the entry of any judgment arising from,
any Third Party Claims, and the Indemnified Party shall consent to a
settlement of, or the entry of any judgment arising from, such Third
Party Claims; provided, that the Indemnifying Party shall (1) pay or
cause to be paid all amounts arising out of such settlement or judgment
concurrently with the effectiveness thereof; (2) shall not encumber any
of the assets of any Indemnified Party or agree to any restriction or
condition that would apply to such Indemnified Party or to the conduct
of that party's business; and (3) shall obtain, as a condition of any
settlement or other resolution, a complete release of each Indemnified
Party. Except for the foregoing, no settlement or entry of judgment in
respect of any Third Party Claim shall be consented to by any
Indemnifying Party or Indemnified Party without the express written
consent of the other party.
(iii) Notwithstanding the provisions of Section 10.03(b)(i),
Buyer shall manage all Remedial Actions conducted with respect to
facilities which constitute Transferred Assets or assets (other than
Excluded Assets) owned or leased by a Glass Machinery Share Company,
provided that Black & Decker and its Representatives shall have the
right, consistent with Buyer's right to manage such Remedial Actions as
aforesaid, to participate fully in all decisions regarding any Remedial
Action, including reasonable access to sites where any Remedial Action
is being conducted, reasonable access to all documents, correspondence,
data, reports or information regarding the Remedial Action, reasonable
access to employees and consultants of Buyer with knowledge of relevant
facts about the Remedial Action and the right to attend all meetings
and participate in any telephone or other conferences with any
Government Authority or other third party regarding the Remedial
Action.
(iv) In the case of the indemnification contemplated by
Section 10.02(b)(iii), in the event that the Indemnifying Party desires
to settle the matters referenced therein or consent to the entry of any
judgment arising thereunder and the Indemnified Party does not wish to
consent to such settlement or entry of judgment, the Indemnified Party
shall have no obligation to consent to the settlement or entry of
judgment provided that it agrees in writing to pay and be responsible
for 100% of any Damages; provided that the
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Indemnified Party shall not be required to consent to any settlement or
agree to be responsible for the payment of Damages thereafter incurred
with respect to any matter the settlement or entry of judgment of which
would require the consent of such Indemnified Party pursuant to Section
10.03(b)(ii). The obligation of an Indemnified Party that rejects any
proposed settlement offer or entry of any such judgment to pay and be
responsible for 100% of any Damages in accordance with this Section
10.03(b)(iv) shall be conditioned upon and subject to the payment by
Indemnifying Party, within five Business Days of the date such
Indemnified Party provides the written agreement contemplated by the
preceding sentence, of an amount, in immediately available funds, equal
to the portion of the total settlement that would have been payable by
the Indemnifying Party according to the percentage sharing arrangement
contemplated by Section 10.04(b)(ii). Thereafter, the Indemnified Party
shall be solely responsible for any Damages and for the defense of the
matter that is the subject of the proposed settlement or entry of
judgment. Notwithstanding the foregoing, an Indemnifying Party may, at
its option and expense, participate in the defense of any Indemnified
Claim.
(c) If the Indemnifying Party and the Indemnified Party are unable to
agree with respect to a procedural matter arising under Section 10.03(b)(iii),
the Indemnifying Party and the Indemnified Party shall, within 10 days after
notice of disagreement given by either party, agree upon a third-party referee
("Referee"), who shall be an attorney and who shall have the authority to review
and resolve the disputed matter. The parties shall present their differences in
writing (each party simultaneously providing to the other a copy of all
documents submitted) to the Referee and shall cause the Referee promptly to
review any facts, law or arguments either the Indemnifying Party or the
Indemnified Party may present. The Referee shall be retained to resolve specific
differences between the parties within the range of such differences. Either
party may request that all discussions with the Referee by either party be in
each other's presence. The decision of the Referee shall be final and binding
unless both the Indemnifying Party and the Indemnified Party agree. The parties
shall share equally all costs and fees of the Referee.
(d) If an Indemnifying Party makes any payment on an Indemnified Claim,
the Indemnifying Party shall be subrogated, to the extent of such payment, to
all rights and remedies of the Indemnified Party to any insurance or other
claims or of the Indemnified Party with respect to such claim.
(e) Notwithstanding the provisions contained in this Section 10.03,
Black & Decker and its Affiliates shall control the defense of the Arbitration
Cases following Closing as if they were indemnifying parties defending a Third
Party Claim in the manner contemplated by Section 10.03(b)(i).
Section 10.04 Limitations. Notwithstanding anything to the contrary in
this Agreement or in any of the Transaction Documents:
(a) Buyer shall only have liability to Black & Decker or any other
Person hereunder with respect to the representations and warranties described in
clause (i) of Section 10.02(a) if such matters were the subject of a written
notice given by the Indemnified Party pursuant to
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Section 10.03(a) within the period following the Closing Date specified for each
respective matter in Section 10.01.
(b) Black & Decker shall only have liability to Buyer or any other
Person hereunder:
(i) with respect to the representations and warranties
described in clause (i) of Section 10.02(b), (y) to the extent that the
aggregate Damages of all Indemnified Parties as the result thereof
exceed $1,000,000 but are not greater than an amount equal to
$1,000,000 plus 33% of the Adjusted Purchase Price (it being understood
that Black & Decker's maximum liability under Section 10.02(b)(i) with
respect to representations and warranties and this Section 10.04(b)(i)
shall be an amount equal to 33% of the Adjusted Purchase Price),
provided that the limitations expressed in this subclause (b) shall not
apply to any claim made under Section B.18; and (z) if such matters
were the subject of a written notice given by the Indemnified Party
pursuant to Section 10.03(a) within the period following the Closing
Date specified for each respective matter in Section 10.01; and
(ii) with respect to the matters described in clauses (iii)(a)
and (iii)(b) of Section 10.02(b), to the extent of (x) 75% of the
aggregate Damages incurred and paid within the first five years
following the Closing Date by all Indemnified Parties as a result
thereof based, to the extent relevant, on the use of the facilities
constituting Transferred Assets or facilities owned or leased by a
Glass Machinery Share Company as of the Closing Date, (y) 50% of the
aggregate Damages incurred and paid within the second five years
following the Closing Date by all Indemnified Parties as the result
thereof based, to the extent relevant, on the use of the facilities
constituting Transferred Assets or facilities owned or leased by a
Glass Machinery Share Company as of the Closing Date, and (z) if the
aggregate of such Damages incurred and paid within first ten years
following the Closing Date by all Indemnified Parties (after giving
effect to the payment of indemnified amounts by Black & Decker to the
Indemnified Parties under this Section 10.04(a)(ii)) exceeds
$5,000,000, all additional Damages incurred and paid by all Indemnified
Parties in the first ten years following the Closing Date by all
Indemnified Parties as a result thereof based, to the extent relevant,
on the use of the facilities constituting Transferred Assets or
facilities owned or leased by a Glass Machinery Share Company as of the
Closing Date.
ARTICLE XI
TERMINATION
Section 11.01 Termination. The Transaction Documents may be terminated
at any time prior to the Closing:
(i) by mutual written agreement of Black & Decker and Buyer;
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(ii) by Black & Decker or Buyer if the Closing shall not have
been consummated by December 31, 1998; provided, however, that neither
Black & Decker nor Buyer may terminate the Transaction Documents
pursuant to this clause (ii) if the Closing shall not have been
consummated by December 31, 1998, by reason of the failure of such
party or any of its Affiliates to perform in all material respects any
of its or their respective covenants or agreements contained in the
Transaction Documents; and
(iii) by either Black & Decker or Buyer if there shall be any
Applicable Law or regulation that makes consummation of the
Contemplated Transactions illegal or otherwise prohibited or if
consummation of the Contemplated Transactions would violate any
nonappealable final order, decree or judgment of any Governmental
Authority having competent jurisdiction.
Any party desiring to terminate this Agreement pursuant to this Section 11.01
shall give written notice of such termination to the other parties to this
Agreement.
Section 11.02 Effect of Termination. If this Agreement is terminated as
permitted by Section 11.01, such termination shall be without liability of any
party (or any Affiliate, stockholder, director, officer, employee, agent,
consultant or Representative of such party) to any other party to this
Agreement; provided, however, that if the Contemplated Transactions fail to
close as a result of a breach of the provisions of any Transaction Document by
Black & Decker or Buyer, such party shall be fully liable for any and all losses
and damages incurred or suffered by the other party as a result of all such
breaches, and the other party shall be able to pursue any and all remedies which
may be available to it, if the other party is ready, willing and able to
otherwise satisfy its obligations under the Transaction Documents.
Notwithstanding the foregoing, the provisions of Sections 6.01 and 12.03, the
second sentence of Section 10.02(a), and this Section 11.02 shall survive any
termination hereof pursuant to Section 11.01.
ARTICLE XII
MISCELLANEOUS
Section 12.01 Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
if to Black & Decker:
The Black & Decker Corporation
701 East Joppa Road
Towson, Maryland 21286
Attention: Senior Vice President and
Chief Financial Officer
Telecopy: ++1(410) 716-3318
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with a copy to:
The Black & Decker Corporation
701 East Joppa Road
Towson, Maryland 21286
Attention: Senior Vice President and
General Counsel
Telecopy: ++1(410) 716-2660
and
Miles & Stockbridge P.C.
10 Light Street
Baltimore, Maryland 21202
Attention: Robert M. Cattaneo, Esquire
Telecopy: ++1(410) 385-3700
if to Buyer:
Bucher Holding AG
8166 Niederweningen
Switzerland
Attention: Chief Executive Officer
Telecopy: ++411 857-2219
with a copy to:
Homburger Rechtsanwaelte
Weinbergstrasse 56/58
8006 Zurich, Switzerland
Attention: Dr. Peter Kurer
Telecopy: ++411 265-3511
or to such other address or telecopy number and with such other copies, as such
party may hereafter specify for the purpose by notice to the other parties. Each
such notice, request or other communication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section 12.01 and evidence of receipt is received or (ii) if given by any
other means, upon delivery or refusal of delivery at the address specified in
this Section 12.01.
Section 12.02 Amendments; Waivers.
(a) Subject to the provisions of Section 9.04, any provision of the
Transaction Documents may be amended or waived prior to the Closing Date if, and
only if, such amendment
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or waiver is in writing and signed, in the case of an amendment, by Black &
Decker and Buyer, or in the case of a waiver, by the party against whom the
waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege under any Transaction Document shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 12.03 Expenses; Taxes. Except as otherwise provided in the
Transaction Documents, all costs and expenses incurred in connection with the
Transaction Documents shall be paid by the party incurring such cost or expense.
Notwithstanding the foregoing, (i) all real estate transfer, stock transfer,
registration and transfer taxes and fees (other than fees and charges associated
with the registration and transfer of Intellectual Property), stamp duties,
notarial charges, sales, use, value added and similar taxes (except to the
extent they are recoverable by Buyer or the Buyer Companies) or governmental
charges resulting from or relating to the transfer of the Transferred Assets or
Shares to a Buyer Company by Black & Decker or any of the Sellers or the
transfer of the Excluded Assets by a Glass Machinery Share Company to Black &
Decker or any of its Affiliates, shall be borne by the party primarily obligated
therefor under Applicable Law (or, absent Applicable Law, local custom) and (ii)
all fees and charges, including notarial charges, associated with the
registration and transfer of Intellectual Property shall be paid by Black &
Decker. Each of Buyer and Black & Decker shall reimburse the other for 50% of
any such fees and taxes and charges paid by the other promptly upon presentation
of a demand therefor consistent with this Section 12.03, provided that Buyer's
obligation to pay such fees and taxes or reimburse Black & Decker for 50% of
such fees and taxes paid by Black & Decker shall be limited to a maximum amount
of $500,000.
Section 12.04 Successors and Assigns. The provisions of the Transaction
Documents shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other party.
Section 12.05 Disclosure. Certain information set forth in the
Disclosure Schedules has been included and disclosed solely for informational
purposes and may not be required to be disclosed pursuant to the terms and
conditions of the Transaction Documents. The disclosure of any such information
shall not be deemed to constitute an acknowledgment or agreement that the
information is required to be disclosed in connection with the representations
and warranties made in the Transaction Documents or that the information is
material, nor shall any information so included and disclosed be deemed to
establish a standard of materiality or otherwise used to determine whether any
other information is material. It is understood and agreed by the parties that
in cases where a representation and warranty excepts from its scope matters that
are "specifically disclosed" only those items marked with an asterisk on the
referenced Disclosure Schedule shall be deemed to have been so specifically
disclosed and that any other disclosures shall not be deemed to be sufficiently
specific to operate as an exception to such representation and warranty
whatsoever.
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Section 12.06 Construction. As used in the Transaction Documents, any
reference to the masculine, feminine or neuter gender shall include all genders,
the plural shall include the singular, and the singular shall include the
plural.
Section 12.07 Entire Agreement.
(a) The Transaction Documents and any other agreements contemplated
thereby (including, to the extent contemplated herein, the Confidentiality
Agreement) constitute the entire agreement among the parties with respect to the
subject matter of such documents and supersede all prior agreements,
understandings and negotiations, both written and oral, between the parties with
respect to the subject matter thereof.
(b) The parties hereto acknowledge and agree that no representation,
warranty, promise, inducement, understanding, covenant or agreement has been
made or relied upon by any party hereto other than those expressly set forth in
the Transaction Documents. Without limiting the generality of the disclaimer set
forth in the preceding sentence, (i) none of the parties to this Agreement has
made or shall be deemed to have made any representations or warranties, in any
presentation or written information relating to the Glass Machinery Business
given or to be given in connection with the Contemplated Transactions, in any
filing made or to be made by or on behalf of any such parties with any
Governmental Authority, and no statement, made in any such presentation or
written materials, made in any such filing or contained in any such other
information shall be deemed a representation or warranty hereunder or otherwise,
and (ii) Black & Decker, on its own behalf and on behalf of the other Sellers,
expressly disclaims any implied warranties, including but not limited to
warranties of fitness for a particular purpose and warranties of
merchantability. Buyer acknowledges that Black & Decker has informed them that
no Person has been authorized by Black & Decker or any of its Affiliates to make
any representation or warranty in respect of the Glass Machinery Business or in
connection with the Contemplated Transactions, unless in writing and contained
in this Agreement or in any of the Transaction Documents to which they are a
party. Black & Decker acknowledges that Buyer has informed them that no Person
has been authorized by Black & Decker or any of its Affiliates to make any
representation or warranty in respect of the Glass Machinery Business or in
connection with the Contemplated Transactions, unless in writing and contained
in this Agreement or in any of the Transaction Documents to which they are a
party.
(c) Except as expressly provided herein or in any other Transaction
Document, no Transaction Document or any provision thereof is intended to confer
upon any Person other than the parties hereto any rights or remedies hereunder.
Section 12.08 Governing Law. Except as otherwise provided in any of the
Transaction Documents, this Agreement and the other Transaction Documents shall
be construed in accordance with and governed by the law of the State of Maryland
(without regard to the choice of law provisions thereof).
Section 12.09 Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures
<PAGE>
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thereto and hereto were upon the same instrument. This Agreement shall become
effective when each party hereto shall have received a counterpart hereof signed
by the other party hereto.
Section 12.10 Jurisdiction. Any dispute, controversy or claim arising
out of or relating to the Transaction Documents or the Contemplated Transactions
or the breach, termination or invalidity thereof, shall exclusively be settled
by arbitration in accordance with the UNCITRAL Arbitration Rules as at present
in force. In addition, or in exception as the case may be, to such rules, Black
& Decker and Buyer agree on the following rules with respect to the arbitration:
(a) The number of arbitrators shall be three and each party shall
appoint one arbitrator and the two party-appointed arbitrators shall appoint the
chairman. In case (i) the defendant party fails to appoint its arbitrator within
thirty days of receipt of the claimant party's request for arbitration or (ii)
if the two party-appointed arbitrators fail to nominate the chairman within
forty days of the nomination of the defendant party-appointed arbitrator, the
appointing authority shall appoint (x) the second party-appointed arbitrator
(who then, together with the plaintiff party-appointed arbitrator, shall appoint
the chairman in accordance with the above) or (y) the chairman, whatever the
case is. In case the claimant party fails to appoint its arbitrator, the request
for arbitration shall not be deemed to be valid.
(b) The appointing authority shall be the International Chamber of
Commerce (ICC) acting in accordance with the Rules adopted by the ICC for such
purpose.
(c) The chairman shall be of British nationality. All arbitrators shall
be practicing lawyers, attorneys, professors of law or judges and shall have
proven experience in arbitrating business and financial disputes; they shall not
be older than the age of sixty-five at the time of their appointment.
(d) The arbitrators shall have sole jurisdiction to decide on their own
competence.
(e) At the request of any of the parties the arbitrators may take any
interim measures deemed necessary in respect of the subject matter of the
dispute; such interim measures may be established in the form of an interim
award; the parties undertake to abide voluntarily by such measures ordered by
the arbitrators.
(f) The language of the arbitration shall be the English language.
(g) The arbitration shall have its seat in Brussels. The arbitrators
shall be free to hold hearings and meetings elsewhere.
(h) The arbitral award (including any interim award) shall be final and
binding upon the parties. The parties undertake to carry out the award
(including any interim or partial awards) without delay and they are waiving any
rights of appeal insofar as such waiver can validly be made.
<PAGE>
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(i) The parties hereby expressly waive the right to avail themselves of
any defense of non-arbitrability and of any privileges or immunities from
jurisdiction, suit and/or execution/ enforcement with respect to any proceedings
instituted in connection with these Transaction Documents or the Contemplated
Transactions before any panel of arbitrators appointed in accordance with these
provisions or any state courts (including the state court which could have
jurisdiction to deal with interim measures of protection, attachments or
recognition or enforcement proceedings).
Section 12.11 Severability. Any provision of the Transaction Documents
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of the
Transaction Documents or affecting the validity or enforceability of such
provision in any other jurisdiction. To the extent any provision of the
Transaction Documents is determined to be prohibited or unenforceable in any
jurisdiction Black & Decker and Buyer agree to use reasonable efforts, and agree
to cause their Affiliates, as the case may be, to use reasonable efforts, to
substitute one or more valid, legal and enforceable provisions that, insofar as
practicable implement the purposes and intent of the prohibited or unenforceable
provision.
Section 12.12 Bulk Sales. Buyer hereby waives compliance by Black &
Decker and each Seller of Transferred Assets located in the United States of
America, in connection with the Contemplated Transactions, with the provisions
of Article 6 of the Uniform Commercial Code as adopted in any states or
jurisdictions where any of the Transferred Assets are located, and any other
applicable bulk sales laws with respect to or requiring notice to Black &
Decker's (or any Seller's) creditors, as the same may be in effect on the
Closing Date. Black & Decker shall indemnify and hold harmless Buyer against any
and all Damages which may be incurred by Buyer as a result of noncompliance with
any such bulk sales law.
<PAGE>
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IN WITNESS WHEREOF, the parties hereto caused this Agreement to be duly
executed by their respective authorized officers on the day and year first above
written.
THE BLACK & DECKER CORPORATION
By: /s/ CHARLES E. FENTON
Charles E. Fenton
Senior Vice President
BUCHER HOLDING AG
By: /s/ RUDOLF HAUSER
Rudolf Hauser
CEO
<PAGE>
EXHIBIT A
DEFINITIONS
(a) The following terms have the following meanings:
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with such other
Person. For purposes of determining whether a Person is an Affiliate, the term
"control" shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of securities, contract or otherwise.
"Affiliated Group" means one or more corporations which (a) include any
of the Glass Machinery Share Companies and (b) for purposes of the tax laws of
any nation are required to or have elected to file Consolidated Returns with one
or more Affiliates of Black & Decker other than a Glass Machinery Company.
"Applicable Law" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, decree or other requirement
of any Governmental Authority (including any Environmental Law) applicable to
such Person or any of their respective properties, assets, officers, directors,
employees, consultants or agents (in connection with such officer's, director's,
employee's, consultant's or agent's activities on behalf of such Person).
"Arbitration Cases" means the two arbitration proceedings pending
before the Court of Arbitration of the International Chamber of Commerce in
London, England between Emhart Glass SA and a customer of Emhart Glass SA.
"Arbitration Cases Customer Receivables" means the accounts receivable
due to Emhart Glass SA by the customer of Emhart Glass SA that is the party that
is adverse to Emhart Glass SA in the Arbitration Cases and relate to the work
performed or products sold by Emhart Glass SA for and to such customer pursuant
to the contracts that are the subject matter of the Arbitration Cases.
"Asbestos Claims" means any claim made by a third party seeking Damages
resulting from exposure to asbestos contained in any machine manufactured and
sold by the Glass Machinery Business prior to Closing.
"Assumed Liabilities" means all liabilities and obligations of each
Seller of Transferred Assets to the extent relating to or arising out of the
operation, affairs and conduct of the Glass Machinery Business or the
Transferred Assets, of any kind, character or description, whether liquidated or
unliquidated, known or unknown, fixed or contingent, accrued or unaccrued,
absolute, determined, determinable or indeterminable or otherwise, whether or
not reflected or reserved against in the Opening Statement or in the calculation
of the Final Net Tangible Asset Amount and whether presently in existence or
arising hereafter, except for Excluded Liabilities, including but not limited to
the following:
(i) all liabilities and obligations relating to the Glass
Machinery Business or the Transferred Assets, whether accrued, liquidated,
contingent, matured or unmatured, at or prior to the Closing, that (a) are set
forth on, reflected or referred to in the Opening Statement, (b) are
specifically disclosed in any of the Disclosure Schedules delivered hereunder,
(c) would be subject to disclosure in any of the Disclosure Schedules delivered
in connection with any of Black & Decker's representations and warranties but
for the materiality standards contained in such representation and warranty, (d)
are reflected in the Final Net Tangible Asset Amount as determined in accordance
with Section 2.04 herein (including without limitation accounts payable and
reserves reflected as contra-asset accounts) or (e) are otherwise a liability or
obligation that a Buyer Company is expressly assuming pursuant to this
Agreement;
(ii) all liabilities and obligations arising under Contracts
to the extent they relate exclusively to the Glass Machinery Business, whether
or not the Contracts have been completed or terminated prior to the Closing
Date, including, without limitation, any such liabilities and obligations
arising from or relating to the performance or non-performance of the Contracts
by the Glass Machinery Business, a Buyer Company or any other Person, whether
arising prior to, on or after the Closing Date, except to the extent they
constitute Excluded Liabilities;
(iii) all liabilities and obligations in respect of employees
and former employees of the Glass Machinery Business, and beneficiaries of
employees and former employees of the Glass Machinery Business, including,
without limitation, liabilities and obligations under or relating to WARN or any
similar state or local law to the extent relating to or arising out of any
actions taken by a Buyer Company on or after the Closing Date, except to the
extent otherwise provided in Exhibit D to be retained by Black & Decker or any
Seller;
(iv) all liabilities and obligations in respect of Transferred
Employees and dependents and beneficiaries of Transferred Employees under
Employee Plans and Benefit Arrangements, except to the extent otherwise provided
in Exhibit D to be retained by Black & Decker or any Seller;
(v) all liabilities and obligations relating to warranty
obligations or services with respect to any product sold or service provided by
the Glass Machinery Business prior to, on or after the Closing Date;
(vi) all Environmental Liabilities, except to the extent they
(i) constitute Excluded Liabilities or (ii) are subject to indemnification
pursuant to Section 10.02(b)(iii);
(vii) all liabilities and obligations (except to the extent
they constitute Environmental Liabilities, which shall be governed by the
foregoing clause (vii)) relating to the Occupational Safety and Health Act of
1970, as amended, and any regulations, decisions or orders promulgated
thereunder, together with any state or local law, regulation or ordinance
pertaining to worker, employee or occupational safety or health in effect as the
same may be amended, supplemented or superseded, whether arising prior to, on or
after the Closing Date;
(viii) all liabilities and obligations arising from or
relating to governmental, judicial or adversarial proceedings (public or
private), litigation, suits, arbitration, disputes, claims, causes of action or
investigations (collectively, "Proceedings") arising from or directly or
indirectly relating to the Glass Machinery Business or any Transferred Assets,
whether or not accrued, liquidated, contingent, matured, unmatured, or known or
unknown to Black & Decker or any Seller or Buyer at or prior to the Closing,
except for liabilities and obligations of a type contemplated by the foregoing
clause (v), which shall be governed by such clause; and
(ix) all liabilities and obligations for sales, use and value
added taxes, gross receipts taxes, property taxes, licenses, employee and
employer withholding and unemployment taxes and other Taxes which are not Income
Taxes.
"Benefit Arrangements" means all life and health insurance,
hospitalization, savings, bonus, deferred compensation, incentive compensation,
bonus plans, stock option, stock purchase, severance pay, disability and fringe
benefit plans, individual employment and severance and change of control
contracts, and other policies and practices providing employee or executive
compensation or benefits to employees or former employees of the Glass Machinery
Business or any of their dependents, maintained or contributed to by the Glass
Machinery Units, other than an Employee Plan.
"Bridge Period" means a taxable year or taxable period which begins
before the Closing Date and ends after the Closing Date.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York or Zurich, Switzerland are
required by law to close.
"Buyer Companies" means Buyer and each company designated by the Buyer
to purchase Transferred Assets or Shares or to assume Assumed Liabilities.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means the letter agreement dated March
27/30, 1998, by and between Black & Decker and Buyer, as the same has been or
may be amended from time to time.
"Consolidated Returns" means all tax returns with respect to
Consolidated Taxes.
"Consolidated Taxes" means all Taxes, penalties and interest due in
respect of any transaction engaged in by any Affiliated Group for which Taxes
are due.
"Contemplated Transactions" means the transactions contemplated by the
Transaction Documents.
"Contest" means any audit, investigation, assessment, appeal,
proceeding or litigation relating to Taxes.
"Contracts" means all contracts, agreements, leases (including leases
of real property), licenses, commitments, sales and purchase orders, and other
instruments of any kind, whether written or oral.
"Corporate Pass Through Charges" means amounts charged by Black &
Decker and its Affiliates to a Glass Machinery Unit for the administration of
payroll, payroll taxes, insurance and other employee benefit programs with
respect to U.S. employees, certain insurance and risk management programs,
certain out-of-pocket expenses associated with the filing, protection and
maintenance of Intellectual Property, and the costs borne by Black & Decker and
its Affiliates with respect to the employment by such Person of the Active
Employees listed on Attachment XVI hereto, all as allocated and charged to the
Glass Machinery Units in accordance with past practice.
"Damages" means all demands, claims, actions or causes of action,
assessments, losses, damages, costs, expenses, liabilities, judgments, awards,
fines, sanctions, penalties, charges and amounts paid in settlement, including,
without limitation, reasonable costs, fees and expenses of attorneys, experts,
accountants, appraisers, consultants, witnesses, investigators and any other
agents or representatives of such Person (with such amounts to be determined net
of any resulting Tax benefit actually received or realized and net of any refund
or reimbursement of any portion of such amounts actually received or realized,
including, without limitation, reimbursement by way of insurance or third party
indemnification), but specifically excluding (i) any costs incurred by or
allocated to an Indemnified Party with respect to time spent by employees of the
Indemnified Party or any of its Affiliates, (ii) any lost profits or opportunity
costs or punitive damages (except to the extent assessed in connection with a
third-party claim with respect to which the Person against which such damages
are assessed is entitled to indemnification hereunder), and (iii) the decrease
in the value of any Transferred Asset or any asset of a Glass Machinery Share
Company to the extent that such valuation is based on any use of such asset
other than its use as of the Closing Date.
"Disclosure Schedules" means the Disclosure Schedules provided by Black
& Decker to Buyer pursuant to Exhibit B dated the date of this Agreement
relating to the Agreement, as it may be amended from time to time in accordance
with this Agreement.
"Employee Plans" means each "employee benefit plan" as defined in
Section 3(3) of ERISA, maintained or contributed to by Black & Decker or an
Affiliate of Black & Decker which provides benefits to employees of the Glass
Machinery Business or their dependents.
"Environmental Claim" means any written or oral notice, claim, demand,
action, suit, complaint, proceeding or other communication by any third Person
including, without limitation, any Governmental Authority alleging liability or
potential liability (including without limitation liability or potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resource damages, property damage, personal injury, fines or penalties)
arising out of, relating to, based on or resulting from (i) the presence,
discharge, emission, release or threatened release of any Hazardous Substances
at any location, (ii) circumstances forming the basis of any violation or
alleged violation of any Environmental Laws, or (iii) otherwise relating to
obligations or liabilities under any Environmental Laws.
"Environmental Laws" means any and all past and present statutes, laws
(including common law), regulations, ordinances, judgments, orders, permits,
codes, decrees or injunctions of any foreign (including, without limitation, the
European Community and the European Union), federal, state or local governmental
authority which (i) impose liability for or standards of conduct concerning the
manufacture, processing, generation, distribution, use, treatment, storage,
disposal, cleanup, transport or handling of Hazardous Substances including, The
Resource Conservation and Recovery Act of 1976, as amended, The Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, The
Superfund Amendment and Reauthorization Act of 1984, as amended, The Toxic
Substances Control Act, as amended, the Occupational Safety and Health Act of
1970, as amended, to the extent it relates to the handling of and exposure to
hazardous or toxic materials or similar substances, and any other so-called
"Superfund" or "Superlien" law or (ii) otherwise relates to contamination,
pollution or the protection of human health or the environment.
"Environmental Liabilities" means all liabilities to the extent arising
in connection with or in any way relating to the Glass Machinery Business or
Black & Decker's or any of its Affiliates' use or ownership thereof, whether
vested or unvested, contingent or fixed, actual or potential, which arise under
or relate to Environmental Laws including, without limitation, (i) Remedial
Actions, (ii) personal injury, wrongful death, economic loss or property damage
claims, (iii) claims for natural resource damages, (iv) violations of law or (v)
any Damages with respect thereto. Notwithstanding the foregoing, Environmental
Liabilities shall not include any increased liabilities resulting from or
arising out of a use of a facility constituting a Transferred Asset or owned or
leased on the Closing Date by a Glass Machinery Share Company other than in the
manner that such facility was used on the Closing Date.
"ERISA" means the Employee Retirement Income Security act of 1974, as
amended.
"Excluded Assets" means with respect to each Seller of Transferred
Assets and each Glass Machinery Share Company:
(i) cash and cash equivalents of a Glass Machinery Unit,
including, without limitation, cash and cash equivalents used as collateral for
letters of credit, deposits with utilities, insurance companies and other
Persons, except to the extent any Glass Machinery Share Company has cash or cash
equivalents on the Closing Date;
(ii) all original books and records that any Seller shall be
required to retain pursuant to any Applicable Law (in which case copies of such
books and records to the extent relating to the Glass Machinery Business shall
be provided to Buyer upon request), or that contain information relating
primarily to any business or activity of a Glass Machinery Unit not forming a
part of the Glass Machinery Business, an Excluded Asset, and Excluded Liability
or any employee of a Seller that is not a Transferred Employee;
(iii) all Tax assets of any Glass Machinery Unit (other than a
Glass Machinery Share Company that is not a member of an Affiliated Group),
other than (A) Tax assets relating to sales, use, value added and similar taxes,
gross receipts taxes, property taxes, licenses, employee and employer
withholding and unemployment taxes and other non-income related taxes and (B)
Income Tax assets of a Glass Machinery Share Company that is not a member of an
Affiliated Group to the extent provided in Section 7.07;
(iv) all assets of a Glass Machinery Unit not held or owned by
or used primarily in connection with the Glass Machinery Business;
(v) all rights and claims of Black & Decker or any Seller
under any of the Transaction Documents and the agreements and instruments
delivered to Black & Decker or any Seller by a Buyer Company pursuant to any of
the Transaction Documents;
(vi) all accounts receivable, notes receivable or similar
claims or rights (whether or not billed or accrued) of the Glass Machinery
Business from Black & Decker or any of its Affiliates, except for accounts
receivable, notes receivable or similar claims or rights (whether billed or
accrued) relating to materials sold or services rendered by a Glass Machinery
Unit to any other Glass Machinery Unit;
(vii) all capital stock or any other securities of any Person
other than the Shares and the partnership interest in the IPGR Partnership held
by Emhart Glass Research, Inc.;
(viii) all Intellectual Property not used primarily in the
Glass Machinery Business including, without limitation, the Emhart Trademarks
(as defined in the Trademark Agreement) other than the rights granted pursuant
to the Trademark Agreement;
(ix) all rights of a Glass Machinery Unit under insurance
policies that insure a Glass Machinery Unit to the extent that any Excluded
Liability constitutes an insured occurrence or insured claim thereunder;
(x) the Arbitration Cases Customer Receivables as reflected in
Note 1 to the Opening Statement up to a total amount of USD$745,000; and
(xi) except as otherwise expressly provided in Exhibit D, all
assets related to Employee Plans and Benefit Arrangements.
"Excluded Liabilities" means in respect of each Seller of Transferred
Assets and each Glass Machinery Share Company the following liabilities and
obligations:
(i) all liabilities and obligations of a Seller of Transferred
Assets not arising out of the conduct of the Glass Machinery Business, except as
otherwise specifically provided in the Transaction Documents;
(ii) all liabilities or obligations of any Glass Machinery
Unit for any Tax arising from or with respect to the Transferred Assets or the
operations of the Glass Machinery Business prior to the Closing, other than (A)
Tax liabilities or obligations relating to sales, use, value added and similar
taxes, gross receipts taxes, property taxes, licenses, employee and employer
withholding and unemployment taxes and other Taxes that are not Income Taxes and
(B) Income Tax liabilities or obligations of a Glass Machinery Share Company
that is not a member of an Affiliated Group to the extent that Buyer is
responsible for such Income Tax liabilities pursuant to Section 7.07;
(iii) all liabilities or obligations, whether presently in
existence or arising after the date of the Agreements, in respect of accounts
payable, notes payable (including intercompany promissory notes and similar
financing arrangements) or similar obligations (whether or not billed or
accrued) to Black & Decker or any of its Affiliates, except for (A) the
Insurance Liabilities, (B) liabilities and obligations for Corporate Pass
Through Charges and (C) liabilities or obligations as of the Closing Date in
respect of accounts payable, notes payable or similar obligations relating to
specific services provided to and specific expenses payable by a Glass Machinery
Unit to another Glass Machinery Unit;
(iv) all liabilities or obligations, whether presently in
existence or arising after the date of the Agreement, relating to fees,
commissions or expenses owed to any broker, finder, investment banker,
accountant, attorney or other intermediary or advisor employed by Black & Decker
in connection with the Contemplated Transactions;
(v) all liabilities or obligations retained by Black & Decker
or any Seller pursuant to Exhibit D;
(vi) all liabilities or obligations related to Excluded Assets
and not otherwise included in the Assumed Liabilities by express provision of
this Agreement;
(vii) all liabilities or obligations related to claims of
manufacturer or design defects (including Asbestos Claims) made prior to, on or
after the Closing Date with respect to any products manufactured and sold or
service provided by the Glass Machinery Business prior to the Closing Date
(including liabilities and obligations in respect of investigations regarding
product safety, product recalls and related matters), unless, except with
respect to an Asbestos Claim, any such claim is based on an injury caused by the
fact that the product to which such claim relates has been inspected, overhauled
or upgraded after the Closing Date by any of the Buyer Companies or any of the
Glass Machinery Share Companies;
(viii) all Environmental Liabilities, whether arising prior
to, on or after the Closing Date, (1) relating to the disposal prior to Closing
of Hazardous Substances at locations other than facilities included in the
Transferred Assets (whether by fee ownership or leasehold interest) or
facilities owned or leased on the Closing Date by a Glass Machinery Share
Company, it being understood and agreed that the migration of Hazardous
Substances in soil or groundwater from a facility included in the Transferred
Assets or owned or leased by a Glass Machinery Share Company on the Closing Date
to surrounding properties shall not be considered such a disposal of Hazardous
Substances, or (2) relating to or arising out of conditions at, or the current
or former operations at, any facilities or locations not included in the
Transferred Assets (whether by fee ownership or leasehold interest) (including
any predecessors to such facilities or locations) or facilities or locations not
owned or leased on the Closing Date by a Glass Machinery Share Company;
(ix) except as provided in Section 10.02(a)(v), all
liabilities or obligations related to the Arbitration Cases; and
(x) all liabilities and obligations related to the litigation
described in item 3 of Schedule B.11.
"Financial Support Arrangements" means any obligations, contingent or
otherwise, of a Person in respect of any indebtedness, obligation or liability
(including assumed indebtedness, obligations or liabilities) of another Person,
including but not limited to remaining obligations or liabilities associated
with indebtedness, obligations or liabilities that are assigned, transferred or
otherwise delegated to another Person, if any, letters of credit and standby
letters of credit (including any related reimbursement or indemnity agreements),
direct or indirect guarantees, endorsements (except for collection or deposit in
the ordinary course of business), notes co-made or discounted, recourse
agreements, take-or-pay agreements, keep-well agreements, agreements to purchase
or repurchase such indebtedness, obligation or liability or any security
therefor or to provide funds for the payment or discharge thereof, agreements to
maintain solvency, assets, level of income or other financial condition,
agreements to make payment other than for value received and any other financial
accommodations.
"GAAP" means U.S. Generally Accepted Accounting Principles as in effect
on the date of the Agreement.
"Glass Machinery Business" means the development, production,
distribution and sale of glass and glass container making machines and systems
(and spare parts therefor) and glass container inspection machinery and systems
(and spare parts therefor) and the repair, refabrication and modification of
glass and glass container making machines and systems and glass container
inspection machines and systems, all as engaged in by the Glass Machinery Units
on the date of this Agreement.
"Glass Machinery Company" means each of the following corporations:
Emhart Glass Machinery Investments, Inc., a Delaware corporation; Emhart Inc., a
Delaware corporation; Emhart Sweden AB, a corporation formed under the laws of
Sweden; Aktiebolaget Sundsvalls Verkstader, a corporation formed under the laws
of Sweden; Emhart S.r.l., a corporation formed under the laws of Italy; Emhart
Glass SA, a corporation formed under the laws of Switzerland; Emhart Glass
Machinery (U.S.) Inc., a Delaware corporation; Emhart Glass Research, Inc., a
Delaware corporation, Emhart Deutschland GmbH, a corporation formed under the
laws of Germany; and Emhart (U.K.) Limited, a corporation formed under the laws
of England.
"Glass Machinery Division" means each of the unincorporated Glass
Machinery Division of Black & Decker Asia Pacific Pte. Ltd. and the
unincorporated Glass Machinery Division of Nippon POP Rivets & Fasteners LTD.
"Glass Machinery Financial Statements" means the entirety of (a) the
special-purpose financial combining statements of operating income and net
assets of the Glass Machinery Business, as attached in Attachment IX to this
Agreement, (b) the Special Purpose Financial Statements (3/22/98) attached as
Attachment XIII and (c) the Statement of the Proposed Final Net Tangible Assets
to be established in accordance with Section 2.04(a).
"Glass Machinery Share Company" means each Glass Machinery Company the
Shares of which are being sold, directly or indirectly, hereunder.
"Glass Machinery Unit" means a Glass Machinery Company or a Glass
Machinery Division.
"Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization (including, without limitation, the
European Community and the European Union) or any regulatory, administrative or
other agency, or any political or other subdivision, department or branch of any
of the foregoing.
"Hazardous Substances" means all hazardous or toxic substances, wastes,
materials or chemicals, petroleum (including crude oil or any fraction thereof)
and petroleum products, asbestos and asbestos-containing materials, pollutants,
contaminants and all other materials, substances and forces regulated pursuant
to, or that could form the basis of liability under any Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Income Taxes" means any income, gains, net worth, surplus, franchise
or with respect to any interest, dividends or royalties, withholding taxes
(including interest, penalties or other additions to Tax) imposed by a Tax
Authority.
"Intellectual Property" means all patents, copyrights, technology,
know-how, processes, trade secrets, inventions, proprietary data, formulae,
research and development data and computer software programs; all trademarks,
trade names, service marks and service names; all registrations, applications,
recordings, licenses and common-law rights relating thereto, all rights to sue
at law or in equity for any infringement or other impairment thereto, including
the right to receive all proceeds and damages therefrom, and all rights to
obtain renewals, continuations, divisions or other extensions of legal
protections pertaining thereto; and all other United States, state and foreign
intellectual property.
"Intellectual Property Assignment Agreements" means Assignment of
United States Trademarks, Trademark Registrations and Applications for
Registration, Assignment of Foreign Trademarks, Trademark Registrations and
Applications for Registration, Assignment of United States Patents and Patent
Applications and Assignment of Foreign Patents and Application for Patents, in
the forms contemplated by Attachments VIII, X, XI and XII to this Agreement.
"Inventory" means all items of inventory notwithstanding how classified
in the financial records of a Glass Machinery Unit, including all raw materials,
work-in-process and finished goods, reconditioned products and products to be
reconditioned products.
"IRS" means the Internal Revenue Service.
"Liens" means any pledge, security, interest, lien, charge,
encumbrance, mortgage, trust deed, or other restriction having like or similar
effect on sale, transfer or disposition, whether imposed by agreement, law or
otherwise..
"Material Adverse Effect" means (i) with respect to the Glass Machinery
Business, a material adverse effect on the assets, properties, business,
financial condition (including the tax position) or results of operations of the
Glass Machinery Business taken as a whole, or (ii) with respect to any other
Person, a material adverse effect on the assets, properties, business, financial
condition (including the tax position) or results of operations of such Person
and its Subsidiaries taken as a whole.
"Net Tangible Assets" means (i) all Transferred Assets of the Glass
Machinery Business, plus (ii) all assets of a Glass Machinery Share Company,
other than any Excluded Asset minus (iii) all (1) Assumed Liabilities of the
Glass Machinery Business, (2) all liabilities of a Glass Machinery Share
Company, other than any Excluded Liability and (3) goodwill, all expressed in
U.S. dollars and as calculated in accordance with the practices and policies
that were employed in the preparation of the Opening Statement, determined, in
each case, consistent with the Opening Statement and in accordance with Note 12
thereto and, in the case of the Final Net Tangible Asset Amount, Attachment
XVIII..
"Non US Benefit Arrangements" means Benefit Arrangements in respect of
Non US Transferred Employees.
"Non US Transferred Employees" means Transferred Employees who are not
US Transferred Employees.
"Opening Statement" means the Statement of Net Assets contained in the
Special Purpose Financial Statements for the quarter ended March 22, 1998
together with the notes thereto, as attached in Attachment XIII to this
Agreement.
"Permitted Liens" means any of the following:
(i) Liens for Taxes that (x) are not yet due or delinquent or
(y) are being contested in good faith by appropriate proceedings;
(ii) statutory Liens or landlords', carriers', warehousemen's,
mechanic's, suppliers', materialmen's or other like Liens arising in the
ordinary course of business with respect to amounts not yet overdue for a period
of 60 days or amounts being contested in good faith by appropriate proceedings;
(iii) easements, rights of way, restrictions and other similar
charges or encumbrances on real property interests, that, individually or in the
aggregate, do not materially interfere with the ordinary course of operation of
the Glass Machinery Business or the use of any such real property for its
current uses;
(iv) leases or subleases granted to others that do not
materially interfere with the ordinary conduct of the Glass Machinery Business;
(v) with respect to real property, title defects or
irregularities that do not in the aggregate materially impair the use of such
real property for its current use;
(vi) Liens in favor of a customer of the Glass Machinery
Business arising in the ordinary course of business;
(vii) Liens, title defects, encumbrances, easements and
restrictions, invalidities of leasehold interests (collectively, "Encumbrances")
that have not had, and could not reasonably be expected to have, a Material
Adverse Effect on the Glass Machinery Business; and
(viii) Encumbrances specifically disclosed in the Disclosure
Schedule or taken into account in the Opening Statement.
"Person" means an individual, a corporation, a general partnership, a
limited partnership, a limited liability company, limited liability partnership,
an association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Post-Closing Period" means any taxable period ending on or after the
Closing Date.
"Pre-Closing Period" means any taxable period that ends before the
Closing Date.
"Remedial Action(s)" means the investigation, clean-up or remediation
of contamination or environmental damage caused by, related to or arising from
the generation, use, handling, treatment, storage, transportation, disposal,
discharge, release, or emission of Hazardous Substances, including, without
limitation, investigations, response, removal and remedial actions under The
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, corrective action under The Resource Conservation and Recovery Act of
1976, as amended, and clean-up requirements under similar Environmental Laws.
"Representatives" means (i) with respect to Buyer, any of the
"Representatives" as defined in the Confidentiality Agreement and (ii) with
respect to B&D or any Seller, each of its respective directors, officers,
advisors, attorneys, accountants, employees or agents.
"Seller" means, each Seller of Shares and Transferred Assets as set
forth on Schedule 2.01.
"Services Agreement" means the Services Agreement substantially in the
form contemplated by Attachment XIV to this Agreement, as the same may be
amended from time to time.
"Shares" means all of the issued and outstanding shares of the
following Glass Machinery Companies which are being sold, to a Buyer Company
pursuant to this Agreement: Emhart (U.K.) Limited; Emhart Sweden AB;
Aktiebolaget Sundsvalls Verkstader; Emhart S.r.l; Emhart Glass Machinery (U.S.)
Inc. and Emhart Glass Research, Inc.
"Subsidiary" as it relates to any Person, shall mean with respect to
any Person, any corporation, partnership, joint venture or other legal entity of
which such Person, either directly or through or together with any other
Subsidiary of such Person, owns more than 50% of the voting power in the
election of directors or their equivalents, other than as affected by events of
default.
"Supplemental Agreements" means, collectively, the Supplemental Asset
Sale Agreements, and the Supplemental Share Sale Agreements.
"Supplemental Asset Sale Agreement" means each agreement between each
Seller of Transferred Assets and Assumed Liabilities and a Buyer Company,
substantially in the form of Attachment II-1, pursuant to which such Seller is
to transfer to a Buyer Company Transferred Assets and Assumed Liabilities.
"Supplemental Share Sale Agreement" means each agreement between each
Seller of Shares and a Buyer Company, substantially in the form of Attachment
II-2, pursuant to which such Seller is to transfer to a Buyer Company Shares and
a Glass Machinery Share Company is to convey and assign to such Seller the
Excluded Assets and Excluded Liabilities of such Glass Machinery Share Company.
"Tax Authority" means a foreign or United States federal, state or
local Governmental Authority having jurisdiction over the assessment,
determination, collection or imposition of any Tax or any private party having
such authority under applicable tax law.
"Tax Returns" means all returns (including information returns),
declarations, reports, estimates and statements regarding Taxes, required to be
filed with any Tax Authority.
"Taxes" means all taxes, charges, fees, levies or other assessments,
including without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, value added, franchise, profits, license,
withholding, payroll, employment, excise, estimated, severance, stamp,
occupation, property, net worth, capital or other taxes, customs, duties, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any Tax
Authority.
"Trademark Agreement" means the Trademark Agreement to be executed by
the parties substantially in the form of Attachment III.
"Transaction Documents" means this Agreement, the Supplemental
Agreements the Services Agreement, the Intellectual Property Assignment
Agreements, the Trademark Agreement, and any exhibits or attachments to any of
the foregoing, as the same may be amended from time to time.
"Transferred Assets" means, other than Excluded Assets, all of the
assets, properties, rights, licenses, permits, Contracts, causes of action and
business of every kind and description as the same shall exist on the Closing
Date, wherever located, real, personal or mixed, tangible or intangible, owned
by, leased by or in the possession of the Glass Machinery Divisions and Emhart
Glass Machinery Investments, Inc., Emhart Inc., Emhart Glass SA and Emhart
Deutschland GmbH, whether or not reflected in the books and records thereof, and
held or used primarily in the conduct of the Glass Machinery Business as the
same shall exist on the Closing Date, and including, without limitation, except
as otherwise specified herein, all direct or indirect right, title and interest
of any Seller of Transferred Assets in, to and under:
(i) all personal property and interests therein (other than
Intellectual Property), including machinery, equipment, furniture, office
equipment, communications equipment, vehicles, storage tanks, spare and
replacement parts, fuel and other tangible property (and interests in any of the
foregoing) owned by any such Seller that are used primarily in connection with
the Glass Machinery Business;
(ii) all Inventory that is owned by any such Seller and held
for sale, use or consumption primarily in the Glass Machinery Business;
(iii) all Contracts that relate primarily to the Glass
Machinery Business to which any such Seller is a party or by which it is bound;
(iv) all accounts, accounts receivable and notes receivable
whether or not billed, accrued or otherwise recognized in the Opening Statement
or taken into account in the determination of the Final Net Tangible Asset
Amount, together with any unpaid interest or fees accrued thereon or other
amounts due with respect thereto of any such Seller to the extent they relate to
the Glass Machinery Business, and any security or collateral for any of the
foregoing;
(v) all expenses that have been prepaid by any such Seller to
the extent relating to the operation of the Glass Machinery Business, including
but not limited to ad valorem Taxes, lease and rental payments;
(vi) all of any such Seller's rights, claims, credits, causes
of action or rights of set-off against Persons, other than Black & Decker or any
of its Affiliates, to the extent relating to the Glass Machinery Business or the
Transferred Assets, including, without limitation, unliquidated rights under
manufacturers' and vendors' warranties;
(vii) all Intellectual Property of any such Seller (other than
Intellectual Property constituting an Excluded Asset) used or held for use
primarily in the Glass Machinery Business, including the goodwill of the Glass
Machinery Business symbolized thereby, it being understood and agreed that the
Intellectual Property used or held for use primarily in the Glass Machinery
Business that is registered or as to which an application for registration is
pending is listed on Attachment XV;
(vii) all transferable franchises, licenses, permits or other
governmental authorizations owned by, or granted to, or held or used by, any
such Seller and primarily related to the Glass Machinery Business;
(ix) except to the such Seller is required to retain the
originals pursuant to any Applicable Law (in which case copies will be provided
to Buyer upon request), all business books, records, files and papers, whether
in hard copy or computer format, of any such Seller used primarily in the Glass
Machinery Business, including, without limitation, books of account, invoices,
engineering information, sales and promotional literature, manuals and data,
sales and purchase correspondence, lists of present and former suppliers, lists
of present and former customers, personnel and employment records of present or
former employees, documentation developed or used for accounting, marketing,
engineering, manufacturing, or any other purpose relating primarily to the
conduct of the Glass Machinery Business at any time prior to the Closing;
(x) all Tax assets that are not an Excluded Asset;
(xi) the right to represent to third parties that Buyer is the
successor to the Glass Machinery Business; and
(xii) all insurance proceeds due or to become due to any such
Seller (except to the extent relating to Excluded Assets or Excluded
Liabilities, net of any retrospective premiums, deductibles, retention or
similar amounts, arising out of or related to damage, destruction or loss of any
property or asset of or used primarily in connection with the Glass Machinery
Business to the extent of any damage or destruction that remains unrepaired, or
to the extent any property or asset remains unreplaced at the Closing Date.
"US Benefit Arrangements" means Benefit Arrangements in respect of US
Transferred Employees.
"US Transferred Employees" means Transferred Employees employed by the
Glass Machinery Business in the United States.
"WARN" means the Worker Adjustment Retraining and Notification Act, as
amended.
(b) "To the knowledge," "known by" or "known" (and any similar phrase) means (i)
with respect to Black & Decker, to the actual knowledge of any of the General
Counsel, Chief Financial Officer, Controller and Treasurer of Black & Decker,
the President of the Glass Machinery Business and the controller of each Glass
Machinery Unit, and shall be deemed to include a representation that a
reasonable investigation or inquiry of the subject matter thereof has been made
of such individuals, and (ii) with respect to Buyer, to the actual knowledge of
Senior Vice Presidents or higher ranking officers of Buyer, and shall be deemed
to include a representation that a reasonable investigation or inquiry of the
subject matter thereof has been made of such individuals.
(c) "Specifically disclosed" or "specific disclosures" shall only mean those
disclosures made in the Disclosure Schedules which are indicated with an
asterisk.
(d) Each of the following terms is defined in the Section set forth opposite
such term:
Term Section
Active Employee....................................................D.01
Adjusted Purchase Price............................................2.02
Agreement......................................................Preamble
Black & Decker.................................................Preamble
Buyer..........................................................Preamble
Buyer's Carryback ................................................ 7.07
Seller's Carryforward .............................................7.07
Buyer's Swiss Pension Plan ....................................... D.18
Buyer's U.K. Pension Plan ........................................ D.15
Buyer's U.S. Pension Plan ....................................... D.08
Buyer Period .................................................... 7.08
Closing............................................................2.03
Competing Business.................................................5.06
Encumbrances..........................................................A
Exchange Consideration.............................................2.02
Final Net Tangible Asset Amount....................................2.04
Hedge Closure Confirmation ....................................... 7.08
Hedge Contracts .................................................. 7.08
Indemnified Claim.................................................10.03
Indemnified Party.................................................10.03
Indemnifying Party................................................10.03
Insurance Liabilities..............................................6.03
Non-U.S. Transferred Employee......................................D.__
Leased Real Property...............................................B.07
Owned Real Property................................................B.07
PBGC...............................................................B.18
Proceedings....................................................... A
Proposed Final Net Tangible Asset Amount...........................2.04
Referee...........................................................10.03
Seller Period .....................................................7.07
Seller's German Pension Plan ......................................D.16
Seller's Hourly Pension Plan ..................................... D.09
Seller's Japanese Plan ............................................D.17
Seller's Savings Bank .............................................D.10
Seller's Swiss Pension Plan .......................................D.18
Seller's U.K. Pension Plan ....................................... D.15
Seller's U.S. Pension Plan.........................................D.08
Successor Hourly Pension Plan .....................................D.09
Successor Savings Plan.............................................D.10
Surviving Representations or Covenants............................10.01
Systems...........................................................B.21
Third Party Claim.................................................10.03
Transferred Employees..............................................D.01
<PAGE>
EXHIBIT B
REPRESENTATIONS AND WARRANTIES OF BLACK & DECKER
Black & Decker hereby represents and warrants to Buyer, that:
B.01 Corporate Existence and Power. Black & Decker is a corporation
duly incorporated, validly existing and in good standing under the laws of the
state of Maryland. Each Seller of Transferred Assets and each Glass Machinery
Share Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the state or jurisdiction of its incorporation and
has all corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on the Glass Machinery Business as now
conducted. Each Seller of Transferred Assets and each Glass Machinery Share
Company is duly qualified to do business as a foreign corporation in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities make such qualification necessary to carry on the Glass
Machinery Business as now conducted, except where the failure to be so qualified
has not been, and could not reasonably be expected to be material to the Glass
Machinery Business.
B.02 Corporate Authorization. The execution, delivery and performance
by Black & Decker and each Seller of each of the Transaction Documents to which
it is a party and the consummation by Black & Decker and each Seller of the
Contemplated Transactions are within its corporate powers and have been duly
authorized by all necessary corporate action on its part. Each of the
Transaction Documents to which it is a party constitutes or will constitute at
Closing a legal, valid and binding agreement of Black & Decker and each Seller,
enforceable against it in accordance with its terms (i) except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally, including the effect of statutory and other laws
regarding fraudulent conveyances and preferential transfers and (ii) subject to
the limitations imposed by general equitable principles (regardless of whether
such enforceability is considered in a proceeding at law or in equity).
B.03 Capitalization. The designations of each class of the capital
stock of each of the Glass Machinery Share Companies, and the number of
authorized and issued shares thereof is as described on Schedule B.03. All of
the Shares and all other capital stock or other securities of the Glass
Machinery Share Companies have been validly issued and are fully paid and
nonassessable. Except as described in Schedule B.03, no shares of capital stock
or other securities of any of the Glass Machinery Share Companies are held in
treasury, and there are no other issued or outstanding shares of capital stock
or other securities of the Glass Machinery Share Companies and no other issued
or outstanding securities of any of the Glass Machinery Share Companies that are
at any time convertible into or exchangeable or exercisable for any capital
stock or other securities of any of such Glass Machinery Companies. None of the
Glass Machinery Share Companies are subject to any commitment or obligation that
would require the issuance or sale of additional shares of capital stock or
other securities of any of such Glass Machinery Companies at any time under
options, subscriptions, warrants, rights or any other obligations. There are no
agreements, commitments, restrictions or arrangements (whether or not legally
enforceable) relating to ownership (including without limitation repurchase or
redemption) or voting of any shares of capital stock or other securities of any
Glass Machinery Share Companies. Except as set forth on Schedule B.03, no Glass
Machinery Share Company has, nor any of the Transferred Assets includes, any
Subsidiary or any equity interest or other investment in any corporation,
partnership, joint venture or other entity of any kind other than another Glass
Machinery Company.
B.04 Ownership of Shares. The Persons listed in Schedule B.03 are the
record and beneficial owners of the Shares, all of which are free of any lien,
security interest, charge, encumbrance or claim. Such Persons have, or will have
on the Closing Date, the right to, and will in fact, transfer to the Buyer or
Buyer's Companies complete and unencumbered legal and equitable title to the
Shares which are to be transferred to the Buyer or Buyer's Companies.
B.05 Governmental Authorization. The execution, delivery and
performance by Black & Decker and each Seller of the Transaction Documents to
which it is a party require no action by or in respect of, or consent or
approval of, or filing with, any Governmental Authority other than:
(i) compliance with any applicable requirements of
the HSR Act;
(ii) actions, consents, approvals or filings set
forth in Schedule B.05 or otherwise expressly referred to in this
Agreement; and
(iii) such other consents, approvals, authorizations,
permits and filings the failure to obtain or make would not be, in the
aggregate, material to the Glass Machinery Business.
B.06 Non-Contravention. Except as set forth in Schedule B.06, the
execution, delivery and performance by Black & Decker and each Seller of each of
the Transaction Documents to which it is a party do not and will not (i)(A)
contravene or conflict with the charter or bylaws of Black & Decker, a Seller or
any Glass Machinery Share Company, (B) assuming compliance with the matters
referred to in Section B.05, contravene or conflict with or constitute a
violation of any provisions of any Applicable Law binding upon Black & Decker, a
Seller or any Glass Machinery Share Company; (C) assuming compliance with the
matters referred to in Section B.05, constitute a default under or give rise to
any right of termination, cancellation or acceleration of, or to a loss of any
benefit relating exclusively to the Glass Machinery Business to which a Seller
of the Transferred Assets is entitled under, any Contract binding upon such a
Seller relating exclusively to the Glass Machinery Business or by which any of
the Transferred Assets is or may be bound or any license, franchise, permit or
similar authorization held by such a Seller relating exclusively to the Glass
Machinery Business; or (D) assuming compliance with the matters referred to in
Section B.05, constitute a default under or give rise to any right of
termination, cancellation or acceleration of, or to a loss of any benefit to
which a Glass Machinery Share Company is entitled under any Contract (other than
an Excluded Asset) to which such a Glass Machinery Share Company is a party or
may be bound or any license, franchise, permit or similar authorization held by
such a Glass Machinery Share Company; except, in the case of clauses (B), (C)
and (D) for any such contravention, conflict, violation, default, termination,
cancellation, acceleration or loss that could not reasonably be expected to be
material to the Glass Machinery Business or (ii) result in the creation or
imposition of any Lien on any Transferred Asset or asset (other than Excluded
Assets) of a Glass Machinery Share Company, other than Permitted Liens.
B.07 Financial Statements. The Glass Machinery Financial Statements
present fairly the financial position and results of operations of the Glass
Machinery Business at the dates and for the periods set forth therein, in
conformity with the principles and procedures set forth in the notes thereto.
B.08 Absence of Certain Changes. Except for matters that would be
permitted in accordance with Section 5.01 if they occurred after the date of
this Agreement or as specifically disclosed in Schedule B.08, from March 22,
1998 to the date of this Agreement, there has not been any material adverse
change in the business, financial condition (including its tax position) or
results of operations of the Glass Machinery Business and there has not been:
(a) any event or occurrence that has been material to the
Glass Machinery Business, other than those resulting from changes, whether
actual or prospective, in general conditions applicable to the industries in
which the Glass Machinery Business is involved or general economic conditions;
(b) any material damage, destruction or other casualty loss
affecting (i) the Glass Machinery Business or (ii) any material assets that
would constitute Transferred Assets if owned, held or used by a Seller of
Transferred Assets on the Closing Date or (iii) any material asset (other than
an Excluded Asset) of a Glass Machinery Share Company;
(c) any transaction or commitment made, or any Contract
entered into (i) by a Glass Machinery Share Company, or (ii) by a Seller of
Transferred Assets relating primarily to the Glass Machinery Business or any
assets that would constitute Transferred Assets if owned, held or used by such a
Seller on the Closing Date (including the acquisition or disposition of any
assets), in either case, material to the Glass Machinery Business taken as a
whole, other than transactions and commitments in the ordinary course of
business and those contemplated by this Agreement;
(d) any termination or amendment (i) by a Glass Machinery
Share Company of any Contract (other than an Excluded Asset) or other right or
(ii) by a Seller of Transferred Assets of any Contract or other right relating
primarily to the Glass Machinery Business, in either case, material to the Glass
Machinery Business taken as a whole, other than terminations or amendments made
in the ordinary course of business and those contemplated by this Agreement;
(e) any sale or other disposition by a Seller of Transferred
Assets or a Glass Machinery Share Company, of more than an aggregate of $500,000
of assets (other than the sale of Inventory (including obsolete Inventory
whether or not in the ordinary course of business) which would constitute
Transferred Assets or assets (other than Excluded Assets) of a Glass Machinery
Share Company on the Closing Date;
(f) any increase in the compensation of any current employee
of the Glass Machinery Business at a level of vice president or above, other
than nondiscretionary increases pursuant to Employee Plans or Benefit
Arrangements specifically disclosed in Schedule B.20; and
(g) any cancellation, compromise, waiver or release by (i) a
Seller of Transferred Assets of any claim or right (or a series of related
rights and claims) related to the Glass Machinery Business, or (ii) a Glass
Machinery Share Company of any claim or right (or a series of related rights and
claims) other than, in either case, cancellations, compromises, waivers or
releases in the ordinary course of business or relating to an Excluded Asset.
B.09 Sufficiency of and Title to the Transferred Assets.
(a) Except as specifically disclosed in Schedule B.09, the
Transferred Assets, and the assets (other than Excluded Assets) of the Glass
Machinery Share Companies, together with the services to be provided to Buyer
Companies pursuant to the Services Agreement, and the Intellectual Property to
be transferred to Buyer pursuant to the Trademark Agreement, constitute, and on
the Closing Date will constitute, all of the assets and services that are
necessary to permit the operation of the Glass Machinery Business in
substantially the same manner as such operations have heretofore been conducted.
(b) Except as specifically disclosed in Schedule B.09, subject
to the receipt of any consents or approvals of any other Person, upon
consummation of the Contemplated Transactions, Buyer will have acquired good and
marketable title in and to, or a valid leasehold interest in, each of the
Transferred Assets (other than any Intellectual Property), free and clear of all
Liens, except for Permitted Liens.
(c) Schedule B.09 includes a true and complete list of all
real property (i) owned by a Glass Machinery Share Company (or real property
which such a Glass Machinery Company has the right to acquire), and (ii) owned
by a Seller of Transferred Assets (or real property which such a Seller has the
right to acquire in connection with its operation of the Glass Machinery
Business) which is included in the Transferred Assets, (collectively, the "Owned
Real Property"). Schedule B.09 sets forth (i) the address of each parcel of
Owned Real Property and (ii) the owner of such Owned Real Property.
(d) Schedule B.09 includes a true and complete list of all
agreements (together with any amendments thereof) pursuant to which (i) a Seller
of Transferred Assets leases, subleases or otherwise occupies (whether as
landlord, tenant, subtenant or other occupancy arrangement) any real property
used in the Glass Machinery Business or (ii) a Glass Machinery Share Company,
leases, subleases, or otherwise occupies (whether as landlord, tenant, subtenant
or other occupancy arrangement) any real property in connection with the
operation of the Glass Machinery Business (collectively, the "Leased Real
Property"). Schedule B.09 sets forth (i) the address of each parcel of Leased
Real Property and (ii) the owner of the leasehold, subleasehold or occupancy
interest for each Leased Real Property.
B.10 No Undisclosed Liabilities. There are (a) no liabilities (other
than Excluded Liabilities) of a Glass Machinery Share Company, or (b) no
liabilities of a Seller of Transferred Assets relating to the Glass Machinery
Business that constitute Assumed Liabilities, in either case, of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, other than:
(i) liabilities disclosed in or provided for in the
Opening Statement and liabilities for matters taken into account in the
determination of the Final Net Tangible Asset Amount;
(ii) liabilities specifically (x) disclosed in
Schedule B.10 and B.11, (y) related to any contract, agreement, lease,
license, commitment, sales or purchase order or other undertaking
disclosed in the Disclosure Schedules or (z) related to any Employee
Plan or Benefit Arrangements identified in Exhibit D or disclosed in
Schedule B.20;
(iii) liabilities incurred in the ordinary course of
business since March 31, 1998;
(iv) liabilities not required to be accrued for or
reserved against in accordance with GAAP; and
(v) liabilities in addition to those referenced in
the foregoing clauses (i) through (iv), that in the aggregate could not
reasonably be expected to be material to the Glass Machinery Business.
B.11 Litigation. Except for Excluded Liabilities, as specifically
disclosed in Schedule B.11 or reserved against or referred to in the Opening
Statement, there is no action, suit, investigation or proceeding pending
against, or to the knowledge of Black & Decker, threatened against or affecting,
a Glass Machinery Share Company, the Glass Machinery Business or any Transferred
Asset before any Governmental Authority that could reasonably be material to the
Glass Machinery Business.
B.12 Material Contracts.
(a) Except as set forth on Schedule B.12 and for Contracts
that are Excluded Assets or Excluded Liabilities, as of the date hereof, the
Sellers of Transferred Assets, with respect to the Glass Machinery Business, and
the Glass Machinery Share Companies are not parties to or otherwise bound by or
subject to:
(i) any Contract that involves the receipt or payment
by any Glass Machinery Unit of more than $500,000 in any twelve (12)
month period other than Contracts relating to the sale of goods or the
provision of services by a Glass Machinery Unit entered in the ordinary
course of business by such Glass Machinery Unit;
(ii) any written employment, severance, consulting or
sales representative Contract (other than those that relate to Active
Employees) which contains an obligation (excluding commissions) to pay
more than $100,000 per year;
(iii) any Contract containing any covenant limiting
the freedom of a Seller of Transferred Assets, with respect of the
Glass Machinery Business or the operations of the Glass Machinery
Business, or a Glass Machinery Share Company to engage in any line of
business or compete with any Person in any geographic area in any
material respect if such Contract will be binding after the Closing
other than sales agency agreements granting exclusive territories to
sales agents and Intellectual Property licenses or sharing agreements
limiting the use of Intellectual Property;
(iv) any Contract in effect on the date of this
Agreement relating to the disposition or acquisition of the assets of,
or any interest in, any business enterprise other than in the ordinary
course of business or, in the case of Sellers of Transferred Assets,
Contracts which do not relate to the Glass Machinery Business;
(v) any Financial Support Arrangements;
(vi) any indebtedness for borrowed money that would
constitute an Assumed Liability or a liability (other than an Excluded
Liability) of a Glass Machinery Share Company, if in existence on the
Closing Date, with a principal amount in excess of $500,000;
(vii) any offset agreement entered into in connection
with an international sales transaction and relating to any Contract
that imposes an obligation to perform that will continue in effect on
or after the Closing Date; or
(viii) any other material Contract not otherwise
disclosed in the Disclosure Schedules.
(b) Except as specifically disclosed in Schedule B.12, each
Contract disclosed in Schedule B.12 is a legal, valid and binding obligation of
the respective Seller or Glass Machinery Share Company enforceable against such
Person in accordance with its terms (except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally, including the
effect of statutory and other laws regarding fraudulent conveyances and
preferential transfers, and subject to the limitations imposed by general
equitable principles regardless of whether such enforceability is considered in
a proceeding at law or in equity), and the respective Seller or Glass Machinery
Share Company is not in breach or default and has not failed to perform any
obligation thereunder, and, to the knowledge of Black & Decker, there does not
exist any event, condition or omission which would constitute a breach or
default (whether by lapse of time or notice or both) by any other Person,
except, in either case, for any such default, failure or breach as has not had,
and could not reasonably be expected to be material to the Glass Machinery
Business.
B.13 Licenses and Permits. Except as specifically disclosed in Schedule
B.13, each Seller of Transferred Assets and each Glass Machinery Share Company
has all material licenses, franchises, permits and other similar authorizations
affecting, or relating in any way to, the Glass Machinery Business required by
law to be obtained by each Seller of Transferred Assets and each such Glass
Machinery Share Company to permit such Person to conduct the Glass Machinery
Business in substantially the same manner as the Glass Machinery Business has
heretofore been conducted.
B.14 Finders' Fees. Except for Lehman Brothers Inc., whose fees will be
paid by Black & Decker, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of
Black & Decker and, except for the employees who are parties to the agreements
described in Section B.20(b)(xi), there is no employee of the Glass Machinery
Business who might be entitled to any fee or commission from Black & Decker or
Buyer or any of their Affiliates upon consummation of the Contemplated
Transactions.
B.15 Environmental Compliance. Except as specifically disclosed in
Schedule B.15, the Glass Machinery Business conducted by the Sellers of
Transferred Assets and the business conducted by the Glass Machinery Share
Companies, is and has been in substantial compliance with all applicable
Environmental Laws, and each of the Sellers of the Transferred Assets and the
Glass Machinery Share Companies has obtained all material permits, licenses and
other authorizations that are required under applicable Environmental Laws.
Except as specifically disclosed in Schedule B.15,(i) the Glass Machinery
Business conducted by the Sellers of Transferred Assets and the business
conducted by the Glass Machinery Share Companies is and has been in material
compliance with the terms and conditions under which the permits, licenses and
other authorizations referenced in the preceding sentence were issued or
granted, (ii) the Sellers of Transferred Assets hold all material permits
required by Environmental Laws that are appropriate and necessary to conduct the
Glass Machinery Business as presently conducted in all material respects and to
operate the Transferred Assets in all material respects as they are presently
operated; (iii) the Glass Machinery Share Companies hold all material permits
required by Environmental Laws that are appropriate and necessary to conduct
their businesses as presently conducted in all material respects and to operate
their assets (other than Excluded Assets) in all material respects as they are
presently operated; (iv) no suspension, cancellation refusal to renew or
termination of any permit referred to in clauses (ii) or (iii) is pending or
threatened; (v) the Sellers of Transferred Assets have not received notice of
any material Environmental Claim relating to or affecting the Glass Machinery
Business or the Transferred Assets, and there is no such threatened
Environmental Claim or any circumstances, conditions or events that could give
rise to such a claim; (vi) the Sellers of Transferred Assets, in connection with
the Glass Machinery Business or the Transferred Assets, have not entered into,
agreed to, or are subject to any judgment, decree, order or other similar
requirement of any Governmental Authority under any Environmental Laws; (vii)
the Glass Machinery Share Companies have not received notice of any material
Environmental Claim and there is no such threatened Environmental Claim; (viii)
neither Black & Decker nor any of its Affiliates received written notice of any
material Environmental Claim and there is no such threatened Environmental Claim
or any circumstances, conditions or events that could give rise to such a claim;
(ix) the Glass Machinery Share Companies have not entered into, agreed in
writing to, or are subject to any judgment, decree, order or other similar
requirement of any Governmental Authority under any Environmental Laws.
B.16 Compliance with Laws. Except as specifically disclosed in
Schedules B.15 and B.16, for violations or infringements of Environmental Laws,
and for violations or infringements that have not had, and may not reasonably be
expected to be material to the Glass Machinery Business, the operation by the
Sellers of Transferred Assets of the Glass Machinery Business and the operation
of the business conducted by the Glass Machinery Share Companies have not
violated or infringed, and do not violate or infringe, in any material respect
any Applicable Law or any order, writ, injunction or decree of any Governmental
Authority.
B.17 Intellectual Property. With respect to (a) Intellectual Property
of each Seller of Transferred Assets that constitutes Transferred Assets and (b)
Intellectual Property of a Glass Machinery Share Company (other than
Intellectual Property constituting an Excluded Asset), except as specifically
disclosed in Schedule B.17:
(a) Each Seller of Transferred Assets and each Glass Machinery
Share Company owns, free and clear of all Liens other than Permitted Liens, and
subject to any licenses granted by the Seller or Glass Machinery Company prior
to the Closing Date, each of which is listed in Schedule B.12(a)(i), all right,
title and interest in such Intellectual Property and such Intellectual Property,
to the extent registered, is unexpired and has not been abandoned;
(b) The use of such Intellectual Property by a Seller of
Transferred Assets in connection with the operation of the Glass Machinery
Business as heretofore conducted or by a Glass Machinery Company in connection
with the operation of the Glass Machinery Business or otherwise does not
conflict with, infringe upon or violate the intellectual property rights of any
other Persons, except to the extent that such conflict, infringement or
violation has not been, and cannot reasonably be expected to be, material to the
Glass Machinery Business;
(c) The operations of the Glass Machinery Business, as
presently conducted, do not infringe upon or violate the intellectual property
rights of any other Persons, except to the extent that such conflict,
infringement or violation has not been, and cannot reasonably be expected to be,
material to the Glass Machinery Business;
(d) The Sellers of Transferred Assets and the Glass Machinery
Share Companies have the right to use all Intellectual Property used by the
Glass Machinery Business and necessary for the continued operation of the Glass
Machinery Business in substantially the same manner as its operations have
heretofore been conducted, except where the failure to have any such
Intellectual Property has not been, and could not reasonably be expected to be
material to the Glass Machinery Business; and
(e) Upon the consummation of the Closing hereunder, (i) Buyer
Companies will be vested with all of the Sellers of Transferred Assets' rights,
title and interest in, and rights and authority to use in connection with the
Glass Machinery Business, all of the Intellectual Property that constitute
Transferred Assets and (ii) such Intellectual Property, together with the
Intellectual Property owned by the Glass Machinery Share Companies (other than
Excluded Assets), and the Intellectual Property licensed to Buyer in accordance
with the Trademark Agreement and any other interests in Intellectual Property
transferred hereunder will collectively constitute such rights and interests in
Intellectual Property which are necessary for the continued operation of the
Glass Machinery Business as a whole in substantially the same manner as its
operations have heretofore been conducted, except where any inaccuracy of clause
(ii) has not been, and could not reasonably be expected to be, material to the
Glass Machinery Business.
(f) To the knowledge of Black & Decker (i) such Intellectual
Property is valid or enforceable and (ii) except as specifically disclosed in
Section (ii) of Schedule B.17, no Person is infringing or violating such
Intellectual Property. .
B.18 Taxes.
(a) Each Seller of Transferred Assets, each Glass Machinery
Share Company and each Affiliated Group, has exercised reasonable care in the
preparation of, and has duly and timely filed, all applicable material Tax
Returns with respect to all Taxes required to be filed to the date hereof and,
as of the Closing Date will have exercised reasonable care in the preparation
of, and will have timely filed, all applicable Tax Returns with respect to Taxes
required to have been filed prior to the Closing Date. All Taxes shown on the
Tax Returns or pursuant to any declarations or assessments received by a Seller
of Transferred Assets or a Glass Machinery Share Company (including estimated
Taxes), have been duly and timely paid, and no such Taxes have created a Lien
(other than a Permitted Lien) against any of the Transferred Assets or the
assets (other than Excluded Assets) of a Glass Machinery Share Company, or
impair the ability of a Seller to transfer the Transferred Assets to Buyer
Companies free and clear of any Lien (other than a Permitted Lien) in accordance
with the terms of this Agreement. All such Tax Returns are true, correct and
complete in all material respects. Except for Taxes that are Excluded
Liabilities, there exists no Tax deficiency or unpaid Tax assessed by any
Governmental Authority against a Seller of Transferred Assets or a Glass
Machinery Share Company which is not fully provided for in the respective
Financial Statements. The statement of the Final Net Tangible Asset Amount
established in accordance with Section 2.04(a) will include sufficient
provisions for all Taxes that are Assumed Liabilities.
(b) As of the date of this Agreement, Schedule B.18 contains a
list of all states and other jurisdictions where each Seller of Transferred
Assets (with respect to Transferred Assets) and each Glass Machinery Share
Company (with respect to its assets other than Excluded Assets), have filed Tax
Returns during the past three years.
B.19 Insurance. Schedule B.19 contains a correct and complete list of
all material policies of insurance held by (a) any Seller of Transferred Assets
that are in effect on the date of this Agreement and that insure the Glass
Machinery Business or (b) any Glass Machinery Share Company. None of the
insurance carriers listed in Schedule B.19 are related to or affiliated with
Black & Decker, other than Shenandoah Insurance, Inc. Black & Decker has not
received notice or any other indication from any insurer or agent (other than
Shenandoah Insurance, Inc.) of any intent to cancel or not to renew any of the
insurance policies listed in Schedule B.19, except for cancellations or failures
to renew that will occur as a result of the Closing.
B.20 Employee Benefit Matters.
(a) Except as listed in Schedule B.20 there is no Employee
Plan or material Benefit Arrangement which covers Transferred Employees and no
collective bargaining agreement covering Transferred Employees.
(b) Except as specifically disclosed in Schedule B.20, with
respect to the Glass Machinery Business:
(i) neither Black & Decker nor any member of its
"Controlled Group" (defined as any organization which is a member of a
controlled group of organizations within the meaning of Code Sections
414(b), (c), (m) or (o)) has ever contributed to or had any liability
to a multi-employer plan, as defined in Section 3(37) of ERISA, which
could reasonably be expected to be, material to the Glass Machinery
Business;
(ii) no fiduciary of any funded Employee Plan has
engaged in a nonexempt "prohibited transaction" (as that term is
defined in Section 4975 of the Code and Section 406 of ERISA) which
could subject Buyer to a penalty tax imposed by Section 4975 of the
Code;
(iii) no Employee Plan has incurred an "accumulated
funding deficiency" within the meaning of Section 412 of the Code or
similar non-U.S. Applicable Law, whether or not waived;
(iv) each Employee Plan and Benefit Arrangement has
been established and administered in all material respects in
accordance with its terms and in compliance with Applicable Law and all
contributions to be made to such plans have been made in accordance
with Applicable Law and the regulations of such plans;
(v) no Employee Plan subject to Title IV of ERISA has
incurred any material liability under such title other than for the
payment of premiums to the Pension Benefit Guaranty Corporation
("PBGC"), all of which have been paid when due;
(vi) no defined benefit Employee Plan has been
terminated; nor have there been any "reportable events" (as that term
is defined in Section 4043 of ERISA and the regulations thereunder)
which would present a risk that an Employee Plan would be terminated by
the PBGC in a distress termination;
(vii) each Employee Plan intended to qualify under
Section 401 of the Code has received a determination letter that it is
so qualified and no event has occurred with respect to any such
Employee Plan which could cause the loss of such qualification or
exemption;
(viii) with respect to each Employee Plan listed in
Schedule B.20, Black & Decker has made available to Buyer the most
recent copy (where applicable) of (1) the plan document; (2) the most
recent determination letter; (3) any summary plan description; and (4)
Form 5500;
(ix) with respect to the Transferred Employees, there
are no post-retirement medical or health plans in effect;
(x) there are no actions, claims or investigations
pending or threatened, against any Employee Plan, Benefit Arrangement,
or any administrator, fiduciary or sponsor thereof with respect to the
Glass Machinery Business, other than benefit claims arising in the
normal course of operation of such Employee Plan or Benefit
Arrangement; and
(xi) except with respect to the Letter Agreements
with Messrs. Siegenthaler and Blatt disclosed under Sections B(f)(9)
and (10) of Schedule B.20 and the Severance Agreements disclosed under
Sections E(2)(4), E(e)(1), E(f)(2) through (6) and E(h)(6) through (8)
of Schedule B.20, no Benefit Arrangement or other agreement or
arrangement exists that could result in the payment to any present or
former employee of the Glass Machinery Business of any money or other
property or accelerate or provide any other rights or benefits to any
present or former employee of the Glass Machinery Business as a result
of the transaction contemplated by this Agreement, whether or not such
payment would constitute a parachute payment within the meaning of Code
Section 280G.
(c) Labor Controversies. The Glass Machinery Units (i) are in
substantial compliance in all material respects with all Applicable Laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours except for the matters described in schedule
B.11, (ii) there is no labor strike, dispute, slowdown or stoppage actually
pending or, to Black & Decker's knowledge, threatened against or affecting the
Glass Machinery Units, (iii) except that the collective bargaining agreement
with the union representing the unionized employees at the Hartford Division has
expired and a new collective bargaining agreement has not yet been executed,
since 1989 none of the Glass Machinery Units have experienced any material
strike, work stoppage or other labor difficulty.
B.21 Year 2000 Matters. The Glass Machinery Business has implemented
Plans (the "Y2K Remediation Plans") to take the actions required to permit the
proper functioning (but only to the extent that such proper functioning would
otherwise be impaired by the occurrence of the year 2000) in and following the
year 2000 of "Systems" (as herein defined) material to the Glass Machinery
Business. The Y2K Remediation Plans (including the testing of all Systems of the
Glass Machinery Business and other equipment after implementation of the Y2K
Remediation Plans) are designed to and are being implemented in a manner that
will prevent impairment in and following the year 2000 of (i) Systems owned,
operated, manufactured or repaired by the Glass Machinery Business, and (ii)
Systems supplied by others or with which the computer systems of the Glass
Machinery Business interface including any System already installed and
operating at a customer's site but only to the extent the Glass Machinery
Business has an existing or contingent year 2000 liability with respect to such
System. The costs that the Glass Machinery Business has not incurred as of the
Closing Date for implementation of the Y2K Remediation Plans are either (i)
covered by the amount of USD$1,500,000 referred to in paragraph 2 of Attachment
V of this Agreement, or (ii) sufficiently provided for in the statement of the
Final Net Tangible Asset Amount to be prepared in accordance with section
2.04(a) of the Transaction Agreement. Except for (i) implementation of the Y2K
Remediation Plans and (ii) Systems required to provide the services provided to
the Glass Machinery Business by Black & Decker and its Affiliates, the Systems
of the Glass Machinery Business are and, with ordinary course upgrading and
maintenance, will continue to be, sufficient for the conduct of the Glass
Machinery Business as currently conducted. "Systems" means computer systems and
other equipment containing embedded microchips.
B.22 Facilities. The facilities and equipment of the Glass Machinery
Business are in all material respects in a good state of repair and operating
condition for use in the ordinary course of business, normal wear and tear
excepted.
B.23 Product Liability Claims. Except as specifically disclosed in
Schedule B.23, since 1989 no law suits, claims, demands or notices of personal
injuries have been asserted against any of the Glass Machinery Units Sellers
relating to any of the products manufactured and sold by the Glass Machinery
Business.
B.24 Disclosure. The representations and warranties contained in this
Exhibit B do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Exhibit B not misleading.
<PAGE>
EXHIBIT C
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Black & Decker that:
C.01 Organization and Existence. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of
Switzerland and has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted. As of the Closing Date, each of the Buyer Companies shall be a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and shall have all corporate powers
and all governmental licenses, authorizations, consents and approvals required
to carry on its business as then conducted. As of the Closing Date, each Buyer
Company will be duly qualified to do business as a foreign corporation in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities (after giving effect to the Contemplated Transactions)
make such qualification necessary to carry on its business as now conducted,
except for those jurisdictions where failure to be so qualified has not been,
and may not reasonably be expected to be material to the Buyer Companies taken
as a whole.
C.02 Corporate Authorization. The execution, delivery and performance
by each Buyer Company of the Transaction Documents and the consummation by each
Buyer Company of the Contemplated Transactions are within the corporate powers
of each Buyer Company and have been (or, prior to the Closing, will have been)
duly authorized by all necessary corporate action on the part of each Buyer
Company. Each of the Transaction Documents constitutes a legal, valid and
binding agreement of each Buyer Company, enforceable against each Buyer Company
in accordance with its terms (i) except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting creditors' rights
generally, including the effect of statutory and other laws regarding fraudulent
conveyances and preferential transfers and (ii) subject to the limitations
imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
C.03 Governmental Authorization. Except as set forth on Schedule B.05,
the execution, delivery and performance by each Buyer Company of the Transaction
Documents requires no action by or in respect of, consents or approvals of, or
filings with, any governmental body, agency, official or authority other than
compliance with any applicable requirements of the HSR Act.
C.04 Non-Contravention. The execution, delivery and performance by each
Buyer Company of the Transaction Documents do not and will not (i) contravene or
conflict with the charter or bylaws of the Buyer Company, (ii) assuming
compliance with the matters referred to in Section C.03, contravene or conflict
with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to the Buyer
Company, or (iii) constitute a default under or give rise to any right of
termination, cancellation or acceleration of any right or obligation of the
Buyer Company or to a loss of any benefit to which the Buyer Company is entitled
under any provision of any agreement, contract or other instrument binding upon
the Buyer Company or any license, franchise, permit or other similar
authorization held by the Buyer Company, except, in the case of clauses (ii) and
(iii), for any such contravention, conflict, violation, default, termination,
cancellation, acceleration or loss that could not reasonably be expected to be
material to the Buyer Companies taken as a whole.
C.05 Finders' Fees. There is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of Buyer who might be entitled to any fee or commission from Seller or Buyer (or
any of their Affiliates) upon consummation of the Contemplated Transactions.
C.06 Litigation. There is no action, suit, investigation or proceeding
pending against, or to the knowledge of Buyer, threatened against or affecting,
any Buyer Company before any court or arbitrator or any Governmental Authority
that in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the Contemplated Transactions.
C.07 Inspections/Investment Intent.
(a) Buyer is an informed and sophisticated participant in the
Contemplated Transactions, and has engaged expert advisors, experienced in
evaluation and purchase of enterprises such as the Glass Machinery Business.
Buyer has undertaken an investigation, has been provided with, has evaluated and
has relied upon certain documents and information to assist Buyer in making an
informed and intelligent decision with respect to the execution of the
Transaction Documents. Buyer acknowledges that Seller has made no representation
or warranty as to the prospects, financial or otherwise, of the Glass Machinery
Business. Buyer agrees that it shall accept the Transferred Assets and the
Assumed Liabilities conveyed by the Sellers of Transferred Assets and through
its acquisition of the Shares the assets (other than Excluded Assets) and the
liabilities (other than Excluded Liabilities) of the Glass Machinery Share
Companies as they exist on the Closing Date (subject to the representations and
warranties made by Black & Decker in the Transaction Documents) based on Buyer's
inspection, examination, determination with respect thereto as to all matters,
and without reliance upon any express or implied representations or warranties
of any nature, whether in writing, orally or otherwise, made by or on behalf of
or imputed to Seller, except as expressly set forth in the Transaction
Documents.
(b) Buyer is aware that none of the Shares have been
registered under the Securities Act of 1933 or any other applicable securities
laws. Buyer is an accredited investor within the meaning of Rule 501 of
Securities and Exchange Commission Rule D. The Buyer Companies are acquiring the
Shares for their own account, for investment purposes only and not with a view
to the distribution thereof. Buyer agrees that the Shares will not be sold,
transferred, offered for sale, pledged, hypothecated or otherwise disposed of
without registration under the Securities Act of 1933 or the securities laws of
other applicable jurisdictions, except pursuant to valid exemptions from
registration under such laws.
C.08 Financing. Buyer has available to it cash, marketable securities
or other investments, or presently available sources of credit, to enable it to
consummate the Contemplated Transactions.
<PAGE>
EXHIBIT D
EMPLOYEES AND EMPLOYEE BENEFIT MATTERS
I. Employees and Employment.
D.01 General. On the Closing Date, the employment of all Active
Employees of the Glass Machinery Business shall (a) be transferred to a Buyer
Company in the case of Active Employees of a Seller of Transferred Assets, (b)
remain employed by a Glass Machinery Share Company in the case of Active
Employees employed by a Glass Machinery Share Company, or (c) be transferred to
a Buyer Company in the case of employees listed on Attachment XVI. In any case,
the employment of such persons shall be considered continuous employment under
Applicable Law. "Active Employee" shall mean any individual who is actively
employed by any Seller of Transferred Assets, who is actively employed by any
Glass Machinery Share Company, who is listed on Attachment XVI, and any employee
of the Glass Machinery Business who is on authorized leave of absence, military
service (without restriction) or lay-off with recall rights (without
restriction). Where applicable the term "Active Employee" shall include
independent contractors. The Active Employees who are employed at any time on or
after the Closing Date by a Glass Machinery Share Company, or by any of the
Buyer Companies are herein collectively referred to as "Transferred Employees."
Except as otherwise expressly contemplated in the Transaction Documents, such
employment shall be at the same workplace and on the same terms and conditions
as those under which such employees are currently employed (except to the extent
that any change is necessary to any stock option plan or other equity-based
Employee Plan or Benefit Arrangement to eliminate the use of any equity
securities of the employer), and the employment of each Transferred Employee
shall be continued by the Buyer Companies for at least the maximum applicable
termination notice period to which a Seller of Transferred Assets, a Glass
Machinery Share Company or such other employer of such Transferred Employee may
be subject under Applicable Law as a result of the Contemplated Transactions.
From and after the Closing Date, the Buyer Companies or the Glass Machinery
Share Companies shall assume or continue to be bound by, as the case may be, all
obligations under any agreements, contracts or Applicable Law relating to the
terms and conditions of employment of all Active Employees, except for any
severance obligations (other than those disclosed in Schedule B.20) that result
solely from the transfer of a Transferred Employee's employment to the Buyer
Companies and not from any other change in the terms and conditions of his or
her employment. Nothing in this Agreement shall restrict the Buyer Companies
from terminating the employment of any Transferred Employee at any time and for
any reason, subject to all obligations under any agreements, contracts or
Applicable Law relating to the terms and conditions of employment of Active
Employees.
D.02 Severance Plans and Agreements. As of the Closing Date, it is the
Buyer's intention to (i) establish or cause to be established severance plans,
agreements and arrangements with substantially similar terms and conditions as
those provided under the applicable severance agreements, plans or arrangements
listed on Schedule B.20, (ii) maintain or cause to be maintained such severance
agreements, plans and arrangements for a period of at least one year following
the Closing Date, and (iii) pay or cause to be paid any benefits to any
Transferred Employees that they may be entitled to receive under such severance
agreements, plans or arrangements. In furtherance and not in limitation of the
provisions of this Section D.02, as of the Closing Date, Buyer shall assume and
discharge the obligations under the individual employee severance agreements
listed on Schedule B.20 provided that such employees are Active Employees.
D.03 Labor Agreements. The Buyer Companies agree to recognize (and to
cause the Glass Machinery Share Companies to continue to recognize) the
applicable labor unions, collective bargaining representatives, trade unions or
work councils representing any employees of the Glass Machinery Business as the
exclusive collective bargaining representatives of the Active Employees with
respect to wages, hours, fringe benefits and other terms and conditions of
employment to the extent so recognized by the current employers of such Active
Employees for all such Active Employees who are within the appropriate
bargaining unit as determined by Applicable Law. The Buyer Companies shall
become successor employers under the applicable labor or collective bargaining
agreements and agree to honor the terms of and to assume all obligations under
existing collective bargaining agreements in respect of such unionized Active
Employees which arise after the Closing Date and all legal obligations arising
from such recognition or assumption.
D.04 Recalled or Rehired Employees. Buyer, for itself, each Buyer
Company and each Glass Machinery Share Company, confirms that any employees of
the Glass Machinery Business that are laid off or on leave with continuing
recall or return rights under applicable agreements, contracts, policies or
Applicable Law as of the Closing Date will be recalled or rehired or returned to
employment in compliance with any applicable agreements, contracts or Applicable
Law and will be accorded the benefits otherwise provided to Transferred
Employees by the Buyer Companies and the Glass Machinery Share Companies.
D.05 Negotiations with Employees or Employee Representatives. If and to
the extent that any provisions of this Agreement are or may be subject to
negotiation with employees, or applicable labor unions, trade unions or work
councils, by policy, contract, collective bargaining agreement or Applicable
Law, Black & Decker and its Affiliates and Buyer Companies shall cooperate in
good faith in such negotiations.
D.06 Termination and Plant Closing Notices; WARN. Black & Decker and
its Affiliates shall provide any notices to the employees of the Glass Machinery
Business that may be required under any Applicable Law, including but not
limited to WARN or any similar state or local law, with respect to events that
occur up to and including the day prior to the Closing Date. Buyer and its
Affiliates shall provide any such notices to Active Employees with respect to
events that occur as a result of the Closing, and to Transferred Employees with
respect to events that occur on and after the Closing Date. Buyer shall not take
any action on or after the Closing that would cause any termination of employees
by Black & Decker and its Affiliates or by a Glass Machinery Share Company that
occur prior to the Closing Date to constitute a "plant closing" or "mass layoff"
under WARN or any similar state or local law, or create any liability to Black &
Decker or its Affiliates for employment termination under Applicable Law.
D.07 Immigration Matters. The Buyer Companies acknowledge that the
Contemplated Transactions may trigger certain obligations under the immigration
laws of the countries where the Glass Machinery Business operates. Buyer shall
comply (and shall cause the Buyer Company and each Glass Machinery Share Company
to comply) with all requirements of such immigration laws and agrees to make (or
cause to be made) any necessary filings with the appropriate Governmental
Authority with regard to the Transferred Employees.
II. United States Employee Benefit Matters.
D.08 Salaried Employee Pension Plans.
(a) As soon as practicable after the Closing Date, with effect
as of the Closing Date, Buyer shall establish a defined benefit plan ("Buyer's
U.S. Salaried Pension Plan"). As soon as practicable following the earlier of
delivery to Black & Decker by Buyer of a favorable determination letter from the
Internal Revenue Service regarding the qualified status of the Buyer's U.S.
Salaried Pension Plan, Black & Decker shall cause the transfer from The Black &
Decker Pension Plan ("Seller's U.S. Salaried Pension Plan") to the Buyer's U.S.
Salaried Pension Plan of assets (in accordance with paragraphs (c) and (d)
below) and all liabilities which are attributable to the US Transferred
Employees who are participants in the Seller's U.S. Salaried Pension Plan as of
the Closing Date. Buyer shall take (or cause to be taken) all action required or
appropriate to vest fully all such US Transferred Employees in their entire
accrued benefits transferred to the Buyer's U.S. Salaried Pension Plan and, to
the extent required under Section 411(d)(6) of the Code, to protect and preserve
all benefits, rights and features relating to those accrued benefits transferred
from Seller's U.S. Salaried Pension Plan. Benefit accruals in respect of US
Transferred Employees under Seller's U.S. Salaried Pension Plan shall cease as
of the Closing Date. Black & Decker and Buyer shall make or cause to be made any
and all filings and submissions to the appropriate Governmental Authorities, and
shall make any necessary plan amendments arising in connection with the transfer
of assets and liabilities from Seller's U.S. Salaried Pension Plan to the
Buyer's U.S. Salaried Pension Plan. Prior to such transfer of assets and
liabilities, Black & Decker shall provide to Buyer a favorable determination
letter from the Internal Revenue Service regarding the qualified status of the
Seller's U.S. Salaried Plan, as then in effect.
(b) It is the Buyer's intention that the Transferred Employees
shall be eligible to participate under the Buyer's U.S. Salaried Pension Plan
for a period of one year following the Closing Date on the same terms and
conditions as provided to the US Transferred Employees under Seller's U.S.
Salaried Pension Plan immediately prior to the Closing Date. Service and
compensation with Black & Decker or any of its Affiliates prior to the Closing
Date which was recognized under Seller's U.S. Salaried Pension Plan shall be
recognized for the same purposes under the Buyer's U.S. Salaried Pension Plan.
(c) The amount of assets to be transferred from the Seller's
U.S. Salaried Pension Plan shall be equal to the Projected Benefit Obligation
("PBO") determined as of the Closing Date in accordance with the Financial
Accounting Standards Board Statement 87 ("FAS 87") and which is attributable to
the US Transferred Employees who are participants in Seller's U.S. Salaried
Pension Plan as of the Closing Date or such larger amount determined under
paragraph (d) below (the "Transfer Amount"). Determination of the PBO shall be
in accordance with the actuarial assumptions used by the Seller's actuary in
preparing the most recent actuarial report for Seller's U.S. Salaried Pension
Plan. The above-described calculation of the amount to be transferred from the
Seller's U.S. Salaried Pension Plan to the Buyer's U.S. Salaried Pension Plan
shall be made by Seller's actuary and reviewed by Buyer's actuary.
(d) All assets transferred under this Section D.08 shall be
made in cash. The transfer contemplated herein shall comply with all
requirements of Sections 414(l) and 401(a)(12) of the Code and in no event shall
the Transfer Amount be less than the amount determined pursuant to Section
414(l) of the Code and Treasury Regulation 1.414(l)-1(n) (using assumptions that
are reasonable, as determined by Seller's actuary in accordance with Treasury
Regulation 1.414(l)-1(b)(5)(ii)) or required by Applicable Law or by any
Governmental Authority. Pending completion of the transfers contemplated by this
Section D.08, any benefits that are payable to US Transferred Employees under
the Seller's U.S. Salaried Pension Plan shall be paid or continue to be paid out
of such plan. The Transfer Amount will be adjusted on a pro-rata basis to
reflect the actual asset performance of the Seller's U.S. Salaried Pension Plan
from the Closing Date to the first day of the month prior to the date of
transfer and credited with interest on a daily basis from that date until the
date of transfer at an interest rate equivalent to the rate on the 90-day United
States Treasury Bills announced for the auction immediately preceding the first
day of the month in which the transfer occurs, and adjusted to reflect benefit
payments and expenses paid after the Closing Date by the Seller's U.S. Salaried
Pension Plan which are related to the obligations being transferred to the
Buyer's U.S. Salaried Pension Plan. Pending the completion of such transfers,
Black & Decker will cooperate with Buyer with respect to plan administration,
disbursement of benefits and other pertinent information.
(e) The Buyer's U.S. Salaried Pension Plan and Buyer shall be
liable for all benefits with respect to US Transferred Employees accrued under
the Seller's U.S. Salaried Pension Plan prior to the Closing Date upon such
transfer of assets in accordance with this Section D.08. The Buyer agrees that
neither Black & Decker, nor any of its Affiliates nor Seller's U.S. Salaried
Pension Plan shall have any further responsibility with respect to the assets
and liabilities so transferred.
D.09 Hourly Paid Employee Pension Plans.
(a) As soon as practicable after the Closing Date, with effect
as of the Closing Date, Buyer shall establish a defined benefit plan ("Successor
U.S. Hourly Pension Plan"). As soon as practicable following the earlier of
delivery to Black & Decker by Buyer of a favorable determination letter from the
Internal Revenue Service regarding the qualified status of the Successor U.S.
Hourly Pension Plan, Black & Decker shall cause the transfer from the Hourly
Employees Retirement Plan of Hartford Division, Emhart Industries, Inc.
("Seller's U.S. Hourly Pension Plan") to the Successor U.S. Hourly Pension Plan
of assets (in accordance with paragraph (c) and (d) below) and all liabilities
which are attributable to the US Transferred Employees who are participants in
the Seller's U.S. Hourly Pension Plan as of the Closing Date. Buyer shall take
(or cause to be taken) all action required or appropriate, to the extent
required under Section 411(d)(6) of the Code, to protect and preserve under the
Successor U.S. Hourly Pension Plan all benefits, rights and features relating to
those accrued benefits transferred from Seller's U.S. Hourly Pension Plan.
Benefit accruals in respect of US Transferred Employees under the Successor U.S.
Hourly Pension Plan shall cease as of the Closing Date. Black & Decker and Buyer
shall make or cause to be made any and all filings and submissions to the
appropriate Governmental Authorities, and shall make any necessary plan
amendments arising in connection with the transfer of assets and liabilities
from Seller's U.S. Hourly Pension Plan to the Successor U.S. Hourly Pension
Plan. Prior to such transfer of assets and liabilities, Black & Decker shall
provide to Buyer a favorable determination letter from the Internal Revenue
Service regarding the qualified status of the Seller's U.S. Hourly Plan, as then
in effect.
(b) The US Transferred Employees shall be eligible to
participate under the Successor U.S. Hourly Pension Plan in accordance with any
applicable collective bargaining agreement and Applicable Law. Service and
compensation with Black & Decker or any of its Affiliates prior to the Closing
Date which was recognized under Seller's U.S. Hourly Pension Plan shall be
recognized for the same purposes under the Successor U.S. Hourly Pension Plan.
(c) The amount of assets to be transferred from the Seller's
U.S. Hourly Pension Plan shall be equal to the Projected Benefit Obligation
("PBO") determined as of the Closing Date in accordance with the Financial
Accounting Standards Board Statement 87 ("FAS 87") but assuming that the unit
benefit rate under the plan shall increase at the rate of 4% per year and which
is attributable to the US Transferred Employees who are participants in Seller's
U.S. Hourly Pension Plan as of the Closing Date or such larger amount determined
under paragraph (d) below (the "Transfer Amount"). Determination of the PBO
shall be in accordance with the actuarial assumptions used by Seller's actuary
in preparing the most recent actuarial report for Seller's U.S. Hourly Pension.
The above-described calculation of the amount to be transferred from the
Seller's U.S. Hourly Pension Plan to the Successor U.S. Hourly Pension Plan
shall be made by Seller's actuary and reviewed by Buyer's actuary.
(d) All assets transferred under this Section D.09 shall be
made in cash. The transfer contemplated herein shall comply with all
requirements of Sections 414(l) and 401(a)(12) of the Code and in no event shall
the Transfer Amount be less than the amount determined pursuant to Section
414(l) of the Code and Treasury Regulation 1.414(l)-1(n) (using assumptions that
are reasonable, as determined by Seller's actuary in accordance with Treasury
Regulation 1.414(l)-1(b)(5)(ii)) or required by Applicable Law or by any
Governmental Authority. Pending completion of the transfers contemplated by this
Section D.09, any benefits that are payable to US Transferred Employees under
the Seller's U.S. Hourly Pension Plan shall be paid or continue to be paid out
of such plan. The Transfer Amount will be adjusted on a pro-rata basis to
reflect the actual asset performance of the Seller's U.S. Hourly Pension Plan
from the Closing Date to the first day of the month prior to the date of
transfer and credited with interest on a daily basis from that date until the
date of transfer at an interest rate equivalent to the rate on the 90-day United
States Treasury Bills announced for the auction immediately preceding the first
day of the month in which the transfer occurs, and adjusted to reflect benefit
payments and expenses paid after the Closing Date by the Seller's U.S. Hourly
Pension Plan which are related to the obligations being transferred to the
Successor U.S. Hourly Pension Plan. Pending the completion of such transfers,
Black & Decker will cooperate with Buyer with respect to plan administration,
disbursement of benefits and other pertinent information.
(e) The Successor U.S. Hourly Pension Plan shall be liable for
all benefits with respect to US Transferred Employees accrued under the Seller's
U.S. Hourly Pension Plan prior to the Closing Date upon the transfer of assets
in accordance with this Section D.09. The Buyer agrees that neither Black &
Decker, any of its Affiliates nor Seller's U.S. Salaried Pension Plan shall have
any further responsibility with respect to the assets and liabilities so
transferred.
D.10 Savings Plans.
(a) Black & Decker shall cause the trustee of The Black &
Decker Retirement Savings Plan ("Seller's Savings Plan") to transfer as of the
transfer date specified below, the full account balances of the US Transferred
Employees under Seller's Savings Plan, to the Successor Savings Plan (as
hereinafter defined). To the extent permissible under Seller's Savings Plan,
such assets shall be transferred to the Successor Savings Plan in cash, except
that participant loans shall be transferred in kind. Black & Decker and Buyer
shall make or cause to be made any and all filings and submissions to the
appropriate Governmental Authorities, and shall make any necessary plan
amendments arising in connection with the transfer of assets and liabilities
from Seller's Savings Plan to the Successor Savings Plan.
(b) As soon as practicable after the Closing Date, Buyer shall
establish or designate (or cause to be established or designated) an individual
account plan for the benefit of US Transferred Employees (the "Successor Savings
Plan"), shall take (or cause to be taken) all necessary action, if any, to
qualify the Successor Savings Plan under the applicable provisions of the Code
and shall make any and all filings and submissions to the appropriate
Governmental Authorities required to be made or its Affiliates in connection
with the transfer of assets contemplated hereby. The Successor Savings Plan
shall provide that those US Transferred Employees and their beneficiaries
covered by Seller's Savings Plan shall receive credit for all service with Black
& Decker or any of its Affiliates prior to the Closing Date for all purposes, to
the same extent such service is recognized under Seller's Savings Plan
immediately prior to the Closing Date and, to the extent of the assets
transferred, benefit accruals. Buyer shall take (or cause to be taken) all
action required or appropriate to vest fully all such US Transferred Employees
in their entire account balances transferred to the Successor Savings Plan and,
to the extent required under Section 411(d)(6) of the Code, to protect and
preserve all benefits, rights and features relating to those account balances
transferred from Seller's Savings Plan. As soon as practicable following the
earlier of the delivery to Black & Decker of a favorable determination letter
from the Internal Revenue Service regarding the qualified status of the
Successor Savings Plan, subject to any withdrawals or distributions made by, to
or on behalf of a US Transferred Employee under the terms of the Seller's
Savings Plan prior to the transfer date, to transfer the full account balances
of US Transferred Employees under Seller's Savings Plan as of the transfer date
to the appropriate trustee designated by the Buyer under the trust agreement
forming a part of the Successor Savings Plan; provided, that assets consisting
of notes or other instruments evidencing loans made to participating US
Transferred Employees shall be transferred in such form to the Successor Savings
Plan. Prior to such transfer of assets and liabilities, Black & Decker shall
provide to Buyer a favorable determination letter from the Internal Revenue
Service regarding the qualified status of the Seller's Savings Plan, as then in
effect.
(c) Buyer, effective as of the date of the transfer of assets
contemplated by this Section D.10, assumes all of the liabilities and
obligations of Black & Decker or any of its Affiliates in respect of the account
balances accumulated by US Transferred Employees under Seller's Savings Plan to
the extent of the assets transferred, and the Successor Savings Plan assumes all
liabilities and obligations of Seller's Savings Plan with respect to all account
balances under Seller's Savings Plan of such US Transferred Employees to the
extent of the assets transferred. Neither Buyer nor any of its Affiliates shall
assume any other obligations or liabilities arising under or attributable to
Seller's Savings Plan and neither Black & Decker nor any of its Affiliates shall
assume any liabilities or obligations under or attributable to the Successor
Savings Plan. Prior to the transfer of assets contemplated by this Section D.10,
Buyer and its Affiliates, if consented to by the applicable US Transferred
Employee, shall withhold from such US Transferred Employee's pay, loan
repayments relating to any outstanding loan to such US Transferred Employee
under Seller's Savings Plan and shall promptly forward those withholdings to
Seller's Savings Plan.
D.11 Health and Welfare Plans; Benefit Arrangements.
(a) For a period of one year following the Closing Date, Buyer
intends to ensure that the US Transferred Employees are provided benefits that
are substantially equivalent on an aggregate basis (and "substantially
identical" with respect to health benefit coverage for purposes of satisfying
Section 4980B of the Code) to those provided under the Employee Plans and
Benefit Arrangements as in effect for those US Transferred Employees immediately
prior to the Closing Date (except to the extent that any change is necessary to
any stock option plan or other equity-based Benefit Arrangement to eliminate the
use of any equity securities of the employer), it being understood and agreed
that such benefits provided by Buyer and its Affiliates shall include at a
minimum health, medical, dental, life, disability and severance benefits. Each
U.S. Transferred Employee shall receive credit for service and compensation with
Black & Decker and its Affiliates prior to the Closing Date for all purposes to
the same extent that service and compensation are recognized under Employee
Plans and Benefit Arrangement immediately prior to the Closing.
(b) With respect to any US Transferred Employee (including any
beneficiary or dependent thereof), except as expressly set forth herein, Black &
Decker and its Affiliates shall retain (i) all liabilities and obligations
arising under any group life, accident, medical, dental or disability plan or
similar arrangement (whether or not insured) to the extent that such liability
or obligation relates to claims incurred (whether or not reported) on or prior
to the Closing Date, and (ii) all liabilities and obligations arising under any
worker's compensation laws to the extent such liability or obligation relates to
the period prior to the Closing Date.
(c) Any group health plan, disability plan or other plans
established or designated by the Buyer and its Affiliates for the benefit of US
Transferred Employees shall not contain any exclusion or limitation with respect
to any preexisting condition; provided, however, that buyer need not waive any
pre-existing condition which was excluded from coverage under the Seller's
plans, to the extent the condition would have been excluded under the Seller's
plans after the Closing Date.
(d) Except as otherwise expressly provided in this Exhibit D,
effective as of the Closing, Buyer shall assume (or cause one of its Affiliates
to assume) the liabilities and obligations of Black & Decker and its Affiliates
in respect of all US Transferred Employees (and their beneficiaries and
dependents) under the Bonus, Stock and Incentive Plans disclosed in Section B(h)
of Schedule B.20 and under the Other Employment Benefit Arrangements/ Fringe
Benefits disclosed in Section H(h) of Schedule B.20 sponsored or maintained by
Black & Decker and its Affiliates at any time prior to the Closing Date (except
to the extent that any change is necessary to any stock option plan or other
equity-based Benefit Arrangement to eliminate the use of any equity securities
of the employer).
D.12 Post-Retirement Medical and Life Insurance.
(a) Black & Decker and its Affiliates shall retain
responsibility for providing health, medical, dental, hospitalization, life
insurance or similar benefits (including, without limitation, reimbursement for
Medicare premiums) to any employee or former employee of the Glass Machinery
Business and their dependents who retires or has retired before the Closing
Date. Buyer and its Affiliates shall be responsible for providing any
post-retirement medical, life or similar benefits to US Transferred Employees
and their dependents.
(b) Notwithstanding the provisions of this Exhibit D,
including but not limited to the provisions of this Section D.12, Black & Decker
and its Affiliates may amend, modify or terminate any plans or arrangements
providing post-retirement health, medical, dental, hospitalization, life
insurance or similar benefits (including, without limitation, reimbursement for
Medicare premiums) to any employee or former employee of the Glass Machinery
Business and their dependents, subject in each case to the provisions of
Applicable Law.
(c) Except as otherwise contemplated by the provisions of this
Exhibit D, including but not limited to the provisions of Section D.11, Buyer
shall not be obligated by this Agreement to provide post-retirement, health,
medical, dental, hospitalization, life insurance or similar benefits (including,
without limitation, reimbursement for Medicare premiums), or any particular
level of such benefits, to US Transferred Employees.
III. Other Country Employee Benefit Matters.
D.13 General. For a period of one year following the Closing Date,
Buyer intends to ensure that the Non-US Transferred Employees are provided
benefits that are substantially equivalent on an aggregate basis to those
provided under the Non-U.S. Benefit Arrangements as in effect for those Non-US
Transferred Employees immediately prior to the Closing Date (except to the
extent that any change is necessary to any stock option plan or other
equity-based Employee Plan or Benefit Arrangement to eliminate the use of any
equity securities of the employer), it being understood that each Non-US
Transferred Employee shall receive credit for all service and compensation with
Black & Decker and its Affiliates prior to the Closing Date for all purposes to
the same extent that service and compensation are recognized under the Benefit
Arrangements immediately prior to the Closing.
D.14 Severance/Termination Indemnities. In furtherance and not in
limitation of the provisions of Section D.13, for a period of at least one year,
Buyer intends to provide (or cause to be provided) severance programs and
termination indemnities with the same terms and conditions as those provided by
Black & Decker and its Affiliates, or that are otherwise available, to the
Non-US Transferred Employees immediately prior to the Closing, including credit
for service and compensation with Black & Decker and its Affiliates, and agrees
to pay or cause to be paid any benefit to Non-US Transferred Employees to which
they may be entitled under any severance programs and/or termination indemnities
applicable to either Buyer and its Affiliates or Black & Decker and its
Affiliates with respect to events that occur on or after the Closing Date or as
a result of the Contemplated Transactions.
D.15 United Kingdom Pension Plan. In furtherance and not in limitation
of the provisions of Section D.13, Black & Decker may elect, on or before the
Closing Date, in its discretion, to have the provisions of either Section
D.15(a) or D.15(b) be effective as of the Closing Date:
(a) If so elected by Black & Decker, the following provisions
shall be effective:
(i) Black & Decker and its Affiliates shall retain
all liabilities and obligations in respect of benefits accrued by employees of
the Glass Machinery Business (including Transferred Employees) as of the Closing
Date under the Black & Decker 1995 Pension Scheme ("Seller's U.K. Pension
Plan"). Accrued benefits of Non-US Transferred Employees under Seller's U.K.
Pension Plan shall be fully vested as of the Closing Date. Benefit accruals in
respect of Non-US Transferred Employees under Seller's U.K. Pension Plan shall
cease as of the Closing Date. No assets of Seller's U.K. Pension Plan shall be
transferred to Buyer or any of its Affiliates or to any employee benefit plan of
Buyer or any of its Affiliates and Buyer shall procure that no employee benefit
or pension plan of Buyer or any of its Affiliates, whether designated in
accordance with (ii) or otherwise, shall accept a transfer from the Seller's
U.K. Pension Plan.
(ii) Prior to or as soon as practicable after the
Closing Date, Buyer shall designate or establish a pension plan for the benefit
of Non-US Transferred Employees who were participants in Seller's U.K. Pension
Plan ("Buyer's U.K. Pension Plan"). Buyer's U.K. Pension Plan shall cover all
such Non-US Transferred Employees each of whom shall be eligible to participate
therein for at least one year following the Closing Date. Buyer's U.K. Pension
Plan shall be a retirement benefit scheme which is, or is capable of being, an
exempt approved scheme (as defined under the Income and Corporation Taxes Act
1988). Buyer's U.K. Pension Plan shall provide benefits which are at least
broadly comparable in value to those provided to such Non-US Transferred
Employees under the Seller's U.K. Pension Plan immediately prior to the Closing
Date, but, for the avoidance of doubt, such benefits may be provided on a
defined benefit or defined contribution basis.
(b) If so elected by Black & Decker, the following provisions
shall be effective, in lieu of the provisions of Section D.15(a):
(i) Accrued benefits of Non-US Transferred Employees
under the Black & Decker 1995 Pension Scheme ("Seller's U.K. Pension Plan")
shall be fully vested as of the Closing Date. Benefit accruals in respect of
Non-US Transferred Employees under Seller's U.K. Pension Plan shall cease as of
the Closing Date. Prior to or as soon as practicable after the Closing Date,
with effect as of the Closing Date, Buyer shall establish a pension plan
("Buyer's U.K. Pension Plan") for the benefit of Non-US Transferred Employees
who were participants in Seller's U.K. Pension Plan. Buyer's U.K. Pension Plan
shall cover all such Non-US Transferred Employees each of whom shall be eligible
to participate therein for at least one year following the Closing Date on the
same terms and conditions as provided to such Non-US Transferred Employees under
Seller's U.K. Pension Plan immediately prior to the Closing Date. Buyer's U.K.
Pension Plan shall be a retirement benefit scheme which is, or is capable of
being, an exempt approved scheme (as defined under the Income and Corporation
Taxes Act 1988). Service and compensation with Black & Decker or any of its
Affiliates prior to the Closing Date which was recognized under Seller's U.K.
Pension Plan shall be recognized for the same purposes under the Buyer's U.K.
Pension Plan.
(ii) As soon as practicable following the Approval
Date or the issuance of indemnities satisfactory to Black & Decker, Black &
Decker in its sole discretion shall cause the transfer from Seller's U.K.
Pension Plan to the Buyer's U.K. Pension Plan of assets (in accordance with
paragraphs (iii) and (iv) below) and all liabilities which are attributable to
the Non-US Transferred Employees (other than Non-Transfer Employees as described
in Section D.15(b)(iii)) who are participants in the Seller's U.K. Pension Plan
as of the Closing Date. For the purposes of this Section D.15(b), "Approval
Date" shall mean the date on which the Buyer shall deliver to Black & Decker
copies of the Buyer's U.K. Pension Plan, governmental approval or determination
letter and other documents verifying that all of the following have occurred
with respect to the Buyer's U.K. Pension Plan: (A) that the plan has been
established; (B) that the plan has obtained the approvals by all Governmental
Authorities which are necessary to obtain any regulatory or fiscal regime; (C)
that the approval of the transfer by all Governmental Authorities, trustees or
managers of the plan has been obtained to the extent the approval is required by
law; and (D) that all notices relating to the transfer and required by law to be
given by the plan, the employer sponsoring the plan or any trustee or other
fiduciary of the plan to any Governmental Authority, employee or beneficiary or
collective bargaining representative, have been given.
(iii) The amount of assets to be transferred from the
Seller's U.K. Pension Plan shall be equal to the Projected Benefit Obligation
("PBO") determined as of the Closing Date in accordance with the Financial
Accounting Standards Board Statement 87 ("FAS 87") and which is attributable to
the Non-US Transferred Employees (excluding Non-Transfer Employees) who are
participants in Seller's U.K. Pension Plan as of the Closing Date or such larger
amount as may be required to be transferred by the plan trustees or Applicable
Law (the "Transfer Amount"). Determination of the PBO shall be in accordance
with the actuarial assumptions used by the Seller's actuary for the
determination of the 1998 FAS 87 expense for Seller's U.K. Pension Plan. The
above-described calculation of the amount to be transferred from the Seller's
U.K. Pension Plan to the Buyer's U.K. Pension Plan shall be made by Seller's
actuary and reviewed by Buyer's actuary. For the purposes of this Section
D.15(b), "Non-Transfer Employees" means those Transferred Employees (including
the beneficiaries of a deceased employee) whose accrued benefits in the Seller's
U.K. Pension Plan are not transferred pursuant to this Agreement to the Buyer's
U.K. Pension Plan by reason of the election or determination by any such
Transferred Employee, the requirements of any law, or the terms of the Seller's
U.K. Pension Plan.
(iv) All assets transferred under this Section
D.15(b) shall be made in cash. The transfer contemplated herein shall comply
with all requirements of Applicable Law. Pending completion of the transfers
contemplated by this Section D.15(b), any benefits that are payable to Non-US
Transferred Employees under the Seller's U.K. Pension Plan shall be paid or
continue to be paid out of such plan. The Transfer Amount will be adjusted on a
pro-rata basis to reflect the actual asset performance of the Seller's U.K.
Pension Plan from the Closing Date to the first day of the month prior to the
date of transfer and credited with interest from that date until the date of
transfer at the rate of 5% per year, and adjusted to reflect benefit payments
and expenses paid or incurred after the Closing Date by the Seller's U.K.
Pension Plan which are related to the obligations being transferred to the
Buyer's U.K. Pension Plan. Pending the completion of such transfers, Black &
Decker will cooperate with Buyer with respect to plan administration,
disbursement of benefits and other pertinent information.
(v) The Buyer's U.K. Pension Plan and Buyer shall be
liable for all benefits with respect to Non-US Transferred Employees (other than
Non-Transfer Employees) accrued under the Seller's U.K. Pension Plan prior to
the Closing Date upon the transfer of assets in accordance with this Section
D.15(b). The Buyer agrees that neither Black & Decker, nor any of its Affiliates
nor Seller's U.K. Pension Plan shall have any further responsibility with
respect to the assets and liabilities so transferred.
D.16 German Retirement Plans. In furtherance and not in limitation of
the provisions of Section D.13:
(a) As of the Closing Date, Black & Decker shall transfer or
cause to be transferred and Buyer shall assume or cause to be assumed the
benefit obligations of all participants, their beneficiaries and dependents
(including, without limitation, terminated vested participants and retirees)
under the Emhart Glass/Emhart Deutschland GmbH/Versorgungsordnung fur unsere
Mitargeiter ("Seller's German Pension Plan"). As soon as administratively
practicable after the Closing Date, Black & Decker and Buyer shall make or cause
to be made any and all filings and submissions to the appropriate Governmental
Authorities required to be made by it in connection with the transfer of benefit
obligations contemplated hereby. The participants and their beneficiaries
covered by Seller's German Pension Plan shall receive credit for all service and
compensation with Black & Decker or any of its Affiliates prior to the Closing
Date for all purposes, to the same extent such service and compensation are
recognized under Seller's German Pension Plan.
(b) Effective as of the Closing, Buyer and its Affiliates
shall assume all of the liabilities and obligations of Black & Decker or any of
its Affiliates in respect of the benefit obligations of all participants and
their beneficiaries under Seller's German Pension Plan. Neither Black & Decker
nor any of its Affiliates shall assume any liabilities or obligations under or
attributable to the Seller's German Pension Plan on and after the Closing Date.
D.17 Japanese Benefit Arrangements. In furtherance and not in
limitation of the provisions of Section D.13:
(a) As of the Closing Date, Black & Decker shall transfer (or
cause to be transferred) and Buyer shall assume (or cause to be assumed) the
benefit obligations of all participants, their beneficiaries and dependents
(including, without limitation, terminated vested participants and retirees)
under any Benefit Arrangements for employees of the Glass Machinery Business
employed by Nippon POP Rivets, K.K. and its predecessors ("Seller's Japanese
Plans"). Black & Decker and Buyer shall make (or cause to be made) any and all
filings and submissions to the appropriate Governmental Authorities and obtain
approvals for the transfer to and assumption by Buyer of any insurance contracts
that may be required or appropriate to be made by it in connection with the
transfer of benefit obligations and insurance contracts contemplated hereby. The
participants and their beneficiaries covered by Seller's Japanese Plans shall
receive credit for all service and compensation with Black & Decker or any of
its Affiliates prior to the Closing Date for all purposes, to the same extent
such service and compensation are recognized under Seller's Japanese Plans.
(b) Effective as of the Closing Date, Buyer and its Affiliates
shall assume all of the liabilities and obligations of Black & Decker or any of
its Affiliates in respect of the benefit obligations of Non-US Transferred
Employees and their beneficiaries under Seller's Japanese Plans and any
insurance contract related thereto. Neither Black & Decker nor any of its
Affiliates shall assume or retain any liabilities or obligations under or
attributable to the Seller's Japanese Plan on and after the Closing Date.
D.18 Swiss Pension Plan. In furtherance and not in limitation of the
provisions of Section D.13:
(a) As of the Closing Date, Black & Decker shall transfer (or
cause to be transferred) and the Buyer shall assume (or cause to be assumed) the
sponsorship of the Emhart Glass AG pension plan ("Seller's Swiss Pension Plan").
As soon as administratively practicable after the Closing Date, Black & Decker
and Buyer shall make (or cause to be made) any and all filings and submissions
to the appropriate Governmental Authorities and make any necessary plan or trust
amendments arising in connection with the transfer of the Seller's Swiss Pension
Plan from Black & Decker and its Affiliates to Buyer and its Affiliates. The
participants and their beneficiaries covered by Seller's Swiss Pension Plan
shall receive credit for all service and compensation with Black & Decker and
its Affiliates prior to the Closing Date for all purposes, to the same extent
such service and compensation are recognized under the Seller's Swiss Pension
Plan.
(b) Effective as of the Closing, Buyer and its Affiliates
shall assume or cause to be assumed all of the liabilities and obligations of
Black & Decker and any of its Affiliates in respect of the benefit obligations
of all participants and their beneficiaries under Seller's Swiss Pension Plan
and in respect of the assets thereof. Neither Black & Decker nor any of its
Affiliates shall retain any liabilities or obligations under or attributable to
the Seller's Swiss Pension Plan or the assets thereof regardless of whether such
liabilities or obligations accrued before or after the Closing.
D.19 Swedish Benefit Arrangements. In furtherance and not in limitation
of the provisions of Section D.13:
(a) As of the Closing Date, Black & Decker shall transfer (or
cause to be transferred) and Buyer shall assume (or cause to be assumed) the
benefit obligations of all participants (including without limitation,
terminated vested employees and retirees), their beneficiaries and dependents
under any Benefit Arrangement maintained for employees of Emhart Sweden AB or
any of its Subsidiaries. Notwithstanding anything to the contrary in this
Agreement, it is understood and agreed that, prior to the Closing Date, Black &
Decker may insure part or all of the benefit liabilities attributable to the
employees of Emhart Sweden AB or any of its Subsidiaries as Black & Decker shall
determine in its discretion. Buyer shall make (or cause to be made) any and all
filings and submissions to any appropriate organization, institution or
Governmental Authority, including but not limited to Forsakringsbolaget Pensions
Garanti, Omsesidigt (Pension Guaranty, Mutual Insurance Company). Buyer
acknowledges that any surety bond issued by Black & Decker in connection with
any Benefit Arrangements of Emhart Sweden AB or any of its Subsidiaries is a
Financial Support Arrangement subject to the provisions of Section 6.03(d),
6.03(e) and 6.03(f) of the Transaction Agreement.
(b) Effective as of the Closing, Buyer and its Affiliates
shall assume all liabilities and obligations of Black & Decker or any of its
Affiliates in respect of any Benefit Arrangements maintained by Emhart Sweden
AB. Neither Black & Decker nor any of its Affiliates shall assume any
liabilities or obligations under or attributable to any Benefit Arrangement
maintained by Emhart Sweden AB on and after the Closing Date.
D.20. Singapore Benefit Arrangements. In furtherance and not in
limitation of the provisions of Section D.13:
(a) As of the Closing Date, Black & Decker shall transfer (or
cause to be transferred) and Buyer shall assume (or cause to be assumed) the
benefit obligations of all participants, their beneficiaries and dependents
(including without limitation, terminated vested employees and retirees) under
all Benefit Arrangements by Black & Decker Asia Pacific that benefit employees
of the Glass Machinery Business. Black & Decker and Buyer shall make (or cause
to be made) any and all filings and submissions to the appropriate Governmental
Authorities required to be made in connection with the transfer of benefit
obligations contemplated hereby. The participants and their beneficiaries
covered by Benefit Arrangements of Black & Decker Asia Pacific shall receive
credit for all service and compensation with Black & Decker or any of its
Affiliates prior to the Closing Date for all purposes to the same extent such
service and compensation are recognized under any Benefit Arrangement maintained
by Black & Decker Asia Pacific.
(b) Effective as of the Closing Date, Buyer and its Affiliates
shall assume all of the liabilities and obligations of Black & Decker or any of
its Affiliates in respect of the benefit obligations under any Benefit
Arrangement maintained by Black & Decker Asia Pacific. Neither Black & Decker
nor any of its Affiliates shall assume any liabilities or obligations under or
attributable to any Benefit Arrangement maintained by Black & Decker Asia
Pacific on and after the Closing Date.
D.21. Italian Benefit Arrangements In furtherance and not in limitation
of the provisions of Section D.13:
(a) As of the Closing Date, Black & Decker shall transfer (or
cause to be transferred) and Buyer shall assume (or cause to be assumed) the
benefit obligations of all participants, their beneficiaries and dependents
(including terminated employees, retirees, their beneficiaries and dependents)
under Benefit Arrangements maintained by Emhart S.r.l. Black & Decker and Buyer
shall make (or cause to be made) any and all filings and submissions to the
appropriate Governmental Authorities required to be made in connection with the
transfer of benefit obligations contemplated hereby. The participants, their
beneficiaries and dependents covered by any Benefit Arrangement maintained by
Emhart S.r.l. shall receive credit for all service and compensation with Black &
Decker or any of its Affiliates prior to the Closing Date for all purposes to
the same extent such service and compensation are recognized under the Benefit
Arrangements maintained by Emhart S.r.l.
(b) Effective as of the Closing, Buyer and its Affiliates
shall assume all of the liabilities and obligations of Black & Decker or any of
its Affiliates in respect of the benefit obligations of any participants, their
beneficiaries and dependents under the Benefit Arrangements maintained by Emhart
S.r.l. Neither Black & Decker nor any of its Affiliates shall retain any
liabilities or obligations under or attributable to the Benefit Arrangements
maintained by Emhart S.r.l on and after the Closing Date.
VII. General.
D.22 No Third Party Beneficiaries. No provision of this Exhibit D or
any other provision in the Transaction Documents shall create any third party
beneficiary or other rights in any employee or former employee (including any
beneficiary or dependent thereof) of Black & Decker or of any of its Affiliates
in respect of continued employment (or resumption of employment) with Black &
Decker or Buyer, or any of their Affiliates, and no provision of this Exhibit D
shall create any such rights in any such individuals in respect of any benefits
that may be provided, directly or indirectly, under any Employee Plan or Benefit
Arrangement, or any plan or arrangement which may be established by Buyer or any
of its Affiliates. Subject to Applicable Law, unless otherwise provided herein,
no provision of this Agreement shall constitute a limitation on rights to amend,
modify or terminate, either before or after Closing, any such Employee Plan or
Benefit Arrangement of Black & Decker or any of its Affiliates.
D.23 Indemnification by Buyer. Effective as of the Closing, Buyer
hereby indemnifies Black & Decker and its Affiliates and their respective
directors, officers, employees and agents against, and agrees to hold them
harmless from, any and all Damages arising out of or pertaining to (i) the
termination of employment of, hiring of or failure or refusal to hire, any
Active Employee of the Glass Machinery Business on or after the Closing; (ii)
any modification of the pay, benefits or any other terms and conditions of
employment of any Transferred Employee on or after the Closing; and (iii) any
breach of any covenants or agreements of the Buyer contained in this Exhibit D.
D.24 Actuarial Calculations. Except as otherwise required by Applicable
Law, the amount of the pension obligations to be determined under this Exhibit D
shall be made using the same assumptions and procedures used in calculating the
PBO liability in determining the Final Net Tangible Asset Amount in accordance
with Attachment XVIII.
EXHIBIT 3 Adopted 10/17/96
As amended 07/16/98
BYLAWS
OF
THE BLACK & DECKER CORPORATION
ARTICLE I
Stockholders
SECTION 1. Annual Meeting.
The annual meeting of stockholders shall be held on the last Tuesday in
April of each year or on such day within 15 days thereof and at such time and at
such place as the Board of Directors may by resolution provide for the purpose
of electing directors and for the transaction of only such other business as is
properly brought before the meeting in accordance with these Bylaws.
To be properly brought before the meeting, business must be either (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board, (b) otherwise properly brought before the meeting by
or at the direction of the Board, or (c) otherwise properly brought before the
meeting by a stockholder. In addition to any other applicable requirements, for
business to be properly brought before an annual meeting by a stockholder, the
stockholder must have given written notice thereof that is received by the
Secretary of the Corporation at the principal executive offices of the
Corporation not less than 90 days nor more than 110 days prior to the meeting;
provided, however, that in the event that less than 100 days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder must be so received not later than the close of
business on the 10th day following the day on which the notice of the date of
the annual meeting was mailed or the public disclosure was made, whichever first
occurred. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and record address of the stockholder proposing such business, (iii) the class
and number of shares of the Corporation which are beneficially owned by the
stockholder, and (iv) any material interest of the stockholder in such business.
Notwithstanding anything in the Bylaws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this section, provided, however, that nothing in this
section shall be deemed to preclude discussion by any stockholder of any
business properly brought before the annual meeting.
The Chairman of the annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Article, and if the
Chairman should so determine, he or she shall so declare to the meeting and any
such business not properly brought before the meeting shall not be transacted.
SECTION 2. Special Meetings.
Special meetings of the stockholders may be called at any time for any
purpose or purposes by the Chief Executive Officer, by a majority of the Board
of Directors, or by a majority of the Executive Committee. Special meetings of
the stockholders shall be called forthwith by the Chairman of the Board, by the
President, or by the Secretary of the Corporation upon the written request of
stockholders entitled to cast a majority of all votes entitled to be cast at the
special meeting. A written request that a special meeting be called shall state
the purpose or purposes of the meeting and the matters proposed to be acted on
at the meeting. However called, notice of the meeting shall be given to each
stockholder and shall state the purpose or purposes of the meeting. No business
other than that stated in the notice shall be transacted at any special meeting.
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SECTION 3. Place of Meetings.
All meetings of stockholders shall be held at the principal offices of
the Corporation at Towson, Baltimore County, Maryland, or at such other location
in the United States of America as the Board of Directors may provide in the
notice of the meeting.
SECTION 4. Notice of Meetings.
Written or printed notice of each meeting of the stockholders shall be
delivered to each stockholder by leaving the notice with the stockholder at the
stockholder's residence or usual place of business, or by mailing it, postage
prepaid and addressed to the stockholder at the stockholder's address as it
appears upon the records of the Corporation. The notice shall be delivered or
mailed not more than 90 nor less than 20 days before the meeting, and shall
state the place, day, and hour at which the meeting is to be held. No notice of
any meeting of the stockholders need be given to any stockholder who attends the
meeting in person or by proxy, or to any stockholder who, in writing executed
and filed with the records of the meeting either before or after the holding
thereof, waives notice.
SECTION 5. Quorum.
At any meeting of stockholders the presence in person or by proxy of
the holders of record of a majority of the shares of stock entitled to vote at
the meeting shall constitute a quorum. In the absence of a quorum, the
stockholders entitled to vote who shall be present in person or by proxy at any
meeting (or adjournment thereof) may, by a majority vote and without further
notice, adjourn the meeting from time to time, but not for a period of over
thirty days at any one time, until a quorum shall attend. At any adjourned
meeting at which a quorum shall be present, any business may be transacted that
could have been transacted if the meeting had been held as originally scheduled.
SECTION 6. Conduct of Meetings.
Meetings of stockholders shall be presided over by the Chairman of the
Board of Directors of the Corporation or, in the Chairman's absence, by the Vice
Chairman of the Board, or if both of such officers are absent, by the President
of the Corporation. The Secretary of the Corporation shall act as secretary of
meetings of the stockholders and in the Secretary's absence, the records of the
proceedings shall be kept and authenticated by such other person as may be
appointed for that purpose at the meeting by the presiding officer. To
participate in a meeting, stockholders must be present in person or by proxy;
stockholders may not participate by means of a conference telephone or other
communications equipment. The rules contained in the current edition of Robert's
Rules of Order Newly Revised shall govern in all cases to which they are
applicable and in which they are not inconsistent with these Bylaws and any
special rules of order that the meeting may adopt.
SECTION 7. Approval of Minutes.
The minutes of all meetings of stockholders shall be corrected and
approved by a committee of directors designated by the Board and if none is
designated, by the Organization Committee. At a subsequent meeting of
stockholders, a synopsis of the minutes shall be read for information at the
request of the presiding officer or any stockholder.
SECTION 8. Proxies.
Stockholders may vote either in person or by proxy, but no proxy that
is dated more than 11 months before the meeting at which it is offered shall be
accepted unless the proxy shall on its face name a longer period for which it is
to remain in force. Each proxy shall be in writing and signed by the
stockholder, or by the stockholder's duly authorized agent, and shall be dated.
The proxy need not be sealed, witnessed or acknowledged. Proxies shall be filed
with the Secretary of the Corporation at or before the meeting.
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SECTION 9. Voting.
Except as otherwise provided in the charter of the Corporation, at all
meetings of stockholders, each holder of shares of Common Stock shall be
entitled to one vote for each share of stock of the Corporation registered in
the stockholder's name upon the books of the Corporation on the date fixed by
the Board of Directors as the record date for the determination of stockholders
entitled to vote at the meeting. Except as otherwise provided in the charter of
the Corporation, all elections and matters submitted to a vote at meetings of
stockholders shall be decided by a majority of all votes cast in person or by
proxy, unless more than a majority of the votes cast is required by statute, by
charter, or by these Bylaws. If the presiding officer shall so determine, a vote
by ballot may be taken upon any election or matter, and the vote shall be so
taken upon the request of the holders of ten percent of the stock present and
entitled to vote on the election or matter. If the presiding officer shall so
determine, the votes on all matters to be voted upon by ballot may be postponed
to be voted on at the same time or on a single ballot.
SECTION 10. Inspectors of Elections.
One or more inspectors may be appointed by the presiding officer at any
meeting. If so appointed, the inspector or inspectors shall open and close the
polls, receive and take charge of the proxies and ballots, decide all questions
as to the qualifications of voters and the validity of proxies, determine and
report the results of elections and votes on matters before the meeting, and do
such other acts as may be proper to conduct the election and the vote with
fairness to all stockholders.
SECTION 11. List of Stockholders.
Prior to each meeting of the stockholders, the Secretary of the
Corporation shall prepare, as of the record date fixed by the Board of Directors
with respect to the meeting, a full and accurate list of all stockholders
entitled to vote at the meeting, indicating the number of shares and class of
stock held by each. The Secretary shall be responsible for the production of
that list at the meeting.
ARTICLE II
Board of Directors
SECTION 1. Powers.
The property, business, and affairs of the Corporation shall be managed
by the Board of Directors of the Corporation. The Board of Directors may
exercise all the powers of the Corporation, except those conferred upon or
reserved to the stockholders by statute, by charter or by these Bylaws. The
Board of Directors shall keep minutes of each of its meetings and a full account
of all of its transactions.
SECTION 2. Number of Directors.
The number of directors of the Corporation shall be 14 or such lesser
number not less than eight as may from time to time be determined by the vote of
three-fourths of the entire Board of Directors. However, the tenure of Office of
a director shall not be affected by any change in number.
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SECTION 3. Nomination of Directors.
Only persons who are nominated in accordance with the following
procedures shall be eligible for election as Directors at a meeting of
stockholders. Nominations of persons for election as Directors may be made at a
meeting of stockholders by or at the direction of the Board of Directors by any
nominating committee or person appointed by the Board or by any stockholder of
the Corporation entitled to vote for the election of Directors at the meeting
who complies with the notice procedures set forth in this section. Nominations,
other than those made by or at the direction of the Board, shall be made
pursuant to written notice delivered to or mailed and received by the Secretary
of the Corporation at the principal executive offices of the Corporation not
less than 90 days nor more than 110 days prior to the meeting; provided,
however, that in the event that less than 100 days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder must be so received not later than the close of business on
the 10th day following the day on which notice of the date of the meeting was
mailed or public disclosure was made, whichever first occurred. The notice to
the Secretary shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or re-election as a Director, (i) the name,
age, business address and residence address of the person, (ii) the principal
occupation or employment of the person, (iii) the class and number of shares of
capital stock of the Corporation which are beneficially owned by the person and
(iv) any other information relating to the person that is required to be
disclosed in solicitations for proxies for election of Directors pursuant to
Rule 14a under the Securities Exchange Act of 1934; and (b) as to the
stockholder giving the notice (i) the name and record address of stockholder and
(ii) the class and number of shares of capital stock of the Corporation which
are beneficially owned by the stockholder. The Corporation may require any
proposed nominee to furnish such other information as may reasonably be required
by the Corporation to determine the eligibility of the proposed nominee to serve
as Director of the Corporation.
The presiding officer of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if the presiding officer shall so
determine and shall so declare to the meeting, the defective nomination shall be
disregarded.
SECTION 4. Election.
Except as hereinafter provided, the members of the Board of Directors
shall be elected each year at the annual meeting of stockholders by the vote of
the holders of record of a majority of the shares of stock present in person or
by proxy and entitled to vote at the meeting. Each director shall hold office
until the next annual meeting of stockholders held after his or her election and
until his or her successor shall have been duly elected and qualified, or until
death, or until he or she shall have resigned, or shall have been removed as
hereinafter provided. Each person elected as director of the Corporation shall
qualify as such by written acceptance or by attendance at and participation as a
director in a duly called meeting of the Board of Directors.
SECTION 5. Removal.
At a duly called meeting of the stockholders at which a quorum is
present, the stockholders may, by vote of the holders of a majority of the votes
entitled to be cast at the meeting, remove with or without cause any director or
directors from office, and may elect a successor or successors to fill any
resulting vacancy for the remainder of the term of the director so removed.
SECTION 6. Vacancies.
If any director shall die or resign, or if the stockholders shall
remove any director without electing a successor to fill the remaining term,
that vacancy may be filled by the vote of a majority of the remaining members of
the Board of Directors, although a majority may be less than a quorum. Vacancies
in the Board created by an increase in the number of directors may be filled by
the vote of a majority of the entire Board as constituted prior to the increase.
A director elected by the Board of Directors to fill any vacancy, however
created, shall hold office until the next annual meeting of stockholders and
until his or her successor shall have been duly elected and qualified.
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SECTION 7. Meetings.
Immediately after each annual meeting of stockholders at which a Board
of Directors shall have been elected, the Board of Directors shall meet, without
notice, for the election of an Executive Committee of the Board of Directors,
for the election of officers of the Corporation, and for the transaction of
other business. Other regular meetings of the Board of Directors shall be held
in the months of February, July, October and December on the day and at the time
designated by the Chief Executive Officer. Special meetings of the Board of
Directors may be called at any time by the Chief Executive Officer or by any two
directors. Regular and special meetings of the Board of Directors may be held at
such place, in or out of the State of Maryland, as the Board may from time to
time determine.
SECTION 8. Notice of Meetings.
Except for the meeting immediately following the annual meeting of
stockholders, notice of the place, day and hour of a regular meeting of the
Board of Directors shall be given in writing to each director not less than
three days prior to the meeting and delivered to the director or to the
director's residence or usual place of business, or by mailing it, postage
prepaid and addressed to the director at his or her address as it appears upon
the records of the Corporation. Notice of special meetings may be given in the
same way, or may be given personally, by telephone, or by telegraph or facsimile
message sent to the director's home or business address as it appears upon the
records of the Corporation, not less than one day prior to the meeting. Unless
required by these Bylaws or by resolution of the Board of Directors, no notice
of any meeting of the Board of Directors need state the business to be
transacted at the meeting. No notice of any meeting of the Board of Directors
need be given to any director who attends, or to any director who, in writing
executed and filed with the records of the meeting either before or after the
holding thereof, waives notice.
SECTION 9. Quorum.
A majority of the Board of Directors shall constitute a quorum for the
transaction of business at meetings of the Board of Directors. Except as
otherwise provided by statute, by charter, or by these Bylaws, the vote of a
majority of the directors present at a duly constituted meeting shall be
sufficient to pass any measure, and such decision shall be the decision of the
Board of Directors. In the absence of a quorum, the directors present, by
majority vote and without further notice, may adjourn the meeting from time to
time until a quorum shall be present. The Board of Directors may also take
action or make decisions by any other method which may be permitted by statute,
by charter, or by these Bylaws.
SECTION 10. Presumption of Assent.
A director of the Corporation who is present at a meeting of the Board
of Directors at which action on any corporate matter is taken shall be presumed
to have assented to the action taken unless the director announces his or her
dissent at the meeting, and (a) the dissent is entered in the minutes of the
meeting, (b) before the meeting adjourns the director files with the person
acting as the secretary of the meeting a written dissent to the action, or (c)
the director forwards a written dissent within 24 hours after the meeting is
adjourned by registered or certified mail to the Secretary of the Corporation.
The right to dissent does not apply to a director who voted in favor of the
action or who failed to announce his or her dissent at the meeting. A director
may abstain from voting on any matter before the meeting by so stating at the
time the vote is taken and by causing the abstention to be recorded or stated in
writing in the same manner as provided above for a dissent.
SECTION 11. Compensation.
Each director shall be entitled to receive such remuneration as may be
fixed from time to time by the Board of Directors. However, no director who
receives a salary as an officer or employee of the Corporation or of any
subsidiary thereof shall receive any remuneration as a director or as a member
of any committee of the Board of Directors. Each director may also receive
reimbursement for the reasonable expenses incurred in attending the meetings of
the Board of Directors, the meetings of any committee thereof, or otherwise in
connection with attending to the affairs of the Corporation.
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SECTION 12. Director Emeritus.
Any retired member of the Board of Directors may be designated by the
Board as a Director Emeritus for a period of one year for each of the three
years next succeeding retirement as a Director. Each Director Emeritus shall
receive notices of meetings, remuneration, and reimbursement for expenses in
attending meetings as may be fixed by the Board of Directors from time to time.
A Director Emeritus shall be entitled to attend all meetings of the Board of
Directors and of any committee to which he or she may be appointed and may
participate in the discussion of (but not in the voting on) any matter properly
before the meeting. A Director Emeritus shall not be counted for the purpose of
determining the number of appointments to be made to a committee or for
determining a quorum of the committee.
ARTICLE III
Committees
SECTION 1. Executive Committee.
At its first meeting after the annual meeting of the stockholders, the
Board of Directors shall elect an Executive Committee consisting of at least
five members of the Board, of whom the Chairman of the Board, if any, shall be
one. The Board shall designate a Chairman of the Committee who shall serve as
Chairman of the Committee at the pleasure of the Board. During the intervals
between the meetings of the Board of Directors, the Executive Committee shall
possess and may exercise all powers in the management and direction of the
business and affairs of the Corporation except as limited by the Maryland
General Corporation Law or by resolution of the Board of Directors. All action
taken by the Executive Committee shall be reported to the Board of Directors at
its meeting next succeeding such action, and shall be subject to revision and
alteration by the Board, provided that no rights of third parties may be
adversely affected by any revision or alteration. Delegation of authority to the
Executive Committee shall not relieve the Board of Directors or any director of
any responsibility imposed by law or statute or by charter.
SECTION 2. Other Committees.
From time to time the Board of Directors by resolution adopted by the
affirmative vote of a majority of the members of the entire Board may provide
for and appoint other committees to have the powers and perform the duties
assigned to them by the Board of Directors. These committees may include, but
are not limited to, an Organization Committee, a Finance Committee, and an Audit
Committee.
SECTION 3. Meetings of Committees.
Each Committee of the Board of Directors shall fix its own rules of
procedure, and shall meet as provided by those rules or by resolution of the
Board, or at the call of the chairman or any two members of the committee. A
majority of each committee shall constitute a quorum thereof, and in every case
the affirmative vote of a majority of the entire committee shall be necessary to
take any action. Each committee may also take action by any other method that
may be permitted by statute, by charter, or by these Bylaws. In the event a
member of a committee fails to attend any meeting of the committee, the other
members of the committee present at the meeting, whether or not they constitute
a quorum, may appoint a member of the Board of Directors to act in the place of
the absent member. Regular minutes of the proceedings of each committee and a
full account of all its transactions shall be kept in a book provided for the
purpose, except that the Organization Committee shall not be required to keep
minutes. Vacancies in any committee of the Board of Directors shall be filled by
the Board of Directors.
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ARTICLE IV
Officers
SECTION 1. Election and Tenure.
The Board of Directors may elect a Chairman and a Vice Chairman from
among the directors. The Board of Directors shall elect a President, a Treasurer
and a Secretary, and one or more Vice Presidents, one or more Assistant
Treasurers, one or more Assistant Secretaries, and such other officers with such
powers and duties as the Board may designate, none of whom need be a director.
Each officer shall hold office until the first meeting of the Board of Directors
after the annual meeting of stockholders next succeeding his or her election and
until a successor shall have been duly chosen and qualified or until he or she
shall have resigned or been removed. All elections to office shall be by a
majority vote of the entire Board of Directors.
SECTION 2. Chairman of the Board.
The Chairman of the Board shall preside at all meetings of stockholders
and of the Board of Directors at which he or she shall be present. The Chairman
shall have such other powers and perform such other duties as from time to time
may be assigned by the Board of Directors.
SECTION 3. Vice Chairman of the Board.
The Vice Chairman of the Board, in the absence of the Chairman of the
Board, shall preside at all meetings of stockholders and the Board of Directors.
(In the absence of the Chairman and the Vice Chairman, the Board of Directors
shall elect a chairman of the meeting.) The Vice Chairman shall have such other
powers and perform such other duties as from time to time may be assigned by the
Board of Directors or by the Chairman of the Board.
SECTION 4. President.
The President shall be the Chief Executive Officer of the Corporation
and, subject to the control of the Board of Directors and the Executive
Committee, shall have general charge and supervision of the Corporation's
business, affairs, and properties. The President shall have authority to sign
and execute, in the name of the Corporation, all authorized deeds, mortgages,
bonds, contracts or other instruments. The President may sign, with the
Secretary or the Treasurer, stock certificates of the Corporation. In the
absence of the Chairman and the Vice Chairman of the Board, the President shall
preside at meetings of stockholders. In general, the President shall perform all
the duties ordinarily incident to the office of a president of a corporation,
and such other duties as, from time to time, may be assigned by the Board of
Directors or by the Executive Committee.
SECTION 5. Vice Presidents.
Each Vice President, which term shall include any Executive Vice
President or Group Vice President, shall have the power to sign and execute,
unless otherwise provided by resolution of the Board of Directors, all contracts
or other obligations in the name of the Corporation in the ordinary course of
business, and with the Secretary, or with the Treasurer, or with an Assistant
Secretary, or with an Assistant Treasurer, may sign stock certificates of the
Corporation. At the request of the President or in the President's absence or
during the President's inability to act, the Vice President or Vice Presidents
shall perform the duties and exercise the functions of the President, and when
so acting shall have the powers of the President. If there is more than one Vice
President, the Board of Directors may determine which one or more of the Vice
Presidents shall perform any of such duties or exercise any of such functions,
or if the determination is not made by the Board, the President may make the
determination. The Vice President or Vice Presidents shall have such other
powers and perform such other duties as may be assigned by the Board of
Directors or by the President. For purposes of this Article IV, Section 5, the
term Vice President does not include a Vice President appointed pursuant to
Article IV, Section 9.
<PAGE>
-8-
SECTION 6. Secretary.
The Secretary shall keep the minutes of the meetings of the
stockholders, of the Board of Directors, and of the Executive Committee,
including all the votes taken at the meetings, and record them in books provided
for that purpose. The Secretary shall see that all notices are duly given in
accordance with the provisions of these Bylaws or as required by statute. The
Secretary shall be the custodian of the records and of the corporate seal of the
Corporation. The Secretary may affix the corporate seal to any document executed
on behalf of the Corporation, and may attest the same. The Secretary may sign,
with the President or a Vice President, stock certificates of the Corporation.
In general, the Secretary shall perform all duties ordinarily incident to the
office of a secretary of a corporation, and such other duties as, from time to
time, may be assigned by the Board of Directors or by the President.
SECTION 7. Treasurer.
The Treasurer shall have charge of and be responsible for all
funds, securities, receipts and disbursements of the Corporation, and shall
deposit or cause to be deposited, in the name of the Corporation, all moneys or
other valuable effects in such banks, trust companies, or depositories as may be
designated by the Board of Directors. The Treasurer shall maintain full and
accurate accounts of all assets, liabilities and transactions of the
Corporation, and shall render to the President and the Board of Directors,
whenever they may require it, an account of all transactions as Treasurer and of
the financial condition of the Corporation. In general, the Treasurer shall
perform all the duties ordinarily incident to the office of a treasurer of a
corporation, and such other duties as, from time to time, may be assigned to him
or her by the Board of Directors or by the President. The Treasurer shall give
the Corporation a bond, if required by the Board of Directors, in a sum, and
with one or more sureties, satisfactory to the Board of Directors, for the
faithful performance of the duties of the office and for the restoration to the
Corporation in case of death, resignation, retirement or removal from office of
all corporate books, papers, vouchers, moneys, and other properties of whatever
kind in his or her possession or under his or her control.
SECTION 8. Subordinate Officers.
The subordinate officers shall consist of such assistant officers and
agents as may be deemed desirable and as may be elected by a majority of the
members of the Board of Directors. Each such subordinate officer shall hold
office for such period, have such authority and perform such duties as the Board
of Directors may prescribe.
SECTION 9. Appointed Vice Presidents.
The Chief Executive Officer may from time to time appoint one or more
Vice Presidents with such administrative powers and duties as may be designated
or approved by the Chief Executive Officer. An appointed Vice President shall
not be a corporate officer and may be removed by the Chief Executive Officer.
SECTION 10. Officers Holding Two or More Offices.
Any two or more of the above named offices, except those of Chairman
and Vice Chairman of the Board and those of President and Vice President, may be
held by the same person, but no officer shall execute, acknowledge or verify any
instrument in more than one capacity, if the instrument is required by statute,
by charter, by these Bylaws, or by resolution of the Board of Directors to be
executed, acknowledged, or verified by two or more officers.
SECTION 11. Compensation.
The Board of Directors shall have power to fix the compensation of all
officers of the Corporation. It may authorize any officer upon whom the power of
appointing subordinate officers may have been conferred to fix the compensation
of the subordinate officers.
<PAGE>
-9-
SECTION 12. Removal.
Any officer of the Corporation may be removed, with or without cause,
by a vote of a majority of the entire Board of Directors, and any officer of the
Corporation appointed by another officer may also be removed, with or without
cause, by the appointing officer, by the Executive Committee, or by the Board of
Directors.
SECTION 13. Vacancies.
A vacancy in any office because of death, resignation, removal, or any
other cause shall be filled for the unexpired portion of the term by election of
the Board of Directors at any regular or special meeting.
ARTICLE V
Stock
SECTION 1. Certificates.
Each stockholder shall be entitled to a certificate or certificates
which shall represent and certify the number and kind of shares of the
Corporation's stock owned by the stockholder for which full payment has been
made, or for which payment is being made by installments in conjunction with a
stockholder-approved option plan. Each stock certificate shall be signed by the
Chairman, the President or a Vice President and countersigned by the Secretary
or Treasurer or Assistant Treasurer of the Corporation. A stock certificate
shall be deemed to be so signed and sealed whether the required signatures are
manual or facsimile signatures and whether the seal is a facsimile seal or any
other form of seal. In case any officer of the Corporation who has signed a
stock certificate ceases to be an officer of the Corporation, whether because of
death, resignation or otherwise, before the stock certificate is issued, the
certificate may nevertheless be issued and delivered by the Corporation as if
the officer had not ceased to be such officer on the date of issue.
SECTION 2. Transfer of Shares.
Shares of stock shall be transferable only on the books of the
Corporation by the holder thereof, in person or by duly authorized agent, upon
the surrender of the stock certificate representing the shares to be
transferred, properly endorsed. The Board of Directors shall have power and
authority to make other rules and regulations concerning the issue, transfer and
registration of stock certificates as it may deem expedient.
SECTION 3. Transfer Agents and Registrars.
The Corporation may have one or more transfer agents and one or more
registrars of its stock, whose respective duties the Board of Directors may,
from time to time, define. No stock certificate shall be valid until
countersigned by a transfer agent, if the Corporation has a transfer agent in
respect of that class or series of capital stock, or until registered by a
registrar, if the Corporation has a registrar in respect of that class or series
of capital stock. The duties of transfer agent and registrar may be combined.
SECTION 4. New Certificates.
In case any stock certificate is alleged to have been lost, stolen,
mutilated, or destroyed, the Board of Directors may authorize the issue of a new
certificate in place thereof upon such terms and conditions as it may deem
advisable. The Board of Directors may, in its discretion, further require the
owner of the stock certificate or the owner's duly authorized agent to give bond
with sufficient surety to the Corporation to indemnify it against any loss or
claim which may arise by reason of the issue of a stock certificate in the place
of one reportedly lost, stolen, or destroyed.
<PAGE>
-10-
SECTION 5. Record Dates.
The Board of Directors may fix, in advance, a date as the record date
for the purpose of determining those stockholders who shall be entitled to
notice of, or to vote at, any meeting of stockholders, or for the purpose of
determining those stockholders who shall be entitled to receive payment of any
dividend or the allotment of any rights, or for the purpose of making any other
proper determination with respect to stockholders. The date shall be not more
than 90 days, and in the case of a meeting of stockholders, not less than 10
days, prior to the date on which the particular action, requiring such
determination of stockholders, is to be taken. In lieu of fixing a record date,
the Board of Directors may provide that the stock transfer books shall be closed
for a stated period, not to exceed in any case 20 days. When the stock transfer
books are closed for the purpose of determining stockholders entitled to notice
of or to vote at a meeting of stockholders, the closing of the transfer books
shall be at least 10 days before the date of the meeting.
SECTION 6. Annual Report.
The President of the Corporation shall annually prepare a full and
correct statement of the affairs of the Corporation, including a balance sheet
and a financial statement of operations for the preceding fiscal year. These
statements shall be sent to the extent possible to each beneficial owner of the
stock of the Corporation prior to or with the proxy statement and notice to
stockholders of the annual meeting of stockholders. It will be submitted at the
annual meeting, and within 20 days thereafter be placed on file at the
Corporation's principal offices in Maryland.
ARTICLE VI
Dividends and Finance
SECTION 1. Dividends.
Subject to any statutory or charter conditions and limitations, the
Board of Directors may in its discretion declare what, if any, dividends shall
be paid from the surplus or from the net profits of the Corporation, the date
when the dividends shall be payable, and the date for the determination of
holders of record to whom the dividends shall be paid.
SECTION 2. Depositories.
The Board of Directors from time to time shall designate one or more
banks or trust companies as depositories of the Corporation and shall designate
those officers and agents who shall have authority to deposit corporate funds in
such depositories. It shall also designate those officers and agents who shall
have authority to withdraw from time to time any or all of the funds of the
Corporation so deposited upon checks, drafts, or orders for the payment of
money, notes and other evidences of indebtedness, drawn against the account and
issued in the name of the Corporation. The signatures of the officers or agents
may be made manually or by facsimile. No check or order for the payment of money
shall be invalidated because a person whose signature appears thereon has ceased
to be an officer or agent of the Corporation prior to the time of payment of the
check or order by any depository.
SECTION 3. Corporate Obligations.
No loans shall be contracted on behalf of the Corporation and no
evidences of indebtedness or guaranties of the obligations of others shall be
issued in the name of the Corporation unless authorized by a resolution of the
Board of Directors. Such authority may be either general or specific. When duly
authorized, all loans, promissory notes, acceptances, other evidences of
indebtedness and guaranties shall be signed by the President, a Vice President,
the Treasurer, or an Assistant Treasurer.
<PAGE>
-11-
SECTION 4. Fiscal Year.
The fiscal year of the Corporation shall begin on the first day of
January and end on the last day of December of each year.
ARTICLE VII
Books and Records
SECTION 1. Books and Records.
The Corporation shall maintain a stock ledger which shall contain the
name and address of each stockholder and the number of shares of stock of the
Corporation which the stockholder holds. The ledger shall be kept at the
principal offices of the Corporation in Towson, Baltimore County, Maryland, or
at the offices of the Corporation's stock transfer agent. All other books,
accounts, and records of the Corporation, including the original or a certified
copy of these Bylaws, the minutes of all stockholders meetings, a copy of the
annual statement, and any voting trust agreements on file with the Corporation,
shall be kept and maintained by the Secretary at the principal offices of the
Corporation in Towson.
SECTION 2. Inspection Rights.
Except as otherwise provided by statute or by charter, the Board of
Directors shall determine whether and to what extent the books, accounts, and
records of the Corporation, or any of them, shall be open to the inspection of
stockholders. No stockholder shall have any right to inspect any book, account,
document or record of the Corporation except as conferred by statute, by
charter, or by resolution of the stockholders or the Board of Directors.
ARTICLE VIII
Seal
SECTION 1. Seal.
The seal of the Corporation shall consist of a circular impression
bearing the name of the Corporation and the word "Maryland" around the rim and
in the center the word "Incorporated" and the year "1910."
<PAGE>
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ARTICLE IX
Indemnification
SECTION 1. Indemnification.
The Corporation to the full extent permitted by, and in the manner
permissible under, the laws of the State of Maryland and other applicable laws
and regulations may indemnify any person who is or was an officer, employee, or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee, or agent of another corporation or entity and
shall indemnify any director of the Corporation or any director who is or was
serving at the request of the Corporation as a director of another corporation
or entity, who by reason of his or her position was, is, or is threatened to be
made a party to an action or proceeding, whether civil, criminal,
administrative, or investigative, against any and all expenses (including, but
not limited to, attorneys' fees, judgments, fines, penalties, and amounts paid
in settlement) actually and reasonably incurred by the director, officer,
employee, or agent in connection with the proceeding. Repeal or modification of
this Section or the relevant law shall not affect adversely any rights or
obligations then existing with respect to any state of facts then or theretofore
existing or any action, suit or proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of facts.
ARTICLE X
Amendments
SECTION 1. Amendment of Bylaws.
These Bylaws may be amended at any meeting of the stockholders by a
majority of all the votes cast, provided the text of the amendment is submitted
with the notice of the meeting. The Board of Directors may also amend these
Bylaws by a vote of a majority of the directors present at a meeting, provided
that the Board of Directors shall not consider or act on any amendment to these
Bylaws that, directly or indirectly, modifies the meaning or effect of any
amendment to these Bylaws adopted by the stockholders within the preceding
12-month period, or any amendment to these Bylaws that, directly or indirectly,
contains substantially similar provisions to those of an amendment rejected by
the stockholders within the preceding 12-month period.
EXHIBIT 4
BLACK & DECKER HOLDINGS INC.,
as Issuer,
THE BLACK & DECKER CORPORATION,
as Guarantor
AND
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
INDENTURE
Dated as of June 26, 1998
$150,000,000
6.55% Senior Notes due 2007
$150,000,000
7.05% Senior Notes due 2028
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE................ 1
SECTION 1.1 Definitions............................................ 1
SECTION 1.2 Incorporation by Reference of TIA...................... 9
SECTION 1.3 Rules of Construction.................................. 10
ARTICLE II
THE TRANCHE A AND TRANCHE B NOTES.................... 10
SECTION 2.1 Form and Dating........................................ 10
SECTION 2.2 Execution and Authentication........................... 12
SECTION 2.3 Exchange Agent and Paying Agent........................ 13
SECTION 2.4 Paying Agent To Hold Assets in Trust................... 14
SECTION 2.5 List of Holders........................................ 14
SECTION 2.6 Transfer and Exchange.................................. 14
SECTION 2.7 Replacement Notes...................................... 19
SECTION 2.8 Outstanding Notes...................................... 19
SECTION 2.9 Treasury Notes......................................... 20
SECTION 2.10 Temporary Notes....................................... 20
SECTION 2.11 Cancellation.......................................... 21
SECTION 2.12 Defaulted Interest.................................... 21
SECTION 2.13 CUSIP and CINS Number................................. 22
SECTION 2.14 Deposit of Moneys..................................... 22
SECTION 2.15 Certain Matters Relating to Global Notes.............. 22
ARTICLE III
REDEMPTION................................ 23
SECTION 3.1 Optional Redemption.................................... 23
SECTION 3.2 Election to Redeem; Notice to Trustee.................. 23
SECTION 3.3 Selection by Trustee of Notes to Be Redeemed........... 23
SECTION 3.4 Notice of Redemption................................... 24
SECTION 3.5 Effect of Notice of Redemption......................... 25
SECTION 3.6 Deposit of Redemption Price............................ 25
SECTION 3.7 Notes Redeemed in Part................................. 26
SECTION 3.8 Applicability of This Article.......................... 26
ARTICLE IV
COVENANTS................................ 27
SECTION 4.1 Payment of Notes....................................... 27
SECTION 4.2 Maintenance of Office or Agency........................ 27
SECTION 4.3 Limitation on Liens.................................... 28
SECTION 4.4 Limitation on Sale-Leaseback Transactions.............. 29
SECTION 4.5 No Lien Created, etc................................... 29
SECTION 4.6 Compliance Certificate; Notice of Default.............. 30
SECTION 4.7 Reports................................................ 30
SECTION 4.8 Payment of Certain Non-Income Taxes and
Similar Charges........................................ 30
<PAGE>
Page
ARTICLE V
MERGER, CONSOLIDATION OR SALE
BY THE COMPANY AND THE GUARANTOR..................... 31
SECTION 5.1 Merger, Consolidation or Sale of All or Substantially
All Assets of the Company.............................. 31
SECTION 5.2 Merger, Consolidation or Sale of All or Substantially
All Assets of the Guarantor............................ 31
ARTICLE VI
DEFAULT AND REMEDIES........................... 31
SECTION 6.1 Events of Default...................................... 31
SECTION 6.2 Acceleration........................................... 34
SECTION 6.3 Other Remedies......................................... 34
SECTION 6.4 Waiver of Past Defaults................................ 34
SECTION 6.5 Control by Majority.................................... 34
SECTION 6.6 Limitation on Suits.................................... 35
SECTION 6.7 Rights of Holders to Receive Payment................... 35
SECTION 6.8 Collection Suit by Trustee............................. 35
SECTION 6.9 Trustee May File Proofs of Claim....................... 35
SECTION 6.10 Priorities............................................ 36
SECTION 6.11 Undertaking for Costs................................. 36
ARTICLE VII
TRUSTEE................................. 36
SECTION 7.1 Duties of Trustee...................................... 36
SECTION 7.2 Rights of Trustee...................................... 38
SECTION 7.3 Individual Rights of Trustee........................... 39
SECTION 7.4 Trustee's Disclaimer................................... 40
SECTION 7.5 Notice of Default...................................... 40
SECTION 7.6 Report by Trustee to Holders........................... 40
SECTION 7.7 Compensation and Indemnity............................. 41
SECTION 7.8 Replacement of Trustee................................. 42
SECTION 7.9 Successor Trustee by Merger, Etc....................... 43
SECTION 7.10 Eligibility; Disqualification; Corporate Trust
Required; Conflicting Interest........................ 44
SECTION 7.11 Preferential Collection of Claims Against Company..... 45
SECTION 7.12 Authenticating Agents................................. 45
ARTICLE VIII
SATISFACTION AND DISCHARGE OF INDENTURE................. 46
SECTION 8.1 Option To Effect Legal Defeasance or Covenant
Defeasance............................................. 46
SECTION 8.2 Legal Defeasance and Discharge......................... 46
SECTION 8.3 Covenant Defeasance.................................... 47
SECTION 8.4 Conditions to Legal or Covenant Defeasance............. 48
SECTION 8.5 Satisfaction and Discharge of Indenture................ 50
SECTION 8.6 Survival of Certain Obligations........................ 51
SECTION 8.7 Acknowledgment of Discharge by Trustee................. 51
SECTION 8.8 Application of Trust Moneys............................ 51
<PAGE>
Page
SECTION 8.9 Repayment to the Company; Unclaimed Money.............. 52
SECTION 8.10 Reinstatement.......................................... 52
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS................... 53
SECTION 9.1 Without Consent of Holders of Notes.................... 53
SECTION 9.2 With Consent of Holders of Notes....................... 54
SECTION 9.3 Compliance with TIA.................................... 55
SECTION 9.4 Revocation and Effect of Consents...................... 55
SECTION 9.5 Notation on or Exchange of Notes....................... 56
SECTION 9.6 Trustee To Sign Amendments, Etc........................ 56
SECTION 9.7 Effect of Supplemental Indentures...................... 56
ARTICLE X
GUARANTEES................................ 56
SECTION 10.1 Guarantees............................................ 56
SECTION 10.2 Successors and Assigns................................ 59
SECTION 10.3 No Waiver............................................. 59
SECTION 10.4 Modification.......................................... 59
ARTICLE XI
MEETINGS OF HOLDERS OF THE NOTES..................... 59
SECTION 11.1 Purposes of Meetings.................................. 59
SECTION 11.2 Place of Meetings..................................... 60
SECTION 11.3 Call and Notice of Meetings........................... 60
SECTION 11.4 Voting at Meetings.................................... 60
SECTION 11.5 Voting Rights, Conduct and Adjournment................ 61
SECTION 11.6 Revocation of Consent by Holders...................... 62
SECTION 11.7 No Delay of Rights by Meeting......................... 62
ARTICLE XII
MISCELLANEOUS.............................. 62
SECTION 12.1 TIA Controls.......................................... 62
SECTION 12.2 Notices............................................... 62
SECTION 12.3 Notice to Holders..................................... 64
SECTION 12.4 Compliance Certificates and Opinions.................. 64
SECTION 12.5 Form of Documents Delivered to Trustee................ 65
SECTION 12.6 Rules by Trustee, Paying Agent, Exchange Agent........ 65
SECTION 12.7 Non-Business Day...................................... 65
SECTION 12.8 Governing Law and Submission to Jurisdiction.......... 66
SECTION 12.9 No Adverse Interpretation of Other Agreements......... 66
SECTION 12.10 Immunity of Incorporators, Stockholders, Employees,
Officers and Directors............................... 66
SECTION 12.11 Successors and Assigns............................... 66
SECTION 12.12 Counterpart Originals................................ 66
SECTION 12.13 Severability......................................... 66
SECTION 12.14 Table of Contents, Headings, etc..................... 66
SECTION 12.15 Benefits of Indenture................................ 66
<PAGE>
Page
SECTION 12.16 Language of Notices, etc............................. 67
SIGNATURES.......................................................... 67
EXHIBITS
Exhibit A - Form of Tranche A Global Note
Exhibit B - Form of Tranche A Definitive Note
Exhibit C - Form of Tranche B Global Note
Exhibit D - Form of Tranche B Definitive Note
Exhibit E - Form of Transfer Certificate -- U.S. Global Note to
Regulation S Global Note During the Restricted Period
Exhibit F - Form of Transfer Certificate -- U.S. Global Note to
Regulation S Global Note After the Restricted Period
Exhibit G-1 - Form of Transfer Certificate -- Regulation S Global
Note to U.S. Global Note During the Restricted Period
Exhibit G-2 - Form of Transfer Certificate -- Regulation S Global
Notes to U.S. Global Note After the Expiration of the
Restricted Period
Exhibit H - Form of Exchange Certificate -- Notes Acquired Pursuant
to Rule 144A
Exhibit I - Form of Exchange Certificate -- Notes Acquired Pursuant
to Regulation S
NOTE: This Table of Contents shall not, for any purpose, be deemed to be part of
this Indenture.
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
310 (a)(1).......................................... 7.10
(a)(2).......................................... 7.10
(a)(3).......................................... NA
(a)(4) ......................................... NA
(a)(5) ......................................... 7.8; 7.10
(b)............................................. 7.3; 7.10
(c)............................................. NA
311 (a)............................................. 7.11
(b)............................................. 7.11
(c)............................................. NA
312 (a)............................................. 2.5
(b)............................................. 14.3
(c)............................................. 14.3
313 (a)............................................. 7.6
(b)(1) NA
(b)(2) 7.6
(c) 7.6;
(d) 7.6
314 (a)............................................. 4.8; 4.10; 14.2;
14.4
(b)............................................. NA
(c)(1).......................................... 7.2; 14.4
(c)(2).......................................... 7.2; 14.4
(c)(3).......................................... NA
(d)............................................. NA
(e)............................................. 14.5
(f)............................................. NA
315 (a)............................................. 7.1(c)
(b)............................................. 7.5; 14.2
(c)............................................. 7.1(a)
(d)............................................. 6.5;
................................................ 7.1(c)
(e)............................................. 6.11
316 (a)(last sentence).............................. 2.9
(a)(1)(A)....................................... 6.5
(a)(1)(B)....................................... 6.4
(a)(2).......................................... NA
(b)............................................. 6.7
317 (a)(1).......................................... 6.8
(a)(2).......................................... 6.9
(b)............................................. 2.4
318 (a)............................................. 14.1
(c)............................................. 14.1
NA means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
-1-
INDENTURE dated as of June 26, 1998, among BLACK & DECKER
HOLDINGS INC., a corporation organized under the laws of Delaware (the
"Company"), THE BLACK & DECKER CORPORATION, a corporation organized
under the laws of Maryland (the "Guarantor"), and THE FIRST NATIONAL
BANK OF CHICAGO, a national banking association, as Trustee (the
"Trustee").
The Company has duly authorized the creation of an issue of
$150,000,000 6.55% Senior Notes due 2007 (the "Tranche A Notes") and
$150,000,000 7.05% Senior Notes due 2028 (the "Tranche B Notes" and together
with the Tranche A Notes, the "Notes") and, to provide therefor, the Company has
duly authorized the execution and delivery of this Indenture.
The Guarantor has duly authorized the creation of the
Guarantee of the Notes and, to provide therefor, the Guarantor has duly
authorized the execution and delivery of this Indenture.
The Company, the Guarantor and the Trustee agree as follows
for the benefit of each other and for the equal and ratable benefit of the
Holders of the Notes:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions. For purposes of this Indenture,
unless otherwise specifically indicated herein, the term "consolidated" with
respect to any Person refers to such Person consolidated with Subsidiaries. In
addition, for purposes of the following definitions and this Indenture
generally, all calculations and determinations shall be made in accordance with
U.S. GAAP and shall be based upon the consolidated financial statements of the
Guarantor and its subsidiaries prepared in accordance with U.S. GAAP. As used in
this Indenture, the following terms shall have the following meanings:
"Additional Amounts" shall have the meaning set forth in
paragraph 2 of Exhibit A and Exhibit C hereto.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise.
"Agent" means any Exchange Agent, Paying Agent, Authenticating
Agent or co-Exchange Agent.
<PAGE>
-2-
"Agent Members" shall have the meaning set forth in Section
2.15.
"Applicable Procedures" shall have the meaning set forth in
Section 2.6(a)(i)(1).
"Attributable Debt" for a lease means the carrying value of
the capitalized rental obligation determined under generally accepted accounting
principles whether or not such obligation is required to be shown on the balance
sheet as a long-term liability. The carrying value may be reduced by the
capitalized value of the rental obligations, calculated on the same basis, that
any sublessee has for all or part of the sample property.
"Authenticating Agent" shall have the meaning set forth in
Section 2.2.
"Authorized Newspaper" means a newspaper customarily published
at least once a day for at least five days in each calendar week and of general
circulation in New York City and in London and, if and so long as the Notes are
listed on the Luxembourg Stock Exchange and such Stock Exchange shall so
require, in Luxembourg or, if it shall be impracticable in the opinion of the
Trustee to make such publication, in another capital city in Western Europe.
Such publication (which may be in different newspapers) is expected to be made
in the Eastern edition of The Wall Street Journal and in the London edition of
the Financial Times, and, if and so long as the Notes are listed on the
Luxembourg Stock Exchange and such Stock Exchange shall so require, in the
Luxemburger Wort.
"Bankruptcy Law" shall have the meaning set forth in Section
6.1.
"Board of Directors" means, with respect to any Person, the
board of directors of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a
resolution of the Board of Directors or of a committee or person to which or to
whom the Board of Directors has properly delegated the appropriate authority, a
copy of which has been certified by the Secretary or an Assistant Secretary of
the Person to have been duly adopted by the Board of Directors and to be in full
force and effect on the date of such certification and delivered to the Trustee.
"Business Day" when used with respect to any particular Place
of Payment, means each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which banking institutions in that Place of Payment are authorized
or obligated by law to close, and shall otherwise mean each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking
<PAGE>
-3-
institutions, at the place where any specified act pursuant to this Indenture is
to occur, are authorized or obligated by law to close.
"Cedel" means Cedel Bank, societe anonyme.
"Certificate of a Firm of Independent Public Accountants"
means a certificate signed by any firm of independent public accountants of
recognized standing selected by the Company or the Guarantor. The term
"Independent" when used with respect to any specified firm of public accountants
means a firm that is or would be qualified to act as the Company's and the
Guarantor's accountants within the meaning of Section 210.2-01 of Regulation S-X
as promulgated by the SEC, and any successor thereto.
"Company" means the party named as such in this Indenture
until a successor replaces it pursuant to this Indenture and thereafter means
such successor.
"Company Order" means a written order or request signed in the
name of the Company by (1) the Chairman of the Board, the Vice Chairman of the
Board, the President or any Vice President of the Company and by a Director, the
Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller, the
Secretary or an Assistant Secretary of the Company or (2) any two Persons
designated in a Company Order previously delivered to the Trustee by any two of
the foregoing officers and delivered to the Trustee.
"Consolidated Net Tangible Assets" means total assets less (1)
total current liabilities (excluding any Debt which, at the option of the
borrower, is renewable or extendible to a term exceeding 12 months and which is
included in current liabilities and further excluding any deferred income taxes
which are included in current liabilities) and (2) goodwill, patents, trademarks
and other like intangibles, all as stated on the Guarantor's most recent
quarter-end consolidated balance sheet preceding the date of determination.
"Corporate Trust Office" means the address of the Trustee
specified in Section 12.2.
"Covenant Defeasance" shall have the meaning set forth in
Section 8.3.
"Custodian" shall have the meaning set forth in Section 6.1.
"Debt" means any debt for borrowed money (including the
Notes), capitalized lease obligations and purchase money obligations, or any
guarantee of such debt, in any such case which would appear on the consolidated
balance sheet of the Guarantor as a liability.
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"Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.
"Default Interest Payment Date" shall have the meaning set
forth in Section 2.12.
"Definitive Notes" means the Tranche A Notes and the Tranche B
Notes in definitive form substantially in the form of Exhibit B and Exhibit D,
respectively.
"Depositary" means the book-entry depositary or its nominee or
the custodian of either, designated by the Company in the Depositary Agreement
until a successor depositary shall have become such pursuant to applicable
provisions of the Depositary Agreement, and thereafter "Depositary" shall mean
such successor book-entry depositary or its nominee or the custodian of either.
"Depositary Agreement" means the Note Depositary Agreement
dated as of the date of this Indenture between the Depositary, the Company and
the Guarantor.
"Distribution" shall mean, with respect to any Note, any
principal, premium, if any, interest, Additional Amounts, if any, or any other
payments or distributions in respect of such Note.
"DTC" means The Depository Trust Company or its successors.
"Euroclear Operator" means Morgan Guaranty Trust Company of
New York (Brussels office), as operator of the Euroclear System.
"Event of Default" shall have the meaning set forth in Section
6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Exchange Agent" shall have the meaning set forth in Section
2.3.
"Exempted Debt" means the sum, without duplication, of the
following items outstanding as of the date Exempted Debt is being determined:
(i) Debt incurred after the date of this Indenture and secured by liens created
or assumed or permitted to exist pursuant to Section 4.3(b), and (ii)
Attributable Debt of the Guarantor and its Subsidiaries in respect of all sale
and lease-back transactions with regard to any Principal Property entered into
pursuant to Section 4.4(b).
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"First Chicago" means The First National Bank of Chicago.
"Funded Debt" means all Debt having a maturity of more than
one year from the date of its creation or having a maturity of less than one
year but by its terms being renewable or extendible, at the option of the
obligor in respect thereof, beyond one year from its creation.
"Global Note" means a security evidencing all or a part of the
Tranche A Notes or the Tranche B Notes deposited with the Depositary in
accordance with Section 2.1 and substantially in the form of Exhibit A and
Exhibit C, respectively.
"Government Securities" means securities that are (i) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such Government
Securities or a specific payment of principal or interest on any such Government
Securities held by such custodian for the account of the holder of such
depository receipt; provided, however, that such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the Government
Securities or the specific payment of principal or interest on the Government
Securities evidenced by such depository receipt.
"guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Debt or other obligations.
"Guarantees" shall have the meaning set forth in Section 10.1.
"Guarantor" shall have the meaning set forth in the preamble
of this Indenture until one or more successor corporations shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
means such successors.
"Guarantor Order" means a written order signed in the name of
the Guarantor by (1) the Chairman of the Board, the Vice Chairman of the Board,
the President or any Vice President of the Guarantor and by the Treasurer, an
Assistant Treasurer, the
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Controller, an Assistant Controller, the Secretary or an Assistant Secretary of
the Guarantor or (2) any two Persons designated in a Guarantor Order previously
delivered to the Trustee by any two of the foregoing officers and delivered to
the Trustee.
"Holder" means, with respect to a particular tranche of Notes
(i) for so long as the Notes of such tranche are represented by Global Notes,
the bearer thereof which shall initially be the Depositary and (ii) in the event
that Definitive Notes of such tranche are issued, the person in whose name a
Definitive Note of such tranche is registered on the Exchange Agent's books.
"Indenture" means this Indenture, as amended, modified or
supplemented from time to time in accordance with the terms hereof, including
the terms of the Notes.
"Initial Purchasers" means Lehman Brothers Inc., Citicorp
Securities, Inc., Nationsbanc Montgomery Securities LLC and Chase Securities
Inc.
"Interest Payment Date" means, with respect to a particular
tranche of Notes the stated maturity of an installment of interest on the Notes
of such tranche.
"Issuance Date" means the closing date for the sale and
issuance of the Notes under this Indenture, which is expected to be on or about
June 26, 1998.
"Legal Defeasance" shall have the meaning set forth in Section
8.2.
"Maturity Date" means July 1, 2007 with respect to the Tranche
A Notes and July 1, 2028 with respect to the Tranche B Notes.
"Notes" shall have the meaning set forth in the preamble of
this Indenture.
"Notice of Default" shall have the meaning set forth in
Section 6.1.
"Offering" means the offering of the Notes described in the
Offering Memorandum.
"Offering Memorandum" means the final offering memorandum of
the Company, dated June 23, 1998 pursuant to which the Notes were sold.
"Officer" means, with respect to any Person (other than any
Agent), the Chairman of the Board, the Vice Chairman of the Board, the
President, any Vice President, the Treasurer or the
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Secretary of such Person (and with respect to the Company, a director thereof).
"Officers' Certificate" means a certificate signed (i) in the
case of the Company, on behalf of the Company by two Officers of the Company or
by an Officer and an Assistant Treasurer or an Assistant Secretary and (ii) in
the case of the Guarantor, on behalf of the Guarantor by two Officers of the
Guarantor or by an Officer and an Assistant Treasurer or Assistant Secretary, in
each case that meets the requirements of Sections 12.4 and 12.5.
"Opinion of Counsel" means a written opinion from legal
counsel (including, if applicable, tax counsel) which and who are reasonably
acceptable to, and addressed to, the Trustee complying with the requirements of
Sections 12.4 and 12.5. Unless otherwise required by the TIA, the legal counsel
may be an employee of or counsel to the Company, the Guarantor or the Trustee.
"Paying Agent" shall have the meaning set forth in Section
2.3.
"Paying Agent Agreement" shall have the meaning set forth in
Section 2.3.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Place of Payment," when used with respect to the Notes means
the place or places where the principal, premium, if any, interest and
Additional Amounts, if any, on the Notes are payable, as contemplated by Section
2.3.
"Principal Property" means land, land improvements, buildings
and associated factory and laboratory equipment owned or leased pursuant to a
capital lease and used by the Guarantor or any Subsidiary primarily for
manufacturing, assembling, processing, producing, packaging or storing its
products, raw materials, inventories or other materials and supplies located in
the United States and having an acquisition cost plus capitalized improvements
in excess of 2% of Consolidated Net Tangible Assets as of the date of
determination, but shall not include any such property financed through the
issuance of tax exempt governmental obligations, or any such property that has
been determined by Board Resolution of the Guarantor not to be of material
importance to the respective businesses conducted by the Guarantor and its
Subsidiaries taken as a whole, effective as of the date such resolution is
adopted.
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"Private Placement Legend" means the legend initially set
forth on the Notes in the form set forth on Exhibit A, B, C and D.
"Record Date" means, with respect to Definitive Notes, a
particular tranche of Notes, the Record Dates specified in the Notes of such
tranche.
"Redemption Date" when used with respect to any Note of a
particular tranche to be redeemed, means the date fixed for such redemption
pursuant to this Indenture and Paragraphs 7 and 8 of the Notes of such tranche.
"Redemption Price" when used with respect to any Note of a
particular tranche to be redeemed, means the price fixed for such redemption
pursuant to this Indenture and Paragraphs 7 and 8 of the Notes of such tranche,
which shall include accrued and unpaid interest thereon and Additional Amounts,
if any, to the Redemption Date.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Certificate" shall have the meaning set forth in
Section 2.6(a)(i)(3)(a).
"Regulation S Global Notes" shall have the meaning set forth
in Section 2.1.
"Regulation S Notes" shall have the meaning set forth in
Section 2.1.
"Release Date" shall have the meaning set forth in Section
2.6(a)(i)(3)(a).
"Restricted Period" means the period of 40 consecutive days
beginning on and including the first day after the Issuance Date.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Subsidiary" means a corporation a majority of the Voting
Stock of which is owned by (i) the Guarantor, (ii) the Guarantor and one or more
Subsidiaries, or (iii) one or more Subsidiaries.
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"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb), as it may be amended from time to time.
"Tranche A Notes" shall have the meaning set forth in the
preamble to this Indenture.
"Tranche B Notes" shall have the meaning set forth in the
preamble to this Indenture.
"Trust Officer" means any officer within the corporate trust
department (or any successor group of the Trustee), including any vice
president, assistant vice president, corporate trust officer, assistant
corporate trust officer, assistant secretary or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by the persons who at that time shall be such officers, and also
means, with respect to a particular corporate trust matter, any other officer to
whom such trust matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions of this
Indenture and thereafter means such successor.
"U.S. GAAP" means generally accepted accounting principles in
the United States as have been approved by a significant segment of the U.S.
accounting profession, which are in effect at the time of each application for
determining compliance with the covenants pursuant to Article IV. For the
purposes of this Indenture, the term "consolidated" with respect to any Person
shall mean such Person consolidated with its Subsidiaries.
"United States" means the United States of America, but
excluding the Commonwealth of Puerto Rico, the Virgin Islands and other
territories and possessions thereof.
"U.S. Global Notes" shall have the meaning set forth in
Section 2.1.
"U.S. Note" shall have the meaning set forth in Section 2.1.
"U.S. Persons" has the meaning given in Regulation S under the
Securities Act.
"Voting Stock" means capital stock having voting power under
ordinary circumstances to elect directors.
SECTION 1.2 Incorporation by Reference of TIA. Except as set
forth in 7.6, this Indenture is subject to the mandatory provisions of the TIA
which are incorporated by reference in, and
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made a part of, this Indenture. The following TIA terms used in this Indenture
have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Notes and the Guarantees;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the indenture securities means the Company, the
Guarantor or any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule and
not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.3 Rules of Construction. Unless the context
otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the
meaning assigned to it in accordance with U.S. GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and words
in the plural include the singular;
(e) provisions apply to successive events and
transactions; and
(f) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
ARTICLE II
THE TRANCHE A AND TRANCHE B NOTES
SECTION 2.1 Form and Dating. The Tranche A Notes and the
notation relating to the Trustee's certificate of authentication shall be
substantially in the form of Exhibits A or B, as applicable, and the Tranche B
Notes and the notation relating to the Trustee's certificate of authentication
shall be
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substantially in the form of Exhibits C or D, as applicable. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. The Company and the Trustee shall approve the form of the Notes and any
notation, legend or endorsement on them. Each Note shall be dated the date of
its issuance and shall show the date of its authentication.
The terms and provisions contained in the Notes, annexed
hereto as Exhibits A, B, C and D shall constitute, and are hereby expressly
made, a part of this Indenture and, to the extent applicable, the Company, the
Guarantor and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. The Notes
will initially be represented by the Global Notes.
The Tranche A Notes and Tranche B Notes, if any, offered and
sold in their initial distribution in reliance on Regulation S shall be
initially issued as a single note, with respect to each tranche, in global
bearer form without interest coupons, substantially in the form of Exhibit A (in
respect of Tranche A Notes) or Exhibit C (in respect of Tranche B Notes) hereto,
with such applicable legends as are provided in Exhibit A or Exhibit C hereto,
as applicable, except as otherwise permitted herein. It is understood that such
Global Notes, if any, shall be deposited initially with the Depositary pursuant
to the terms of the Depositary Agreement, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. Such Global Notes shall be
referred to herein as the "Regulation S Global Notes". The aggregate principal
amount of each Regulation S Global Note may from time to time be increased or
decreased by adjustments made by annotation or endorsement thereon by the
Company or by the Trustee, the Depositary or a custodian of either on behalf of
the Company (or by the issue of a further Regulation S Global Notes), in
connection with a corresponding decrease or increase in the aggregate principal
amount of the U.S. Global Note of the same tranche or in consequence of the
issue of Definitive Notes or additional Regulation S Notes, as hereinafter
provided. The Regulation S Global Notes and all other Notes that are not U.S.
Global Notes shall collectively be referred to herein as the "Regulation S
Notes".
The Tranche A Notes and Tranche B Notes, if any, offered and
sold in their initial distribution in reliance on Rule 144A shall be initially
issued as a single note, with respect to each tranche, in global bearer form
without interest coupons, substantially in the form of Exhibit A (in respect of
Tranche A) or Exhibit C (in respect of Tranche B) hereto, with such applicable
legends as are provided in Exhibit A and Exhibit C hereto, as applicable, except
as otherwise permitted herein. It is understood that such Global Notes, if any,
shall be deposited initially with the Depositary pursuant to the terms of the
Depositary Agreement, duly executed by the Company and authenticated by the
Trustee as hereinafter provided. Such Global Notes shall be referred to herein
as the "U.S. Global
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Notes". The aggregate principal amount of each U.S. Global Note may from time to
time be increased or decreased by adjustments made by annotation or endorsement
thereon by the Company or by the Trustee, the Depositary or a custodian of
either on behalf of the Company (or by the issue of a further U.S. Global
Notes), in connection with a corresponding decrease or increase in the aggregate
principal amount the Regulation S Global Note of the same tranche or in
consequence of the issue of Definitive Notes or additional U.S. Notes, as
hereinafter provided. The U.S. Global Notes and all other Notes evidencing the
debt, or any portion of the debt, initially evidenced by such U.S. Global Notes,
other than Notes transferred or exchanged upon certification as provided in
Section 2.6(a)(i)(1), (2) or (4), shall collectively be referred to herein as
the "U.S. Notes."
SECTION 2.2 Execution and Authentication. The Notes shall be
executed on behalf of the Company by two Officers by manual or facsimile
signature. The Notes shall be so executed under the corporate seal (which may be
in facsimile form) of the Company reproduced thereon.
If an Officer whose signature is on a Note was an Officer at
the time of such execution but no longer holds that office or position at the
time the Trustee authenticates the Note, the Note shall be valid nevertheless.
A Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Note. The
signature shall be conclusive evidence that the Note has been authenticated
under this Indenture.
The Trustee shall authenticate Tranche A Notes for original
issue in the aggregate principal amount of $150,000,000 and Tranche B Notes for
an original issue in the aggregate principal amount of $150,000,000, in each
case upon receipt of a Company Order and Guarantor Order, each in the form of an
Officers' Certificate. The Officers' Certificate shall specify the amount of
Tranche A Notes and Tranche B Notes to be authenticated, the type of Notes and
the date on which the Notes of each tranche are to be authenticated, whether the
Notes of each tranche are to be Definitive Notes or Global Notes and whether or
not the Notes of each tranche shall bear the Private Placement Legend, or such
other information as the Trustee may reasonably request. The aggregate principal
amount of Tranche A Notes outstanding at any time may not exceed $150,000,000
and the aggregate principal amount of Tranche B Notes outstanding at any one
time may not exceed $150,000,000 except, in each case, as provided in Section
2.7. Upon receipt of a Company Order, the Trustee shall authenticate Notes in
substitution of Notes originally issued to reflect any name change of the
Company.
The Trustee may appoint an authenticating agent
("Authenticating Agent") reasonably acceptable to the Company and the Guarantor
to authenticate Notes. Unless otherwise provided
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in the appointment, an Authenticating Agent may authenticate Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such Authenticating Agent. An Authenticating
Agent has the same rights as an Agent to deal with the Company, the Guarantor
and Affiliates of the Company and the Guarantor. The Trustee hereby appoints The
First National Bank of Chicago to be the Authenticating Agent on the Issuance
Date.
The Notes shall be issuable only in denominations of $1,000
and any multiple thereof. The Global Notes shall be in bearer form without
coupons and the Definitive Notes shall be in registered form.
SECTION 2.3 Exchange Agent and Paying Agent. The Company shall
maintain (a) an office or agency in the United States, where (a) Global Notes
may be presented or surrendered for transfer or for exchange pursuant to Section
2.6 (the "Exchange Agent"), (b) Global Notes may be presented or surrendered for
payment ("Paying Agent") and (c) notices and demands in respect of such Global
Notes and this Indenture may be served. In the event that Definitive Notes are
issued, (x) Definitive Notes may be presented or surrendered for registration of
transfer or for exchange, (y) Definitive Notes may be presented or surrendered
for payment and (z) notices and demands in respect of the Definitive Notes and
this Indenture may be served at an office of the Exchange Agent or the Paying
Agent, as applicable, in the Borough of Manhattan, The City of New York. In the
event that Definitive Notes are issued, the Exchange Agent shall keep a register
of the Notes and of their transfer and exchange. The Company, upon notice to the
Trustee, may have one or more co-Exchange Agents and one or more additional
Paying Agents reasonably acceptable to the Trustee. The term "Exchange Agent"
includes any co-Exchange Agent and the term "Paying Agent" includes any
additional Paying Agent. The Company is initially appointing First Chicago Trust
Company of New York as Exchange Agent and Paying Agent pursuant to the Paying
Agent Agreement dated as of June 26, 1998, among the Company, the Guarantor and
the Paying Agent (the "Paying Agent Agreement") until such time as First Chicago
Trust Company of New York has resigned or a successor has been appointed. The
Company may change any Exchange Agent or Paying Agent without notice to any
Holder. The Company may appoint the Guarantor to act as Exchange Agent or Paying
Agent, except that for purposes of a redemption pursuant to paragraph 7 and 8 of
the Notes, none of the Company, the Guarantor and any Affiliate of the Company
or Guarantor, may act as Paying Agent. If Definitive Notes are issued, the
Company will appoint Kredietbank S.A. Luxembourgeoise, or such other Person
located in Luxembourg and reasonably acceptable to the Trustee, as an additional
paying and transfer agent. Upon the issuance of Definitive Notes, Holders will
be able to receive principal, premium, if any, interest and Additional Amounts,
if any, on the Notes and will be able to transfer Definitive Notes at the
Luxembourg office of such paying and transfer agent,
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subject to the right of the Company or the Guarantor to mail payments in
accordance with the terms of this Indenture. In all circumstances, the Company
shall ensure that the Paying Agent shall be located outside the United Kingdom.
SECTION 2.4 Paying Agent To Hold Assets in Trust. The Company
shall require each Paying Agent other than the Trustee to agree in writing that
each Paying Agent shall hold in trust for the benefit of Holders or the Trustee
all assets held by the Paying Agent for the payment of principal, premium, if
any, interest and Additional Amounts, if any, on the Notes, and shall notify the
Trustee of any Default by the Company in making any such payment. The Company at
any time may require a Paying Agent to distribute all assets held by it to the
Trustee and account for any assets disbursed and the Trustee may at any time
during the continuance of any payment Default, upon written request to a Paying
Agent, require such Paying Agent to distribute all assets held by it to the
Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to the
Paying Agent, the Paying Agent shall have no further liability for such assets.
SECTION 2.5 List of Holders. In the event Definitive Notes are
issued, the Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Exchange Agent, the Company shall furnish to
the Trustee before each Record Date and at such other times as the Trustee may
request in writing a list as of such date and in such form as the Trustee may
reasonably require of the names and addresses of Holders, which list may be
conclusively relied upon by the Trustee.
SECTION 2.6 Transfer and Exchange. (a) The following
procedures and restrictions shall not apply with respect to Notes of a
particular tranche transferred or exchanged for the account of a Person who is
not an Affiliate of the Company at the time of the transfer or exchange and has
not been an Affiliate during the preceding three months, provided a period of at
least two years has elapsed since the later of the date the Notes of such
tranche were acquired from the Company or from an Affiliate of the Company.
(i) Notwithstanding any other provisions of this Indenture or
the Notes, transfers and exchanges, of any whole or part of a Global Note of the
kinds described in clauses (1), (2), (3), (4) and (5) below and exchanges of any
whole or part of Global Notes or of other Notes as described in clause (6)
below, shall be made only in accordance with this Section 2.6(a), and all
transfers of any whole or part of Regulation S Global Notes, if any, shall
comply with clause (7) below.
(1) Transfers of U.S. Global Note to Regulation S Global Note
During the Restricted Period. If the Holder of a
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U.S. Global Note of a particular tranche wishes at any time during the
Restricted Period to transfer, in whole or in part, a portion of such Note to
the applicable Regulation S Global Note, such transfer may be effected, subject
to the rules and procedures of DTC, the Euroclear Operator and Cedel, to the
extent applicable (the "Applicable Procedures"), only in accordance with the
provisions of this Section 2.6(a)(i)(1). Upon receipt by the Trustee of a
certificate in substantially the form set forth in Exhibit E, the Trustee shall
present the relevant Global Notes to the Company or its agent to reduce the
principal amount of the applicable U.S. Global Note and to increase the
principal amount of the applicable Regulation S Global Note, by the principal
amount of the portion of the U.S. Global Note to be so transferred, by
annotation thereon.
(2) Transfers of U.S. Global Note to Regulation S Global Note
After the Expiration of the Restricted Period. If the Holder of a U.S. Global
Note of a particular tranche wishes at any time after the expiration of the
Restricted Period to transfer, in whole or in part, a portion of such Note to
the applicable Regulation S Global Note, such transfer may be effected, subject
to the Applicable Procedures, only in accordance with this Section 2.6(a)(i)(2).
Upon receipt by the Trustee of a certificate in substantially the form set forth
in Exhibit F, the Trustee shall present the relevant Global Notes to the Company
or its agent to reduce the principal amount of the applicable U.S. Global Note,
and to increase the principal amount of the applicable Regulation S Global Note,
by the principal amount of the portion of the U.S. Global Notes to be so
transferred, by annotation thereon.
(3) Transfers of Regulation S Global Note to U.S. Global Note
During the Restricted Period; Transfers of Regulation S Global Note to U.S.
Global Note After Restricted Period. (a) If the Holder of a Regulation S Global
Note of a particular tranche wishes at any time during the Restricted Period to
transfer, in whole or in part, a portion of such Note to the applicable U.S.
Global Note, such transfer may be effected, subject to the Applicable
Procedures, only in accordance with this Section 2.6(a)(i)(3)(a). Upon receipt
by the Trustee with respect to a transfer of such Regulation S Global Note
during the Restricted Period (but not after the expiration of the Restricted
Period) of a certificate in substantially the form set forth in Exhibit G-1, the
Trustee shall present the relevant Global Notes to the Company or its agent to
reduce the principal amount of the applicable Regulation S Global Note, and to
increase the principal amount of the applicable U.S. Global Notes, by the
principal amount of the portion of the Regulation S Global Note to be so
transferred, by annotation thereon.
(b) If the Holder of a Regulation S Global Note of a
particular tranche wishes at any time after the expiration of the Restricted
Period to transfer, in whole or in part, a portion of such Note to the
applicable U.S. Global Note, such transfer may
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be effected, subject to the Applicable Procedures, only in accordance with this
Section 2.6(a)(i)(3)(b). Upon receipt by the Trustee of a certificate in
substantially the form set forth in Exhibit G-2, the Trustee shall present the
relevant Global Notes to the Company or its agent to reduce the principal amount
of the applicable Regulation S Global Note, and to increase the principal amount
of the applicable U.S. Global Note, by the principal amount of the portion of
the Regulation S Global Note to be so transferred, by annotation thereon.
(4) Exchanges of U.S. Global Note for Regulation S Global
Note. If the Holder of a U.S. Global Note of a particular tranche wishes at any
time to exchange, in whole or in part, a portion of such Note to the applicable
Regulation S Global Note, such exchange may be effected, subject to the
Applicable Procedures, only in accordance with the provisions of this Section
2.6(a)(i)(4). Upon receipt by the Trustee of a certificate in substantially the
form set forth in Exhibit H, the Trustee shall present the relevant Global Notes
to the Company or its agent to reduce the principal amount of the applicable
U.S. Global Note, and to increase the principal amount of the applicable
Regulation S Global Note, by the principal amount of the portion of the U.S.
Global Note to be so exchanged, by annotation thereon.
(5) Exchanges of Regulation S Global Note for U.S Global Note.
If the Holder of a Regulation S Global Note of a particular tranche wishes at
any time to exchange, in whole or in part, a portion of such Note to the
applicable U.S. Global Note, such exchange may be effected, subject to the
Applicable Procedures, only in accordance with the provisions of this Section
2.6(a)(i)(5). Upon receipt by the Trustee of a certificate in substantially the
form set forth in Exhibit I, the Trustee shall present the relevant Global Notes
to the Company or its agent to reduce the principal amount of the applicable
Regulation S Global Note, and to increase the principal amount of the applicable
U.S. Global Note, by the principal amount of the portion of the Regulation S
Global Note to be so exchanged, by annotation thereon.
(6) Other Exchanges. In the event that any Global Note or any
portion thereof is exchanged for Notes in definitive form pursuant to Section
2.6(c) hereof, such Definitive Notes may in turn be exchanged (on transfer or
otherwise) for other Definitive Notes and only in accordance with such
procedures, which shall be substantially consistent with the provisions of
clauses (1) through (5) above and (7) below (including the certification
requirements intended to ensure that transfers and exchanges of portions of a
Note comply with Rule 144A or Regulation S, as the case may be) and any
Applicable Procedures, as may from time to time be adopted by the Company and
the Exchange Agent.
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(7) Interests in Regulation S Global Note to be Held Through
the Euroclear Operator or Cedel. Until the expiration of the Restricted Period,
interests in a Regulation S Global Note may be held only through the Euroclear
Operator and Cedel.
(ii) Each U.S. Note issued hereunder shall, upon issuance,
bear the legend set forth on the form of the Note attached hereto as Exhibit A,
B, C and D and such legend shall not be removed from such Note except as
provided in the next sentence. The legend required for a U.S. Note of a
particular tranche may be removed from such U.S. Note if there is delivered to
the Company such satisfactory evidence, which may include an opinion of
independent U.S. counsel, as may be reasonably required by the Company, that
neither such legend nor the restrictions on transfer set forth therein are
required to ensure that transfers of such Note will not violate the registration
requirements of the Securities Act. Upon provision of such satisfactory
evidence, the Trustee, at the direction of the Company, shall authenticate and
deliver in exchange for such Note another Note or Notes having an equal
aggregate principal amount that does not bear such legend. If such a legend
required for a U.S. Note has been removed from a U.S. Note as provided above, no
other Note issued in exchange for all or any part of such Note shall bear such
legend, unless the Company has reasonable cause to believe that such other Note
is a "restricted security" within the meaning of Rule 144 and instructs the
Trustee to cause a legend to appear thereon.
(b) Transfer of any Global Note shall be by delivery. Each
Global Note of a tranche authenticated under this Indenture shall be in bearer
form and it is understood that such Global Note will initially be delivered to
the Depositary or a nominee or custodian therefor, and each such Global Note of
such tranche shall constitute a single Note for all purposes of this Indenture.
(c) All Global Notes of a particular tranche shall be
exchanged by the Company (with authentication by the Trustee) for one or more
Definitive Notes of the same tranche free of charge, substantially in the form
of Exhibit B (in respect of Tranche A Notes) or Exhibit D (in respect of Tranche
B Notes), if, for such tranche of Notes, (a) DTC (i) has notified the Company
that it is unwilling or unable to continue as, or ceases to be, a clearing
agency registered under the Exchange Act and (ii) a successor to DTC registered
as a clearing agency under the Exchange Act is not able to be appointed by the
Company within 90 days of such notification, (b) for so long as the Depositary
is the Holder, such circumstances as set out in Section 2.4 of the Depositary
Agreement have occurred or (c) at any time at the option of the Company. If an
Event of Default with respect to a particular tranche of Notes occurs and is
continuing, the Company shall, at the request of the Holder thereof, exchange
all or part of a Global Note of such tranche for one or more Definitive Notes of
the same tranche (with authentication by the Trustee),
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substantially in the form of Exhibit B (in respect of Tranche A Notes) or
Exhibit D (in respect of Tranche B Notes); provided, however, that the principal
amount at maturity of such Definitive Notes and such Global Note after such
exchange shall be $1,000 or multiples thereof. Whenever all of a Global Note is
exchanged for one or more Definitive Notes, it shall be surrendered by the
Holder thereof to the Trustee for cancellation. Whenever a part of a Global Note
is exchanged for one or more Definitive Notes the Global Note shall be
surrendered by the Holder thereof to the Trustee who shall cause an adjustment
to be made to Schedule A of such Global Note such that the principal amount of
such Global Note will be equal to the portion of such Global Note not exchanged
and shall thereafter return such Global Note to such Holder. All Definitive
Notes issued in exchange for a Global Note or any portion thereof shall be
registered in such names as the Depositary shall instruct the Trustee based on
the instructions of DTC. Every Note authenticated and delivered in exchange for
or in lieu of a Global Note, or any portion thereof, pursuant to Section 2.6(a),
2.7, 2.10 or 3.7 hereof or otherwise, shall be authenticated and delivered in
the form of, and shall be, a Global Note. A Global Note may not be exchanged for
a Definitive Note other than as provided in this Section 2.6(c).
(d) Definitive Notes of a particular tranche shall be
transferable only upon the surrender of a Definitive Note of the same tranche
for registration of transfer. When a Definitive Note is presented to the
Exchange Agent or a co-Exchange Agent with a request to register a transfer, the
Exchange Agent shall register the transfer as requested if its requirements for
such transfers are met. When Definitive Notes are presented to the Exchange
Agent or a co-Exchange Agent with a request to exchange them for an equal
principal amount of Definitive Notes of other denominations, the Exchange Agent
shall make the exchange as requested if the same requirements are met. To permit
registration of transfers and exchanges, the Company and the Guarantor shall
execute and the Trustee shall authenticate Definitive Notes at the Exchange
Agent's or co-Exchange Agent's request.
(e) The Company shall not be required to make, and the
Exchange Agent need not register transfers or exchanges of, Definitive Notes
selected for redemption (except, in the case of Definitive Notes to be redeemed
in part, the portion thereof not to be redeemed) for a period of 15 days before
a selection of Definitive Notes to be redeemed.
(f) Prior to the due presentation for registration of transfer
of any Definitive Note, the Company, the Guarantor, the Trustee, the Paying
Agent, the Exchange Agent or any co-Exchange Agent may deem and treat the Person
in whose name a Definitive Note is registered as the absolute owner of such
Definitive Note for the purpose of receiving payment of principal, premium, if
any, interest and Additional Amounts, if any, on such Definitive Note and for
all other purposes whatsoever, whether or not such
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Definitive Note is overdue, and none of the Company, the Guarantor, the Trustee,
the Paying Agent, the Exchange Agent or any co-Exchange Agent shall be affected
by notice to the contrary.
(g) The Company may require payment of a sum sufficient to pay
all taxes, assessments or other governmental charges in connection with any
transfer or exchange pursuant to this Section 2.6.
(h) All Notes issued upon any transfer or exchange pursuant to
the terms of this Indenture will evidence the same debt (including the Guarantee
of the Guarantor) and will be entitled to the same benefits under this Indenture
as the Notes surrendered upon such transfer or exchange.
(i) Holders of Notes (or holders of interests therein) and
prospective purchasers designated by such Holders (or holders of interests
therein) will have the right to obtain from the Company and the Guarantor upon
request by such Holders (or holders of interests therein) or prospective
purchasers, during any period in which the Guarantor is not subject to Section
13 or 15(d) of the Exchange Act, or is exempt from reporting pursuant to
12g3-2(b) under the Exchange Act, the information required by paragraph d(4)(i)
of Rule 144A in connection with any transfer or proposed transfer of such Notes.
SECTION 2.7 Replacement Notes. If a mutilated Definitive Note
is surrendered to the Exchange Agent, if a mutilated Global Note is surrendered
to the Company or if the Holder of a Note claims that such Note has been lost,
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Note (including the Guarantor's Guarantee) in such
form as the Note being replaced if the requirements of the Trustee, the Exchange
Agent, the Company and the Guarantor are met. If required by the Trustee, the
Exchange Agent, the Company or the Guarantor, such Holder must provide an
indemnity bond or other indemnity, sufficient in the judgment of the Company,
the Guarantor, the Exchange Agent and the Trustee, to protect the Company, the
Guarantor, the Trustee and any Agent from any loss which any of them may suffer
if a Note is replaced. The Company, the Guarantor and the Trustee may charge
such Holder for its reasonable, out-of-pocket expenses in replacing a Note,
including reasonable fees and expenses of counsel. Every replacement Note is an
additional obligation of the Company guaranteed by the Guarantor.
SECTION 2.8 Outstanding Notes. Notes outstanding at any time
of a particular tranche are all the Notes of such tranche that have been
authenticated by the Trustee except those cancelled by it, those delivered to it
for cancellation, those reductions in the Global Note of such tranche effected
in accordance with the provisions hereof and those described in this Section as
not outstanding. Subject to Section 2.9, a Note does
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not cease to be outstanding because the Company, the Guarantor or any of its
Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.7 (other than a
mutilated Note surrendered for replacement), it ceases to be outstanding unless
the Trustee receives proof satisfactory to it that the replaced Note is held by
a bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender
of such Note and replacement thereof pursuant to Section 2.7.
If the principal amount of any Note is considered paid under
Section 4.1 hereof, it ceases to be outstanding and interest and Additional
Amounts, if any, on it cease to accrue.
If on a Redemption Date or the Maturity Date of a particular
tranche the Paying Agent holds cash in U.S. dollars or Government Securities
sufficient to pay all of the principal, premium, if any, interest and Additional
Amounts, if any, due on the Notes of such tranche payable on that date, then on
and after that date such Notes cease to be outstanding and interest and
Additional Amounts, if any, on such Notes cease to accrue.
SECTION 2.9 Treasury Notes. In determining whether the Holders
of the required principal amount of Notes of a particular tranche have concurred
in any direction, waiver or consent, Notes of such tranche owned by the Company
or its Affiliates shall be disregarded, except that, for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes of such tranche that the Trustee
actually knows are so owned shall be disregarded.
The Company shall notify the Trustee, in writing, when it or
any of its Affiliates repurchases or otherwise acquires Notes, of the aggregate
principal amount of such Notes so repurchased or otherwise acquired. The Trustee
may require an Officers' Certificate listing Notes owned by the Company, a
Subsidiary of the Company or an Affiliate of the Company.
SECTION 2.10 Temporary Notes. Until permanent Definitive Notes
of a particular tranche are ready for delivery, the Company and the Guarantor
may prepare and the Trustee shall authenticate temporary Definitive Notes of
such tranche upon receipt of a Company Order and Guarantor Order each in the
form of an Officers' Certificate. Each Officers' Certificate shall specify the
amount of temporary Definitive Notes of a particular tranche to be authenticated
and the date on which the temporary Definitive Notes of such tranche are to be
authenticated. Temporary Definitive Notes of a particular tranche shall be
substantially in the form of permanent Definitive Notes of such tranche but may
have variations that the Company or the Guarantor considers appropriate for
temporary Definitive Notes of such tranche. Without unreasonable delay, the
Company and the Guarantor shall prepare and the Trustee shall authenticate upon
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receipt of a Company Order and Guarantor Order pursuant to Section 2.2 permanent
Definitive Notes of a particular tranche in exchange for temporary Definitive
Notes of such tranche.
SECTION 2.11 Cancellation. The Company at any time may deliver
Notes to the Trustee for cancellation. The Exchange Agent and the Paying Agent
shall forward to the Trustee any Notes surrendered to them for transfer,
exchange or payment. The Trustee, or at the direction of the Trustee, the
Exchange Agent or the Paying Agent, and no one else, shall cancel and, at the
written direction of the Company, shall dispose of (subject to the record
retention requirements of the Exchange Act) all Notes surrendered for transfer,
exchange, payment or cancellation; provided, however, that the Trustee may, but
shall not be required to, destroy such cancelled Notes. Subject to Section 2.7,
the Company may not issue new Notes to replace Notes that it has paid or
delivered to the Trustee for cancellation. If the Company shall acquire any of
the Notes, such acquisition shall not operate as a redemption or satisfaction of
the Debt represented by such Notes unless and until the same are surrendered to
the Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12 Defaulted Interest. If the Company defaults in a
payment of interest on the Tranche A Notes or the Tranche B Notes, it shall pay
the defaulted interest of such Notes, plus (to the extent lawful) any interest
payable on the defaulted interest to the Holder thereof. The Company shall
notify the Trustee and Paying Agent in writing of the amount of defaulted
interest proposed to be paid on each Note and the date of the proposed payment
(a "Default Interest Payment Date"), and at the same time the Company shall
deposit with the Trustee or Paying Agent an amount of money equal to the
aggregate amount proposed to be paid in respect of such defaulted interest or
shall make arrangements satisfactory to the Trustee or Paying Agent for such
deposit prior to the date of the proposed payment, such money when deposited to
be held in trust for the benefit of the Persons entitled to such defaulted
interest as in this Section 2.12; provided, however, that in no event shall the
Company deposit monies proposed to be paid in respect of defaulted interest
later than 11:00 a.m. New York City time on the proposed Default Interest
Payment Date. At least 30 days before the Default Interest Payment Date, the
Company shall mail to each Holder of Notes of the applicable tranche and publish
in a leading newspaper having a general circulation in New York (which is
expected to be the Wall Street Journal) (and so long as the Tranche A Notes or
the Tranche B Notes, as applicable, are listed on the Luxembourg Stock Exchange
and the rules of such Luxembourg Stock Exchange shall so require, a newspaper
having a general circulation in Luxembourg (which is expected to be the
Luxemburger Wort)) or, in the case of Definitive Notes of a particular tranche,
mail by first-class mail to each Holder's registered address (and, so long as
the Tranche A Notes or the Tranche B Notes are listed on the Luxembourg Stock
Exchange and
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the rules of such Stock Exchange shall so require, publish in a newspaper having
a general circulation in Luxembourg (which is expected to be the Luxemburger
Wort)), with a copy to the Trustee, a notice that states the Default Interest
Payment Date and the amount of defaulted interest, and interest payable on such
defaulted interest, if any, to be paid.
SECTION 2.13 CUSIP and CINS Number. The Company in issuing the
Tranche A and the Tranche B Notes may use a "CUSIP" or "CINS" number, and if so,
the Trustee shall use the CUSIP and CINS number in notices of redemption or
exchange as a convenience to Holders; provided, however, that any such notice
may state that no representation is made as to the correctness or accuracy of
the CUSIP and CINS number printed in the notice or on the Notes, and that
reliance may be placed only on the other identification numbers printed on the
Notes. The Company shall promptly notify the Trustee of any change in the CUSIP
or CINS number.
SECTION 2.14 Deposit of Moneys. Prior to 11:00 a.m. New York
City time on each Interest Payment Date and Maturity Date, the Company shall
have deposited with the Paying Agent in immediately available funds money
sufficient to make cash payments, if any, due on such Interest Payment Date or
Maturity Date, as the case may be, in a timely manner which permits the Paying
Agent to remit payment to the Holders on such Interest Payment Date or Maturity
Date, as the case may be.
SECTION 2.15 Certain Matters Relating to Global Notes.
(a) For the avoidance of doubt, members of, or participants
in, the Depositary ("Agent Members") shall have no rights under this Indenture
with respect to any Global Note held on their behalf by the Depositary, or the
Trustee as its custodian, or under the Global Note, and the Depositary for so
long as it is Holder may be treated by the Company, the Guarantor, the Trustee
and any agent of the Company, the Guarantor or the Trustee as the absolute owner
of the Global Note for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Guarantor, the Trustee or any
agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or
impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Note.
(b) The Holder of any Global Note of a particular tranche may
grant proxies and otherwise authorize any person, including Agent Members and
persons that may hold interests through Agent Members, to take any action which
a Holder is entitled to take under this Indenture or the Notes of that tranche.
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ARTICLE III
REDEMPTION
SECTION 3.1 Optional Redemption. The Company may redeem all or
any portion of the Notes of a particular tranche, upon the terms and at the
Redemption Prices set forth in each of the Notes of that tranche. The Guarantor
may redeem all of the Notes of a particular tranche upon the terms and at the
Redemption Prices set forth in the Notes of that tranche. Any redemption
pursuant to this Section 3.1 shall be made pursuant to the provisions of this
Article III.
SECTION 3.2 Election to Redeem; Notice to Trustee. The
election of the Company or the Guarantor to redeem any Notes of a particular
tranche shall be evidenced by or pursuant to a Board Resolution. In case of any
redemption at the election of the Company of less than all of the Notes of a
particular tranche, the Company shall, at least 60 days prior to the Redemption
Date fixed by the Company (unless a shorter notice shall be satisfactory to the
Trustee) notify the Trustee by Company Order of such Redemption Date, the
Redemption Price (or if the Redemption Price is not calculable at such time, the
formula for calculating such price) and of the principal amount of Notes of such
tranche to be redeemed and shall deliver to the Trustee such documentation and
records as shall enable such Trustee to select the Notes of such tranche to be
redeemed pursuant to Section 3.3; provided, however, that if the Redemption
Price is not calculable at the time such notice is sent, the Company shall
notify the Trustee promptly at such time such Redemption Price is calculable. In
any case of redemption of Notes of a particular tranche pursuant to Section 8 of
the Notes of such tranche, prior to any Notice of redemption given pursuant to
Section 3.4, the Company or the Guarantor, as the case may be, shall deliver to
the Trustee an opinion of tax counsel reasonably satisfactory to the Trustee to
the effect that the circumstances referred to in Section 8 in such Note exist.
SECTION 3.3 Selection by Trustee of Notes to Be Redeemed. If
less than all the Notes of a particular tranche are to be redeemed, the Trustee
may select the particular Notes of such tranche to be redeemed not more than 60
days prior to the Redemption Date for such Notes, from the outstanding Notes of
such tranche not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions (equal to the minimum authorized denomination for such
Notes, or any multiple thereof) of the principal amount of Notes of such tranche
of a denomination larger than the minimum authorized denomination for such
Notes.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of
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any Notes selected for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Notes of a
particular tranche shall relate, in the case of any Note of a particular tranche
redeemed or to be redeemed only in part, to the portion of the principal amount
of such Notes which has been or is to be redeemed.
SECTION 3.4 Notice of Redemption. Notice of redemption of a
particular tranche of Notes shall be mailed to the Holders by first-class mail
and given in the manner provided in Section 12.3 not later than the thirtieth
day and not earlier than the sixtieth day prior to the Redemption Date, to each
Holder of Notes of the relevant tranche to be redeemed.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price if such price is calculable at the
time such notice is sent or, if not, the formula for calculating such
price; provided, however, that notice of the Redemption Price shall be
mailed to the Holders by first-class mail and given in the manner
provided in Section 12.3 promptly after such price is calculable;
(c) if less than all outstanding Notes of a particular tranche
are to be redeemed, the identification (and, in the case of partial
redemption, the respective principal amounts) of the particular Notes
such tranche to be redeemed;
(d) the place or places where such Notes are to be surrendered
for payment of the Redemption Price;
(e) the name and address of the Paying Agent;
(f) that Notes of a particular tranche called for redemption
must be surrendered to the Paying Agent to collect the Redemption Price
plus accrued and unpaid interest, if any, and Additional Amounts, if
any;
(g) that, unless the Company or the Guarantor defaults in
making the redemption payment, interest and Additional Amounts, if any,
on Notes of a particular tranche called for redemption ceases to accrue
on and after the Redemption Date, and the only remaining right of the
Holders of such Notes of such tranche is to receive payment of the
Redemption Price upon surrender to the Paying Agent of the Notes of
such tranche redeemed;
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(h) (i) if any Global Note of a particular tranche is being
redeemed in part, the portion of the principal amount of such Note of
such tranche to be redeemed and that, after the Redemption Date,
interest and Additional Amounts, if any, shall cease to accrue on the
portion called for redemption, and upon surrender of such Global Note
of such tranche, the Global Note of such tranche with a notation on
Schedule A thereof adjusting the principal amount thereof to be equal
to the unredeemed portion, will be returned and (ii) if any Definitive
Note of a particular tranche is being redeemed in part, the portion of
the principal amount of such Note of such tranche to be redeemed, and
that, after the Redemption Date, upon surrender of such Definitive Note
of such tranche, a new Definitive Note or Notes of such tranche in
aggregate principal amount equal to the unredeemed portion thereof will
be issued in the name of the Holder thereof, upon cancellation of the
original Note of such tranche;
(i) the paragraph of the Notes pursuant to which the Notes of
a particular tranche are to be redeemed; and
(j) the CUSIP or CINS number, and that no representation is
made as to the correctness or accuracy of the CUSIP or CINS number, if
any, listed in such notice or printed on the Notes of such tranche.
If at the time a notice of redemption is being made to Holders
of Notes of a particular tranche pursuant to this Section 3.4, Notes of such
tranche are listed on the Luxembourg Stock Exchange, and so long as the rules of
the Luxembourg Stock Exchange so require, the Company or the Guarantor, as the
case may be, shall also cause a notice of redemption to be published in a
leading daily newspaper of general circulation in Luxembourg (which is expected
to be the Luxemburger Wort), at least 30 days but not more than 60 days before
the Redemption Date.
SECTION 3.5 Effect of Notice of Redemption. Once notice of
redemption is given in accordance with Section 3.4, Notes of a particular
tranche called for redemption become due and payable on the Redemption Date and
at the Redemption Price. Upon surrender to the Trustee or Paying Agent, such
Notes of such tranche called for redemption shall be paid at the Redemption
Price, but installments of interest, the maturity of which is on or prior to the
Redemption Date, shall be payable to Holders on the relevant Interest Payment
Date, or, in the case of Definitive Notes, Holders of record at the close of
business on the relevant Record Dates.
SECTION 3.6 Deposit of Redemption Price. Prior to 11:00 a.m.
New York City time on the Redemption Date, the Company or the Guarantor, as the
case may be, shall deposit with the Paying Agent, in immediately available
funds, U.S. dollars sufficient to pay the Redemption Price of all Notes of a
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particular tranche to be redeemed on that date. The Paying Agent shall promptly
return to the Company or the Guarantor, as the case may be, any cash in U.S.
dollars so deposited which is not required for that purpose upon the written
request of the Company or the Guarantor, as the case may be.
If the Company or the Guarantor, as the case may be, complies
with the preceding paragraph, then, unless the Company or the Guarantor defaults
in the payment of such Redemption Price on the Notes of a particular tranche to
be redeemed will cease to accrue on and after the applicable Redemption Date,
whether or not such Notes of such tranche are presented for payment. With
respect to Definitive Notes of a particular tranche, if a Definitive Note of
such tranche is redeemed on or after an interest Record Date but on or prior to
the related Interest Payment Date, then any accrued and unpaid interest and
Additional Amounts, if any, shall be paid to the Person in whose name such Note
of such tranche was registered at the close of business on such Record Date. If
any Note of a particular tranche called for redemption shall not be so paid upon
surrender for redemption because of the failure of the Company or the Guarantor
to comply with the preceding paragraph, interest and Additional Amounts, if any,
shall be paid on the unpaid principal (or premium, if any), from the Redemption
Date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.1.
SECTION 3.7 Notes Redeemed in Part. Upon surrender and
cancellation of a Definitive Note of a particular tranche that is redeemed in
part, the Company and the Guarantor shall execute and the Trustee shall
authenticate for the Holder (at the Company's expense) a new Definitive Note of
such tranche equal in principal amount to the unredeemed portion of the
Definitive Note surrendered and cancelled; provided, however, that each such
Definitive Note shall be in a principal amount at maturity of $1,000 or a
multiple thereof. Upon surrender of a Global Note of a particular tranche that
is redeemed in part, the Paying Agent shall forward such Global Note to the
Trustee who shall make a notation on Schedule A thereof to reduce the principal
amount of such Global Note to an amount equal to the unredeemed portion of the
Global Note surrendered; provided, however, that each such Global Note shall be
in a principal amount at maturity of $1,000 or a multiple thereof.
SECTION 3.8 Applicability of This Article. Redemption of Notes
of a particular tranche as permitted or required by any form of Note of such
tranche issued pursuant to this Indenture shall be made in accordance with such
form of Note and this Article, provided, however, that if any provision of any
such form of Note shall conflict with any provision of this Article, the
provision of such form of Note shall govern.
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ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Notes. The Company shall promptly pay
the principal, premium, if any, interest and Additional Amounts, if any, on the
Tranche A Notes on the dates and in the manner provided in the Tranche A Notes.
The Company shall promptly pay the principal, premium, if any, interest and
Additional Amounts, if any, on the Tranche B Notes on the dates and in the
manner provided in the Tranche B Notes. Except in the case that the Guarantor or
any Affiliate of the Guarantor is the Paying Agent, the Company may satisfy its
obligations under the preceding sentences by making payment to the Paying Agent.
To the extent lawful, the Company or the Guarantor shall pay
interest on overdue principal at the rate borne by the Tranche A Notes and shall
pay interest on overdue installments of interest at the same rate. Interest will
be computed on the basis of a 360-day year comprised of twelve 30-day months
and, in the case of an incomplete month, the number of days elapsed, the amount
of interest payable on the Tranche A Notes for any period to be equal to the
product of (i) the principal amount of the Tranche A Notes outstanding during
such period, (ii) the stated rate of interest per annum (expressed as a decimal
fraction) payable on the Tranche A Notes and (iii) a fraction, the numerator of
which is the total number of full months elapsed in such period multiplied by
30, plus the number of days in an incomplete month during which such Tranche A
Notes were outstanding, and the denominator of which is 360.
To the extent lawful, the Company or the Guarantor shall pay
interest on overdue principal at the rate borne by the Tranche B Notes and shall
pay interest on overdue installments of interest at the same rate. Interest will
be computed on the basis of a 360-day year comprised of twelve 30-day months
and, in the case of an incomplete month, the number of days elapsed, the amount
of interest payable on the Tranche B Notes for any period to be equal to the
product of (i) the principal amount of the Tranche B Notes outstanding during
such period, (ii) the stated rate of interest per annum (expressed as a decimal
fraction) payable on the Tranche B Notes and (iii) a fraction, the numerator of
which is the total number of full months elapsed in such period multiplied by
30, plus the number of days in an incomplete month during which such Tranche B
Notes were outstanding, and the denominator of which is 360.
SECTION 4.2 Maintenance of Office or Agency. The Company shall
maintain the office or agency (which office may be an office of the Trustee or
an affiliate of the Trustee, Exchange Agent or co-Exchange Agent) required under
Section 2.3 where Notes may be surrendered for registration of transfer or for
exchange and where notices and demands to or upon the Company in
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respect of the Notes and this Indenture may be served. The Company shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 12.2.
SECTION 4.3 Limitation on Liens. (a) The Guarantor will not,
and will not permit any Subsidiary to, directly or indirectly, as security for
any Debt, mortgage, pledge or create or permit to exist any lien on any shares
of stock, indebtedness or other obligations of a Subsidiary or any Principal
Property, whether such shares of stock, indebtedness or other obligations of a
Subsidiary or Principal Property are owned at the date of this Indenture or
hereafter acquired, unless the Company or the Guarantor secures or causes to be
secured any outstanding Notes equally and ratably with all Debt secured by such
mortgage, pledge or lien, so long as that Debt shall be secured; provided,
however, that this covenant shall not apply in the case of (i) the creation of
any mortgage, pledge or other lien on any shares of stock, indebtedness or other
obligations of a Subsidiary or a Principal Property hereafter acquired
(including acquisitions by way of merger or consolidation) by the Guarantor or a
Subsidiary contemporaneously with such acquisition, or within 120 days
thereafter, to secure or provide for the payment or financing of any part of the
purchase price thereof, or the assumption of any mortgage, pledge or other lien
upon any shares of stock, indebtedness or other obligations of a Subsidiary or a
Principal Property hereafter acquired existing at the time of such acquisition,
or the acquisition of any shares of stock, indebtedness or other obligations of
a Subsidiary or a Principal Property subject to any mortgage, pledge or other
lien without the assumption thereof, provided that any mortgage, pledge or lien
referred to in this clause (i) shall attach only to the shares of stock,
indebtedness or other obligations of a Subsidiary or a Principal Property so
acquired and fixed improvements thereon; (ii) any mortgage, pledge or other lien
on any shares of stock, indebtedness or other obligations of a Subsidiary or a
Principal Property existing on the date that the Notes are first issued; (iii)
any mortgage, pledge or other lien on any shares of stock, indebtedness or other
obligations of a Subsidiary or a Principal Property in favor of the Company, the
Guarantor or any other Subsidiary; (iv) any mortgage, pledge or other lien on a
Principal Property being constructed or improved securing Debt incurred to
finance the construction or improvements; (v) any mortgage, pledge or other lien
on shares of stock, indebtedness or other obligations of a Subsidiary or a
Principal Property incurred in connection with the issuance by a state or
political subdivision thereof of any securities the interest on which is exempt
from Federal income taxes by virtue of Section 103 of the United States Internal
Revenue Code of 1986, as amended, or any other laws and regulations in effect at
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the time of such issuance; and (vi) any renewal of or substitution for any
mortgage, pledge or other lien permitted by any of the preceding clauses (i)
through (v), provided, in the case of a mortgage, pledge or other lien permitted
under clause (i), (ii) or (iv), the Debt secured is not increased nor the line
extended to any additional assets.
(b) Notwithstanding the provisions of paragraph (a) of this
Section 4.3, the Guarantor or any Subsidiary may create or assume liens in
addition to those permitted by paragraph (a) of this Section 4.3, and renew,
extend or replace such liens, provided, that at the time of such creation,
assumption, renewal, extension or replacement, and after giving effect thereto,
Exempted Debt does not exceed 10% of Consolidated Net Tangible Assets.
SECTION 4.4 Limitation on Sale-Leaseback Transactions. (a) The
Guarantor will not, and will not permit, any Subsidiary to, sell or transfer,
directly or indirectly, except to the Guarantor or a Subsidiary, a Principal
Property as an entirety, or any substantial portion thereof, with the intention
of taking back a lease of all or part of such property except a lease for a
period of three years or less at the end of which it is intended that the use of
such property by the lessee will be discontinued; provided that, notwithstanding
the foregoing, the Guarantor or any Subsidiary may sell a Principal Property and
lease it back for a longer period (i) if the Guarantor or such Subsidiary would
be entitled, pursuant to the provisions of Section 4.3(a), to create a mortgage
on the property to be leased securing Debt in an amount equal to the
Attributable Debt with respect to the sale and lease-back transaction without
equally and ratably securing the outstanding Notes or (ii) if (A) the Guarantor
promptly informs the Trustee of such transactions, (B) the net proceeds of such
transactions are at least equal to the fair value (as determined by a Board
Resolution) of such property and (C) the Guarantor causes an amount equal to the
net proceeds of the sale to be applied to the retirement (whether by redemption,
cancellation after open-market purchases, or otherwise), within 120 days after
receipt of such proceeds, of Funded Debt and having an outstanding principal
amount equal to the net proceeds.
(b) Notwithstanding the provisions of paragraph (a) of this
Section 4.4, the Guarantor or any Subsidiary may enter into sale and lease-back
transactions in addition to those permitted by paragraph (a) of this Section 4.4
and without any obligation to retire any outstanding Funded Debt, provided that
at the time of entering into such sale and lease-back transactions and after
giving effect thereto, Exempted Debt does not exceed 10% of Consolidated Net
Tangible Assets.
SECTION 4.5 No Lien Created, etc. This Indenture and the Notes
do not create a lien, charge or encumbrances on any property of the Company, the
Guarantor or any Subsidiary.
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SECTION 4.6 Compliance Certificate; Notice of Default. (a) The
Company shall deliver to the Trustee within 120 days after the end of each
fiscal year of the Company an Officers' Certificate signed by the principal
executive officer, principal financial officer or principal accounting officer
of the Company stating whether or not the signers know of any Default or Event
of Default. If they know of a Default or Event of Default, the certificate shall
describe the Default or Event of Default. The certificate need not comply with
Section 12.4
(b) The Guarantor shall deliver to the Trustee within 120 days
after the end of each fiscal year of the Guarantor an Officers' Certificate
signed by the principal executive officer, principal financial officer or
principal accounting officer of the Guarantor stating whether or not the signers
know of any Default or Event of Default. If they know of a Default or Event of
Default, the certificate shall describe the Default or Event of Default. The
certificate need not comply with Section 12.4.
SECTION 4.7 Reports. (a) The Company shall comply with the
provisions of Section 314(c) of the TIA.
(b) The Guarantor shall file with the Trustee within 15 days
after it files them with the Commission copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) which
the Guarantor is required to file with the Commission pursuant to Sections 13 or
15(d) of the Securities Exchange Act of 1934. The Guarantor also shall comply
with the other provisions of Section 314(a) of the Trust Indenture Act.
(c) Such reports shall be delivered to the Exchange Agent and,
after the issuance of Definitive Notes, the Exchange Agent will mail them at the
Company's expense to the Holders at their addresses appearing in the register of
Notes maintained by the Exchange Agent.
SECTION 4.8 Payment of Certain Non-Income Taxes and Similar
Charges. The Company will pay any present or future stamp, court or documentary
taxes, or any other excise or property taxes, charges or similar levies which
arise in any jurisdiction from the execution, delivery or registration of the
Notes or any other document or instrument referred to therein, or the receipt of
any payments with respect to the Notes, excluding any such taxes, charges or
similar levies imposed by any jurisdiction outside the United Kingdom, the
United States of America or any jurisdiction in which a Paying Agent is located,
other than those resulting from, or required to be paid in connection with, the
enforcement of the Notes of a particular tranche or any other such document or
instrument following the occurrence of any Event of Default with respect to the
Notes of such tranche.
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ARTICLE V
MERGER, CONSOLIDATION OR SALE
BY THE COMPANY AND THE GUARANTOR
SECTION 5.1 Merger, Consolidation or Sale of All or
Substantially All Assets of the Company. The Company shall not consolidate with
or merge into, or transfer, directly or indirectly, all or substantially all of
its assets to another corporation or other Person unless (1) the resulting,
surviving or transferee corporation or other Person assumes by supplemental
indenture all the obligations of the Company under the Notes and this Indenture,
(2) immediately after giving effect to such transaction, no Event of Default and
no circumstances that, after notice or lapse of time or both, would become an
Event of Default, shall have happened and be continuing, and (3) the Company
shall have delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such
supplemental indenture comply with this Indenture, and thereafter all such
obligations of the Company shall terminate.
SECTION 5.2 Merger, Consolidation or Sale of All or
Substantially All Assets of the Guarantor. The Guarantor shall not consolidate
with or merge into, or transfer, directly or indirectly, all or substantially
all of its assets to another corporation or other Person unless (1) the
resulting, surviving or transferee corporation or other Person assumes by
supplemental indenture all the obligations of the Guarantor under the Notes and
this Indenture, (2) immediately after giving effect to such transaction, no
Event of Default and no circumstances that, after notice or lapse of time or
both, would become an Event of Default, shall have happened and be continuing,
and (3) the Guarantor shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture comply with this Indenture,
and thereafter all such obligations of the Guarantor shall terminate.
ARTICLE VI
DEFAULT AND REMEDIES
SECTION 6.1 Events of Default. An "Event of Default" occurs
with respect to the Notes of a particular tranche if:
(a) the Company or the Guarantor defaults in the payment of
interest or Additional Amounts, if any, on any Note of such tranche,
when the same becomes due and payable and the default continues for a
period of 30 days;
(b) the Company or the Guarantor defaults in the payment of
the principal of (or premium on, if any) any Note
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of such tranche when the same becomes due and payable at maturity, upon
redemption or otherwise;
(c) the Company or the Guarantor fails to comply with any of
its other agreements in the Notes of such tranche or this Indenture for
the benefit of such tranche and the default continues for the period
and after the notice specified in this Section;
(d) the Company, the Guarantor or any Subsidiary fails to pay,
in accordance with its terms and when payable, any of the principal,
premium, if any, interest or additional amounts, if any, on any Debt
(including any tranche of Notes other than the tranche or tranches, if
any, with respect to which the failure to pay principal, premium, if
any, interest or Additional Amounts is also an "Event of Default" under
Section 6.1(a) and/or 6.1(b) above) having, in the aggregate, a then
outstanding principal amount in excess of $20,000,000 or the maturity
of any Debt in such amount shall have been accelerated by any holder or
holders thereof or any trustee or agent acting on behalf of such holder
or holders, or any Debt in such amount shall have been required by such
holder, holders, trustee or agent to be prepaid prior to the stated
maturity thereof, in accordance with the provisions of any contract
evidencing, providing for the creation of or concerning such Debt;
(e) the Company or the Guarantor pursuant to or within the
meaning of any Bankruptcy Law:
(1) commences a voluntary case,
(2) consents to the entry of an order for relief
against it in an involuntary case,
(3) consents to the appointment of a Custodian
of it or for all or substantially all of its
property,
(4) makes a general assignment for the benefit
of its creditors, or
(5) ceases or suspends generally payments of its
debts or announces an intention so to do or
is (or is deemed for the purposes of any law
applicable to it to be) unable to pay its
debts as they fall due, or makes a general
assignment for the benefit of or a
composition with its creditors generally or
a moratorium is declared in respect of any
of its indebtedness;
(f) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
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(1) is for relief against the Company or the
Guarantor in an involuntary case,
(2) appoints a Custodian of the Company or of
the Guarantor or for all or substantially
all of the Company's or Guarantor's
property, as the case may be,
(3) orders the winding up or liquidation of the
Company or the Guarantor, or
(4) orders any execution of distress in respect
of any material liability to be levied
against the Company or the Guarantor or an
encumbrancer takes possession of the whole
or any material part of, the property,
undertaking, or assets of the Company or the
Guarantor,
and the order or decree remains unstayed and in effect for 60 days; or
(g) the Guarantee with respect to such tranche of Notes ceases
to be in full force and effect or the Guarantor denies or disaffirms
its obligations under such Guarantee.
The term "Bankruptcy Law" means Title 11, United States Code
or any similar Federal or state law for the relief of debtors and the U.K.
Insolvency Act 1986 as supplemented or amended together with all rules,
regulations and instruments made thereunder and applicable United Kingdom law
relating to bankruptcy, insolvency, winding up, administration, receivership and
other similar matters. The term "Custodian" means any receiver, trustee,
assignee, liquidator, custodian or similar official under any Bankruptcy Law.
A default under clause (c) is not an Event of Default with
respect to the Notes of a particular tranche until the Trustee or the Holders of
at least 25% in principal amount of all the Notes of such tranche notify the
Company or the Guarantor (and the Trustee if such notice is given by Holders) of
the default and the Company or the Guarantor, as the case may be, does not cure
the default within 30 days after receipt of the notice. The notice must specify
the default, demand that it be remedied and state that the notice is a "Notice
of Default." Subject to the provisions of Article VII, the Trustee shall not be
charged with knowledge of any default unless written notice thereof shall have
been given to the Trustee by the Company, the Guarantor, the Paying Agent, the
Holder of a Note of the applicable tranche or an agent of such Holder.
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SECTION 6.2 Acceleration. If an Event of Default with respect
to the Notes of a particular tranche occurs and is continuing, the Trustee by
notice to the Company and the Guarantor or the Holders of at least 25% in
principal amount of the Notes of such tranche, by notice to the Company, the
Guarantor and the Trustee, may declare the principal, premium, if any, accrued
interest and Additional Amounts, if any, on all the Notes of such tranche to be
due and payable immediately. Upon a declaration such principal, premium, if any,
interest and Additional Amounts, if any, shall be due and payable immediately.
The Holders of a majority in principal amount of the Notes of a particular
tranche by notice to the Trustee may rescind an acceleration (and upon such
rescission any past Event of Default caused by such acceleration shall be deemed
cured) with respect to the Notes of such tranche and its consequences if all
existing Events of Default with respect to the Notes of such tranche have been
cured or waived, if the rescission would not conflict with any judgment or
decree, and if all payments due to the Trustee and any predecessor Trustee under
Section 7.7 have been made. No such rescission shall affect any subsequent
Default or impair any rights consequent thereto.
SECTION 6.3 Other Remedies. If an Event of Default with
respect to the Notes of a particular tranche occurs and is continuing, the
Trustee may pursue any available remedy by proceeding at law or in equity to
collect the payment of principal, premium, if any, interest and Additional
Amounts, if any, on the Notes of such tranche or to enforce the performance of
any provision of such Notes, the applicable Guarantees or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 6.4 Waiver of Past Defaults. The Holders of a majority
in principal amount of the Notes of a particular tranche by notice to the
Trustee may waive an existing Default or Event of Default with respect to the
Notes of such tranche and its consequences. When a Default or Event of Default
is waived, it is cured and stops continuing, but no such waiver shall extend to
any subsequent or other Default or Event of Default or impair any right
consequent thereto.
SECTION 6.5 Control by Majority. The Holders of a majority in
principal amount of the Notes of a particular tranche may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or of exercising any trust or power conferred on it with respect to the
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Notes of such tranche. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture, or, subject to Section 7.1, that the
Trustee determines is unduly prejudicial to the rights of other Holders of the
Notes of the same tranche or would involve the Trustee in personal liability.
SECTION 6.6 Limitation on Suits. No Holder of a Note of a
particular tranche may pursue any remedy with respect to this Indenture or the
Notes of such tranche unless:
(a) the Holder gives to the Trustee written notice stating
that an Event of Default with respect to the Notes of such tranche is
continuing;
(b) the Holders of at least 25% in principal amount of the
Notes of such tranche make a written request to the Trustee to pursue
the remedy;
(c) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the Notes of such tranche do not give the Trustee a
direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over the other Holder.
SECTION 6.7 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal, premium, if any, interest and Additional
Amounts, if any, on the Notes, on or after the respective due dates expressed in
the Notes, or to bring suit for the enforcement of any such payment on or after
such respective date, shall not be impaired or affected without the consent of
the Holder.
SECTION 6.8 Collection Suit by Trustee. If an Event of Default
in payment of principal, premium, if any, interest or Additional Amounts, if
any, specified in Section 6.1(a) or (b) occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust against
the Company or the Guarantor for the whole amount of principal, premium, if any,
interest and Additional Amounts, if any, remaining unpaid.
SECTION 6.9 Trustee May File Proofs of Claim. The Trustee may
file such proofs of claim and other papers or
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documents as may be necessary or advisable in order to have the claims of the
Trustee and the Holders allowed in any judicial proceedings relative to the
Company or the Guarantor, its creditors or its property, and unless prohibited
by law or applicable regulations, may vote on behalf of the Holders in any
election of a trustee in bankruptcy or other Person performing similar
functions.
SECTION 6.10 Priorities. If the Trustee collects any money
pursuant to this Article with respect to the Notes of a particular tranche, it
shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.7.
Second: to the Holders of Notes of such tranche for amounts
due and unpaid on such Notes for principal, premium, if any, interest and
Additional Amounts, if any, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Notes for principal, premium,
if any, interest and Additional Amounts, if any, respectively; and
Third: to the Company or the Guarantor, as applicable.
The Trustee may fix a record date and payment date for any
payment to Holders pursuant to this Section.
SECTION 6.11 Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit other than
the Trustee of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit including the Trustee, having due regard
to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.7 or a suit by Holders of more than 10% in
principal amount of the Notes.
ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee. (a) If an Event of Default with
respect to a particular tranche of Notes known to the Trustee has occurred and
is continuing, the Trustee shall, on behalf of the Holders of the Notes of such
tranche, exercise such of the rights and powers vested in it by this Indenture
and use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the
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conduct of his or her own affairs. Subject to such provisions, the Trustee will
be under no obligation to exercise any of its rights or powers under this
Indenture at the request of any of the Holders of Notes, unless they shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
(b) Except during the continuance of an Event of Default with
respect to a particular tranche of Notes known to the Trustee:
(i) The Trustee and the Agents will perform only those duties
as are specifically set forth herein and no others and no implied covenants or
obligations shall be read into this Indenture against the Trustee or the Agents.
(ii) In the absence of bad faith on their part, the Trustee
and the Agents may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions and
such other documents delivered to them pursuant to Section 12.4 hereof furnished
to the Trustee and conforming to the requirements of this Indenture. However, in
the case of any such certificates or opinions which by any provision hereof are
required to be furnished to the Trustee, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) This paragraph does not limit the effect of paragraph (b)
of this Section 7.1.
(ii) Neither the Trustee nor any Agent shall be liable for any
error of judgment made in good faith by a Trust Officer, unless it is proved
that the Trustee or such Agent was negligent in ascertaining the pertinent
facts.
(iii) The Trustee shall not be liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a majority in principal
amount of the outstanding Notes of a particular tranche relating to the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under this
Indenture with respect to such Notes; and
(d) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or to take or omit to take any
action under this Indenture or take any action at the request or direction of
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Holders if it shall have reasonable grounds for believing that repayment of such
funds is not assured to it or it does not receive an indemnity satisfactory to
it in its sole discretion against such risk, liability, loss, fee or expense
which might be incurred by it in compliance with such request or direction.
(e) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), (c) and (d) of this Section 7.1.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company or
the Guarantor. Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) Any provision hereof relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section 7.1 and, upon qualification of this Indenture under
the TIA, the TIA.
SECTION 7.2 Rights of Trustee. Subject to Section 7.1:
(a) The Trustee and each Agent may rely conclusively on and
shall be protected from acting or refraining from acting based upon any document
believed by them to be genuine and to have been signed or presented by the
proper person. Neither the Trustee nor any Agent shall be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent order,
approval, appraisal, bond, debenture, note, coupon, security or other paper or
document, but the Trustee or its Agent, as the case may be, in its discretion,
may make reasonable further inquiry or investigation into such facts or matters
stated in such document and if the Trustee or its Agent as the case may be,
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company and the
Guarantor, at reasonable times during normal business hours, personally or by
agent or attorney;
(b) any request, direction, order or demand of the Company or
Guarantor mentioned herein shall be sufficiently evidenced by (i) a Company
Order or Guarantor Order, as the case may be, or an Officers' Certificate and
(ii) any resolution of the Board of Directors of the Company or Guarantor may be
sufficiently evidenced by a Board Resolution;
(c) before the Trustee acts or refrains from acting, it may
require, in the absence of bad faith, an Officers' Certificate or an Opinion of
Counsel or both, which shall conform to the provisions of Sections 12.4 and
12.5. Neither the Trustee
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nor any Agent shall be liable for any action it takes or omits to take in good
faith in reliance on such certificate or opinion;
(d) The Trustee and any Agent may act through their attorneys
and agents and shall not be responsible for the misconduct or negligence of any
agent (other than an agent who is an employee of the Trustee or such Agent)
appointed with due care.
(e) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be authorized or
within its rights or powers conferred upon it by this Indenture; provided,
however, that the Trustee's conduct does not constitute willful misconduct,
negligence or bad faith.
(f) The Trustee or any Agent may consult with counsel of its
selection and the advice or opinion of such counsel or any Opinion of Counsel as
to matters of law shall be full and complete authorization and protection from
liability in respect of any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(g) Subject to Section 9.2 hereof, the Trustee may (but shall
not be obligated to), without the consent of the Holders, give any consent,
waiver or approval required by the terms hereof, but shall not without the
consent of the Holders of not less than a majority in aggregate principal amount
of the Notes of a particular tranche at the time outstanding (i) give any
consent, waiver or approval or (ii) agree to any amendment or modification of
this Indenture, in each case, that shall have a material adverse effect on the
interests of any Holder of Notes of such tranche. The Trustee shall be entitled
to request and conclusively rely on an Opinion of Counsel with respect to
whether any consent, waiver, approval, amendment or modification shall have a
material adverse effect on the interests of any Holder of Notes of a particular
tranche.
(h) The Trustee shall not be charged with knowledge of any
Event of Default with respect to the Notes of a particular tranche unless either
(1) a Trust Officer shall have actual knowledge of such Event of Default or (2)
written notice of such Event of Default shall have been given to the Trustee by
the Company, the Guarantor or any other obligor on the Notes of such tranche or
by any Holder of the Notes of such tranche.
(i) The Trustee shall have no duties or responsibilities with
respect to and shall have no liability for the actions taken or the failures to
act of any other Trustees appointed hereunder.
SECTION 7.3 Individual Rights of Trustee. The Trustee in its
individual or any other capacity may, subject to Sections 7.10 and 7.11, become
the owner or pledgee of Notes and may
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otherwise deal with the Company, the Guarantor, its Subsidiaries, or their
respective Affiliates with the same rights it would have if it were not Trustee.
However, in the event that the Trustee acquires any conflicting interest, as
defined by Section 310(b) of the TIA, it must eliminate such conflict within 90
days, apply to the SEC for permission to continue as trustee or resign. Any
Agent may do the same with like rights.
SECTION 7.4 Trustee's Disclaimer. The Trustee and the Agents
shall not be responsible for and make no representation as to the validity,
effectiveness or adequacy of this Indenture or the Notes; it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision hereof,
it shall not be responsible for the use or application of any money received by
any Paying Agent other than the Trustee and it shall not be responsible for any
statement or recital herein of the Company or the Guarantor, the Offering
Memorandum or any other document issued in connection with the sale of Notes or
any statement in the Notes other than the Trustee's certificate of
authentication.
SECTION 7.5 Notice of Default. (a) If a Default or an Event of
Default with respect to a particular tranche of Notes occurs and is continuing
and the Trustee receives actual notice of such event, the Trustee shall mail to
each Holder of Notes of such tranche, as their names and addresses appear on the
list of Holders described in Section 2.5, notice of the uncured Default or Event
of Default within 90 days after the Trustee receives such notice. Except in the
case of a Default or Event of Default in payment of principal, premium, if any,
interest or Additional Amounts, if any, on any Note of a particular tranche, the
Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is in the interest
of the Holders of Notes of such tranche, and provided, further, that in the case
of any default of the character specified in Section 6.1(c) no such notice to
Holders shall be given until at least 60 days after the occurrence thereof. For
the purpose of this Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of Default with
respect to the Notes.
SECTION 7.6 Report by Trustee to Holders. This Section 7.6
shall not be operative as a part of this Indenture until this Indenture is
qualified under the TIA, and, until such qualification, this Indenture shall be
construed as if this Section 7.6 were not contained herein.
Within 60 days after each May 15 beginning with May 15, 1999,
the Trustee shall, to the extent that any of the events described in TIA Section
313(a) occurred within the previous twelve months, but not otherwise, mail to
each Holder a brief report dated as of such date that complies with TIA Section
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313(a). The Trustee also shall comply with TIA Sections 313(b), 313(c) and
313(d).
A copy of each report at the time of its mailing to Holders
shall be mailed to the Company and the Guarantor and filed with the SEC and each
securities exchange, if any, on which the Notes of a particular tranche are
listed.
The Company shall promptly notify the Trustee if the Notes of
a particular tranche become listed on any securities exchange or of any
delisting thereof.
SECTION 7.7 Compensation and Indemnity. The Company shall pay
to the Trustee from time to time such compensation as the Company and the
Trustee shall from time to time agree in writing for its acceptance of this
Indenture and services hereunder. The Trustee's and the Agents' compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances (including reasonable fees and expenses of
counsel) incurred or made by it in addition to the compensation for their
services, except any such disbursements, expenses and advances as may be
attributable to the Trustee's or any Agent's negligence or bad faith. Such
expenses shall include the reasonable compensation, disbursements and expenses
of the Trustee's and Agents' accountants, experts and counsel and any taxes or
other expenses incurred by a trust created pursuant to Section 8.4 hereof.
The Company shall indemnify each of the Trustees, any
predecessor Trustee and the Agents for, and hold them harmless against, any and
all loss, damage, claim, expense or liability including taxes (other than taxes
based on the income of the Trustee) incurred by the Trustee or an Agent without
negligence, willful misconduct or bad faith on its part in connection with
acceptance of administration of this trust and its duties under this Indenture,
including the reasonable expenses and attorneys' fees and expenses of defending
itself against any claim of liability arising hereunder. The Trustee and the
Agents shall notify the Company promptly of any claim asserted against the
Trustee or such Agent for which it may seek indemnity. However, the failure by
the Trustee or the Agent to so notify the Company shall not relieve the Company
of its obligations hereunder. The Company shall defend the claim and the Trustee
or such Agent shall cooperate in the defense (and may employ its own counsel) at
the Company's expense. The Trustee or such Agent may have separate counsel and
the Company shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its written consent, which
consent shall not be unreasonably withheld. The Company need not reimburse any
expense or indemnify against any loss or liability incurred by the Trustee or
such Agent as a result of the violation of this Indenture by the Trustee or such
Agent if such violation arose from the Trustee's or such Agent's negligence or
bad faith.
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To secure the Company's payment obligations in this Section
7.7, the Trustee and the Agents shall have a senior lien prior to the Notes
against all money or property held or collected by the Trustee and the Agents,
in its capacitY as Trustee or Agent, except money or property held in trust to
pay principal, premium, if any, interest or Additional Amounts, if any, on
particular Notes.
When the Trustee or an Agent incurs expenses or renders
services after an Event of Default specified in Section 6.1(e) or (f) occurs,
the expenses (including the reasonable fees and expenses of its agents and
counsel) and the compensation for the services shall be preferred over the
status of the Holders in a proceeding under any Bankruptcy Law and are intended
to constitute expenses of administration under any Bankruptcy Law. The Company's
obligations under this Section 7.7 and any claim or lien arising hereunder shall
survive the resignation or removal of any Trustee or Agent, the discharge of the
Company's obligations pursuant to Article VIII and any rejection or termination
under any Bankruptcy Law.
SECTION 7.8 Replacement of Trustee. The Trustee may resign as
Trustee on behalf of the Holders of Notes of a particular tranche at any time by
so notifying the Company and the Guarantor in writing. The Holders of a majority
in principal amount of the outstanding Notes of a particular tranche may remove
the Trustee as Trustee on behalf of Holders of Notes of such tranche by so
notifying the Company, the Guarantor and the Trustee in writing and may appoint
a successor trustee with the Company's and the Guarantor's consent. A
resignation or removal of the Trustee and appointment of a successor Trustee
shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this section. The Company or the Guarantor may remove
the Trustee if:
(i) the Trustee fails to comply with Section 7.10;
(ii) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(iii) a receiver or other public officer takes charge of the
Trustee or its property; or
(iv) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall notify each Holder of
such event and shall promptly appoint a successor Trustee. Within one year after
the successor Trustee takes office, the Holders of a majority in principal
amount of the then outstanding Notes of a particular tranche may, with the
Company's consent, appoint a successor Trustee to replace the
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successor Trustee appointed by the Company to serve as Trustee on behalf of
Holders of Notes of such tranche.
Every successor Trustee appointed hereunder with respect to
the Notes of a particular tranche shall execute, acknowledge and deliver to the
Company, the Guarantor and to the retiring Trustee an instrument accepting such
appointment and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but on the request of the Company, the Guarantor
or the successor Trustee, such retiring Trustee shall, upon payment of its
charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder.
Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in the immediately preceding paragraph of this Section, as the case may be.
If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, the Guarantor or the Holders of at least 10% in principal amount of the
then outstanding Notes of a particular tranche may petition any court of
competent jurisdiction for the appointment of a successor Trustee to serve as
Trustee on behalf of Holders of Notes of such tranche.
If the Trustee after written request by any Holder who has
been a Holder for at least six months fails to comply with Section 7.10, such
Holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Company's obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.
SECTION 7.9 Successor Trustee by Merger, Etc. Any corporation
into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which such Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of such
Trustee, shall be the successor of such Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Notes shall have been authenticated, but
not
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delivered, by the Trustee or the Authenticating Agent, any successor by merger,
conversion or consolidation to such authenticating Trustee, or any successor
Authenticating Agent, as the case may be, may adopt such authentication and
deliver the Notes so authenticated with the same effect as if such successor
Trustee or successor Authenticating Agent had itself authenticated such Notes.
SECTION 7.10 Eligibility; Disqualification; Corporate Trust
Required; Conflicting Interest. The Trustee for the Notes shall be subject to
the provisions of Section 310(b) of the TIA (as if this Indenture were qualified
thereunder) during the period of time required thereby. Nothing herein shall
prevent the Trustee from filing with the SEC the application referred to in the
penultimate paragraph of Section 310(b) of the TIA. In determining whether the
Trustee has a conflicting interest as defined in Section 310(b) of the TIA with
respect to a tranche of Notes, there shall be excluded Notes of the other
tranche of Notes.
The Trustee shall not be deemed to have a conflict of interest
under Section 310(b) of the TIA with respect to any other indenture entered into
with the Company or the Guarantor, provided that the Notes issued under this
Indenture are wholly unsecured and any other indenture and the securities issued
thereunder are wholly unsecured and rank equally with the Notes.
There shall at all times be a Trustee hereunder which shall be
(i) a corporation organized and doing business under the laws of the United
States of America, any state thereof, or the District of Columbia, authorized
under such laws to exercise corporate trust powers, and subject to supervision
or examination by Federal or State authority, or (ii) a corporation or other
Person organized and doing business under the laws of a foreign government that
is permitted to act as Trustee pursuant to a rule, regulation, or other order of
the SEC, authorized under such laws to exercise corporate trust powers, and
subject to supervision or examination by authority of such foreign government or
a political subdivision thereof substantially equivalent to supervision or
examination applicable to United States institutional trustees, having, in
either case, a combined capital and surplus of at least $10,000,000. If such
corporation publishes reports of condition at least annually, pursuant to law or
to requirements of the aforesaid supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. The Company, the Guarantor
or any Person directly or indirectly controlling, controlled by, or under common
control with the Company or the Guarantor shall not serve as Trustee for the
Notes. If at any time the Trustee shall cease to be eligible in accordance with
the provisions of this Section, it shall resign immediately in the manner and
with the effect hereunder specified in this Article.
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SECTION 7.11 Preferential Collection of Claims Against
Company. The Trustee, in its capacity as Trustee hereunder, shall comply with
TIA Section 311(a), excluding any creditor relationship listed in TIA Section
311(b). A Trustee who has resigned or been removed shall be subject to TIA
Section 311(a) to the extent indicated.
SECTION 7.12 Authenticating Agents. From time to time, the
Trustee may, subject to its sole discretion, appoint one or more Authenticating
Agents with respect to the Notes of a particular tranche, which may include any
director or officer of the Company, the Guarantor or any Affiliate with power to
act in the name of the Trustee and subject to its discretion in the
authentication and delivery of the Notes of such tranche in connection with
registrations of transfers and exchanges under Sections 2.6, 2.7, and 3.7 as
fully to all intents and purposes as though such Authenticating Agent had been
expressly authorized by those Sections of this Indenture to authenticate and
deliver such Notes. For all purposes of this Indenture the authentication and
delivery of such Notes by an Authentication Agent for such Notes pursuant to
this Section shall be deemed to be authentication and delivery of such Notes "by
the Trustee" for the Notes of such series. Any such Authenticating Agent shall
at all times be a corporation organized and doing business under the laws of the
United States or of any State thereof, or the District of Columbia, authorized
under such laws to exercise corporate trust powers, and, if other than an
Affiliate of the Trustee, having a combined capital and surplus of at least
$10,000,000, and subject to supervision or examination by Federal, State, or
District of Columbia authority. If such corporation publishes reports of
condition at least annually pursuant to law or the requirements of such
supervising or examining authority, then for the purposes of this Section the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in this
Section.
Any Authenticating Agent may resign at any time by giving
written notice of resignation to the Trustee and to the Company. The Trustee may
at any time terminate the appointment of any Authenticating Agent by giving
written notice of termination to such Authenticating Agent and to the Company in
the manner set forth in Section 12.2. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section, the Trustee
may appoint a successor Authenticating Agent, shall give written notice of such
appointment to the Company and shall give written notice of such appointment to
all Holders of Notes of such tranche in the manner set forth in Section 12.3.
Any successor Authenticating Agent
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upon acceptance of his appointment hereunder, shall become vested with all the
rights, powers and duties of his predecessor hereunder, with like effect as if
originally named as an Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section.
The Company agrees to pay to any corporation that has been
appointed as Authenticating Agent from time to time reasonable compensation for
such services.
If an appointment with respect to the Notes of a particular
tranche is made pursuant to this Section, the Notes of such tranche may have
endorsed thereon, in addition to the Trustee's certification of authentication,
an alternate certificate of authentication in the following form:
"This is one of the Notes designated therein described in the
within-mentioned Indenture.
[-----------------------],
as Trustee
By:_________________________________
As Authenticating Agent
By:________________________________"
ARTICLE VIII
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.1 Option To Effect Legal Defeasance or Covenant
Defeasance. The Company or the Guarantor, as the case may be, may, at the option
of its Board of Directors evidenced by a resolution set forth in an Officers'
Certificate, at any time, with respect to the Notes of a particular tranche,
elect to have either Section 8.2 or 8.3 be applied to all outstanding Notes of
such tranche upon compliance with the conditions set forth below in this Article
VIII.
SECTION 8.2 Legal Defeasance and Discharge. Upon the Company's
or the Guarantor's exercise under Section 8.1 of the option applicable to this
Section 8.2, the Company or the Guarantor, as the case may be, shall be deemed
to have been discharged from its obligations with respect to all outstanding
Notes of a particular tranche or Guarantees with respect to such tranche of
Notes, as the case may be, on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Company
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shall be deemed to have paid and discharged all the obligations relating to the
outstanding Notes of such tranche or the Guarantor shall be deemed to have
discharged all the obligations relating to the Guarantees with respect to such
tranche of Notes, and such Notes and Guarantees, as applicable, shall thereafter
be deemed to be "outstanding" only for the purposes of Section 8.6, Section 8.8
and the other Sections of this Indenture referred to in clauses (a) and (d)
below, and to have satisfied all of their other respective obligations under
such Notes or Guarantees and this Indenture and cured all then existing Events
of Default with respect to such tranche of Notes (and the Trustee, on demand of
and at the expense of the Company or the Guarantor, as the case may be, shall
execute proper instruments acknowledging the same), except for the following
which shall survive until otherwise terminated or discharged hereunder: (a) the
rights of holders of outstanding Notes of such tranche and Guarantees with
respect to such tranche of Notes to receive payments in respect of the
principal, premium, if any and interest on such Notes when such payments are due
or on the Redemption Date solely out of the trust created pursuant to this
Indenture, (b) the right of holders of outstanding Notes of such tranche to
receive payments in respect of Additional Amounts, if any, on such Notes when
such payments are due or on the Redemption Date; (c) the rights, powers, trusts,
duties and immunities of the Trustee, and the Company's and Guarantor's
obligations in connection therewith; and (d) this Article VIII and the
obligations set forth in Section 8.6 hereof.
Subject to compliance with this Article VIII, the Company or
the Guarantor may exercise its option under this Section 8.2 notwithstanding the
prior exercise of its option under Section 8.3 with respect to the Notes of a
particular tranche or the Guarantee with respect to such tranche of Notes, as
applicable.
SECTION 8.3 Covenant Defeasance. Upon the Company's or the
Guarantor's exercise under Section 8.1 of the option applicable to this Section
8.3, the Company or the Guarantor, as the case may be, shall be released from
any obligations under the covenants contained in Sections 4.3, 4.4 and 4.6
hereof with respect to the outstanding Notes of a particular tranche or
Guarantees with respect to such tranche of Notes, as the case may be, on and
after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the Notes of such tranche and Guarantees with
respect to such tranche of Notes, as applicable, shall thereafter be deemed not
"outstanding" for the purposes of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder (it being understood that such Notes and Guarantees shall not be
deemed outstanding for accounting purposes). For this purpose, such Covenant
Defeasance means that, with respect to the outstanding Notes of a particular
tranche and Guarantees with
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respect to the Notes of such tranche, the Company and the Guarantor,
respectively, may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or Event of Default with respect to the Notes of such
tranche under Section 6.1(c), nor shall any event referred to in Sections 6.1(d)
thereafter constitute a Default or Event of Default with respect to the Notes of
such tranche, but, except as specified above, the remainder of this Indenture
and such Notes and Guarantees shall be unaffected thereby.
SECTION 8.4 Conditions to Legal or Covenant Defeasance. The
following shall be the conditions to the application of either Section 8.2 or
Section 8.3 to the outstanding Notes of a particular tranche and Guarantees with
respect to the Notes of such tranche:
(i) in the case of Legal Defeasance, either (A) all Notes
of such tranche theretofore authenticated and delivered under the
Indenture must have been delivered to the Trustee for cancellation or
(B) the Company or the Guarantor, as the case may be, must irrevocably
deposit, or cause to be irrevocably deposited, with the Trustee, in
trust, for the benefit of the Holders of the Notes of such tranche,
cash in U.S. dollars, non-callable Government Securities or a
combination thereof in such amounts (and, in the case of Government
Securities, together with the predetermined and certain income to
accrue thereon, without consideration of any reinvestment thereof) as
will be sufficient, as evidenced by a Certificate of a Firm of
Independent Public Accountants delivered to the Trustee to pay the
principal, premium, if any, interest and Additional Amounts, if any,
due on the outstanding Notes of such tranche on the stated maturity
date or on the applicable Redemption Date, as the case may be, of such
principal, premium, if any, interest and Additional Amounts, if any, on
the outstanding Notes of such tranche;
(ii) in the case of Covenant Defeasance, the Company or the
Guarantor, as the case may be, must irrevocably deposit, or cause to be
irrevocably deposited, with the Trustee, in trust, for the benefit of
the Holders of the Notes, cash in U.S. dollars, non-callable Government
Securities or a combination thereof in such amounts (and, in the case
of Government Securities, together with the predetermined and certain
income to accrue thereon, without consideration of any reinvestment
thereof) as will be sufficient, as evidenced by a Certificate of a Firm
of Independent Public Accountants delivered to the Trustee to pay the
principal, premium, if any, interest and Additional Amounts, if any,
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due on the outstanding Notes of such tranche on the stated maturity
date or on the applicable Redemption Date, as the case may be, of such
principal, premium, if any, interest and Additional Amounts, if any, on
the outstanding Notes of such tranche;
(iii) in the case of Legal Defeasance, the Company or the
Guarantor, as the case may be, shall have delivered to the Trustee (A)
an Opinion of Counsel in the United States reasonably acceptable to the
Trustee confirming that, subject to customary assumptions and
exclusions, (1) the Company has received from, or there has been
published by, the U.S. Internal Revenue Service a ruling or (2) since
the Issuance Date, there has been a change in the applicable U.S.
federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel in the United States shall confirm
that, subject to customary assumptions and exclusions, the Holders of
the outstanding Notes of such tranche will not recognize income, gain
or loss for U.S. federal income tax purposes as a result of such Legal
Defeasance and will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred and (B) an Opinion
of Counsel in the United Kingdom reasonably acceptable to the Trustee
to the effect that Holders of the outstanding Notes of such tranche
will not recognize income, gain or loss for United Kingdom income tax
purposes as a result of such Legal Defeasance and will be subject to
United Kingdom income tax on the same amounts, in the same manner and
at the same time as would have been the case if such Legal Defeasance
had not occurred;
(iv) in the case of Covenant Defeasance, the Company shall
have delivered to the Trustee (A) an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that, subject to
customary assumptions and exclusions, the Holders of the outstanding
Notes of such tranche will not recognize income, gain or loss for U.S.
federal income tax purposes as a result of such Covenant Defeasance and
will be subject to such tax on the same amounts, in the same manner and
at the same times as would have been the case if such Covenant
Defeasance had not occurred and (B) an Opinion of Counsel in the United
Kingdom reasonably acceptable to the Trustee to the effect that Holders
of the outstanding Notes of such tranche will not recognize income,
gain or loss for United Kingdom income tax purposes as a result of such
Covenant Defeasance and will be subject to United Kingdom income tax on
the same amount in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(v) such Covenant Defeasance shall not result in a breach
or violation of, or constitute a default under any
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material agreement or instrument to which the Company or the Guarantor
is a party or by which the Company or the Guarantor is bound;
(vi) in the case of Legal Defeasance, 91 days shall have
passed during which no Event of Default under Section 6.1(e) or 6.1(f)
has occurred;
(vii) the Company or the Guarantor, as the case may be,
shall have delivered to the Trustee an Officers' Certificate stating
that the deposit was not made by the Company or the Guarantor, as the
case may be, with the intent of defeating, hindering, delaying or
defrauding any creditors of the Company or the Guarantor, as the case
may be, or others;
(viii) the Company or the Guarantor, as the case may be,
shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel complying with Section 12.4; and
(ix) if the Notes of such tranche are then listed on any
securities exchange, the Company or the Guarantor, as the case may be,
has delivered to the Trustee an Opinion of Counsel to the effect that
such deposit and defeasance will not cause such Notes to be delisted.
SECTION 8.5 Satisfaction and Discharge of Indenture. This
Indenture will be discharged with respect of the Notes of a particular tranche
and will cease to be of further effect as to all Notes of such tranche issued
thereunder and all obligations of the Guarantor with respect to the Notes of
such tranche, including the Guarantees with respect to the Notes of such
tranche, when either (a) all such Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes of such tranche which have been replaced
or paid and Notes of such tranche for whose payment money has theretofore been
deposited in trust and thereafter repaid to the Company) have been delivered to
the Trustee for cancellation; or (b)(i) all such Notes not theretofore delivered
to the Trustee for cancellation have become due and payable by reason of the
mailing of a notice of redemption or otherwise or will become due and payable
within one year and the Company or the Guarantor has irrevocably deposited or
caused to be deposited with the Trustee as trust funds in trust an amount of
money in U.S. dollars or Government Securities or any combination thereof
sufficient to pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation for principal, premium, if
any, accrued and unpaid interest and Additional Amounts, if any, to the date of
maturity or redemption; (ii) no Default with respect to the Notes of such
tranche shall have occurred within 91 days of such deposit or shall occur as a
result of such deposit and such deposit will not result in a breach or violation
of, or constitute a default under, any other instrument to which the Company or
the Guarantor is a party or by which it is bound; (iii) the Company or the
Guarantor has paid or caused to be paid
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all sums payable by it with respect to the Notes of such tranche under this
Indenture; and (iv) the Company or the Guarantor has delivered irrevocable
instructions to the Trustee under this Indenture to apply the deposited money
toward the payment of such Notes at maturity or the redemption date, as the case
may be. In addition, with respect to clause (b) of the preceding sentence, the
Company or the Guarantor shall have (i) delivered to the Trustee an Opinion of
Counsel to the effect that the Holders of Notes will not recognize income, gain
or loss for United States federal income tax purposes or United Kingdom income
tax purposes as a result of such deposit, defeasance and discharge and will be
subject to federal income tax on the same amount and in the same manner and at
the same times as would have been the case if such deposit, defeasance and
discharge had not occurred; (ii) if such Notes are then listed on any securities
exchange, delivered to the Trustee an Opinion of Counsel to the effect that such
deposit, defeasance and discharge will not cause such Notes to be delisted; and
(iii) delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, complying with Section 12.4.
SECTION 8.6 Survival of Certain Obligations. Notwithstanding
the satisfaction and discharge of this Indenture with respect to a particular
tranche of Notes and of the Notes of such tranche and Guarantees with respect to
the Notes of such tranche referred to in Section 8.1, 8.2, 8.3, 8.4 or 8.5, the
respective obligations of the Company, the Guarantor and the Trustee under
Sections 2.6, 2.7, 4.2, 7.7, 7.8 and 7.10 shall survive until the Notes of such
tranche and related Guarantees are no longer outstanding. Nothing contained in
this Article VIII shall abrogate any of the obligations or duties of the Trustee
under this Indenture.
SECTION 8.7 Acknowledgment of Discharge by Trustee. Subject to
Section 8.10, after (i) the conditions of Section 8.4 or 8.5 have been
satisfied, (ii) the Company or the Guarantor has paid or caused to be paid all
other sums payable hereunder by the Company or the Guarantor and (iii) the
Company and the Guarantor have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent referred
to in clause (i) above relating to the satisfaction and discharge of this
Indenture with respect to a particular tranche of Notes have been complied with,
the Trustee upon written request shall acknowledge in writing the discharge of
all of the Guarantor's obligations under this Indenture with respect to the
Notes of such tranche and all of the Company's obligations under this Indenture
with respect to the Notes of such tranche except for those surviving obligations
specified in this Article VIII.
SECTION 8.8 Application of Trust Moneys. All cash in U.S.
dollars and Government Securities deposited with the Trustee pursuant to Section
8.4 or 8.5 in respect of Notes of a particular tranche or Guarantees with
respect to the Notes of such tranche shall be held in trust and applied by the
Trustee,
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in accordance with the provisions of such Notes, Guarantees and this Indenture,
to the payment, either directly or through any Paying Agent (including the
Company acting as its own Paying Agent) as the Trustee may determine, to the
Holders of such Notes, of all sums due and to become due thereon for principal,
premium, if any, interest and Additional Amounts, if any but such money need not
be segregated from other funds except to the extent required by law. The Holder
of any Note replaced pursuant to Section 2.7 shall not be entitled to any such
payment and shall look only to the Company or the Guarantor for any payment
which such Holder may be entitled to collect. In connection with the
satisfaction and discharge of this Indenture or the defeasance of certain
obligations under this Indenture, the Company may direct the Trustee to (i)
invest any money received by the Trustee on the Government Securities deposited
in trust in additional Government Securities, and (ii) deliver or pay to the
Company from time to time upon the request of the Company any money or
Government Securities held by it, which, as evidenced by a Certificate of a Firm
of Independent Public Accountants, are in excess of the amount thereof which
would then have been required to be deposited for the purpose for which such
money or Government Securities were deposited or received.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the Government
Securities deposited pursuant to Section 8.4 or 8.5 or the principal, premium,
if any, interest and Additional Amounts, if any, received in respect thereof
other than any such tax, fee or other charge which by law is for the account of
the Holders of outstanding Notes.
SECTION 8.9 Repayment to the Company; Unclaimed Money. The
Trustee and any Paying Agent shall promptly pay or return to the Company upon
Company Order, as the case may be, any cash or Government Securities held by
them at any time that are not required for the payment of the principal,
premium, if any, interest and any Additional Amounts, if any, on the Notes for
which cash or Government Securities have been deposited pursuant to Section 8.4
or 8.5.
SECTION 8.10 Reinstatement. If the Trustee or Paying Agent is
unable to apply any cash or Government Securities in accordance with Section
8.2, 8.3, 8.4 or 8.5 by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Notes and the Guarantor's obligations under this Indenture
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.2, 8.3, 8.4 or 8.5 until such time as the Trustee or Paying Agent is
permitted to apply all such cash or Government Securities in accordance with
Section 8.2, 8.3, 8.4 or 8.5; provided, however, that if the Company or the
Guarantor has made any payment of principal, premium, if any, interest or any
Additional Amounts,
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if any, on any Notes because of the reinstatement of its obligations, the
Company and the Guarantor shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money or Government Securities held
by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 Without Consent of Holders of Notes. Without
notice to or the consent of any Holders, the Company and the Guarantor, when
each is authorized by a Board Resolution,and the Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to such Trustee, for any of the following purposes:
(i) to evidence the succession of another corporation or other
Person to the Company or the Guarantor, and the assumption by any such
successor of the covenants of the Company or the Guarantor, as the case
may be, herein and in the Notes;
(ii) to add to the covenants of the Company or the Guarantor,
for the benefit of the Holders of Notes of a particular tranche, to
convey, transfer, assign, mortgage or pledge any property to or with
the Trustee or otherwise secure the Notes of a particular tranche or to
surrender any right or power herein conferred upon the Company or the
Guarantor;
(iii) to add any additional Events of Default with respect to
the Notes;
(iv) to evidence and provide for the acceptance of appointment
hereunder of a Trustee other than First Chicago, as Trustee and to add
to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder;
(v) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes of a
particular tranche and to add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of the trust hereunder;
(vi) to add to the conditions, limitations and restrictions on
the authorized amount, form, terms or purposes of issue, authentication
and delivery of Notes, as herein set forth, other conditions,
limitations and restrictions thereafter to be observed;
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(vii) to add to or change or eliminate any provisions of this
Indenture as shall be necessary or desirable in accordance with any
amendments to the TIA;
(viii) to cure any ambiguity, omission, defect or
inconsistency;
(ix) to make any other amendment, modification, change or
supplement to this Indenture or the Notes of any tranche that does not
materially adversely affect the rights of any Holder of any Notes of
that tranche;
(x) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under this Indenture of any such
Holder; and
(xi) to surrender any right or power conferred upon the
Company or the Guarantor.
The Trustee may waive compliance by the Company or the Guarantor with
any provision of this Indenture or the Notes without notice to or consent of any
Holder of any Notes if such waiver does not materially adversely affect the
rights of any Holder of any Notes.
SECTION 9.2 With Consent of Holders of Notes. The Company, the
Guarantor and the Trustee may enter into an indenture or indentures supplemental
hereto for the purpose of amending or supplementing any of the provisions of
this Indenture, to the extent applicable to the Notes of a particular tranche,
or the Notes of a particular tranche or Guarantees of a particular tranche of
Notes, without notice to any Holder, but with the written consent of the Holders
of a majority in aggregate principal amount of the Notes of such tranche then
outstanding. The Holders of a majority in principal amount of the Notes of such
tranche affected may waive compliance by the Company or the Guarantor with any
provision of this Indenture or the Notes of such tranche or Guarantee of such
tranche without notice to any Holder, in each case by act of said Holders
delivered to the Company the Guarantor and the Trustee. No such supplemental
indenture shall, without the consent of the Holder of each outstanding Note of
such tranche affected thereby:
(i) change the Maturity Date of the principal of, or any
installment of principal of or interest on, any Note of such tranche,
or reduce the principal amount thereof or the rate of interest thereon,
if any, or any premium payable upon the redemption thereof, or change
any obligation of the Company or the Guarantor to pay Additional
Amounts, if any, (except as contemplated by Sections 5.1 and 5.2 and
permitted by Section 9.1(i)) or change the Place of Payment or the
currency in which any Note of such tranche or the interest thereon is
payable;
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(ii) reduce the percentage in principal amount of the Notes of
such tranche, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture;
(iii) modify any of the provisions of this Section, except to
increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Note of such tranche affected thereby;
provided, however, that this clause shall not be deemed to require the
consent of any Holder of a Note of such tranche with respect to changes
in the references to "the Trustee" and concomitant changes in this
Section, or the deletion of this proviso, in accordance with the
requirements of Sections 7.8, 7.10, 9.1(iv) and 9.1(v); and
(iv) amend the terms of the Notes of such tranche (including
the Guarantees) or this Indenture in a way that would result in the
loss of an exemption from any taxes or an exemption from any obligation
to withhold or deduct taxes unless the Company and the Guarantor agree
to pay Additional Amounts, if any, in respect thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company or the Guarantor shall mail to the Holders of
Notes affected thereby a notice briefly describing the amendment, supplement or
waiver. Any failure of the Company or the Guarantor to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such amendment or supplemental indenture or waiver.
SECTION 9.3 Compliance with TIA. From the date on which this
Indenture is qualified under the TIA, every amendment, waiver or supplement of
this Indenture or the Notes shall comply with the TIA as then in effect.
SECTION 9.4 Revocation and Effect of Consents. Until an
amendment, supplement or waiver becomes effective, a consent to it by a Holder
of a Note is a continuing consent by the Holder of a Note and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder of a Note or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder of a Note.
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The Company may fix a record date for determining which
Holders of the Notes must consent to such amendment, supplement or waiver. If
the Company fixes a record date, the record date shall be fixed at (i) the later
of 30 days prior to the first solicitation of such consent or the date of the
most recent list of Holders of Notes furnished to the Trustee prior to such
solicitation pursuant to Section 2.5 or (ii) such other date as the Company
shall designate.
SECTION 9.5 Notation on or Exchange of Notes. The Trustee may
place an appropriate notation about an amendment, supplement or waiver on any
Note thereafter authenticated. The Company in exchange for all Notes of a
particular tranche may issue and the Trustee shall authenticate new Notes of
such tranche that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note
of a particular tranche shall not affect the validity and effect of such
amendment, supplement or waiver.
SECTION 9.6 Trustee To Sign Amendments, Etc. The Trustee shall
execute any amendment, supplement or waiver authorized pursuant to this Article
IX; provided, however, that the Trustee may, but shall not be obligated to,
execute any such amendment, supplement or waiver which affects the Trustee's own
rights, duties or immunities under this Indenture. The Trustee shall be entitled
to receive indemnity reasonably satisfactory to it, and shall be fully protected
in relying upon, an Opinion of Counsel and an Officers' Certificate from each of
the Company and the Guarantor each stating that the execution of any amendment,
supplement or waiver authorized pursuant to this Article IX is authorized or
permitted by this Indenture and constitutes the legal, valid and binding
obligations of the Company and the Guarantor enforceable in accordance with its
terms. Such Opinion of Counsel shall not be an expense of the Trustee.
SECTION 9.7 Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this Article, this Indenture shall
be modified in accordance therewith and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Notes theretofore
or thereafter authenticated and delivered hereunder shall be bound thereby.
ARTICLE X
GUARANTEES
SECTION 10.1 Guarantees. The Guarantor hereby unconditionally
and irrevocably guarantees to each Holder and to the Trustee and its successors
and assigns (i)(a) the full and punctual payment of principal and interest on
the Notes of such Holder when due, whether at maturity, by acceleration, by
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redemption or otherwise, and all other monetary obligations of the Company under
this Indenture and the Notes (including Additional Amounts, if any) and (b) the
full and punctual performance within applicable grace periods of all other
obligations of the Company under this Indenture and the Notes and (ii) in the
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal (all of the
foregoing being hereinafter collectively called the "Guarantees").
The Guarantor waives presentation to, demand of, payment from
and protest to the Company of any of the Guarantees and also waives notice of
protest for nonpayment. The Guarantor waives notice of any default under the
Notes or the Guarantees. The Guarantees hereunder shall not be affected by (a)
the failure of any Holder or the Trustee to assert any claim or demand or to
enforce any right or remedy against the Company or any other Person under this
Indenture, the Notes or any other agreement or otherwise; (b) any extension or
renewal of any thereof; (c) any rescission, waiver, amendment or modification of
any of the terms or provisions of this Indenture, the Notes or any other
agreement; (d) the release of any security held by any Holder or the Trustee for
the Guarantees or any of them; (e) the failure of any Holder or Trustee to
exercise any right or remedy against any other guarantor of the Guarantees or
(f) any change in the ownership of the Guarantor.
The Guarantor further agrees that its Guarantees hereunder
constitute a guarantee of payment, performance and compliance when due (and not
a guarantee of collection).
The Guarantor hereby agrees that its obligations hereunder
shall be as principal and not merely as surety, and shall be absolute and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or failure to enforce the provisions of any Note or this Indenture,
or any waiver, modification, consent or indulgence granted to the Company with
respect thereto (unless the same shall also be provided the Guarantor), by the
Holder of any Note or the Trustee, the recovery of any judgment against the
Company or any action to enforce the same, or any other circumstances which may
otherwise constitute a legal or equitable discharge of a surety or guarantor;
provided that, notwithstanding the foregoing, no such waiver, modification,
indulgence or circumstance shall, without the consent of the Guarantor, increase
the principal amount of a Note or the interest rate thereon or increase any
premium payable upon redemption thereof. The Guarantees shall not be subject to
any reduction, limitation, impairment or termination for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and shall not
be subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Guarantees or otherwise. Without
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limiting the generality of the foregoing, the Guarantor covenants that the
Guarantees shall not be discharged or impaired or otherwise affected by the
failure of any Holder or the Trustee to assert any claim or demand or to enforce
any remedy under this Indenture, the Notes or any other agreement, by any waiver
or modification of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of the Guarantor or would otherwise
operate as a discharge of the Guarantor as a matter of law or equity.
The Guarantor further agrees that the Guarantees shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal, premium, if any, interest or
Additional Amounts, if any, on the Tranche A Notes or the Tranche B Notes is
rescinded or must otherwise be restored by any Holder or the Trustee upon the
bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against the
Guarantor by virtue hereof, upon the failure of the Company to pay the principal
of, premium on, if any, interest on, or Additional Amounts, if any, on the
Tranche A Notes or the Tranche B Notes when and as the same shall become due,
whether at maturity, by acceleration, by redemption or otherwise, or to perform
or comply with any other obligation under the Notes, the Guarantor hereby
promises to and will, upon receipt of written demand by the Trustee, forthwith
pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal
to the sum of (i) the unpaid amount of such obligations under such Notes, (ii)
accrued and unpaid interest on such obligations under such Notes (but only to
the extent not prohibited by law) and (iii) all other monetary obligations with
respect to such Notes (including Additional Amounts, if any) of the Company to
the Holders and the Trustee.
The Guarantor will be subrogated to all rights of the Holder
against the Company in respect of any amount paid by the Guarantor pursuant to
the provisions of the Guarantee; provided, however, that the Guarantor shall not
be entitled to enforce, or to receive any payments arising out of or based upon,
such right of subrogation until the principal of, premium on, if any, interest
and Additional Amounts, if any, on such Note shall have been paid in full. The
Guarantor further agrees that, as between it, on the one hand, and the Holders
and the Trustee, on the other hand, (x) the maturity of the obligations with
respect to the Tranche A Notes or Tranche B Notes hereby may be accelerated as
provided in Article VI for the purposes of the Guarantees, herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations with respect to such Notes, and (y)
in the event of any declaration of acceleration of such obligations as provided
in Article VI, the
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Guarantees (whether or not due and payable) shall forthwith become due and
payable by the Guarantor for the purposes of this Section.
The Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees and expenses) incurred by the
Trustee or any Holder in enforcing any rights under this Section.
SECTION 10.2 Successors and Assigns. This Article X shall be
binding upon the Guarantor and its successors and assigns and shall inure to the
benefit of the successors and assigns of the Trustee and the Holders and, in the
event of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges conferred upon that party in this Indenture and in the
Notes shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of this Indenture.
SECTION 10.3 No Waiver. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article X shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of any
right, power or privilege. The rights, remedies and benefits of the Trustee and
the Holders herein expressly specified are cumulative and not exclusive of any
other rights, remedies or benefits which either may have under this Article X at
law, in equity, by statute or otherwise.
SECTION 10.4 Modification. No modification, amendment or
waiver of any provision of this Article X, nor the consent to any departure by
the Guarantor therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Trustee, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which given.
No notice to or demand on the Guarantor in any case shall entitle the Guarantor
to any other or further notice or demand in the same, similar or other
circumstances.
ARTICLE XI
MEETINGS OF HOLDERS OF THE NOTES
SECTION 11.1 Purposes of Meetings. A meeting of the Holders of
a particular tranche of Notes may be called at any time from time to time
pursuant to this Article XI for any of the following purposes:
(1) to give any notice to the Company, the Guarantor or to the
Trustee, or to give any directions to the Trustee, or to consent to the
waiving of any Default hereunder and
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its consequences, or to take any other action authorized to be taken by
Holders pursuant to Article VI hereof;
(2) to remove the Trustee and appoint a successor trustee
pursuant to Article VII hereof;
(3) to consent to the execution of an indenture supplemental
hereto pursuant to Article IX hereof; or
(4) to take any other action authorized to be taken by or on
behalf of the Holders of any specified aggregate principal amount of
the outstanding Notes of a particular tranche under any other provision
of this Indenture or under applicable law.
SECTION 11.2 Place of Meetings. Meetings of Holders may be
held at such place or places as the Trustee or, in case of its failure to act,
the Company, the Guarantor or the Holders calling the meeting, shall from time
to time determine.
SECTION 11.3 Call and Notice of Meetings. (a) The Trustee may
at any time call a meeting of Holders of a particular tranche of Notes to be
held at such time and at such place in the location determined by the Trustee
pursuant to Section 11.2 hereof. Notice of every meeting of Holders, setting
forth the time and the place of such meeting and in general terms the action
proposed to be taken at such meeting, shall be mailed to each Holder and
published in the manner contemplated by Section 12.3 hereof. Such notice shall
be given not less than 20 days nor more than 90 days prior to the date fixed for
the meeting.
(b) In case at any time the Company or the Guarantor, as the
case may be, pursuant to a Board Resolution, or the Holders of at least a
majority in aggregate principal amount of the Notes of a particular tranche then
outstanding, shall have requested the Trustee to call a meeting of the Holders,
by written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have made the first giving of
the notice of such meeting within 20 days after receipt of such request, then
the Company, the Guarantor or the Holders in the amount above specified may
determine the time (not less than 21 days after notice is given) and the place
in the location determined by the Company, the Guarantor or the Holders pursuant
to Section 11.2 hereof for such meeting and may call such meeting to take any
action authorized in Section 11.1 hereof by giving notice thereof as provided in
Section 11.3(a) hereof.
SECTION 11.4 Voting at Meetings. To be entitled to vote at any
meeting of Holders, a Person shall be (i) a Holder or (ii) a Person appointed in
writing as proxy for a Holder or Holders by such Holder or Holders. The only
Persons who shall be entitled to be present or to speak at any meeting of
Holders shall be the Persons so entitled to vote at such meeting and
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their counsel, any representatives of the Trustee and its counsel, any
representatives of the Company and its counsel and any representatives of the
Guarantor and its counsel.
SECTION 11.5 Voting Rights, Conduct and Adjournment. (a)
Notwithstanding any other provisions of this Indenture, the Trustee may make
such reasonable regulations as it may deem advisable for any meeting of Holders
in regard to proof of the holding of Notes of a particular tranche and of the
appointment of proxies and in regard to the appointment and duties of inspectors
of votes, the submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning the conduct of
the meeting as it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Notes of a particular tranche
shall be proved in the manner specified in Article II hereof and the appointment
of any proxy shall be proved in such manner as is deemed appropriate by the
Trustee or by having the signature of the person executing the proxy witnessed
or guaranteed by any bank, banker or trust company customarily authorized to
certify to the holding of a security such as a Global Note.
(b) No action at a meeting of Holders shall be effective
unless approved by Persons holding or representing Notes of a particular tranche
in the aggregate principal amount required by the provision of this Indenture
pursuant to which such action is being taken.
(c) At any meeting of Holders, each Holder or proxy shall be
entitled to one vote for each $1,000 principal amount of outstanding Notes of a
particular tranche held or represented; provided, however, that no vote shall be
cast or counted at any meeting in respect of any Note of such tranche challenged
as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of outstanding Note of such tranche held by him or instruments in
writing duly designating him as the person to vote on behalf of Holders. Any
meeting of Holders with respect to which a meeting was duly called pursuant to
the provisions of Section 11.3 may be adjourned from time to time by a majority
of such Holders present and the meeting may be held as so adjourned without
further notice.
(d) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company, the Guarantor or by Holders as provided in Section 11.3, in which
case the Company, the Guarantor or the Holders calling the meeting, as the case
may be, shall in like manner appoint a temporary chairman. A permanent chairman
and a permanent secretary of the meeting shall be elected by a majority vote of
the meeting.
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SECTION 11.6 Revocation of Consent by Holders. At any time
prior to (but not after) the evidencing to the Trustee of the taking of any
action at a meeting of Holders by the Holders of the percentage in aggregate
principal amount of the Notes of a particular tranche specified in this
Indenture in connection with such action, any Holder of a Note of such tranche
the serial number of which is included in the Notes of such tranche the Holders
of which have consented to such action may, by filing written notice with the
Trustee at its principal corporate trust office and upon proof of holding as
provided herein, revoke such consent so far as concerns such Notes. Except as
aforesaid any such consent given by the Holder of any Notes shall be conclusive
and binding upon such Holder and upon all future Holders and owners of such
Notes and of any Notes issued in exchange therefore, in lieu thereof or upon
transfer thereof, irrespective of whether or not any notation in regard thereto
is made upon such Notes. Any action taken by the Holders of the percentage in
aggregate principal amount of the Holders specified in this Indenture in
connection with such action shall be conclusively binding upon the Company, the
Guarantor, the Trustee and the Holders of all the Notes of such tranche.
SECTION 11.7 No Delay of Rights by Meeting. Nothing contained
in this Article XI shall be deemed or construed to authorize or permit, by
reason of any call of a meeting of Holders or any rights expressly or impliedly
conferred hereunder to make such call, any hindrance or delay in the exercise of
any right or rights conferred upon or reserved to the Trustee or to any Holder
under any of the provisions of this Indenture or of the Notes of any tranche.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 TIA Controls. Except as otherwise provided
herein, if any provision hereof limits, qualifies or conflicts with the duties
imposed by any of Sections 310 through 317, inclusive, of the TIA through the
operation of Section 318(c) thereof, such imposed duties shall control.
SECTION 12.2 Notices. Any notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by
first-class mail addressed as follows:
if to the Company:
Black & Decker Holdings Inc.
210 Bath Road
Slough, Berkshire
SL1 3YD England
Attention: Secretary
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with a copy to the Guarantor;
if to the Guarantor:
The Black & Decker Corporation
701 East Joppa Road
Towson, Maryland 21286
Attention: Treasurer
with a copy to:
Miles & Stockbridge P.C.
10 Light Street
Baltimore, Maryland 21202
Attention: Glenn Campbell
and
The Black & Decker Corporation
701 East Joppa Road
Towson, Maryland 21228
Attention: General Counsel
if to the Trustee:
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust Services Division
Facsimile: 312-407-1708
with a copy to:
The First National Bank of Chicago
153 West 51st Street, 6th Floor
New York, New York 10019
Attention: Michael Pinzon
For purposes of Section 4.2:
The First Chicago Trust Company of New York
14 Wall Street, 8th Floor
New York, New York 10005
Attention: Michael Pinzon
Facsimile: 212-240-8938
if to the Exchange Agent or Paying Agent:
The First Chicago Trust Company of New York
14 Wall Street, 8th Floor
New York, New York 10005
Attention: Michael Pinzon
Facsimile: 212-240-8938
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The Company, the Guarantor or the Trustee by notice to the others may
designate additional or different addresses for subsequent notices or
communications. If the Trustee of any Notes is other than the Trustee initially
named in this Indenture or any successor thereto, any notice or communication
shall be sufficiently given if in writing and delivered in person or mailed by
first class mail addressed to that Trustee at the address provided for in the
supplemental indenture executed in connection with the appointment of that
Trustee in respect of the Notes.
SECTION 12.3 Notice to Holders. Any notice or communication
mailed to a Holder shall be mailed by first-class mail or other equivalent means
at that Holder's address as it appears on the registration books of the Exchange
Agent and shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
Notices regarding the Notes of a particular tranche will be
(i) published in a leading newspaper having a general circulation in New York
(which is expected to be the Wall Street Journal) (and so long as such Notes are
listed on the Luxembourg Stock Exchange and the rules of such Luxembourg Stock
Exchange shall so require, a newspaper having a general circulation in
Luxembourg (which is expected to be the Luxemburger Wort)) or (ii) in the case
of Definitive Notes of a particular tranche, mailed to Holders by first-class
mail at their respective addresses as they appear on the registration books of
the Exchange Agent (and, so long as such Notes are listed on the Luxembourg
Stock Exchange and the rules of such Stock Exchange shall so require, published
in a newspaper having a general circulation in Luxembourg (which is expected to
be the Luxemburger Wort)). Notices given by publication will be deemed given on
the first date on which publication is made and notices given by first-class
mail, postage prepaid, will be deemed given five calendar days after mailing.
SECTION 12.4 Compliance Certificates and Opinions. Upon any
request or application by the Company or the Guarantor to the Trustee to take
any action under this Indenture, the Company or the Guarantor shall furnish to
the Trustee (i) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and (ii) an Opinion of
Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
<PAGE>
-65-
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include (i) a
statement that the person making such certificate or opinion has read such
certificate or condition, (ii) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based, (iii) a statement that, in the opinion
of such person, the person has made such examination or investigation as is
necessary to enable the person to express an informed opinion as to whether such
covenant or condition has been complied with, and (iv) a statement as to whether
or not, in the opinion of such person, such condition or covenant has been
complied with.
SECTION 12.5 Form of Documents Delivered to Trustee. Any
certificate or opinion of an officer of the Company or the Guarantor may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to matters upon which his certificate or opinion is based are
erroneous.
Any such certificate or Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company or Guarantor stating
that the information with respect to such factual matters is in the possession
of the Company or Guarantor, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
SECTION 12.6 Rules by Trustee, Paying Agent, Exchange Agent.
The Trustee, Paying Agent or Exchange Agent may make reasonable rules for its
functions.
SECTION 12.7 Non-Business Day. In any case where any payment
date of a Note of any particular tranche shall not be a Business Day at any
Place of Payment with respect to Notes of that tranche, then (notwithstanding
any other provision of this Indenture or of the Notes) payment of principal,
premium, if any, interest or Additional Amounts, if any, with respect to such
Note need not be made at such Place of Payment on such date, but may be made on
the next succeeding Business Day at such Place of Payment with the same force
and effect as if made on the payment date, provided that no interest shall
accrue for the period from and after such payment date.
<PAGE>
-66-
SECTION 12.8 Governing Law and Submission to Jurisdiction.
THIS INDENTURE, THE GUARANTEE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH OF THE COMPANY AND
THE GUARANTOR AGREES TO SUBMIT TO THE JURISDICTION OF THE U.S. FEDERAL AND NEW
YORK STATE COURTS LOCATED IN THE BOROUGH OF MANHATTAN, CITY AND STATE OF NEW
YORK FOR PURPOSES OF ANY LEGAL ACTIONS AND PROCEEDINGS ARISING OUT OF OR BASED
UPON THE NOTES AND THE INDENTURE, IN THE CASE OF THE COMPANY, AND THE GUARANTEES
AND THE INDENTURE IN THE CASE OF THE GUARANTOR.
SECTION 12.9 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of any of the Company, the Guarantor or any of its Subsidiaries. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 12.10 Immunity of Incorporators, Stockholders,
Employees, Officers and Directors. A director, officer, employee, stockholder or
incorporator, as such, of the Company or the Guarantor shall not have any
liability for any obligation of the Company or the Guarantor under the Notes or
the Indenture or for any claim based on, with respect to or by reason of such
obligations or their creation. All such liability is waived and released as a
condition of, and as partial consideration for, the execution of this Indenture
and the issue of the Notes.
SECTION 12.11 Successors and Assigns. Except as otherwise
provided herein, all covenants and agreements in this Indenture by the Company
and the Guarantor shall bind their successors and assigns, whether so expressed
or not.
SECTION 12.12 Counterpart Originals. All parties hereto may
sign any number of copies of this Indenture. Each signed copy or counterpart
shall be an original, but all of them together shall represent one and the same
agreement.
SECTION 12.13 Severability. In any case any provision in this
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 12.14 Table of Contents, Headings, etc. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 12.15 Benefits of Indenture. Nothing in this Indenture
or in the Notes, expressed or implied, shall give to any Person, other than the
parties hereto, any Paying Agent, any Exchange Agent or co-Exchange Agent and
their successors hereunder and the Holders of Notes, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
<PAGE>
-67-
SECTION 12.16 Language of Notices, etc. Any request, demand,
authorization, direction, notice, consent or waiver required or permitted under
this Indenture shall be in the English language, and any published notice may
also be in an official language of the country or province of publication.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested as of the date first written above.
[SEAL] BLACK & DECKER HOLDINGS INC.,
as Issuer
Attest: /s/Norman R. Judd By /s/Mark M. Rothleitner
Director Name: Mark M. Rothleitner
Title: Director
[SEAL] THE BLACK & DECKER CORPORATION,
as Guarantor
Attest: /s/Lucy A. Bosley By /s/Thomas M. Schoewe
Asst. Secretary Name: Thomas M. Schoewe
Title: Senior Vice President
and Chief Financial
Officer
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By /s/Michael Pinzon
Name: Michael Pinzon
Title: Trust Officer
EXHIBIT 11(a)
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Amounts in Millions Except Per Share Data)
<TABLE>
<CAPTION>
For The Three Months Ended
June 28, 1998 June 29, 1997
Amount Per Share Amount Per Share
Basic:
<S> <C> <C> <C> <C>
Average shares outstanding 94.1 94.5
==== ====
Net earnings $58.4 $.62 $45.5 $.48
===== ==== ===== ====
Diluted:
Average shares outstanding 94.1 94.5
Dilutive stock options and stock
issuable under employee benefit
plans--based on the Treasury
stock method using the average
market price 1.7 1.6
---- ----
Adjusted average shares outstanding
for diluted calculation 95.8 96.1
==== ====
Net earnings $58.4 $.61 $45.5 $.47
===== ==== ===== ====
</TABLE>
EXHIBIT 11(b)
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Amounts in Millions Except Per Share Data)
<TABLE>
<CAPTION>
For The Six Months Ended
June 28, 1998 June 29, 1997
Amount Per Share Amount Per Share
Basic:
<S> <C> <C> <C> <C>
Average shares outstanding 94.6 94.4
==== ====
Net earnings (loss) $(913.0) $(9.65) $71.8 $.76
======== ======= ===== ====
Diluted:
Average shares outstanding 94.6 94.4
Dilutive stock options and stock
issuable under employee benefit
plans--based on the Treasury
stock method using the average
market price 1.8 (Note 1) 1.7
---- -----
Adjusted average shares outstanding
for diluted calculation 96.4 96.1
==== ====
Net earnings (loss) $(913.0) $(9.48) $71.8 $.75
======== ======= ===== ====
<FN>
Notes: 1. Due to the net loss incurred by the Corporation for the
six-month period ended June 28, 1998, the assumed exercise of
stock options and stock issuable under employee benefit plans is
anti-dilutive and, therefore, is not used in the calculation of
diluted earnings per share included in the financial statements.
As a result, the financial statements reflect diluted earnings
per share equal to basic earnings per share for the six-months
ended June 28, 1998--both a loss of $9.65 per share.
</FN>
</TABLE>
EXHIBIT 12
<TABLE>
THE BLACK & DECKER CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Millions of Dollars Except Ratios)
<CAPTION>
Three Months Ended Six Months Ended
June 28, 1998 June 28, 1998
-------------- --------------
EARNINGS:
<S> <C> <C>
Earnings (loss) before income taxes (Note 1) $ 116.3 $(881.7)
Interest expense 35.7 72.3
Portion of rent expense representative of an
interest factor 6.3 12.6
------- -------
Adjusted earnings (loss) before income taxes
and fixed charges $ 158.3 $(796.8)
======= =======
FIXED CHARGES:
Interest expense $ 35.7 $ 72.3
Portion of rent expense representative
of an interest factor 6.3 12.6
------- -------
Total fixed charges $ 42.0 $ 84.9
======= =======
RATIO OF EARNINGS TO FIXED
CHARGES (DEFICIENCY) (Notes 1 and 2) 3.77 --
======= =======
<FN>
Note: 1. Included in earnings (loss) before income taxes for the six
months ended June 28, 1998, are restructuring charges in the
amount of $140.0 and a write-off of goodwill in the amount of
$900.0, both of which were recognized in the first quarter of
1998.
2. Earnings (loss) before income taxes for the six months ended
June 28, 1998, were insufficient to cover fixed charges by the
amount of $881.7.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains financial information extracted from the Corporation's
unaudited interim financial statements as of and for the six months ended
June 28, 1998, and the accompanying footnotes and is qualified in its entirety
by the reference to such financial statements.
</LEGEND>
<CIK> 0000012355
<NAME> THE BLACK & DECKER CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-28-1998
<CASH> 204,100
<SECURITIES> 0
<RECEIVABLES> 815,700<F1>
<ALLOWANCES> 0
<INVENTORY> 765,000
<CURRENT-ASSETS> 1,989,900
<PP&E> 781,300<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,217,600
<CURRENT-LIABILITIES> 1,327,300
<BONDS> 1,658,100
0
0
<COMMON> 46,500
<OTHER-SE> 654,800
<TOTAL-LIABILITY-AND-EQUITY> 4,217,600
<SALES> 2,178,000
<TOTAL-REVENUES> 2,178,000
<CGS> 1,430,200
<TOTAL-COSTS> 2,999,100<F3>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 72,300
<INCOME-PRETAX> (881,700)<F3>
<INCOME-TAX> 31,300<F4>
<INCOME-CONTINUING> (913,000)<F5>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (913,000)<F5>
<EPS-PRIMARY> (9.65)<F6>
<EPS-DILUTED> (9.65)
<FN>
<F1>Represents net trade receivables.
<F2>Represents net property, plant, and equipment.
<F3>Includes a pre-tax restructuring charge in the amount of $140,000, a
write-off of goodwill in the amount of $900,000 and a pre-tax gain on the
sale of businesses of $36,500.
<F4>Includes a $40,000 tax benefit associated with the restructuring charge and
$32,300 of tax expense resulting from the gain on the sale of businesses,
both items were recognized during the six months ended June 28,1998.
<F5>Includes a restructuring charge and a gain on the sale of businesses, net of
tax effects, in the amounts of $100,000 and $4,200, respectively, and a
write-off of goodwill in the amount of $900,000.
<F6>Represents basic earnings per share.
</FN>
</TABLE>
