<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 15, 1996
KERR GROUP, INC.
-----------------------------------------------------
(Exact Name of Registrant as specified in its Charter)
DELAWARE 1-7272 95-0898810
- ---------------------------- --------------------- ----------------
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of corporation) Identification No.)
1840 CENTURY PARK EAST, LOS ANGELES, CALIFORNIA 90067
- ----------------------------------------------- -----------
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (310) 556-2200
NOT APPLICABLE
----------------------------------
(Former name or former address, if changed since last report)
Page 1 of 57 Pages
Index Exhibit Appears on Page 11
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Pursuant to the terms of an Asset Purchase Agreement (the "Asset
Purchase Agreement"), dated as of March 15, 1996, between Kerr Group, Inc. (the
"Registrant") and Alltrista Corporation ("Alltrista"), the Registrant sold
manufacturing assets, supplies, work in process inventory and certain
trademarks relating to its Consumer Products Business to Alltrista, for
approximately $14,500,000 (the "Purchase Price").
The Registrant used $7,500,000 of the Purchase Price to reduce
outstanding indebtedness, including the payment of $3,500,000 which was secured
by certain assets of the Registrant. The balance of the Purchase Price will be
used for working capital and to pay certain expenses of the restructuring
referred to below.
The Registrant also expects to receive approximately $16,500,000,
primarily during the remainder of 1996, from the sale to its customers of the
inventory and from the collection of accounts receivable of the Consumer
Products Business.
Pursuant to the Asset Purchase Agreement, the Registrant retains all
accounts receivable and finished goods inventory relating to the Business, as
well as all accounts payable and other liabilities accrued prior to March 15,
1996. The Registrant also granted to Alltrista a perpetual and exclusive
worldwide license to use the name "Kerr" and any variations thereof in
connection with the home canning supplies business or the consumer food
products industry. If there occurs a change of control or majority ownership
of Alltrista which is not approved prior to such changes by a majority of the
members of the Alltrista board of directors in office immediately prior to such
change, the Registrant has the option to terminate this license.
The Registrant also agreed to not compete with Alltrista for a period
of ten years in the home canning supplies business in the United States, Canada
or anywhere where the Registrant has distributed and sold products in the home
canning business in the past twelve months.
Pursuant to the terms of a Sales Agent Agreement (the "Sales Agent
Agreement"), dated as of March 15, 1996, between the Registrant and Alltrista,
the Registrant retained Alltrista to serve as its non-exclusive sales agent in
connection with the sale of home canning inventory owned by the Registrant.
The Sales Agent Agreement has a term of 30 months, subject to earlier
termination in certain events. Alltrista will be paid a fee of 1/2 of 1% of
the Net Sales (as defined in the Sales Agent Agreement) made by it on behalf of
the Registrant.
The foregoing descriptions of the Asset Purchase Agreement and the
Sales Agent Agreement are qualified in their entirety by reference to such
agreements, which have been filed as exhibits to this Form 8-K.
(2)
<PAGE> 3
ITEM 5. OTHER EVENTS.
On March 15, 1996, the Registrant announced, in addition to the
transaction with Alltrista referred to above, that its debt holders had agreed
to extend, until May 15, 1996, waivers with respect to defaults under certain
financial covenants in loan agreements with the Registrant and to extend the
maturity of a $6,040,000 note due April 15, 1996 until May 15, 1996.
Discussions with the Registrant's lenders are continuing regarding further
amendments of terms, including the further extension of the $6,040,000 note,
and additional reduction of indebtedness. The indebtedness owed to the debt
holders is unsecured.
The Registrant also announced a restructuring which would include
moving the corporate headquarters from Los Angeles, California to Lancaster,
Pennsylvania, where the Registrant's Plastic Products Business is
headquartered, and the consolidation of certain manufacturing facilities. The
restructuring is expected to result in annualized cost savings of approximately
$6,500,000. These savings will be substantially realized in 1997.
The Registrant also announced that Roger W. Norian, its Chairman of
the Board and Chief Executive Officer, had decided not to move to Lancaster and
that, based on the recommendation of Mr. Norian, D. Gordon Strickland, Senior
Vice President, Chief Financial Officer and General Manager of the Consumer
Products Business, had been named as President, Chief Executive Officer and
elected a Director of the Registrant.
In connection with the sale of the Consumer Products Business assets
and the restructuring program, the Registrant will report in the first quarter
of 1996 a one-time pretax gain of approximately $2,900,000 on the sale of
certain assets of the Consumer Products Business and a one-time pretax loss on
the restructuring of $7,700,000. In addition to the one-time charge on the
restructuring, the Registrant will incur additional non-recurring pretax
charges of $2,400,000 during 1996 and 1997 for restructuring related costs
that accounting rules do not permit to be accrued at the time of announcement
of a restructuring.
On March 15, 1996, the Registrant issued a press release relating to
the foregoing, a copy of which is attached hereto as Exhibit 99.1 and
incorporated herein by reference.
(3)
<PAGE> 4
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro forma financial information.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following Proforma Consolidated Financial Statements for the
fiscal year ended December 31, 1995 give effect to the sale of certain assets
relating to the Consumer Products Business and the Registrant's sale to its
customers of the inventory and the collection of the accounts receivable of the
Consumer Products Business. The proforma adjustments are based on available
information and upon certain assumptions that the Registrant believes are
reasonable under the circumstances. The proforma financial information should
be read in conjunction with the December 31, 1995 Audited Consolidated
Financial Statements of the Registrant.
The Proforma Consolidated Balance Sheet and Proforma Consolidated
Statement of Earnings are necessarily based upon allocations, assumptions and
approximations and, therefore, do not reflect in precise numerical terms the
impact of the transaction on the historical financial statements. In addition,
such proforma statements should not be used as a basis for forecasting the
future operations of the Registrant.
The proforma adjustments made in the preparation of the Proforma
Consolidated Balance Sheet assume that the sale of certain assets of the
Consumer Products Business had been consummated at December 31, 1995. The
proforma adjustments related to the Proforma Consolidated Statement of Earnings
assume that the sale of certain assets of the Consumer Products Business had
been consummated as of January 1, 1995.
Concurrently with the sale of certain assets of the Consumer Products
Business, the Registrant announced a restructuring which will include the
relocation of the corporate headquarters and the consolidation of certain
manufacturing facilities. The restructuring is expected to result in
annualized cost savings of approximately $6,500,000. These cost savings will
be substantially realized in 1997. The Proforma Consolidated Financial
Statements do not include either the one-time losses to be incurred related to
the restructuring or the expected future cost savings.
(4)
<PAGE> 5
KERR GROUP, INC.
Proforma Consolidated Balance Sheet
As of December 31, 1995
(In Thousands)
<TABLE>
<CAPTION>
(Unaudited)
-------------------------------------
Proforma Adjustments
------------------------
As Sale of Other
Reported Assets Adjustments PROFORMA
-------- ------ ----------- --------
(a)
<S> <C> <C> <C> <C>
ASSETS
------
Current Assets -
Cash and cash equivalents $ 3,904 $14,500 $ 18,404
Receivables 7,430 (276)(b) 7,154
Inventories 31,041 (895) (12,398)(b) 17,748
Prepaid expenses and other current assets 3,108 (440)(d) 2,668
Net current assets related to discontinued
operations - - 11,324 (b) 11,324 (e)
-------- ------- ------- --------
Total current assets 45,483 13,605 (1,790) 57,298
Net property, plant and equipment 51,515 (4,697) 46,818
Deferred income taxes 8,057 (3,501) 1,330 5,886
Goodwill and other intangibles, net 7,140 (156) (442)(d) 6,542
Other assets 8,026 - - 8,026
-------- ------- ------- --------
$120,221 $ 5,251 $ (902) $124,570
======== ======= ======= ========
LIABILITIES AND EQUITY
----------------------
Current liabilities -
Short-term debt $ 6,500 $ 6,500
Senior debt due 1997 through 2003
classified as current(f) 50,000 50,000
Accounts payable 10,488 (1,350)(b) 9,138
Accrued pension liability 3,777 3,777
Other current liabilities 5,056 - 1,323 (d) 6,379
-------- ------- ------- --------
Total current liabilities 75,821 - (27) 75,794
Long-term pension liability 18,318 18,318
Other long-term liabilities 2,175 1,120 (d) 3,295
Stockholders' equity -
Preferred stock 9,748 9,748
Common stock 2,113 2,113
Additional paid in capital 27,239 27,239
Retained earnings 1,860 5,251 (c) (3,512)(c) 3,599
Treasury stock (6,913) (6,913)
Excess of additional pension liability over
unrecognized prior service costs (10,140) - 1,517 (d) (8,623)
-------- ------- ------- --------
Total stockholders' equity 23,907 5,251 (1,995) 27,163
-------- ------- ------- --------
$120,221 $ 5,251 $ (902) $124,570
======== ======= ======= ========
</TABLE>
See accompanying notes to Proforma Consolidated Balance Sheet.
(5)
<PAGE> 6
Notes to Proforma Consolidated Balance Sheet
(a) Represents payment to the Registrant by Alltrista in respect
of certain of the Registrant's assets relating to the Consumer
Products Business.
(b) Represents adjustment to reclassify receivables, inventories,
payables and other current liabilities relating to the
Consumer Products Business to Net Current Assets Related to
Discontinued Operations.
(c) Represents adjustment to reflect the after tax gain of
$1,739,000 (pretax gain of $2,900,000) on the sale of the
Consumer Products Business.
(d) Represents adjustments and accruals for costs related to the
sale of certain assets of the Consumer Products Business.
(e) The Registrant expects to collect the proceeds from the Net
Current Assets Related to Discontinued Operations primarily
during the remainder of 1996.
(f) As of December 31, 1995, the Registrant's $50,000,000 of
outstanding senior debt was classified as short-term because
the Registrant was in default of certain financial covenants
for which the Registrant had received waivers only through
May 15, 1996.
(6)
<PAGE> 7
KERR GROUP, INC.
PROFORMA CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
YEAR ENDED DECEMBER 31, 1995
(In Thousands)
<TABLE>
<CAPTION>
(Unaudited)
-----------------------------
Proforma
Adjustments
-----------
As Sale of
Reported Assets PROFORMA
-------- ------ --------
(a)
<S> <C> <C> <C>
Net sales $138,995 $(29,808) $109,187
Cost of sales 108,964 (22,337) 86,627
-------- ------- --------
Gross profit 30,031 (7,471) 22,560
Selling, warehouse, general and
administrative expense 32,037 (9,061) 22,976
Loss on revaluation of land 1,000 1,000
Interest expense 6,047 (681) 5,366 (b)
Interest and other income (228) (228)
-------- ------- --------
Earnings (loss) from continuing
operations before income taxes (8,825) 2,271 (6,554)(c)(d)
Provision (benefit) for income taxes (3,518) 905 (2,613)
------- ------- --------
Net earnings (loss) from continuing
operations before preferred stock
dividends $ (5,307) $ 1,366 $ (3,941)(c)(d)
======== ======== ========
Primary and fully diluted net earnings (loss)
per common share from continuing
operations(e) $ (1.60) $ (1.24)(c)(d)
======== ========
</TABLE>
See accompanying notes to Proforma Consolidated Statement of Earnings (Loss).
(7)
<PAGE> 8
Notes to Proforma Consolidated Statement of Earnings (Loss)
(a) Represents adjustment to reflect the elimination of revenues
and costs related to the Consumer Products Business, including
the elimination of interest expense related to the utilization
of a portion of the proceeds from the sale of certain assets
of the Consumer Products Business to repay $7,500,000 of debt.
(b) The proforma amounts only reflect the elimination of interest
expense related to the repayment of $7,500,000 of debt. The
Registrant expects to retire additional debt, and realize
additional interest savings, in connection with the cash
proceeds from the collection of the net current assets of the
Consumer Products Business.
(c) The proforma amounts do not reflect the impact of the
restructuring announced March 15, 1996 which includes moving
the corporate headquarters and the consolidation of certain
manufacturing facilities. The restructuring is expected to
result in annualized cost savings of approximately $6,500,000,
which will be substantially realized in 1997.
(d) The Registrant has not included in the Proforma Consolidated
Statement of Earnings (Loss) any non-recurring charges or
credits related to i) the sale of certain assets of the
Consumer Products Business or ii) the restructuring described
in Note (c) above.
(e) Weighted average number of common shares outstanding for the
proforma twelve-month period ending December 31, 1995 were
3,842,000. Fully diluted net earnings per common share
reflect, when dilutive, (1) the incremental common shares
issuable upon the assumed exercise of outstanding stock
options, and (2) the assumed conversion of the Preferred stock
and the elimination of the related Preferred Stock dividends.
Antidilution occurred in the proforma twelve-month period
ending December 31, 1995.
(8)
<PAGE> 9
(c) Exhibits.
2.1 Asset Purchase Agreement, dated as of March 15,
1996, between Kerr Group, Inc. and Alltrista
Corporation.*
99.1 Sales Agent Agreement, dated as of March 15, 1996,
between Kerr Group, Inc. and Alltrista Corporation.
99.2 Press release issued by Kerr Group, Inc., dated
March 15, 1996.
________________________
* Pursuant to Item 2 of Rule 601 under Regulation S-K, certain exhibits and
schedules have been omitted from this Agreement. The Registrant hereby agrees
to furnish supplementally a copy of any omitted schedule or exhibit to the
Commission upon request.
(9)
<PAGE> 10
SIGNATURES
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 hereunto duly authorized.
KERR GROUP, INC.
Dated: March 29, 1996 By:/s/ D. GORDON STRICKLAND
______________________________
D. Gordon Strickland
President and Chief
Executive Officer
(10)
<PAGE> 11
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
1 Asset Purchase Agreement, dated
as of March 15, 1996, between Kerr
Group, Inc. and Alltrista Corporation*
99.1 Sales Agent Agreement, dated as of
March 15, 1996, between Kerr Group,
Inc. and Alltrista Corporation
99.2 Press release issued by Kerr Group,
Inc., dated March 15, 1996
________________________
* Pursuant to Item 2 of Rule 601 under Regulation S-K, certain exhibits and
schedules have been omitted from this Agreement. The Registrant hereby agrees
to furnish supplementally a copy of any omitted schedule or exhibit to the
Commission upon request.
(11)
<PAGE> 1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
KERR GROUP, INC. ("SELLER")
AND
ALLTRISTA CORPORATION ("BUYER")
DATED AS OF MARCH 15, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . 1
1.1 Assets to be Purchased by Buyer . . . . . . . . . . . . 1
1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . 2
SECTION 2. LIABILITIES . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Assumed Liabilities . . . . . . . . . . . . . . . . . . 2
2.2 Liabilities Not Assumed by Buyer . . . . . . . . . . . . 2
SECTION 3. EXCLUSIVE LICENSE . . . . . . . . . . . . . . . . . . . 3
SECTION 4. PURCHASE PRICE AND PAYMENT . . . . . . . . . . . . . . . 3
4 1 Purchase Price . . . . . . . . . . . . . . . . . . . . . 3
4.2 Payment of Purchase Price . . . . . . . . . . . . . . . 3
4.3 Allocation of Purchase Price . . . . . . . . . . . . . . 3
SECTION 5. CLOSING; CLOSING DATE . . . . . . . . . . . . . . . . . 4
5.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . 4
5.2 Seller's Obligations at Closing . . . . . . . . . . . . 4
5.3 Buyer's Obligations at Closing . . . . . . . . . . . . . 5
SECTION 6. EMPLOYEES OF SELLER . . . . . . . . . . . . . . . . . . 6
6.1 Employees . . . . . . . . . . . . . . . . . . . . . . . 6
6.2 WARN Act . . . . . . . . . . . . . . . . . . . . . . .. 6
6.3 Compensation and Benefits . . . . . . . . . . . . . . 7
6.4 Vacation . . . . . . . . . . . . . . . . . . . . . . .. 7
6.5 Defined Contribution Plan . . . . . . . . . . . . . . 7
SECTION 7. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . 8
7.1 Due Incorporation and Authority . . . . . . . . . . . . 8
7.2 Ownership of Purchased Assets . . . . . . . . . . . . . 8
7.3 Compliance with Laws . . . . . . . . . . . . . . . . . . 8
7.4 Authority; No Violation . . . . . . . . . . . . . . . . 8
7.5 Destruction of Purchased Assets . . . . . . . . . . . . 9
7.6 Actions and Proceedings . . . . . . . . . . . . . . . 9
7.7 Consents and Approvals . . . . . . . . . . . . . . . . . 9
7.8 License . . . . . . . . . . . . . . . . . . . . . . . . 9
7.9 Product Liability . . . . . . . . . . . . . . . . . . . 9
7.10 Right to Acquire Purchased Assets . . . . . . . . . . 10
7.11 Condition of Purchased Assets . . . . . . . . . . . . 10
7.12 Assignments . . . . . . .. . . . . . . . . . . . . . . . 10
</TABLE>
i
<PAGE> 3
<TABLE> Page
----
<S> <C>
7.13 Lease . . . . . . . . . . . . . . . . . . . . . . 10
7.14 Labor Matters . . . . . . . . . . . . . . . . . . . 11
7.15 Financial Information . . . . . . . . . . . . . . . 11
SECTION 8. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . 11
8.1 Due Incorporation and Authority . . . . . . . . . . . 11
8.2 Authority; No Violation . . . . . . . . . . . . . . . 12
8.3 Consents and Approvals . . . . . . . . . . . . . . . . 12
8.4 Actions and Proceedings . . . . . . . . . . . . . . 12
SECTION 9. COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . 13
9.1 Further Assurances . . . . . . . . . . . . . . . . . . 13
9.2 Noncompetition . . . . . . . . . . . . . . . . . . . . 13
9.3 Audit of Home Canning Supplies Business . . . . . . 14
SECTION 10. TAX MATTERS . . . . . . . . . . . . . . . . . . . . 14
10.1 Tax Definition . . . . . . . . . . . . . . . . . . . 14
10.2 Tax Matters . . . . . . . . . . . . . . . . . . . . 14
10.3 Tax Cooperation; Allocation of Taxes . . . . . . . . 15
SECTION 11. SURVIVAL OF REPRESENTATIONS AND
WARRANTIES OF SELLER AND BUYER . . . . . . . . . . . 15
SECTION 12. INDEMNIFICATION . . . . . . . . . . . . . . . . . . 16
12.1 Obligation of Seller to Indemnify . . . . . . . . .. 16
12.2 Obligation of Buyer to Indemnify . . . . . . . . . .. 16
12.3 Notice and Opportunity to Defend . . . . . . . . . . . 17
12.4 Limitation of Liability . . . . . . . . . . . . . . . 17
SECTION 13. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . 18
13.1 Expenses . . . . . . . . . . . . . . . . . . . . . .. 18
13.2 Notices . . . . . . . . . . . . . . . . . . . . . .. 18
13.3 Entire Agreement . . . . . . . . . . . . . . . . . .. 19
13.4 Waivers and Amendments; Remedies . . . . . . . . . .. 19
13.5 Arbitration . . . . . . . . . . . . . . . . . . . .. 20
13.6 Governing Law; Jurisdiction . . . . . . . . . . . .. 20
13.7 Binding Effect; No Assignment . . . . . . . . . . .. 20
13.8 Counterparts . . . . . . . . . . . . . . . . . . . .. 20
13.9 Exhibits and Schedules . . . . . . . . . . . . . . . . 20
13.10 Headings and Gender . . . . . . . . . . . . . . . . .. 20
13.11 Severability . . . . . . . . . . . . . . . . . . . .. 20
</TABLE>
ii
<PAGE> 4
SCHEDULES
---------
<TABLE>
<S> <C>
Schedule 1.1(a) Machinery and Equipment
Schedule 1.1(b) Raw Materials
Schedule l.l(c) Contracts of Seller
Schedule 6.1 Seller's Employees
Schedule 7.4 Excepted Contracts
Schedule 7.9 Product Liability
Schedule 7.14 Employee Benefit Plans
Schedule 7.15 Financial Information
EXHIBITS
--------
Exhibit A Bill of Sale
Exhibit B Assignment of Trademarks
Exhibit C Assignment of Contract Rights
and Acceptance of Assignment
Exhibit D Assignment and Assumption of
Lease
Exhibit E Opinion of Counsel of Seller
Exhibit F Opinion of Counsel of Buyer
</TABLE>
iii
<PAGE> 5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of the 15th day of March,
1996, by and between KERR GROUP, INC., a Delaware corporation ("Seller"), and
ALLTRISTA CORPORATION, an Indiana corporation ("Buyer").
WITNESSETH:
WHEREAS, Seller operates two business segments: the Plastic Products
segment and the Consumer Products segment. Operations in the Consumer Products
segment include the manufacture and sale of caps and lids and the sale of glass
jars, a line of pickling spice and pectin products for home canning and the
sale of other related products including ice tea tumblers and beverage mugs
(collectively "Home Canning Supplies Business"); and
WHEREAS, Buyer wishes to purchase from Seller, and Seller wishes to
sell to Buyer, in accordance with the terms and subject to the conditions of
this Agreement, certain assets and rights of Seller related to the Home Canning
Supplies Business.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter set forth, the parties hereby agree as follows:
1. Sale of Assets.
1.1 Assets to be Purchased by Buyer. Except as otherwise provided
in Section 1.2 hereof, at the Closing (as defined in Section 5 hereof), Seller
shall sell, assign, transfer, and deliver to Buyer, or cause to be sold,
assigned, transferred, and delivered to Buyer, and Buyer shall purchase, all of
the Purchased Assets (as hereinafter defined), on the terms and subject to the
conditions set forth herein. "Purchased Assets" shall mean all of the
following assets and rights:
(a) all right, title, and interest of Seller in and to all of the
machinery and equipment of Seller used exclusively in the Home Canning Supplies
Business as identified on Schedule l.l(a) hereto (the "Equipment"); and
(b) all right, title, and interest of Seller in certain raw material
identified on Schedule 1.1(b) hereto (the "Raw Materials"); and
(c) all right, title, and interest of Seller in certain contracts to
which Seller is a party relating exclusively to the Home Canning Supplies
Business as identified on Schedule 1.1(c) hereto (the "Contracts"); and
<PAGE> 6
(d) all right, title, and interest of Seller in the trademarks
"Extra Crisp," "Jel 'N Jam" and "Self-Sealing" and the related trademark
registrations (the "Trademarks"); and
(e) all books and records of the Seller relating to the Home
Canning Supplies Business including without limitation customer mailing lists,
trade show materials, sales and marketing literature, market research and
related artwork; and
(f) the perpetual and exclusive license to use the name "Kerr"
as set forth in Section 3.
1.2 Excluded Assets. Anything in Section 1.1 to the contrary
notwithstanding, there shall be excluded from the assets and rights to be
transferred to Buyer hereunder, and the term "Purchased Assets" shall not mean
or include: (i) any cash or cash equivalents of Seller (including marketable
securities) on hand or in bank accounts, (ii) any accounts or notes receivable
of Seller, (iii) any inventory of Seller, including work in process or finished
goods, or (iv) any other assets or rights of Seller not described in Section
1.1 (the "Excluded Assets").
2. Liabilities.
2.1 Assumed Liabilities. Subject to the terms and conditions of
this Agreement, all pre-Closing liabilities relating to the Purchased Assets
and the Home Canning Supplies Business of Seller (the "Pre-Closing
Liabilities") shall be retained by Seller and shall not be assumed by Buyer;
provided, however, Buyer shall assume the following specific obligations and
liabilities of Seller as of the Closing Date: (1) all right, title, interest
in, and obligations under a certain Amended and Restated Lease by and between
Phoenician Properties, as Lessor, and Seller, as Lessee, dated May 16, 1994,
with respect to Seller's facility located in Jackson, Tennessee (the "Lease"),
(2) all right, title, interest in, and obligations under a certain Glass Supply
Agreement by and between Seller and Ball Foster Glass Container Co., L.L.C.,
dated September 9, 1992 (the "Glass Supply Agreement"), and (3) all obligations
associated with any employees of Seller who are employed in connection with the
Home Canning Supplies Business and who become employees of Buyer in accordance
with Section 6 of this Agreement, including any severance pay obligations to
any such employees hired by Buyer which accrue after the Closing Date and the
accrued vacation pay liability pursuant to Section 6.4 (collectively, the
"Assumed Liabilities").
2.2 Liabilities Not Assumed by Buyer. Anything in this Agreement
to the contrary notwithstanding, Buyer shall not assume, or in any way be
liable for, any liabilities or obligations of Seller other than those
specifically referenced in Section 2.1 (the
Page 2
<PAGE> 7
"Excluded Liabilities"). For purposes of this Agreement, all Excluded
Liabilities shall be deemed to be Pre-Closing Liabilities.
3. Exclusive License. Seller hereby grants to Buyer, in consideration of
the rights and benefits granted herein, a perpetual exclusive, worldwide
license to use the "Kerr" name and any variations thereof in connection with
the Home Canning Supplies Business or the consumer food products industry (the
"License"). In the event the "Kerr" name as it is used in this Section is
registered with the United States Patent and Trademark Office, Seller shall
execute any and all documents necessary to record the License with the United
States Patent and Trademark Office.
Buyer shall be entitled to enforce and recover for all infringements
of the "Kerr" name and the Trademarks consistent with the terms of this Section
3. Buyer and Seller shall cooperate with each other in preventing the
unauthorized use of the "Kerr" name and the Trademarks and prosecuting
infringers. If there occurs a change of control or majority ownership of Buyer
which is not approved prior to such change by a majority of the members of the
Buyer's board of directors in office immediately prior to such change, then
Seller shall have the option, upon written notice to Buyer, to terminate the
License.
4. Purchase Price and Payment.
4.1 Purchase Price. The aggregate purchase price for the
Purchased Assets, the License, and the covenants of Seller (including Section
9.2) shall be Fourteen Million Four Hundred Seventeen Thousand Dollars
($14,417,000) (the "Purchase Price"), which includes a credit for vacation pay
accrued in the amount of $106,611 pursuant to Section 6.4 and prepaid rent of
the Seller in the amount of $23,917.
4.2 Payment of Purchase Price. At the Closing, Buyer shall
deliver to Seller the Purchase Price by wire transfer to one or more accounts
at banks in the United States identified by Seller at least two (2) business
days prior to the Closing Date.
4.3 Allocation of Purchase Price. Buyer and Seller agree that
this Agreement is a purchase and sale of assets for tax purposes. No later
than thirty (30) days from Closing, Buyer and Seller shall use their best
efforts to agree on an allocation of the Purchase Price among the Purchased
Assets, the License, and the covenants of Seller (including Section 9.2).
("Allocation Agreement"). Buyer and Seller shall report, or cause to be
reported, this transaction for tax purposes in accordance with the Allocation
Agreement and each party agrees to act in accordance with such Allocation
Agreement in the course of any tax audit, tax review or tax litigation
concerning such party and relating thereto. Neither Seller nor Buyer will
assert, or permit to be
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asserted, that the allocation set forth in the Allocation Agreement was not
separately bargained for at arm's length and in good faith.
5. Closing; Closing Date.
5.1 Closing. The closing of the sale and purchase of the Purchased
Assets contemplated hereby (the "Closing") shall take place simultaneously with
the execution of this Agreement on March 15, 1996, at the offices of Willkie
Farr & Gallagher, One Citicorp Center, 153 E. 53rd Street, New York, New York
or at a date, time, and location mutually acceptable to the parties. The
applicable time and date is herein called the "Closing Date." Buyer shall be
deemed to own the Purchased Assets at 3:30 p.m., Central Standard time, on the
Closing Date. In connection with the assignment of the Lease, Buyer shall be
provided with possession of the leased premises at 3:30 p.m., Central Standard
time, on the Closing Date. As soon as practicable after the Closing, Seller
and Buyer shall agree upon all prorations of utilities, taxes or similar items
which are the responsibility or property of Seller under the Lease, and the
prorations shall be based on such time and date.
5.2 Seller's Obligations at Closing. At the Closing, Seller shall
deliver (or cause to be delivered) to Buyer the following (in form and
substance reasonably satisfactory to counsel for Buyer):
(i) A Uniform Commercial Code search from the State of
Tennessee and the County of Madison, Tennessee
showing no liens on the Purchased Assets;
(ii) A duly executed Bill of Sale by Seller for the
Equipment and the Raw Materials and such other
documents or instruments of transfer necessary to
vest in Buyer full and complete title to the
Equipment and the Raw Materials, free and clear of
all liens, pledges, security interests, and
encumbrances on the Closing Date, substantially in
the form attached hereto as Exhibit A;
(iii) A duly executed Assignment of the Trademarks,
substantially in the form attached hereto as
Exhibit B;
(iv) A duly executed Assignment of Contract Rights and
Acceptance of Assignment by Seller assigning the
rights, title, interest, and obligations in, under,
and to the Contracts and the Glass Supply Agreement
to Buyer, substantially in the form attached hereto
as Exhibit C;
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(v) A duly executed Assignment and Assumption of Lease by
Seller assigning the rights, title, interest, and
obligations in, under, and to the Lease to Buyer,
substantially in the form attached hereto as Exhibit
D;
(vi) An opinion of Seller's counsel, substantially in the
form attached hereto as Exhibit E;
(vii) Certified resolutions of the directors of Seller
approving and authorizing the transactions
contemplated by this Agreement;
(viii) A duly executed Sales Agent Agreement by Seller
wherein Buyer agrees to act as Seller's agent with
respect to the sale of Kerr Pre-Closing Inventory (as
defined therein); and
(ix) such other instruments, documents, and considerations
which may be reasonably required by Buyer or Buyer's
counsel to effectuate the transaction contemplated by
this Agreement.
5.3 Buyer's Obligations at Closing. At the Closing, Buyer shall
deliver (or cause to be delivered) to Seller the following (in form and
substance reasonably satisfactory to counsel for Seller):
(i) Payment of the Purchase Price in accordance with the
terms and conditions set forth in Section 4;
(ii) A duly executed Assignment of Contract Rights and
Acceptance of Assignment by Buyer accepting the
assignment of the rights, title, interest, and
obligations in, under, and to the Contracts and the
Glass Supply Agreement to Buyer, substantially in the
form attached hereto as Exhibit C;
(iii) A duly executed Assignment and Assumption of Lease by
Buyer accepting the assignment of the rights, title,
interest, and obligations in, under, and to the Lease
to Buyer, substantially in the form attached hereto
as Exhibit D;
(iv) An opinion of Buyer's counsel, substantially in the
form attached hereto as Exhibit F;
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(v) Certified resolutions of the directors of Buyer
approving and authorizing the transactions
contemplated by this Agreement; and
(vi) A duly executed Sales Agent Agreement by Buyer
wherein Buyer agrees to act as Seller's agent with
respect to the sale of Kerr Pre-Closing Inventory;
and
(vii) such other instruments, documents, and considerations
which may be reasonably required by Buyer or Buyer's
counsel to effectuate the transaction contemplated by
this Agreement.
6. Employees of Seller.
6.1 Employees. Buyer shall, effective as of the Closing Date, offer
to employ all employees of the Seller listed on Schedule 6.1 who are actively
employed in the Home Canning Supplies Business ("H.C. Employees"). Any
employees of the Seller who would otherwise be H.C. Employees as of the
Closing Date but for the fact that they are on temporary leave of absence due
to illness, short-term disability, or vacation shall be extended an employment
offer by Buyer provided they return from such temporary leave of absence and
report for work to Buyer within 90 days of the Closing Date, or such longer
period as may be required by any federal or state law granting employees
re-employment rights upon return from a leave of absence and shall be deemed to
be H.C. Employees as of the date they report for work to Buyer. Buyer shall
have no responsibility to employ any H.C. Employees who are disabled within the
meaning of the long-term disability plan of Seller. Unless specifically noted
by Seller on Schedule 6.1 or elsewhere, the employment of all H.C. Employees
shall terminate on the Closing Date. The employment commencement date of the
qualified H.C. Employees with the Buyer shall be the later of the Closing Date
or the date any otherwise qualified H.C. Employee reports for work to Buyer, as
noted above. Once employed by the Buyer, the affected employees shall be known
as the "Alltrista H.C. Employees." Buyer shall not be obligated to continue
any employment relationship with any Alltrista H.C. Employees for any specific
period of time.
6.2 WARN Act. Buyer shall assume responsibility for any obligations
or liabilities to the Alltrista H.C. Employees under the Worker Adjustment and
Retraining Notification Act (the "WARN Act"). Seller retains any
responsibility for any obligations or liabilities to H.C. Employees who do not
become Alltrista H.C. Employees under the WARN Act as a result of actions taken
by Seller on or after the Closing Date.
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6.3 Compensation and Benefits. Unless otherwise specified in this
Agreement, Seller shall remain responsible for all liabilities related to H.C.
Employees which accrue or have been accrued on or prior to the Closing Date.
Buyer shall provide any Alltrista H.C. Employees with a total package of
initial compensation and benefits substantially similar to the compensation and
benefits currently provided by Seller to the H.C. Employees assuming comparable
levels of work responsibilities. Alltrista H.C. Employees shall be credited
with the same years of service for participation, eligibility for benefits, and
vesting purposes under the terms of any employee pension benefit plan or
employee welfare benefit plan offered by Buyer to said employees that were
credited to them under the terms of the Seller's comparable plan(s). Buyer
shall make any necessary modifications to its employee benefit plans to reflect
the intent of this Section 6.3.
Alltrista H.C. Employees shall continue to be eligible to participate
in and be covered by Seller's health and dental benefits plan until December
31, 1996. Buyer shall reimburse Seller for the premium cost thereof accruing
after the Closing Date promptly upon presentation by the Seller to the Buyer of
such premuim costs for the Alltrista H.C. Employees. Seller shall amend its
contract with its insurance carrier to provide that Seller retains financial
reponsibility under such plan until the plan's anniversary date, January 1,
1997.
Seller shall be responsible for any severance benefits which may
become payable to H.C. Employees which do not become Alltrista H.C. Employees
for whatever reason. If Alltrista H.C. Employees are subsequently terminated
by Buyer, Buyer shall be responsible for any severance benefit payments under
the terms of its severance benefit plans in effect at the time of an affected
employee's termination of employment.
6.4 Vacation. Accrued and unused vacation pay of the H.C. Employees
who become Alltrista H.C. Employees as of the Closing Date has been reflected
as a credit to the Purchase Price. Any accrued but unused vacation days of any
Alltrista H.C. Employees as of the Closing Date shall transfer with the
affected employees and shall be available to them as employees of the Buyer.
Buyer shall hold Seller harmless from any claims made by Alltrista H.C.
Employees for accrued and unused vacation benefits as of the Closing Date.
6.5 Defined Contribution Plan. Following the Closing Date, Buyer and
Seller shall cooperate with the Alltrista H.C. Employees who wish to elect a
qualified rollover into Buyer's defined contribution (401(k)) plan.
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7. Representations and Warranties of Seller.
Seller represents and warrants to Buyer on the date hereof as follows:
7.1 Due Incorporation and Authority. Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has all requisite corporate power and lawful
authority to own, lease, and operate its assets, properties, and business and
to carry on its business as now being and as heretofore conducted.
7.2 Ownership of Purchased Assets. Seller is the owner of the
Purchased Assets. Seller has, and at the Closing Buyer will receive, good and
marketable title to all such Purchased Assets, free and clear of any liens,
security interests or other encumbrances.
7.3 Compliance with Laws. Seller is in compliance in all material
respects with all laws, regulations, orders, judgments, decrees or other
judicial or administrative mandates of any court or governmental, regulatory or
administrative agency, instrumentality or authority or other tribunal
applicable to the Home Canning Supplies Business (including, without
limitation, any law, regulation, order or requirement relating to securities,
properties, business, products, advertising, sales or employment practices,
terms and conditions of employment, wages and hours, safety, occupational
safety, health or welfare conditions relating to premises occupied,
environmental protection, product safety and liability, and civil rights).
7.4 Authority; No Violation. Seller has the full legal right,
power, and authority to execute and deliver this Agreement and the other
instruments and agreements contemplated by this Agreement and to perform its
obligations hereunder and thereunder. This Agreement and the transactions
contemplated hereby have been duly authorized by Seller. This Agreement has
been duly executed and delivered by Seller and is a valid and binding agreement
of Seller enforceable against Seller in accordance with its terms. The
execution, delivery, and performance of this Agreement and the consummation of
the transactions contemplated hereby (the "Contemplated Transactions") will not
(i) violate, conflict with or result in the breach of any provision of the
organizational documents of Seller; (ii) except as set forth on Schedule 7.4,
violate or result in the breach of any of the terms of any contract or other
agreement to which Seller is a party or binding upon Seller or any of its
properties which violation or breach would have a material adverse effect on
the value of the Purchased Assets or Seller's ability to convey the Purchased
Assets to Buyer or otherwise perform its obligations hereunder ("Material
Adverse Effect"); (iii) violate any order, writ, judgment, injunction,
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award or decree of any court, arbitrator or governmental or regulatory body
against, or binding upon, Seller or upon the assets of Seller; (iv) violate any
statute, law or regulation of any jurisdiction; or (v) result in the creation
or imposition of any lien or encumbrance on any of the Purchased Assets.
7.5 Destruction of or Damage to Purchased Assets. There is no
damage, destruction or loss which has or would have a material adverse effect
on the Purchased Assets.
7.6 Actions and Proceedings. There are no actions, suits or
claims or legal, administrative or arbitrable proceedings or investigations
pending, or, to the knowledge of Seller after due inquiry, threatened, against
or involving Seller, any of its properties or assets, or the Purchased Assets
which, individually or in the aggregate, could, if decided adversely to Seller,
have a Material Adverse Effect. Seller is not charged by any governmental
agency, instrumentality or authority with a violation of, or, to the knowledge
of Seller after due inquiry, threatened by any governmental agency,
instrumentality or authority with a charge of a violation of, any Federal,
State, county or municipal law or regulation relating to the Home Canning
Supplies Business which could have a Material Adverse Effect.
7.7 Consents and Approvals. Except as set forth on Schedule 7.4,
the execution and delivery by Seller of this Agreement, the performance by
Seller of its obligations hereunder, and the consummation of the Contemplated
Transactions do not require Seller to obtain any consent, approval or waiver or
any action of or by, any person or governmental or regulatory body. All
licenses, permits, and other authorizations and approvals issued to Seller by
regulatory and other governmental agencies and instrumentalities necessary for
or relating in any way to the Home Canning Supplies Business are validly issued
and in full force and effect, except where the failure to have such licenses,
permits or other authorizations and approvals would not have a Material Adverse
Effect.
7.8 License. Seller owns all right, title, and interest in and to
the "Kerr" trademark for the purposes of the License. Seller has the full
legal right, power, and authority to grant the License to Buyer and to perform
its obligations with respect to the License. There are no licenses,
sublicenses or other agreements as to which Seller is a party and pursuant to
which any person, other than Seller, is authorized to use the "Kerr" trademark,
other than the License.
7.9 Product Liability. Except as set forth on Schedule 7.9, there
are no actions, suits or claims or legal, administrative or arbitrable
proceedings pending, or, to the knowledge of Seller after due inquiry,
threatened, by any end-user customer against
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Seller based upon or arising out of personal injury or property damage caused
by any products of Seller in the Home Canning Supplies Business.
7.10 Right to Acquire Purchased Assets. No party, other than
Buyer, has the right to acquire the Purchased Assets.
7.11 Condition of Purchased Assets. The Equipment is in good and
operable condition, normal wear and tear excepted.
7.12 Assignments. The Contracts and the Glass Supply Agreement
are all in full force and effect and Seller has the authority to assign such
agreements to Buyer, and, if the assignment of such agreements requires the
consent of any other party, Seller has obtained the requisite consent of such
party to the assignments. All obligations presently due and payable by Seller
under the Glass Supply Agreement as of Closing have been paid.
7.13 Lease. (a) Seller has a valid and enforceable leasehold
interest in the premises as described in the Lease. True and accurate copies
of the Lease have been delivered to Buyer.
(b) With respect to the Lease, no default or event of default on the
part of Seller as Lessee, and, to the knowledge of Seller, no default or event
of default on the part of the Lessor, under the provisions of any of said
leases, and no event which with the giving of notice or passage of time, or
both, would constitute such default or event of default on the part of Seller,
or, to the knowledge of Seller, on the part of the Lessor, has occurred and is
continuing unremedied or unwaived. As of the Closing Date, all rent due under
the Lease has been paid.
(c) The buildings and improvements leased by Seller under the
Lease and the operation or maintenance thereof as now operated and maintained,
do not (i) contravene any zoning or building law or ordinance or other
administrative regulation or (ii) violate any easement, right, assessment,
set-back, limitation, restrictive covenant or any provision of federal, state
or local law, the effect of which materially interferes with or prevents the
continued use of such property for the purposes for which the property is now
being used, or would materially affect the value thereof. The Seller has in
place all legally required operating permits for the operation of the Home
Canning Supplies Business on the real property leased by Seller pursuant to the
Lease.
(d) There exists no pending or, to the knowledge of Seller,
threatened condemnation, eminent domain or similar proceeding with respect to,
or which could affect, the real property leased by Seller pursuant to the
Lease.
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7.14 Labor Matters. (a) Seller has delivered or will deliver to
Buyer true, accurate and complete copies of all personnel files for all
Alltrista H.C. Employees setting forth the name of each such person, the title
or job classification of each such person, the present salary or compensation
of each such person, the amounts paid to such individual in the calendar year
1995 and including without limitation employment applications and compensation
historical data. Seller shall be responsible for and shall indemnify Buyer
from all of its wage, salary, and benefit obligations to Seller's employees
(other than vacation pay) including without limitation Seller's obligation, if
any, to pay covered medical expenses incurred by its employees on or prior to
the Closing Date but not submitted by its employees to Seller or its welfare
plan insurer until after the Closing Date.
(b) Except as set forth on Schedule 7.14, Seller is not, with
respect to any H.C. Employee, a party to any written or, to Seller's knowledge,
oral (i) employee collective bargaining agreement, employment agreement,
consulting agreement, deferred compensation agreement, confidentiality
agreement, or covenant not to compete, or (ii) employees' pension,
profit-sharing, stock option, bonus, incentive, stock purchase, welfare, life
insurance, hospital or medical benefit plan, or any other employee benefit
plan.
7.15 Financial Information. Attached as Schedule 7.15 is summary
financial information of the Home Canning Supplies Business which has been
provided by Seller to Buyer for Sellers fiscal years ended December 31, 1994
and December 31, 1995 ("Annual Financial Information"). The Financial
Information (i) has been prepared in accordance with generally accepted
accounting principles consistently applied and (ii) presents fairly the results
of operation of the Home Canning Business for the period then ended.
Neither the representations and warranties of Seller contained herein
nor in any certificate, Exhibit, Schedule or other writing delivered to Buyer
pursuant hereto or in connection with the sale of the Purchased Assets contain
any untrue statement of a material fact or, taken together, omit to state a
material fact necessary in order to make the statements herein and therein not
misleading. The foregoing representations and warranties of Seller are made
with the knowledge and expectation that Buyer is placing complete reliance on
such representations and warranties in order to enter into this Agreement.
8. Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:
8.1 Due Incorporation and Authority. Buyer is a corporation duly
organized and validly existing under the laws of the State of Indiana and has
all requisite corporate power and authority to own,
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lease, and operate its assets, properties, and business and to carry on its
business as now being and as heretofore conducted.
8.2 Authority; No Violation. Buyer has the full legal right,
power, and authority to execute and deliver this Agreement and the other
instruments and agreements contemplated by this Agreement and to perform its
obligations hereunder and thereunder. This Agreement and the transactions
contemplated hereby have been duly authorized by Buyer. This Agreement has
been duly executed and delivered by Buyer and is a valid and binding agreement
of Buyer enforceable against Buyer in accordance with its terms. The
execution, delivery, and performance of this Agreement and the consummation of
the transactions contemplated hereby, including but not limited to, the
acquisition and ownership of the Purchased Assets, the use of the License, and
the assumption and discharge of the Assumed Liabilities, will not in any
material respect (i) violate, conflict with or result in the breach of any
provision of the organizational documents of Buyer; (ii) violate or result in
the breach of any of the terms of any contract or other agreement to which
Buyer is a party or binding upon Buyer or any of its properties; (iii) violate
any order, writ, judgment, injunction, award or decree of any court, arbitrator
or governmental or regulatory body against, or binding upon, Buyer or upon the
assets of Buyer; (iv) violate any statute, law or regulation of any
jurisdiction; or (v) contravene or constitute a default under or give rise to a
right of termination, cancellation or acceleration of any right or obligation
of Buyer.
8.3 Consents and Approvals. The execution and delivery by Buyer
of this Agreement, the performance by Buyer of its obligations hereunder, and
the consummation of the Contemplated Transactions do not require Buyer to
obtain any consent, approval or waiver or any action of or by, any person or
governmental or regulatory body.
8.4 Actions and Proceedings. There are no actions, suits or
claims or legal, administrative or arbitrable proceedings or investigations
pending, or, to the knowledge of Buyer, threatened, against or involving Buyer
or any of its properties or assets which, individually or in the aggregate,
could, if decided adversely to Buyer, have a material adverse effect upon the
condition of its business or otherwise on Buyer's ability to consummate the
Contemplated Transactions.
Neither the representations and warranties of Buyer contained herein nor in any
certificate, Exhibit, Schedule or other writing delivered to Seller pursuant
hereto or in connection with the sale of the Purchased Assets contain any
untrue statement of a material fact or, taken together, omit to state a
material fact necessary in order to make the statements herein and therein not
misleading. The foregoing representations and warranties of Buyer are made
with
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the knowledge and expectation that Seller is placing complete reliance on such
representations and warranties in order to enter into this Agreement.
9. Covenants and Agreements. The parties covenant and agree as follows:
9.1 Further Assurances. Each of the parties shall execute such
documents and other papers and take such further actions as may be reasonably
requested by the other party to carry out the provisions hereof and the
Contemplated Transactions. Each such party shall use commercially reasonable
efforts to fulfill or obtain the fulfillment of the conditions to the other
party's obligations hereunder. Following Closing, Seller shall cooperate with
Buyer in the transition of the Home Canning Supplies Business including data
processing, employment information and documentation and other related
activities. Buyer shall reimburse Seller for any out-of-pocket costs incurred
by Seller as a result of providing such transition services.
9.2 Noncompetition.
(a) For a period of ten (10) years from the Closing Date, Seller
shall not compete, engage, or render services in the Home Canning Supplies
Business in the United States, Canada or anywhere where Seller has distributed
and sold products in the home canning industry in the past twelve (12) months
or is currently distributing and selling products in the home canning industry,
either directly or indirectly, as a principal or for its own account or solely
or jointly with others, or as stockholder in any corporation or joint stock
association, in any organization which is in the Home Canning Supplies
Business; provided, however, that the following shall not constitute violations
of this Section 9.2: (i) the investment by Seller's employee benefit plans in
any publicly traded company provided that such investment represents less than
5% of such companies outstanding securities, or (ii) the activities of Seller
after the Closing relating to the sale of any of the Kerr Pre-Closing
Inventory. For purposes of this Section, "compete" shall mean, directly or
indirectly, own, manage, operate, control, participate in, be a shareholder in,
provide any assistance to contract with or be connected in any manner with any
form of business organization that engages in the Home Canning Supplies
Business.
(b) Seller specifically acknowledges the necessity for the
covenants contained in this Section and that the restrictive period of time and
geographic limitations specified are reasonable in view of the Contemplated
Transactions, the nature of the business in which Buyer is engaged, and
Seller's knowledge of Buyer's operations. If any provision contained in this
Section shall for any reason be held invalid, illegal or unenforceable in any
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respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Section, but this Section shall be construed as if
such invalid, illegal or unenforceable provision had never been contained
herein. It is the intention of the parties that if any of the restrictions or
covenants contained herein is held to cover a geographic area or to be for a
length of time which is not permitted by applicable law, or in any way
construed to be too broad or to any extent invalid, such provision shall not be
construed to be null, void and of no effect, but to the extent such provision
would be valid or enforceable under applicable law, a court of competent
jurisdiction shall construe and interpret or reform this Section to provide for
a covenant having the maximum enforceable geographic area, time period, and
other provisions (not greater than those contained herein) as shall be valid
and enforceable under such applicable law. Seller acknowledges that Buyer
would be irreparably harmed by any breach of this Section and that there would
be no adequate remedy at law or in damages to compensate Buyer for any such
breach. In addition to all other rights and remedies which Buyer may have at
law, as an additional and cumulative remedy, Buyer shall be entitled to
injunctive relief and specific performance by Seller of this Section, and
Seller consents to the entry thereof.
9.3 Audit of Home Canning Supplies Business. Seller shall provide
any required financial information relating to the Home Canning Supplies
Business to its outside auditors who shall perform an audit of the financial
statements of the Home Canning Supplies Business for Buyer as of and for the
twelve months ended December 31, 1995 in a form which complies with the
provisions of Item 7 of Form 8-K. The audit shall be completed no later than
April 30, 1996 and Seller shall cooperate in the preparation of the financial
statements and the audit. Buyer will be responsible for the cost of such
audit.
10. Tax Matters.
10.1 Tax Definition. For purposes of this Agreement, "Tax" or
"Taxes" means any net income, alternative or minimum tax, withholding, payroll
or employment tax, sales, real estate, personal property or other taxes or
fees, penalties, and interest pertaining to the assets or the Home Canning
Supplies Business of Seller.
10.2 Tax Matters. Seller hereby represents and warrants to Buyer
that Seller has paid, will timely pay or will cause to be paid (i) all Taxes
payable by it attributable to any pre-closing Tax period which are required to
be paid on or prior to the Closing Date, the non-payment of which would result
in a lien or other type of encumbrance on any Purchased Asset, and (ii) all
Taxes relating to the ownership of the Purchased Assets or the operation of the
Home Canning Supplies Business on and prior to the Closing Date.
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10.3 Tax Cooperation; Allocation of Taxes.
(a) Buyer and Seller agree to furnish or cause to be furnished to
each other, upon request, as promptly as practicable, such information and
assistance relating to the Purchased Assets as is reasonably necessary for the
filing of any Tax return, declaration or report, the making of any election
related to Taxes, the preparation for any audit by any taxing authority, or the
prosecution or defense of any claim, suit or proceeding with respect to Taxes.
Seller and Buyer shall cooperate fully, as and to the extent reasonably
requested by the other party, in the conduct of any audit, litigation or other
proceeding with respect to Taxes to the extent relevant to the Purchased
Assets.
(b) All personal property taxes, similar ad valorem obligations,
and special assessments imposed with respect to the Purchased Assets for a Tax
period which includes (but does not end on) the Closing Date shall be
apportioned between Seller and Buyer, with Seller bearing a portion of such
Taxes based on the number of days in the Tax period on and prior to the Closing
Date and Buyer bearing a portion of such Taxes based on the number of days in
the Tax period after the Closing Date.
(c) Any transfer, documentary, sales, use, excise or other Taxes
and fees (including recording or filing fees) imposed in connection with this
Agreement and the Contemplated Transactions shall be borne and paid by Buyer.
(d) Taxes described in Section 10.3(b) and (c) shall initially be
timely paid as provided by applicable law and the paying party shall be
entitled to reimbursement from the nonpaying party in accordance with Section
10.3(b) and (c). The paying party shall promptly notify the non-paying party
of the payment of such Tax and the non-paying party shall make such
reimbursement within ten (10) business days after it receives such notice. Any
payment not made within such time shall bear interest at the rate per annum
determined, from time to time, under the provisions of Section 6621(a)(2) of
the Internal Revenue Code for each day until paid.
11. Survival of Representations and Warranties of Seller and Buyer.
All representations, warranties, covenants, and agreements shall
survive the execution and delivery of this Agreement and the Closing hereunder
and shall thereafter terminate and expire on the date which is twelve (12)
months after the Closing Date; provided, however, that (i) the covenant in
Section 9.2 shall survive the Closing for ten (10) years, (ii) the covenants in
Section 10 shall survive the Closing for the applicable statutory period, and
(iii) the indemnification obligations of Seller and Buyer pursuant to
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Section 12.1(b) and 12.2(b) for claims by any third party shall survive
indefinitely. Notwithstanding the foregoing, (i) any representation, warranty,
covenant or agreement in respect of which indemnity may be sought under Section
12.1 or 12.2 shall survive the time at which it would otherwise terminate, as
to a particular misrepresentation or particular breach thereof giving rise to
such right to indemnity, if written notice of the misrepresentation or breach
thereof giving rise to such right to indemnity shall have been given to the
party against whom such indemnity may be sought prior to such time, and (ii)
any indemnity claim based on any misrepresentation or breach of any
representation, warranty, covenant or agreement in respect of which indemnity
may be sought under Section 12.1 or 12.2 shall be made promptly after the party
seeking to make such claim first became aware of the facts constituting the
basis thereof (unless, prior to such time, notice of such claim shall have been
given to the party against whom such indemnity may be sought).
12. Indemnification.
12.1 Obligation of Seller to Indemnify. Subject to Section 11,
Seller agrees to indemnify, defend, and hold harmless Buyer from and against
any and all claims, causes of action, losses, liabilities, damages, Taxes,
assessments, penalties, judgments, costs or expenses (including reasonable
attorneys' fees and disbursements) (individually, the "Loss" and collectively,
the "Losses") incurred, directly or indirectly by Buyer, based upon, arising
out of or otherwise in respect of (a) any breach of any of the representations,
warranties, covenants or agreements of Seller contained in this Agreement or
any instrument or agreement delivered in connection with this Agreement, (b)
any Pre-Closing Liabilities, (c) any liability including any liability
asserted by a third party against Buyer which arises out of or is in any way
connected with the ownership or use of the Purchased Assets or the operation of
the Home Canning Supplies Business on or prior to the Closing, and (d) any
liability including any liability asserted by a third party which arises out of
or is in any way connected with Kerr Pre-Closing Inventory.
12.2 Obligation of Buyer to Indemnify. Subject to Section 11,
Buyer agrees to indemnify, defend, and hold harmless Seller from and against
any Losses incurred, directly or indirectly by Seller, based upon, arising out
of or otherwise in respect of (a) any breach of any of the representations,
warranties, covenants or agreements of Buyer contained in this Agreement or any
instrument or agreement delivered in connection with this Agreement, (b) any
liability, including any liability asserted by a third party against Seller
which arises out of or is in any way connected with the ownership or the use by
Buyer of the Purchased Assets or the operation of the Home Canning Supplies
Business after the Closing,
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except any liability which arises out of or is in any way connected with Kerr
Pre-Closing Inventory, and (c) any Assumed Liabilities.
12.3 Notice and Opportunity to Defend.
(a) Promptly after receipt by any party hereto (the "Indemnitee")
of notice of any demand, claim or circumstance which would or might give rise
to a claim or the commencement of any action, proceeding or investigation (an
"Asserted Liability") that may result in a Loss, the Indemnitee shall give
notice thereof (the "Claims Notice") to the party obligated to provide
indemnification pursuant to Section 12.1 or 12.2 (the "Indemnifying Party").
The Claims Notice shall describe the Asserted Liability, and shall indicate the
amount (to the extent known) of the Loss that has been or may be suffered by
the Indemnitee.
(b) The Indemnifying Party may elect to compromise or defend, at
its own expense and by its own counsel, any Asserted Liability. If the
Indemnifying Party elects to compromise or defend such Asserted Liability, it
shall within thirty (30) days (or sooner, if the nature of the Asserted
Liability so requires) notify the Indemnitee of its intent to do so, and the
Indemnitee shall cooperate, at the expense of the Indemnifying Party, in the
compromise of, or defense against, such Asserted Liability. If the
Indemnifying Party elects not to compromise or defend the Asserted Liability,
fails to notify the Indemnitee of its election as herein provided or contests
its obligation to indemnify under this Agreement, the Indemnitee may pay,
compromise or defend such Asserted Liability. Notwithstanding the foregoing,
the Indemnitee may not settle or compromise any claim without the consent of
the Indemnifying Party which consent shall not be unreasonably withheld. In
any event, the Indemnitee and the Indemnifying Party may participate, at its
own expense, in the defense of such Asserted Liability. If the Indemnifying
Party chooses to defend any claim, the Indemnitee shall make available to the
Indemnifying Party any books, records or other documents within its control
that are necessary or appropriate for such defense.
12.4 Limitation of Liability.
Except in respect of Sections 2.1, 2.2 and 10 (as to which the
limitations expressed in this Section 12.4 shall not apply), neither party
shall be entitled to any recovery from the other party under this Section 12
unless and until the amount of Losses suffered, sustained or incurred by the
asserting party, or to which such party becomes subject, shall exceed $50,000
(and then only to the extent of such excess).
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13. Miscellaneous.
13.1 Expenses. Each of Buyer and Seller shall bear its own
expenses in connection with the execution, delivery, and performance of this
Agreement and the consummation of the Contemplated Transactions. Each of Buyer
and Seller represents and warrants to the other that no finder, broker or other
agent shall be entitled to receive any fee, commission or other payment from
either party in connection with the consummation of the Contemplated
Transactions, except Lehman Brothers whose expenses shall be the sole
responsibility of Seller. Buyer shall bear all expenses associated with the
legalization, authentication, or recording of the License with the United
States Patent and Trademark Office. In the event that Buyer or Seller proceed
with an action, suit or proceeding to enforce their rights hereunder, the
prevailing party shall be entitled to be reimbursed for all fees and expenses
incurred by it in connection with such action, suit or proceeding, including
reasonable attorneys' fees.
13.2 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally, sent
by facsimile transmission or sent by certified, registered or express mail,
postage prepaid. Any such notice shall be deemed given when so delivered
personally or sent by facsimile transmission (with a copy printed as
confirmation) or, if mailed, five (5) days after the date of deposit in the
United States mail, as follows:
(a) if to Buyer, to:
Alltrista Corporation
Attention: Thomas B. Clark
301 South High Street
P. O. Box 5004
Muncie, Indiana 47305-2326
Facsimile: (317) 281-5400
with a copy to:
Bingham Summers Welsh & Spilman
Attention: Joseph E. DeGroff, Esq.
2700 Market Tower
10 West Market Street
Indianapolis, Indiana 46204-2982
Facsimile: (317) 236-9907
(b) if to Seller, to:
Kerr Group, Inc.
Attention: D. Gordon Strickland
1840 Century Park East
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Los Angeles, California 90067
Facsimile: 310-282-8011
with a copy to:
Willkie Farr & Gallagher
Attention: Steven J. Gartner
One Citicorp Center
155 E. 53rd Street
New York, New York 10022-4677
Facsimile: 212-821-8111
Any party may by notice given in accordance with this Section to the other
party designate another address or person for receipt of notices hereunder.
13.3 Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto) contains the entire agreement between the parties with respect
to the purchase of the Purchased Assets, the License, and related transactions,
and supersedes all prior agreements, written or oral, with respect thereto.
13.4 Waivers and Amendments; Remedies. This Agreement may be
amended, and the terms hereof may be waived, only by a written instrument
signed by Buyer and Seller and, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, nor shall any waiver
on the part of any party of any such right, power or privilege, nor any single
or partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
The remedies set forth in this Agreement shall be cumulative and no one shall
be construed as exclusive of any other or of any remedy provided by law and
failure of any party to exercise any remedy at any time shall not operate as a
waiver of the right of such party to exercise any remedy for the same or
subsequent default at any time.
13.5 Arbitration. The parties agree that any controversy or claim
arising out of or relating to this Agreement shall be settled by arbitration in
accordance with the commercial arbitration rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction. Buyer and Seller shall each select
one person to act as arbitrator, and the two selected shall select a third
arbitrator within ten (10) days of their appointment. If the arbitrators
selected by the parties are unable or fail to agree upon the third arbitrator,
the third arbitrator shall be selected by the American Arbitration Association.
The arbitration proceedings shall take place in Chicago, Illinois unless Buyer
and Seller mutually agree otherwise. The parties shall each bear their
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own costs and expenses and an equal share of the arbitrators' fees and
expenses; provided, however, that the arbitrators shall have the discretion to
award costs and attorneys fees to the prevailing party.
The procedures specified in this Section shall be the sole and
exclusive procedures for the resolution of disputes between the parties arising
out of or relating to this Agreement; provided, however, that a party may seek
a preliminary injunction or other preliminary judicial relief if in its
judgment such action is necessary to avoid irreparable harm. Despite such
action, the parties will continue to participate in good faith in the
procedures specified in this Section.
13.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
13.7 Binding Effect; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. This rights and obligations of any party to
this Agreement shall not be assignable by such party without the prior written
consent of all other parties to this Agreement. For purposes of this
Agreement, "successors" shall include any subsidiaries of the parties to this
Agreement, whether now existing or hereafter formed, any successors of the
parties by merger or other business combination, and any subsidiaries of the
successors and assigns of the parties.
13.8 Counterparts. This Agreement may be executed by the parties
hereto manually or by facsimile signatures in separate counterparts, each of
which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
13.9 Exhibits and Schedules. The Exhibits and Schedules are a
part of this Agreement as if fully set forth herein.
13.10 Headings and Gender. The headings in this Agreement are for
reference only, and shall not affect the interpretation of this Agreement.
Whenever in this Agreement any masculine, feminine or neuter pronoun is used,
such pronouns shall also include the other genders whenever required by
context.
13.11 Severability. The provisions of this Agreement are severable
and the invalidity of any one or more provisions of this Agreement does not
affect or limit the enforceability of the remaining provisions.
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IN WITNESS WHEREOF, the parties hereto have executed this Asset
Purchase Agreement as of the date and year first above written.
KERR GROUP, INC.
By: /s/ Geoffrey A. Whynot
----------------------------------
Geoffrey A. Whynot
Vice President and
Treasurer
ALLTRISTA CORPORATION
By: /s/ William L. Skinner
---------------------------------
William L. Skinner
Senior Vice President
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<PAGE> 1
EXHIBIT 99.1
EXECUTION COPY
- ---------------------------------------------------------------------------
KERR GROUP, INC.
AND
ALLTRISTA CORPORATION
________________________
SALES AGENT AGREEMENT
________________________
--------------------------
Dated as of March 15, 1996
--------------------------
- ---------------------------------------------------------------------------
<PAGE> 2
SALES AGENT AGREEMENT
THIS SALES AGENT AGREEMENT, dated as of March 15, 1996, by and
between KERR GROUP, INC., a Delaware corporation ("Kerr"), and ALLTRISTA
CORPORATION, an Indiana corporation ("Agent").
W I T N E S S E T H:
WHEREAS, pursuant to the terms of an Asset Purchase Agreement,
dated as of the date hereof, between Kerr and Agent (the "Asset Purchase
Agreement"), Kerr has sold certain assets to Agent; and
WHEREAS, Kerr desires to retain Agent to act as its
non-exclusive sales agent in connection with the sale of Kerr Pre-Closing
Inventory (as herein defined), on the terms and subject to the provisions
hereof; and
WHEREAS, Agent is willing to act as agent of Kerr in
connection with the sale of Kerr Pre-Closing Inventory, on the terms and
subject to the provisions hereof.
NOW, THEREFORE, in consideration of the foregoing premises and
the respective covenants and agreements hereinafter contained, the parties
hereby agree as follows:
SECTION 1. DEFINITIONS.
SECTION 1.1. Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
"Alltrista Products" shall mean Home Canning Products
manufactured by Agent including Kerr Post-Closing Products.
"Asset Purchase Agreement" shall have the meaning set forth in
the Recitals hereto.
"Closing Date" shall mean the date hereof.
"Fee" shall have the meaning ascribed to such term in Section
2.2 of this Agreement.
"Home Canning Products" shall mean home canning products
manufactured or held for sale by Kerr or Agent, including without limitation
home canning caps, lids and jars.
<PAGE> 3
"Loss" shall mean any loss, damage, liability, cost or expense
(including reasonable fees and expenses of counsel).
"Net Sales Price" shall mean the price for Kerr Pre-Closing
Inventory set forth as the invoice price on the invoice delivered to any
purchaser of Kerr Pre-Closing Inventory. Net Sales Price shall in any event be
the sales price before any deductions for brokers fees or commissions and after
freight or other transportation costs.
"Kerr Pre-Closing Inventory" shall mean Home Canning Products
manufactured or held for sale by or on behalf of Kerr on or prior to the
Closing Date, including without limitation any Packing Materials.
"Kerr Post-Closing Products" shall mean Home Canning Products
manufactured or held for sale by or on behalf of Agent after the Closing Date
that use the name "Kerr".
"Packing Materials" shall mean any cartons, bacon boxes or
flatpacks owned by Kerr on the Closing Date specifically for use in the
operation of its home canning business.
"person" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, trust or unincorporated
organization.
"Physical Inventory" shall have the meaning set forth in
Section 2.1(c).
"Relevant Period" shall mean the period commencing on January
1, 1995 and ending on the day prior to the Closing Date.
"Term" shall have the meaning set forth in Section 2.3 hereof.
SECTION 2. APPOINTMENT OF AGENT; COMPENSATION; DUTIES.
SECTION 2.1. Appointment of Agent. (a) Subject to the terms
and conditions herein set forth, Kerr hereby appoints Agent to serve as its
non-exclusive agent during the Term for purposes of selling Kerr Pre-Closing
Inventory, and Agent hereby accepts such appointment.
(b) Subject to the terms and conditions herein set forth,
Agent shall use its best efforts to sell Kerr Pre-Closing Inventory as promptly
as practicable during the Term.
(c) Promptly following the Closing Date, Kerr shall take a
physical inventory of the Kerr Pre-Closing Inventory, which shall exclude all
obsolete inventory (as determined in accordance with generally accepted
accounting principles
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consistently applied) (the "Physical Inventory"). Representatives of Agent may
be present during the taking of the Physical Inventory. Kerr shall deliver a
copy of the Physical Inventory identifying the Kerr Pre-Closing Inventory by
product and number of units to Agent as soon as practicable.
SECTION 2.2. Compensation. In consideration for its services
hereunder, Kerr shall pay Agent a fee equal to 1/2 of 1% of the Net Sales Price
of all Kerr Pre-Closing Inventory sold by Agent on behalf of Kerr pursuant to
the terms of this Agreement (the "Fee"). The Fee shall be payable on a
quarterly basis no later than 45 days after the end of each fiscal quarter of
Kerr. Kerr shall furnish Agent with documentation reasonably requested by
Agent to support Kerr's calculation of the Fee.
SECTION 2.3. Term of Appointment. Agent shall serve as Agent
pursuant to the terms of this Agreement until the earliest of (i) the date on
which Kerr and Agent agree in writing to terminate this Agreement, (ii) the
date on which at least 95% of the units set forth on the Physical Inventory
shall have been sold and (iii) September 15, 1998 (the "Term").
SECTION 2.4. Obligations. (a) During the Term, Agent shall
offer for sale to its customers and potential customers Kerr brand products in
each area in the United States in which Kerr's Home Canning Products were sold
during the Relevant Period. Agent shall not make any public announcement or
statement during the Term (i) to the effect that it intends to discontinue the
manufacture or sale of Home Canning Products using the Kerr name, or (ii) which
otherwise has the effect of discouraging customers or potential customers from
purchasing Kerr Pre-Closing Inventory.
(b) In the event any customer places an order for any Home
Canning Products using the Kerr name during the Term, Agent shall arrange to
have the order first filled with Kerr Pre-Closing Inventory.
(c) In the event Kerr advises Agent in writing that it has
insufficient inventory to fill any customer order, Agent may fill that order
with Kerr Post-Closing Products of that type. In the event Kerr fails to
notify Agent within 2 business days as to whether it has sufficient inventory
to fill any customer order, Kerr shall be deemed to have waived its right to
fill such order. Agent's only recourse in the event Kerr is unable to fill a
customer order with Kerr Pre-Closing Inventory is to fill such order with
Alltrista Products, and Kerr and Agent shall have no liability whatsoever to
each other in such event.
(d) Packing Materials may be sold by Agent, on behalf of
Kerr, either in bulk or as a component of a finished product. In the event
Packing Materials are sold as a component of a finished product, such Packing
Materials shall continue to be owned by Kerr, and Kerr shall bear all risk of
loss associated
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with such Packing Materials. Kerr shall be entitled to be paid for sales of
Packing Materials as a part of finished product if and when the finished
product is sold by Agent and Agent receives payment therefor. Kerr and Agent
shall mutually agree as to the allocation of the Net Sales Price between
Packing Materials and all other components of the finished product.
(e) Kerr shall have the right, in its sole discretion, to
accept or reject any customer order presented to it by Agent. Kerr shall
directly invoice customers for the purchase price of Kerr Pre-Closing Inventory
and shall, in its sole discretion, establish credit terms therefor.
Notwithstanding the foregoing, in the event the customer is purchasing both
Kerr Pre-Closing Inventory and Alltrista Products, and Agent shall have
notified Kerr in writing that sending two invoices to the customer is
impracticable or unacceptable to the customer, Kerr and Agent shall mutually
agree as to how such customer shall be invoiced. In the event Agent receives
any payments relating to Kerr Pre-Closing Inventory, such payments shall be
remitted to Kerr within five days of the receipt thereof and, prior to
remitting such payments, shall be held in trust by Agent for the account of
Kerr. In the event Kerr receives any payment relating to Alltrista Products,
such payments shall be remitted to Agent within five days of the receipt
thereof and, prior to remitting such payments, shall be held in trust by Kerr
for the account of Agent.
(f) Kerr shall, in its sole discretion, determine the
warehouse from which Kerr Pre-Closing Inventory sold by Agent on behalf of Kerr
pursuant to the terms of this Agreement shall be shipped.
SECTION 2.5. Assumption of Liabilities; Insurance; Taxes.
Agent shall at no time take title to any Kerr Pre-Closing Inventory, nor shall
risk of loss with respect to Kerr Pre-Closing Inventory pass to Agent at any
time. During the Term, any Kerr Pre-Closing Inventory located at the Kerr
plant in Jackson, Tennessee shall remain at such plant until sold. Agent
waives any right to receive any storage or other fees in connection with such
inventory. Kerr shall have the obligation to insure all such Kerr Pre-Closing
Inventory. Agent shall have no liability for any taxes relating to the Kerr
Pre-Closing Inventory or the sale of the Kerr Pre-Closing Inventory (including
personal property and income taxes).
SECTION 3. PURCHASE PRICE; ADJUSTMENTS.
SECTION 3.1. Purchase Price. (a) Agent shall have the
authority to negotiate the purchase price for Kerr Pre-Closing Inventory,
subject to final approval by Kerr.
(b) Deductions by customers shall be allocated between Kerr
and Agent, on a customer-by-customer basis, based on the nature of the
deduction, it being understood that the deduction by a customer on a particular
invoice shall not necessarily control such allocation.
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<PAGE> 6
Representatives of Kerr and Agent shall meet in good faith on a periodic basis
to resolve such allocation. All disputes relating to such allocation shall be
resolved by arbitration in accordance with the provisions of Section 13.6 of
the Asset Purchase Agreement.
(c) All returns, retains and rebills shall first be charged
to Agent to the extent Agent has sold any Kerr Post-Closing Products and then
to Kerr to the extent of any Kerr Pre-Closing Inventory sold. Notwithstanding
the foregoing, Kerr shall be responsible for any returns of any defective or
damaged Kerr Pre-Closing Inventory.
SECTION 3.2. No Set-Off. Agent expressly understands and
agrees that it shall have no rights of set-off under this Agreement for any
claims or amounts due to Agent under the Asset Purchase Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PARTIES.
SECTION 4.1 Kerr Representations. Kerr hereby represents and
warrants to Agent that (i) Kerr is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and has all requisite corporate power and authority to own its
properties and assets and to conduct its businesses as now conducted; (ii) Kerr
has all requisite corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder; (iii) the execution and delivery of
this Agreement by Kerr and the performance of its obligations hereunder have
been duly authorized by all necessary corporate action by the Board of
Directors of Kerr, and no other corporate proceedings on the part of Kerr are
necessary to authorize such execution, delivery and performance; (iv) the
execution, delivery and performance of this Agreement by Kerr do not and will
not conflict with (A) any provision of law, (B) the Certificate of
Incorporation or by-laws of Kerr, or (C) any court or administrative order or
decree applicable to Kerr or its properties or assets; and (v) this Agreement
has been duly executed by it and constitutes its valid and binding obligation,
enforceable against it in accordance with its terms.
SECTION 4.2. Agent Representations. Agent hereby represents
and warrants to Kerr that (i) Agent is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and has all requisite corporate power and authority to own its
properties and assets and to conduct its businesses as now conducted; (ii)
Agent has all requisite corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder; (iii) the execution and
delivery of this Agreement by Agent and the performance of its obligations
hereunder have been duly authorized by all necessary corporate action by the
Board of Directors of Agent, and no other corporate proceedings on the part of
Agent are necessary to authorize such execution,
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<PAGE> 7
delivery and performance; (iv) the execution, delivery and performance of this
Agreement by Agent do not and will not conflict with (A) any provision of law,
(B) the Articles of Incorporation or by-laws of Agent, or (C) any court or
administrative order or decree applicable to Agent or its properties or assets;
and (v) this Agreement has been duly executed by it and constitutes its valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 5. COVENANTS.
SECTION 5.1. Product Identification. (a) Agent shall use its
best efforts to identify any Kerr Post-Closing Products sold by it. Such
efforts shall include, to the extent commercially reasonable, stamping or
imprinting on all caps and lids manufactured after the Closing Date a symbol or
other identifying mark of Agent. Agent shall within five (5) days of the
Closing Date notify Kerr in writing as to the method by which it intends to
identify any Kerr Post-Closing Products. In the event Agent changes such
method it shall provide prompt written notice of such change to Kerr.
SECTION 5.2. Each of Agent and Kerr shall keep true and
correct records relating to all sales made by it of Kerr Pre-Closing Inventory
and Alltrista Products in order to enable the parties to determine the
appropriate compensation due to Agent and the allocation of deductions by
customers. Agent shall provide Kerr with written reports on a monthly basis,
summarizing all sales of Home Canning Products, by customer, and providing such
other information as Kerr may reasonably request in order to verify compliance
by Agent with the terms of this Agreement. Kerr shall have the right to
inspect, review and audit the books and records of Agent relating to the
subject matter of this Agreement, and in connection therewith Agent shall
afford to Kerr, and to the accountants, counsel and representatives of Kerr,
reasonable access during normal business hours to all books and records of
Agent relating to the sales of Alltrista Products.
SECTION 6. INDEMNIFICATION.
SECTION 6.1. Indemnification by Kerr. Kerr shall indemnify
and fully defend, save and hold Agent, and the officers, directors, employees,
agents and affiliates of Agent (collectively, the "Agent Indemnitees"),
harmless for any Loss of any kind or nature whatsoever suffered by Agent as a
direct consequence of any suit, action, investigation, claim or proceeding
(collectively, a "Proceeding") arising out of or relating to any product
liability claim relating to any Kerr Pre-Closing Inventory (the "Agent
Indemnified Liabilities"); provided, however, that Kerr shall have no
obligation to an Agent Indemnitee hereunder with respect to Agent Indemnified
Liabilities arising from the gross negligence or willful misconduct of Agent or
any other Agent Indemnitee.
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<PAGE> 8
SECTION 6.2. Procedures for Indemnification by Kerr. If
Agent asserts that Kerr has become obligated to Agent pursuant to Section 6.1,
or if any Proceeding is begun, made or instituted as a result of which Kerr may
become obligated to an Agent Indemnitee hereunder, Agent shall give prompt
written notice to Kerr specifying in reasonable detail the facts upon which the
claimed indemnification obligation is based. Kerr will have the right, at any
time and at its election, to assume the defense of such Proceeding. Agent
shall have the right, but not the obligation, to participate at its own expense
by counsel of its choice in the defense of any Proceeding the defense of which
Kerr shall have assumed and shall in any event cooperate with and assist Kerr
to the extent reasonably possible. If Kerr elects to assume the defense of any
such Proceeding, Kerr shall not be liable for any settlement or compromise of
such Proceeding made without its written consent (which consent shall not be
unreasonably withheld or delayed). If Kerr elects not to assume the defense of
any such Proceeding, Agent shall have the obligation to do so, and shall have
the right to make any compromise or settlement thereof with the written consent
of Kerr (which consent shall not be unreasonably withheld or delayed).
SECTION 6.3. Indemnification by Agent. Agent shall indemnify
and fully defend, save and hold Kerr, and the officers, directors, employees,
agents and affiliates of Kerr (collectively, the "Kerr Indemnitees"), harmless
for any Loss of any kind or nature whatsoever suffered by Kerr as a direct
consequence of any Proceeding arising out of or relating to any product
liability claim relating to any Alltrista Product (the "Kerr Indemnified
Liabilities"); provided, however, that Agent shall have no obligation to a Kerr
Indemnitee hereunder with respect to Kerr Indemnified Liabilities arising from
the gross negligence or willful misconduct of Kerr or any other Kerr
Indemnitee.
SECTION 6.4. Procedures for Indemnification by Agent. If
Kerr asserts that Agent has become obligated to it pursuant to Section 6.3, or
if any Proceeding is begun, made or instituted as a result of which Agent may
become obligated to a Kerr Indemnitee hereunder, Kerr shall give prompt,
written notice to Agent specifying in reasonable detail the facts upon which
the claimed indemnification obligation is based. Agent will have the right, at
any time and at its election, to assume the defense of such Proceeding. Kerr
shall have the right, but not the obligation, to participate at its own expense
by counsel of its choice in the defense of any Proceeding the defense of which
Agent shall have assumed and shall in any event cooperate with and assist Agent
to the extent reasonably possible. If Agent elects to assume the defense of
any such Proceeding, Agent shall not be liable for any settlement or compromise
of such Proceeding made without its written consent (which consent shall not be
unreasonably withheld or delayed). If Agent elects not to assume the defense
of any such Proceeding, Kerr shall have the obligation to do so, and shall have
the right to make any
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<PAGE> 9
reasonable compromise or settlement thereof with the written consent of Agent
(which consent shall not be unreasonably withheld or delayed).
SECTION 7. MISCELLANEOUS.
SECTION 7.1. Successors and Assigns. Neither party shall
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the other party, and any such attempted assignment without
such prior written consent shall be void and of no force and effect. This
Agreement shall inure to the benefit of and shall be binding upon the
successors and permitted assigns of the parties hereto. For purposes of this
Agreement, "successors" shall include any subsidiaries of the parties to this
Agreement, whether now existing or hereafter formed, any successors of the
parties by merger or other business combination, and the subsidiaries of the
successors and assigns of the parties.
SECTION 7.2. Governing Law. This Agreement shall be
construed, performed and enforced in accordance with, and governed by, the laws
of the State of New York, without giving effect to the principles of conflicts
of laws thereof.
SECTION 7.3. Expenses. Except as otherwise provided herein,
each of the parties hereto shall pay its own expenses in connection with this
Agreement and the transactions contemplated hereby. Notwithstanding the
foregoing, in the event either party prevails in any action, suit or proceeding
brought by it against the other party hereto to enforce its rights hereunder,
the prevailing party shall be entitled to be reimbursed for all fees and
expenses incurred by it in connection with such action, suit or proceeding,
including reasonable attorneys fees.
SECTION 7.4. Force Majeure. Neither party shall be liable
for any failure of or delay in the performance of this Agreement for the period
that such failure or delay is due to acts of God, public enemy, civil war,
strikes or labor disputes, or any other cause beyond the parties' reasonable
control. Each party agrees to notify the other party promptly of the
occurrence of any such cause and to carry out this Agreement as promptly as
practicable after such cause is terminated.
SECTION 7.5. Severability. In the event that any part of
this Agreement is declared by any court or other judicial or administrative
body to be null, void or unenforceable, said provision shall survive to the
extent it is not so declared, and all of the other provisions of this Agreement
shall remain in full force and effect.
SECTION 7.6. Notices. All notices, requests, demands and
other communications under this Agreement shall be in writing and shall be
deemed to have been duly given (i) on the date of service if served personally
on the party to whom notice is to be given, (ii) on the day of transmission if
sent via
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<PAGE> 10
facsimile transmission to the facsimile number given below, and telephonic
confirmation of receipt is obtained promptly after completion of transmission,
(iii) on the day after delivery to Federal Express or similar overnight courier
or the Express Mail service maintained by the United States Postal Service or
(iv) on the fifth day after mailing, if mailed to the party to whom notice is
to be given, by first class mail, registered or certified, postage prepaid and
properly addressed, to the party as follows:
If to Kerr:
Kerr Group, Inc.
1840 Century Park East
Los Angeles, CA 90067
Attn: D. Gordon Strickland
Telecopy: (310) 282-8011
Copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attn: Harvey L. Sperry, Esq.
Telecopy: (212) 821-8111
If to Agent:
Alltrista Corporation
301 South High Street
Muncie, Indiana 47305-2326
Attn: William L. Skinner
Telecopy: (317) 281-5400
Copy to:
Bingham Summers Welsh & Spilman
2700 Market Tower
10 West Market Street
Indianapolis, Indiana 46204-2982
Attn: Joseph E. DeGroff, Esq.
Telecopy: (317) 236-9907
Any party may change its address for the purpose of this
Section by giving the other party written notice of its new address in the
manner set forth above.
SECTION 7.7. Amendments; Waivers. This Agreement may be
amended or modified, and any of the terms, covenants, representations,
warranties or conditions hereof may be waived, only by a written instrument
executed by the parties hereto, or in the case of a waiver, by the party
waiving compliance. Any waiver by any party of any condition, or of the breach
of any provision, term, covenant, representation or warranty contained in this
Agreement, in any one or more instances, shall not be
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<PAGE> 11
deemed to be nor construed as further or continuing waiver of any such
condition, or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.
SECTION 7.8. Entire Agreement. This Agreement contains the
entire understanding between the parties hereto with respect to the
transactions contemplated hereby and supersedes and replaces all prior and
contemporaneous agreements and understandings, oral or written, with regard to
such transactions. All schedules hereto and any documents and instruments
delivered pursuant to any provision hereof are expressly made a part of this
Agreement as fully as though completely set forth herein.
SECTION 7.9. Section and Paragraph Headings. The section and
paragraph headings in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
SECTION 7.10. Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original, but both of which
shall constitute the same instrument.
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
KERR GROUP, INC.
By: /s/ Geoffrey A. Whynot
------------------------
ALLTRISTA CORPORATION
By: /s/ William L. Skinner
------------------------
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<PAGE> 1
EXHIBIT 99.2
1840 Century Park East
[LOGO] Los Angeles, CA 90067
(310) 556-2200
FOR IMMEDIATE RELEASE
KERR ANNOUNCES ASSET SALE, DEBT REDUCTION, RESTRUCTURING
PROGRAM, A NEW CHIEF EXECUTIVE OFFICER, AND 1995 RESULTS
LOS ANGELES, CALIFORNIA (March 15, 1996) -- Kerr Group, Inc.
(NYSE:KGM), announced today the sale of certain assets of the Consumer Products
Business, a reduction of debt and extension of waivers by lenders, a
restructuring program, a new Chief Executive Officer, and 1995 financial
results.
SALE OF ASSETS
Roger W. Norian, Chairman, President and Chief Executive Officer, said
that the Company had sold certain assets of the Consumer Products Business to
Alltrista Corporation for a purchase price of $14.5 million. He said that the
Company also expects to receive approximately $16.5 million, primarily during
the remainder of 1996, from the Company's sale to its customers of the
inventory and from the collection of the accounts receivable of the Consumer
Products Business. These proceeds will be utilized for working capital, to
reduce debt, including $3.5 million of debt secured by liens on certain fixed
assets of the Company, and to fund costs of the restructuring program.
<PAGE> 2
DEBT REDUCTION
Mr. Norian said that the debt holders had agreed to extend, until May
15, 1996, waivers with respect to defaults under certain financial covenants in
loan agreements with the Company and to extend the maturity of a $6.0 million
note due April 15, 1996, until May 15, 1996. He also stated that discussions
with the Company's lenders were continuing regarding further amendments of
terms, including the further extension of the maturity of the $6.0 million
note, and additional reduction of indebtedness. He said that the indebtedness
of the Company is unsecured.
RESTRUCTURING PROGRAM
Mr. Norian said that he had recommended to the Board of Directors a
restructuring of the Company which would include moving the corporate
headquarters from Los Angeles, California to Lancaster, Pennsylvania, where the
Plastic Products Business is headquartered, and the consolidation of certain
manufacturing facilities. He said this restructuring would result in
annualized cost savings of approximately $6.5 million. These savings will be
substantially realized in 1997.
Mr. Norian said that he had told the Board of Directors that, after
more than 20 years with the Company in its Los Angeles office, first as Chief
Financial Officer and then as Chief Executive Officer, he had decided not to
move to Lancaster. He said that he had recommended that D. Gordon Strickland,
Senior Vice President, Chief Financial Officer and General Manager of the
Consumer Products Business, be elected as President, Chief Executive Officer,
and a Director of the Company. Mr. Norian said that
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<PAGE> 3
the Board had approved the restructuring program, accepted his decision not to
move to Lancaster, and approved his recommendation with respect to Mr.
Strickland. Mr. Norian said that effective today, he had been succeeded by Mr.
Strickland. Mr. Norian said that he would continue as a Director but had
resigned as Chairman.
In connection with the sale of Consumer Products Business assets and
the restructuring program, the Company will report in the first quarter of 1996
a one time pretax charge of approximately $4.8 million, which is comprised of a
$2.9 million gain on the sale of the Consumer Products assets and a
restructuring charge of $7.7 million. In addition to this charge, the Company
will incur additional non-recurring pretax charges of $2.4 million during 1996
and early 1997 for restructuring related costs that accounting rules do not
permit to be accrued at the time of announcement of a restructuring.
1995 FINANCIAL RESULTS
Kerr reported a loss applicable to common stockholders of $6,136,000
or $1.60 per common share for the year ended December 31, 1995, compared to
earnings applicable to common stockholders for the year ended December 31, 1994
of $2,575,000 or 70 cents per common share. The loss in 1995 includes an
unusual loss of $602,000 after tax, or $0.16 cents per common share, related to
the write-down in the book value of land formerly used by the Company as a
glass container manufacturing plant.
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<PAGE> 4
The decline in earnings in 1995, as compared to 1994, was due
primarily to lower earnings in both the Plastic Products and Consumer Products
Businesses, and higher interest expense. Earnings of the Plastic Products
Business decreased in 1995 compared to 1994, primarily due to cost-price
pressures, including substantially higher resin costs and competitive pricing.
The current price the Company is paying for resin has declined
significantly since July 1995.
Earnings of the Consumer Products Business decreased in 1995 compared
to 1994, primarily due to the sale of higher cost inventory produced during
1994, higher customer rebates, and lower sales volume due to adverse weather
conditions.
Net sales amounted to $138,995,000 in 1995 compared to $139,156,000 in
1994.
Net sales of the Plastic Products Business increased to $109,187,000
in 1995 compared to $106,792,000 in 1994. Segment operating earnings of the
Plastic Products Business decreased to $4,842,000 in 1995, compared to
$12,055,000 in 1994.
Net sales of the Consumer Products Business decreased to $29,808,000
in 1995 from $32,364,000 in 1994. Segment operating earnings of the Consumer
Products Business decreased to a loss of $1,590,000 in 1995, compared to
earnings of $3,213,000 in 1994.
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<PAGE> 5
For the three months ended December 31, 1995, the Company had a loss
applicable to common stockholders of $3,744,000 or 95 cents per common share,
compared to earnings applicable to common stockholders of $24,000 or 1 cent per
common share in the three months ended December 31, 1994. The decline in
earnings in 1995 was primarily due to lower earnings in both the Plastic
Products and Consumer Products Businesses. Earnings of the Plastic Products
Business declined primarily due to cost-price pressures and lower production
volume. Earnings of the Consumer Products Business decreased primarily due to
the sale of higher cost inventory produced in 1994, higher customer rebates,
and lower sales volume. The loss in the fourth quarter of 1995 includes an
unusual loss of $602,000 or $0.15 cents per common share related to the
write-down in the book value of land.
Net sales were $27,692,000 in the fourth quarter of 1995 as compared
to $28,148,000 in the same period in 1994.
Kerr is a major producer of plastic packaging products.
# # #
Company Contact: D. Gordon Strickland
President and Chief Executive Officer
(310) 284-2585
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<PAGE> 6
KERR GROUP, INC.
Consolidated Statements of Earnings (Loss) for the
Three Months and Twelve Months Ended December 31, 1995 and 1994
(In Thousands)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------ ------------------------
1995 1994 1995 1994
------- ------- -------- --------
(Unaudited) (Audited)
<S> <C> <C> <C> <C>
Net sales $27,692 $28,148 $138,995 $139,156
Cost of sales 24,101 19,607 108,964 96,356
------- ------- -------- --------
Gross profit 3,591 8,541 30,031 42,800
Selling, warehouse, general and
administrative expense 6,931 7,098 32,037 32,435
Loss on revaluation of land (1) 1,000 -0- 1,000 -0-
Interest expense 1,587 1,258 6,047 4,985
Interest and other income (90) (72) (228) (369)
------- ------- -------- --------
Earnings (loss) before income taxes (5,837) 257 (8,825) 5,749
Provision (benefit) for income taxes (2,301) 25 (3,518) 2,345
------- ------- -------- --------
Net earnings (loss) $(3,536) $ 232 $ (5,307) $ 3,404
Preferred stock dividends 208 208 829 829
------- ------- -------- --------
Net earnings (loss) applicable
to common stockholders $(3,744) $ 24 $ (6,136) $ 2,575
======= ======= ======== ========
Net earnings (loss) per common share,
primary and fully diluted: (2) $ (0.95) $ 0.01 $ (1.60) $ 0.70
======= ======= ======== ========
</TABLE>
(1) During the fourth quarter of 1995, the Company incurred a pretax loss of
$1,000,000 (after-tax loss of $602,000 or 15 cents per common share)
related to the write-down in the book value of land held for sale formerly
used by the Company as a glass container manufacturing plant.
(2) Weighted average number of common shares outstanding for the three months
and twelve months ended December 31, 1995 were 3,933,000 and 3,842,000,
respectively, and for the three months and twelve months ended December 31,
1994 were 3,677,000 and 3,674,000, respectively. Fully diluted net
earnings per common share reflect when dilutive, a) the incremental common
shares issuable upon the assumed exercise of outstanding stock options, and
b) the assumed conversion of the Preferred Stock and the elimination of the
related Preferred Stock dividends. Antidilution occurred in the three
months and twelve months ended December 31, 1995 and 1994.
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