<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8-K
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 26, 1994
------------------------
FIRST BRANDS CORPORATION
(Exact name of registrant as specified in its charter)
------------------------
<TABLE>
<S> <C>
Delaware 06-1171404
(State of Organization) (I.R.S. Employer Identification No.)
</TABLE>
83 Wooster Heights Road
Building 301, P. O. Box 1911
Danbury, CT 06813-1911
(Address of principal executive offices)
Registrant's telephone number, including area code: (203) 731-2300
<PAGE>
Item 2 Acquisition or Disposition of Assets
On August 26, 1994, First Brands Corporation (the Company) sold its
antifreeze and car care products businesses (excluding STP and SIMONIZ) (the
Business) in an asset sale to Prestone Products Corporation (Prestone), a
company organized and indirectly controlled by Vestar Equity Partners L.P., a
private investment firm. The selling price was $142,000,000 in cash and a
$13,000,000 subordinated debenture maturing in 2003, the fair market value of
which has been estimated at $9,000,000. The debenture carries a cash pay rate of
7 1/2% or an optional compound deferred rate of 10%. As part of the transaction,
the Company will reimburse Prestone approximately $29,000,000, which represents
the proportional interest previously sold in Prestone's accounts receivable
under the Company's securitization program. The consideration received in the
sale was negotiated and is believed to be a fair value for the Business. The
Company is in the process of finalizing its calculation of the gain on sale.
Registrant expects to retain the net proceeds from the sale of the Business for:
1) reduction of debt; 2) the repurchase of 1,500,000 shares of the Company's
common stock; and 3) for future acquisitions and other general corporate
purposes.
The assets sold were all of the assets directly used in the Business
included trademarks, receivables, inventory and the fixed assets at three
antifreeze manufacturing facilities. Liabilities directly involved with the
Business were also assumed.
The Company will provide to Prestone, certain administrative and accounting
services at cost for up to one year, and will supply certain manufactured car
care products at cost for two years. Prestone will provide to the Company
certain automotive laboratory services at cost for up to 2 years. The Company
will also act as Prestone's distributor outside of North America for
compensation believed to be competitive.
Item 7 Financial Statements and Exhibits
A. Not Applicable
B. Proforma Financial Information
The accompanying unaudited condensed consolidated proforma statement of
income is presented as if the sale of the Business had occurred on June 30,
1993. The accompanying unaudited condensed proforma balance sheet is presented
as if the sale occurred June 30, 1994. The proforma financial statements have
been prepared for informational purposes only and do not purport to be
indicative of what would actually have occurred had the sale of the Business
occurred at the beginning of the fiscal year ended June 30, 1994.
<PAGE>
<TABLE>
<CAPTION>
June 30, 1994 Proforma June 30, 1994
Historical Adjustments(1) Proforma
------------- -------------- -------------
<S> <C> <C> <C>
Net Sales $ 1,086,320 ($190,573) $ 895,747
Cost of Goods Sold 665,896 (137,604) 528,292
Selling General & Admin 269,181 (24,180)(2) 245,001
Amortization and other Depreciation 20,768 (3,390) 17,378
Interest, discount and other expenses 26,740 (6,410)(3) 20,330
Provision for Income Taxes 43,569 (7,975) 35,594
Net Income $ 60,166 (11,014) $ 49,152
------------- -------------- -------------
------------- -------------- -------------
Earnings Per Share $ 2.71 -- $ 2.22
</TABLE>
FIRST BRANDS CORPORATION
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1994
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1994 Proforma June 30, 1994
Historical Adjustments(1) Proforma
------------- -------------- -------------
<S> <C> <C> <C>
Cash............................................................... $ 13,384 $ -- $ 13,384
Accounts and Notes Receivable...................................... 89,769 10,785(5) 78,984
Inventory.......................................................... 155,737 29,592 126,145
Deferred Tax Asset................................................. 26,239 -- 26,239
Prepaid Expenses................................................... 5,756 134 5,622
------------- -------------- -------------
Total Current Assets.......................................... 290,885 40,511 250,374
Property, Plant & Equip., Net...................................... 266,357 22,246 244,111
Intangibles, Net................................................... 256,743 52,290 204,453
------------- -------------- -------------
Total Assets............................................. $ 813,985 $115,047 $ 698,938
------------- -------------- -------------
------------- -------------- -------------
Accounts and Notes Payable......................................... $ 60,510 $(17,878)(6) $ 78,388
Accrued Liabilities................................................ 177,393 18,193 159,200
Current Portion -- Long Term Debt.................................. 204 -- 204
Total Current Liabilities................................ 238,107 315 237,792
Long Term Debt..................................................... 153,430 142,000(7) 11,430
Other Long Term Obligations........................................ 61,718 2,000 59,718
------------- -------------- -------------
Total Liabilities........................................ 453,255 144,315 308,940
------------- -------------- -------------
Net Assets............................................... 360,730 (29,268) 389,998
Total Liabilities & Net Assets........................... $ 813,985 $115,047 $ 698,938
------------- -------------- -------------
------------- -------------- -------------
</TABLE>
<PAGE>
NOTES TO PROFORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1-Description of Transaction
On August 26, 1994, the Company sold its antifreeze and car care products
(excluding STP and SIMONIZ) businesses to Prestone Products Corporation for
$142,000,000 in cash and a $13,000,000 subordinated debenture maturing in 2003.
The debenture carries a cash pay rate of 7 1/2% or an optional compound deferred
rate of 10%. For financial statement purposes the note is valued at $9,000,000
due to the nominal interest rates being below market for the type of note
received.
NOTE 2-Basis of Presentation
The proforma condensed consolidated financial statements represent the
results of operations for the year ended June 30, 1994 and the balance sheet at
June 30, 1994, after giving effect to certain proforma adjustments related to
the sale of the Business as if it had occurred June 30, 1993, for the statement
of income and June 30, 1994, for the balance sheet.
NOTE 3-Proforma Adjustments
The proforma adjustments related to the sale of the Business:
(1) Elimination of results of operations of the Business for the year
ended June 30, 1994.
(2) Net of a $3,000,000 portion of overhead expense previously
allocated to the Business which is expected to continue.
(3) Elimination of interest expense of $6,410,000 reflecting the
reduction of debt from the net sale proceeds, calculated based on
the ratio of the net assets sold to the sum of total net assets
plus consolidated debt of the Company.
(4) Elimination of Balance Sheet assets sold to, and liabilities
assumed by, Prestone.
(5) Elimination of $19,785,000 of Prestone receivables offset by
debenture received from Prestone valued at $9,000,000.
(6) Elimination of Prestone payables of $10,912,000 offset by
$28,790,000 obligation to reimburse Prestone for proportional
interest in accounts receivable previously sold.
(7) Reduction of long-term debt from cash proceeds received.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
there unto duly authorized.
FIRST BRANDS CORPORATION
DATE: September 12, 1994
By: .................................
Donald A. DeSantis
Senior Vice President and
Chief Financial Officer
<PAGE>
C. EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- - ------ ----------------------
<S> <C>
2 (a)* -- Purchase and Sale Agreement, dated as of June 30, 1994, between the Registrant and Vestar/Freeze
Holdings Corporation and Vestar Equity Partners, L.P., relating to the sale by the Registrant of
its businesses of developing, manufacturing, marketing, selling and/or distributing automotive
antifreeze, cooling system service tools, cooling system chemicals for cleaning and sealing
leaks in automotive cooling systems, ice fighting products, Prestone brake fluid products,
Prestone power steering fluid products, and Prestone transmission stop-leak fluid products, and
antifreeze recycling business.
(b)* -- Amendment No. 1 thereto, dated as of August 25, 1994.
</TABLE>
- - ------------
* Filed herewith
<PAGE>
EXHIBIT 2(a)
PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT (this 'Agreement') dated as of June 30, 1994,
among FIRST BRANDS CORPORATION, a Delaware corporation ('Seller'), VESTAR/FREEZE
HOLDINGS CORPORATION, a Delaware corporation ('Buyer'), and VESTAR EQUITY
PARTNERS, L.P., a limited partnership formed under the laws of the state of
Delaware ('Guarantor').
WITNESSETH:
WHEREAS, Seller is engaged itself and through its affiliates in the
business of developing, manufacturing, marketing, selling, and/or distributing
automotive antifreeze, cooling system service tools, cooling system chemicals
for cleaning and sealing leaks in automotive cooling systems, ice fighting
products, brake fluid products, power steering fluid products, and transmission
stop-leak fluid products (in the case of brake fluid products, power steering
fluid products and transmission stop-leak fluid products only to the extent such
business is conducted using the 'Prestone' trademark), and the antifreeze
recycling business (said businesses as conducted worldwide, but excluding the
Republic of the Philippines, being collectively referred to as the
'Businesses');
WHEREAS, Seller owns or holds itself or through its affiliates certain
assets, including land, buildings and other real property, fixed assets,
machinery, equipment, inventory and other personal property, patents,
technology, trademarks, contracts and other intangible property employed or held
in connection with the Businesses; and
<PAGE>
WHEREAS, Buyer wishes to purchase, and Seller is willing to sell and cause
its affiliates to sell, all of their right, title and interest in the
Businesses, together with all of the assets of Seller and its affiliates
employed or held in connection with the Businesses (other than Excluded Assets
as defined below), and as part of such purchase and sale, Buyer is willing to
assume, or cause to be assumed by an affiliate, certain of the obligations and
liabilities of Seller and Seller's affiliates related to the Businesses and to
the assets employed or held in connection with the Businesses;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements hereinafter set forth, the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Assets to be Transferred. Subject to the terms and conditions of this
Agreement, and except as otherwise provided in Articles 1.2 and 1.4 hereof, at
the Closing (as defined in Article 10.1 hereof), Seller shall or shall cause its
affiliates to sell, assign, transfer, convey and deliver to Buyer, and Buyer
shall purchase, acquire and accept from Seller and its affiliates, all of
Seller's and such affiliates', right, title and interest in and to all property,
plant, machinery, equipment, inventories, goodwill, and other assets of every
kind, character and description, whether tangible or intangible, whether real,
personal or mixed, and wherever situated, owned, leased or licensed by Seller
and its affiliates and employed or held in connection with the normal and
customary business or operations of the Businesses with such changes, deletions
or additions thereto as may occur from the date hereof to the Closing in the
ordinary course of business, consistent with past practice and consistent with
the terms and conditions of this Agreement and all other agreements executed in
connection
<PAGE>
herewith, including, without limitation, each of the following assets except as
otherwise provided in Article 1.2 hereof (together, the 'Assets'):
(i) all properties, assets, rights and entitlements reflected on the
balance sheet included in the Closing Date Audited Financial Statements (as
hereinafter defined);
(ii) all real property and interests therein owned by Seller or its
affiliates and located in Freehold, New Jersey, Torrance, California, and
Alsip, Illinois, (a legal description of each property being annexed hereto
as Schedule 1.1(ii)(a)) and all leases and subleases of real property used
or held by Seller or its affiliates in connection with the Businesses and
listed on Schedule 1.1(ii)(b) together with all the right, title and
interest of Seller or its affiliates in and to all plants, buildings,
fixtures, improvements, rights of way and appurtenances thereon or thereto
and easements and any other rights appurtenant thereto;
(iii) all machinery, equipment, spare parts, vehicles and other
tangible personal property, including construction in progress, owned by
Seller or its affiliates normally located at any plant, facility or
property of the Businesses or used or held by Seller or its affiliates in
connection with the Businesses;
(iv) all leases and subleases of machinery, equipment, vehicles and
other tangible personal property located at any plant, facility or property
of the Businesses used or held by Seller or its affiliates in connection
with the Businesses;
12
<PAGE>
(v) all inventory items relating to the Businesses (including raw
materials and supplies, work-in-progress, samples, supply inventory, spare
parts and finished goods) owned by Seller or its affiliates located at any
plant, facility or property used or held in connection with the Businesses
including, without limitation, any of the foregoing in transit from
manufacturing facilities of Seller or any affiliate of Seller to Seller's
warehouses (the 'Inventory');
(vi) all accounts and notes receivable and contingent rights thereto,
deposits and advances, and other receivables associated with or arising out
of the Businesses (the 'Accounts Receivable');
(vii) all contracts, leases, commitments, sales orders, purchase
orders, invoices and other agreements relating to the Businesses, and all
warranties, claims and causes of action against third parties relating to
any of the assets transferred pursuant to this Agreement;
(viii) all prepaid expenses relating to the assets transferred
pursuant to this Agreement;
(ix) all United States and foreign patents and patent applications
owned by or assignable to Seller or any affiliate of Seller and used or
held in connection with or applicable to the Businesses, all unfiled
dockets pertaining to disclosures of inventions made by any employee or
agent of Seller or any affiliate of Seller and assignable to Seller or any
affiliate of Seller throughout the world (other than unfiled dockets
pertaining to disclosure of inventions made by any employee or
13
<PAGE>
agent in the Republic of the Philippines) or owned by or assignable to
Seller or any affiliate of Seller and used or held in connection with or
applicable to the Businesses throughout the world (other than unfiled
dockets pertaining to disclosure of inventions made by any employee or
agent in the Republic of the Philippines) and all trademarks, trade names,
assumed names, service marks and logos throughout the world (other than the
Republic of the Philippines), whether registered or at common law
(collectively 'Trademarks'), together with the goodwill associated with the
Trademarks and all copyrights, technology, know-how, processes, trade
secrets and all other intellectual property throughout the world (other
than the Republic of the Philippines) owned by Seller or any affiliate of
Seller and used or held in connection with the Businesses, and all licenses
to use in connection with or applicable to the Businesses, throughout the
world (other than the Republic of the Philippines), patents, trademarks,
trade names, assumed names, service marks and logos, copyrights,
technology, know-how, processes, trade secrets and all other intellectual
properties licensed to Seller or any affiliate of Seller and used or held
in connection with the Businesses (collectively 'Intellectual Property'),
in each case to the extent not excluded pursuant to Section 1.2 hereof;
(x) all sales literature, trade show exhibits and related materials,
promotional literature and other selling material ('Promotional Material')
which covers exclusively products of the Businesses and is
14
<PAGE>
owned by Seller or any affiliate of Seller and such quantities as Buyer and
Seller shall reasonably agree of Promotional Materials which cover both
products of the Businesses and products of Seller and its affiliates which
are not part of the Businesses;
(xi) originals or copies of all records, files, invoices, customer
lists, supplier lists, blueprints, specifications, designs, accounting
books and records, tax books and records, business books and records,
operating data and plans, and other relevant data owned by Seller or any
affiliate of Seller and used or held in connection with the Businesses.
Except as otherwise agreed by Buyer and Seller, Seller shall retain
originals of any such items which (x) relate primarily to the Excluded
Assets or Excluded Liabilities; (y) income tax books and records; (z) tax
books and records (other than income tax) relating to taxes paid by Seller
prior to Closing; provided that Buyer shall receive copies of the items set
forth in clauses (x), (y) and (z) and Buyer shall receive originals of all
other such items;
(xii) all federal, state, local and other governmental licenses,
permits, approvals and authorizations associated with or necessary for
conduct of the Businesses as presently conducted and as conducted on the
Closing to the extent transferrable;
(xiii) all other properties and assets relating to the Businesses and
the conduct of their business as presently conducted or as conducted on the
Closing;
15
<PAGE>
(xiv) the computer software set forth in Article 11.8 hereof; and
(xv) all personal computers owned by Seller or any of its affiliates
and customarily used by the Employees (as defined in Article 4.1); all
office furniture and equipment located at the real property listed on
Schedule 1.1(ii)(a); and substitute office furniture selected by Seller to
replace the office furniture customarily used by the Employees at locations
other than the real property listed on Schedule 1.1(ii)(a).
1.2 Excluded Assets. The parties to this Agreement expressly understand and
agree that neither Seller nor any affiliate of Seller is hereunder selling,
assigning, transferring or conveying to Buyer any of the following assets,
rights and properties (the 'Excluded Assets'):
(i) Cash of Seller or any affiliate of Seller (other than petty cash
located at the real property described in Schedule 1.1(ii)(a));
(ii) Inter-company receivables of Seller or any affiliate of Seller
and pension or other funded employee benefit plan assets of plans
maintained by Seller or any affiliate of Seller (except as otherwise
provided in Article IV hereof);
(iii) Seller's water remover product business and all assets related
thereto;
(iv) all inventory of raw materials and supplies, work in progress and
supply inventory of all products of the Businesses to be supplied to Buyer
pursuant to the Contract Packaging Agreement (as defined in Article
1.3(c));
16
<PAGE>
(v) all rights of Seller and its affiliates to the names and marks
'FIRST BRANDS,' the 'FB logo' and 'STP,' except to the extent such names
and marks shall be licensed by Seller pursuant to the Trademark License (as
defined in Article 1.3(b) hereof) or permitted under Article 11.7 hereof
and all other trademarks and tradenames not listed on Schedule 5.13(b) and
all right, title and interest to the Prestone Trademark in the Republic of
the Philippines;
(vi) the manufacturing facilities located at Paulsboro, New Jersey,
and the machinery, equipment and other personal property located thereat;
(vii) the STP bottle making equipment and the plastic drinking straw
manufacturing equipment located at Seller's Freehold, New Jersey, plant and
the STP shrink wrap equipment located at Seller's Alsip, Illinois plant;
(viii) except as otherwise agreed and specially provided for herein or
in the Bridging Agreement (as defined in Article 1.3(d)), any assets the
ownership, use or possession of which is shared by Seller with any of its
affiliates and is identified on Schedule 1.2(viii);
(ix) computer software or licenses for such software, except the
software specifically provided for in Article 11.8 hereof;
(x) those assets, rights and properties of Seller listed on Schedule
1.2(x) attached hereto;
(xi) the capital stock of all affiliates of Seller;
17
<PAGE>
(xii) all real property and interests therein owned by Seller or any
affiliate of Seller and not listed on Schedule 1.1(ii)(a) and any and all
leases and subleases of real property not listed on Schedule 1.1(ii)(b);
(xiii) all accounts and notes receivable arising out of the business
or the operations of the Businesses in the United States (which are the
Subject Receivables referred to in the Contingent Rights Instrument (as
defined in Article 1.3(g));
(xiv) warehouse facilities leased by Seller and located in Mentor,
Ohio;
(xv) any trademarks or tradenames of Seller or its affiliates except
for those set forth on Schedule 5.13(b);
(xvi) the non-exclusive right to use all technology heretofore used by
Seller and its affiliates in the manufacture of brake fluid products,
transmission stop-leak products and power steering fluid products;
provided, however, that each party shall maintain the confidentiality of
the technology;
(xvii) all assets of Seller and its affiliates located in the Republic
of the Philippines subject, however, to the limitations set forth in
Article 11.9;
(xviii) such quantities of Promotional Materials which cover both
products of the Businesses and products of the Seller and its affiliates
which are not part of the Businesses as Buyer and Seller shall reasonably
agree; and
18
<PAGE>
(xix) All office furniture and equipment and computer equipment of
Seller and its affiliates at locations other than the real estate listed on
Schedule 1.1(ii)(a) except (x) personal computers owned by Seller or any of
its affiliates and customarily used by the Employees and (y) substitute
office furniture selected by Seller to replace the office furniture
customarily used by the Employees at locations other than the real property
listed on Schedule 1.1(ii)(a).
1.3 Other Transactions. In addition to the transactions contemplated above,
the following acts or transactions shall also occur on or before the Closing;
(a) Buyer and Seller shall each execute and deliver a research and
development agreement covering a sharing of research and development expenses
and facilities (the 'Research and Development Sharing Agreement') in form and
substance reasonably satisfactory to Buyer and Seller and containing terms not
inconsistent with those set forth on the term sheet attached hereto as Exhibit
1.3(a).
(b) Buyer and Seller shall each execute and deliver a trademark licensing
agreement for the use of the trademark 'STP' on specified product lines (the
'Trademark License') in form and substance reasonably satisfactory to Buyer and
Seller and containing terms not inconsistent with the term sheet attached hereto
as Exhibit 1.3(b).
(c) Buyer and Seller shall each execute and deliver contract packaging
agreements for the supply of all products that are a part of the Businesses
except automotive antifreeze (the 'Contract Packaging Agreements') in form and
substance reasonably satisfactory to Buyer and Seller and containing terms not
19
<PAGE>
inconsistent with the term sheet attached hereto as Exhibit 1.3(c).
(d) Buyer and Seller shall each execute and deliver a bridging agreement
(the 'Bridging Agreement') in substantially the form attached hereto as Exhibit
1.3(d).
(e) Buyer and Seller shall each execute and deliver distributor agreements
for the exclusive distribution of the products of the Businesses in Mexico,
Europe and the Far East including Hong Kong by Seller or its affiliates in form
and substance reasonably satisfactory to Buyer and Seller (the 'Distributor
Agreements').
(f) Seller and Buyer shall execute and deliver a bridging agreement (the
'STP Bridging Agreement') pursuant to which Buyer shall supply to Seller STP
bottles, plastic straws and shrink wrap services for STP products, in form and
substance reasonably satisfactory to Buyer and Seller and containing terms not
inconsistent with the term sheet attached hereto as Exhibit 1.3(f).
(g) Seller and Buyer shall execute and deliver the Contingent Rights
Instrument (the 'Contingent Rights Instrument') in substantially the form
attached hereto as Exhibit 1.3(g).
(h) Seller and Buyer shall execute and deliver a bridging agreement in form
and substance reasonably satisfactory to Buyer and Seller covering services to
be rendered by Seller to Buyer with respect to the Businesses as conducted in
Canada (the 'Canadian Bridging Agreement').
(i) Seller and Buyer shall execute and deliver an agreement with respect to
shared quality assurance equipment located in East Hartford, Ct. (the 'Quality
Assurance Agreement') in form and substance reasonably satisfactory to
20
<PAGE>
Buyer and Seller.
The agreements set forth in paragraphs (a) through (i) of this Article 1.3
are hereinafter referred to as the 'Ancillary Agreements.'
1.4 Assignment of Assets.
(a) Upon the terms and subject to the conditions of this Agreement, to the
extent that any lease, contract, license, agreement, sales or purchase order,
commitment, property interest, qualification or other Asset described in Article
1.1 hereof to be sold, assigned, transferred or conveyed to Buyer, or any claim,
right or benefit arising thereunder or resulting therefrom (the 'Interests'),
cannot be sold, assigned, transferred or conveyed without the approval, consent
or waiver of the issuer thereof or the other party thereto or any third person
(including a government or governmental unit) after the parties and their
affiliates have used all reasonable efforts to obtain all required approvals,
consents and waivers, or such sale, assignment, transfer or conveyance or
attempted sale, assignment, transfer or conveyance would constitute a breach
thereof or a violation of any law, decree, order, regulation or other
governmental edict, this Agreement shall not constitute a sale, assignment,
transfer or conveyance thereof or an attempted sale, assignment, transfer or
conveyance thereof at such time.
(b) Upon the terms and subject to the conditions of this Agreement, neither
Seller nor its affiliates is obligated to sell, assign, transfer or convey to
Buyer, and Buyer is not obligated to purchase from Seller or its affiliates, any
of Seller's or such affiliates' rights and obligations in and to any of the
Interests without first having obtained all necessary approvals, filings,
consents or waivers required to effect such
21
<PAGE>
sale, assignment, transfer or conveyance and all permits, licenses,
registrations or other authorizations necessary to conduct the Businesses.
Seller shall and shall cause its affiliates to use all reasonable efforts, and
Buyer shall cooperate with Seller, to obtain or make all approvals, filings,
consents or waivers necessary to convey to Buyer each such Interest, or for
Buyer to conduct the Businesses, as soon as practicable.
(c) To the extent that any of the approvals, consents or waivers or
permits, licenses, registrations or other authorizations referred to in Article
1.4(a) hereof have not been obtained by Seller as of the Closing, Seller shall,
during the remaining term of such Interest, use all reasonable efforts, to (i)
obtain the consent of any such third person (including a government or
governmental unit), (ii) cooperate with Buyer in any reasonable and lawful
arrangement designed to provide the benefits of such Interest to Buyer so long
as Buyer fully cooperates with Seller in such arrangements and so long as such
arrangements will not cause Seller or its affiliates to be considered either a
public utility or a common carrier, and (iii) enforce, at the request and for
the benefit of Buyer, any rights of Seller or its affiliates arising from such
Interest against such issuer thereof or the other party or parties thereto
(including the right to elect to terminate any such Interest in accordance with
the terms thereof upon the advice of Buyer).
1.5 Obtaining Permits and Licenses; Bonds and Guarantees.
(a) Buyer, in cooperation with Seller, shall use all reasonable efforts to
obtain as of the Closing or as soon thereafter as may be practicable all permits
and licenses required by any governmental agency with respect to the assets of
the
22
<PAGE>
Businesses (including, without limitation, environmental and other operating
permits), without any guaranty or liability of Seller with respect thereto.
Seller will or will cause its affiliates to assign, transfer and convey to Buyer
at the Closing those permits and licenses which are held or used by Seller or
its affiliates in connection with the Businesses and can be assigned without
having to obtain the consent of any third party with respect thereto, provided
that Seller and Buyer will work together and use all reasonable efforts to
obtain any third party consents necessary to the assignment or transfer of any
other permits or licenses used or held by Seller and its affiliates in
connection with the Businesses which are so assignable or transferable.
Subsequent to the assignment, transfer and conveyance of each asset on or after
Closing, to the extent permitted by law, Seller and its affiliates shall have
the right to cancel any permits or licenses held by Seller and its affiliates
now applicable to such Asset to the extent not assigned or transferred to Buyer
pursuant to this Article 1.5. The failure of Seller and its affiliates to cancel
any permits or licenses shall not affect the respective rights, obligations,
liabilities and indemnifications of Seller and its affiliates by Buyer under
this Agreement.
(b) Buyer shall use all reasonable efforts (which shall not include
agreeing to any modification of the terms of the underlying obligations) to
cause itself to be substituted in all respects for Seller, effective as of
Closing, in respect of all obligations of Seller under each of the bonds,
guarantees, undertakings and letters of credit obtained by Seller for the
benefit of the Businesses (other than those that relate to Excluded Assets)
('Guarantees'), except Guarantees, the obligations underlying which Buyer has
elected to cancel and has notified Seller of such election and is
23
<PAGE>
pursuing or will diligently pursue such cancellation or cancellations. If Buyer
is unable to effect such substitution with respect to any Guaranty after using
all reasonable efforts to do so, Buyer shall obtain letters of credit, on terms
and from financial institutions reasonably satisfactory to Seller, with respect
to the obligations covered by each of the Guarantees (to the extent they relate
to the Businesses) for which Buyer does not effect such substitution. Subsequent
to Closing, with respect to any uncancelled Guaranty for which no substitution
is effected or letter of credit provided, Buyer shall indemnify Seller against
any liability under such Guaranty to the extent they relate to the Businesses
and if such Guarantee remains uncancelled on the 60th day after the Closing,
Buyer shall secure its indemnity by providing Seller with a letter of credit in
Seller's favor from a bank and in an amount reasonably satisfactory to Seller.
If such letter of credit is not provided to Seller within 30 days of Seller's
written request therefor, Seller may cancel or otherwise terminate such
Guarantee.
ARTICLE II
CONSIDERATION
2.1 Purchase Price.
As consideration for the Assets, at the Closing (as defined in Article 10.1
hereof) Buyer shall (i) pay Seller (for its account and the account of its
affiliates) $142 million by wire transfer of immediately available funds and
issue to Seller $13 million principal amount of 7 1/2% Subordinated Notes of
Buyer due in 2003 (the 'Subordinated Note') in the form attached hereto as
Exhibit 2.1 and (ii) assume, subject to Articles III and 5.20 hereof, the
Assumed Liabilities (the 'Purchase Price'). The cash portion of the Purchase
Price shall be paid to Seller and its affiliates as
24
<PAGE>
follows: (a) an amount equal to the value of the assets transferred by F.B.
Canada, less any liabilities of F.B. Canada assumed by Buyer shall be paid to
Seller as agent for F.B. Canada by wire transfer of immediately available funds;
and (b) the balance of the Purchase Price shall be paid to Seller (for its
account and the account of its affiliates). For purposes of the preceding
sentence, the value of the assets transferred shall be determined in accordance
with the procedure set forth in Section 2.2 relating to allocation of purchase
price.
2.2 Allocation of Purchase Price.
Buyer and Seller agree to allocate the Purchase Price in accordance with
the rules under Section 1060 of the Internal Revenue Code of 1986, as amended (
the 'Code'), and the Treasury Regulations promulgated thereunder. Such
allocation shall be prepared in accordance with an appraisal conducted by an
independent appraiser retained by Buyer. If Seller, in good faith, determines
that such proposed allocation is unreasonable, Buyer and Seller agree at their
shared expense to retain the Arbitrator to settle any dispute between Buyer and
Seller regarding the allocations at least 60 days prior to the date upon which
either party is required to file any 1060 Forms. Seller and Buyer agree to act
in accordance with the computations and allocations contained in the allocation
(including any modifications thereto reflecting any post-closing adjustments) in
any relevant tax returns or filings filed by them (including any forms or
reports required to be filed pursuant to Section 1060 of the Code, the Treasury
Regulations promulgated thereunder or any provisions of local, state and foreign
law ('1060 Forms'), and to cooperate in the preparation of any 1060 Forms and to
file such 1060 Forms in the manner required by applicable law. Buyer shall make
available promptly to Seller
25
<PAGE>
copies of all appraisals of the Assets or any portion thereof obtained by Buyer.
For purposes of this Agreement, the Arbitrator shall be a single arbitrator
selected in accordance with the Commercial Arbitration Rules of the American
Arbitration Association.
ARTICLE III
LIABILITIES, OBLIGATIONS AND INDEMNITIES
3.1 Liabilities and Indemnity.
(a) Subject to the provisions of Article 3.1(b) hereof and except as
otherwise provided in this Agreement, effective as of the Closing, Buyer shall,
without any further responsibility or liability of or recourse to Seller or its
affiliates or any of Seller's or such affiliates' directors, shareholders,
officers, employees, agents, consultants, representatives, successors,
transferees or assigns (hereinafter sometimes referred to as 'Seller Indemnified
Parties'), absolutely and irrevocably assume and be solely liable and
responsible for any and all Assumed Liabilities (as defined in this Article
3.1(a)). The term 'Assumed Liabilities' shall mean and include all Liabilities
(as defined in this Article 3.1(a)) of Seller, FB Canada, PT Systems and FB
Properties relating to or arising out of the Businesses prior to the Closing
whether or not disclosed in any Schedule or Exhibit attached to this Agreement
or previously delivered to Buyer or the facts on which any Liability are based
are disclosed in any Schedule or Exhibit previously delivered to Buyer or
attached to this Agreement, provided, however, that the term 'Assumed
Liabilities' shall not mean or include, or be deemed to mean or include, and
Seller shall indemnify and hold Buyer, its affiliates and their respective
directors, shareholders, partners, officers, employees, agents,
26
<PAGE>
consultants, representatives, successors, transferees and assigns (hereinafter
sometimes referred to as 'Buyer Indemnified Parties') harmless against (i) any
Liabilities which are satisfied or discharged prior to the Closing and (ii) any
Excluded Liabilities (as defined in Article 3.1(b) hereof) (including in each
case any penalties, fines, reasonable attorneys' fees and other costs incident
to proceedings or investigations or the prosecution or defense of any claim).
The term 'Liability' shall mean and include any direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility,
whether known or unknown, fixed or unfixed, choate or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise.
Except as set forth in this Article 3.1(a), Buyer will assume no Liability of
Seller or its affiliates. Buyer shall indemnify and hold the Seller Indemnified
Parties harmless from and against (i) any and all Assumed Liabilities
(including, without limitation, reasonable fees and expenses of counsel) of
whatever kind and nature, and (ii) any damage, liability, loss, cost or expense
(including any penalties, fines, reasonable attorneys' fees and other costs
incident to proceedings or investigations or the prosecution or defense of any
claim) (collectively, 'Damages') which are caused by or arise out of (a) the
failure by Buyer to perform or fulfill any agreement or covenant to be performed
or fulfilled by it under this Agreement or (b) any breach of any representation
or warranty of Buyer. It is agreed and understood that claims under (i) of the
preceding sentence may be brought by Seller or its affiliates at any time and
shall not be limited as to dollar amount and no claim shall be asserted for a
claim under clause (ii) of the preceding sentence after the first anniversary of
the Closing. No Seller Indemnified Party shall be entitled to
27
<PAGE>
indemnification for claims under (ii) of the second preceding sentence for any
Damage attributable to a single fact or set of circumstances unless the Damage
to such Seller Indemnified Party resulting therefrom exceeds $25,000 and unless
and until the aggregate amount of claims of Seller Indemnified Parties exceed
$1,000,000. If the aggregate amount of such claims exceeds $1,000,000, then
Seller may claim indemnification only for any claims in excess of $1,000,000.
The aggregate indemnification obligations of Buyer for all claims under (ii) of
the fourth preceding sentence shall not exceed $15,000,000.
(b) There shall be excluded from Assumed Liabilities the following
Liabilities ('Excluded Liabilities'):
(i) Liabilities that are due and payable with respect to the operation
of the Businesses prior to the Closing for all taxes (including income,
sales, property and other taxes), all levies, imposts and duties in the
nature of taxes and all deficiencies, assessments, charges and penalties
associated therewith;
(ii) Liabilities accruing before or after Closing for Seller's or its
affiliates' medical, dental, disability and life insurance programs for
employees retiring or otherwise terminating their employment prior to
Closing;
(iii) Liabilities for claims incurred at or prior to Closing for
Seller's or its affiliates' medical, dental, disability, life insurance and
other employee benefit programs;
(iv) Liabilities accruing prior to Closing to the extent that Seller
28
<PAGE>
or any of its affiliates is actually reimbursed therefor under its
insurance policies;
(v) Seller's or its affiliates' inter-company payables;
(vi) Indebtedness under any bond, note, debenture or similar
instrument or any other indebtedness for borrowed money of Seller or any
affiliate of Seller;
(vii) Any liability or obligation of Seller or any affiliate of Seller
related to the Excluded Assets;
(viii) Any obligation or liability of Seller or any affiliate of
Seller under this Agreement (including without limitation liability under
Articles 3.1, 3.2 and 5.18 hereof) or any other agreement contemplated
hereby or arising from or relating to the negotiation and execution of this
Agreement;
(ix) Liabilities of Seller or any affiliate of Seller arising out of
or as a consequence of (a) injury or death of any person as a consequence
of any event occurring prior to Closing, (b) damage to the property of any
third party as a consequence of any event occurring prior to Closing, (c)
workers' compensation claims relating to occurrences prior to Closing;
(x) Liabilities and obligations for bonuses payable by Seller or any
affiliates of Seller to the Employees accruing prior to Closing and
liabilities and obligations for salaries and wages or other compensation
payable by Seller or any affiliates of Seller to all the Employees except
those who are paid on a weekly basis and employed at the real property
29
<PAGE>
of Seller listed on Schedule 1.1(ii)(a) hereto;
(xi) Damages and Liabilities arising out of or in connection with
pending litigation against Seller and/or its affiliates involving the
franchise arrangements of P.T. Systems and any and all future litigation or
claims involving the conduct of the franchise arrangements of P.T. Systems
prior to Closing; and
(xii) Except as otherwise provided in Article 4.1 hereof, any
liabilities arising before or as a result of Closing out of or in
connection with any plans, programs or arrangements of Seller or any
affiliate of Seller including, without limitation any severance payments or
other benefits payable as a result of the transactions contemplated hereby.
(c) Effective as of Closing, Seller shall without any further
responsibility or liability of or recourse to any Buyer Indemnified Party
absolutely and irrevocably assume and be solely liable and responsible for any
and all Liabilities of Seller and its affiliates other than Assumed Liabilities.
Seller shall indemnify and hold each Buyer Indemnified Party harmless from and
against any and all (i) Liabilities which are satisfied or discharged prior to
Closing; (ii) Excluded Liabilities; (iii) Liabilities of Seller or any of its
affiliates other than Assumed Liabilities; and (iv) any Damages which are caused
by or arise out of (a) the failure by Seller or any of its affiliates to perform
or fulfill any agreement or covenant to be performed or fulfilled by it under
this Agreement or (b) any breach of any representation or warranty of Seller or
any of its affiliates. No claim shall be asserted for a claim under clause (iv)
above after the first anniversary of Closing, provided that the foregoing shall
not apply to claims for a
30
<PAGE>
breach of a representation or warranty under Articles 5.9 or 5.15 hereof, which
may be brought at any time on or prior to the third aniversary of Closing and it
is agreed and understood that claims under clauses (i) through (iii) above may
be brought by a Buyer Indemnified Party at any time and shall not be limited as
to dollar amount. No Buyer Indemnified Party shall be entitled to
indemnification for claims under clause (iv) above for any claim or damage
attributable to a single fact or set of circumstances unless the loss or damage
to the Buyer Indemnified Parties resulting therefrom exceeds $25,000 and unless
and until the aggregate amount of claims of Buyer Indemnified Parties in excess
of the amounts set forth above exceed $1,000,000. If the aggregate amount of
such claims exceeds $1,000,000, then the Buyer Indemnified Parties may claim
indemnification only for any claims in excess of $1,000,000. The aggregate
indemnification obligations of Seller for claims under clause (iv) above shall
not exceed $15,000,000. The first $3,000,000 of indemnification amounts payable
to Buyer Indemnified Parties under this Article 3.1(c) shall be paid to the
relevant Buyer Indemnified Parties by wire transfer of immediately available
funds and any amounts payable to Buyer Indemnified Parties in excess of
$3,000,000 shall be paid to the relevant Buyer Indemnified Parties up to 50% (at
the election of Seller) by a corresponding reduction in the outstanding
principal amount (if any) of the Subordinated Note and the balance (no less than
50%) by wire transfer of immediately available funds. Upon any reduction of the
outstanding principal amount of the Subordinated Note hereunder, Seller shall
surrender the Subordinated Note and Buyer shall issue to Seller a new
Subordinated Note in the principal amount then outstanding.
31
<PAGE>
3.2 Indemnification Procedure.
The obligation of a party (the 'Indemnifying Party') to indemnify any
person or entity (the 'Indemnified Party') under Article 3.1 hereof is
conditioned upon receiving from the Indemnified Party written notice of the
assertion or institution of a claim arising from or related to any liability set
forth in Article 3.1 hereof (a 'Claim') or of the occurrence of an event which
the Indemnified Party believes could lead to the assertion of a Claim, promptly
after the Indemnified Party becomes aware of such Claim or event; provided,
however, that the failure of the Indemnifying Party to receive such notice on a
timely basis shall relieve the Indemnifying Party of its obligation to indemnify
hereunder only if and to the extent that such failure is prejudicial to its
ability to defend such Claim. Subject to the terms hereof, the Indemnifying
Party shall have the absolute right, in its sole discretion and at its sole
expense, to elect to defend, settle or otherwise protect against any Claim with
legal counsel of its own selection reasonably satisfactory to the Indemnified
Party provided, however, that no Claim may be settled by the Indemnifying Party
without the consent of the Indemnified Party which consent shall not be
unreasonably withheld. The Indemnified Party shall have the right, but not the
obligation, to participate, at its own expense, in the defense thereof through
counsel of its own and shall have the right, but not the obligation, to assert
any and all defenses, cross claims or counterclaims it may have and the fees and
expenses of such counsel will be at the expense of such Indemnified Party unless
(i) the employment of such counsel and payment of such counsel's fees by the
Indemnifying Party has been specifically authorized by the Indemnifying Party,
(ii) the Indemnifying Party does not employ counsel that is reasonably
satisfactory to the Indemnified Party, or there is a conflict of
32
<PAGE>
interest between the position of the Indemnifying Party on the one hand and the
Indemnified Party on the other hand, or (iii) the Indemnifying Party fails to
assume the defense or fails to contest such action in good faith, in any which
case, if the Indemnified Party notifies the Indemnifying Party that it elects to
employ separate counsel, the Indemnifying Party will not have the right to
assume the defense of such action on behalf of the Indemnified Party and the
reasonable fees and expenses of such separate counsel shall be borne by the
Indemnifying Party. The Indemnified Party shall, and shall cause its affiliates
to, at all times cooperate in all reasonable ways with, make its relevant files
and records available for inspection and copying by, and make (subject to
assertion of attorney-client and other applicable privileges) its employees
available or otherwise render reasonable assistance to the Indemnifying Party in
connection with its defense of any Claim. Subject to the next sentence, in the
event the Indemnified Party, without prior consent of the Indemnifying Party
(which shall not be unreasonably withheld), makes any settlement with respect to
any Claim, the Indemnifying Party shall be discharged from all obligations under
Article 3.1 hereof with respect to such Claim. In the event the Indemnifying
Party fails timely to defend, contest or otherwise protect against any Claim or
to contest any Claim in good faith, the Indemnified Party shall have the right,
but not the obligation, to defend, contest, assert cross claims or counterclaims
or otherwise protect against the same, to make any compromise or settlement
thereof and to recover from the Indemnifying Party and be indemnified by the
Indemnifying Party for the entire cost thereof, including without limitation,
legal expenses, disbursements and all amounts paid as a result of such Claim or
the compromise or settlement thereof.
33
<PAGE>
ARTICLE IV
EMPLOYEES
4.1 Employment and Benefits. Buyer will accept the transfer of employment
of those employees of Seller listed on Schedule 4.1 attached hereto, with such
changes, deletions or additions thereto as may occur from the date hereof to the
Closing in the ordinary course of business and consistent with the terms and
conditions of this Agreement (the 'Employees'); provided, however that not later
than July 18, 1994 Seller and Buyer shall agree upon a final list of employees
which shall be utilized for the purposes of Article 4.2(a) (such list is
hereinafter referred to as the 'Transfer List' and the employees reflected on
the Transfer List are hereinafter referred to as the 'Transferred Employees').
For purposes of this Article IV, the terms 'Employees' and 'Transferred
Employees' shall not include any person on disability, layoff or leave of
absence as of the Closing; provided, however, that such individuals shall become
Employees as of the Closing if they report to work within ninety (90) days after
the Closing or such longer period as required by law; and provided further, that
during such period all liabilities associated with the employment of such
individuals shall remain the responsibility of Seller. Buyer shall employ each
of the Employees during the one year period after the Closing and such
employment shall be in positions substantially equivalent to those presently
held, with the same or greater wages or salaries as those being enjoyed as of
the Closing and, for one year after the Closing (but two years with respect to
the Buyer's Retirement Plan as hereinafter defined) with benefits substantially
equivalent (except for such changes as may be required by law) in the aggregate
to those provided under Seller's benefit plans and
34
<PAGE>
compensation policies and practices listed in Schedule 4.1 attached hereto;
provided, that except as otherwise specifically provided herein with respect to
the 401(k) Plan and the Savings Plan (each as hereinafter defined); Buyer shall
have no obligation to take into account for any purpose hereunder or provide any
benefits related to or payable in stock of Buyer, Seller or any of their
respective subsidiaries; and, provided, further, that nothing herein shall
preclude any changes required by applicable law or by the increased costs to
provide such benefits other than as specifically provided in Articles 4.2(a) and
4.2(b) hereof. Notwithstanding anything to the contrary set forth herein,
nothing herein shall preclude Buyer f;rom terminating any Employee for any
reason for which Seller could have terminated such person prior to the Closing.
Buyer shall accept and credit the Employees, for all purposes under all benefit
plans and compensation policies and practices (subject to the occurrence of the
transfers contemplated by Section 4.2(a) and 4.2(b) hereof), with all previous
service recognized by Seller or its subsidiaries or the predecessor of the
Businesses, Union Carbide Corporation, for benefit plan purposes, and shall
accept and assume responsibility for all current year, vested or carried forward
vacation benefits accrued by each Employee under Seller's vacation plan but not
taken as of the Closing to the extent reflected on the Closing Balance Sheet.
4.2 Pension Plan; Defined Contribution Plan. With respect to the Retirement
Program Plan for Employees of First Brands Corporation and its Participating
Subsidiary Companies (the 'Pension Plan'), the Savings Plan for Employees of
First Brands Corporation and Participating Subsidiary Companies (the 'Savings
Plan') and the 401(k) Opportunity Plan for Employees of First Brands Corporation
('401(k) Plan'),
35
<PAGE>
Buyer and Seller agree as follows:
(a) Pension Plan.
(i) On or before the Closing, Seller shall cause each Employee who is
a participant in the Pension Plan to become fully vested, to the extent not
already vested, as of the Closing in the benefits accrued under the Pension
Plan as of the Closing. Employees shall cease to accrue any benefits under
the Seller's Pension Plan as of the Closing. As of the Closing, the defined
benefit plan established by the Buyer in accordance with Article 4.2(a)(ii)
(the 'Buyer's Retirement Plan') shall include as participants the Employees
who were participants in the Pension Plan immediately prior to the Closing.
Other Employees shall become participants in Buyer's Retirement Plan in
accordance with its terms.
(ii) As soon as practicable after the Closing, Buyer shall establish
the Buyer's Retirement Plan, which shall contain terms substantially
similar to the terms of the Pension Plan, and take any necessary action to
qualify the Buyer's Retirement Plan under the applicable provisions of the
Code. Each of the Buyer and Seller shall make all filings and submissions
to appropriate governmental agencies required of them in connection with a
transfer of assets as described below.
(iii) Upon satisfaction of the obligations described in Article
4.2(a)(ii) above and upon receipt of evidence reasonably acceptable to the
Buyer with respect to the Pension Plan and to the Seller with respect to
the Buyer's Retirement Plan, that each such plan is qualified under the
Code, Seller
36
<PAGE>
shall cause the respective trustees of the Seller's Pension Plan to
transfer an amount equal to $2,750,000 (the 'Transfer Amount') as follows:
(x) within 30 days after the Closing at least 75% of the Transfer Amount in
cash or marketable securities reasonably acceptable to Buyer; and (y)
within 60 days after the transfer in this Subsection (x), the balance of
the Transfer Amount, with interest thereon of 8% per annum in cash or
marketable securities reasonably acceptable to Buyer. Such transfer will be
made to the trustee of the Buyer's Retirement Plan for the trust of the
Buyer's Retirement Plan and in no event shall less than 25% of all
transfers be made in cash; provided, however, that in no event shall the
amount transferred be less than the amount required under Section 414(1) of
the Code as certified by Sellers' actuaries (which certification shall be
reasonably acceptable to Buyer) or the present value of the accrued
benefits (whether or not vested) under the Pension Plan. Buyer shall
maintain the Buyer's Retirement Plan for no less than two years after the
Closing, in substantially the form adopted (with such changes as are
required by law). Each of the parties hereto shall pay its own expenses in
connection with the foregoing transfer of assets and assumption of
liabilities.
(b) Defined Contribution Plans.
(i) On or before the Closing, Seller shall cause each Employee who is
a participant in the 401(k) Plan or the Savings Plan (the 'Defined
Contribution Plans') to become fully vested, to the extent not already
vested, as of the Closing Date in his account balance under each such plan.
The Defined Contribution Plans shall be amended to provide that
contributions thereto in
37
<PAGE>
respect of Employees shall cease as of the Closing Date.
(ii) As soon as practicable after the Closing Date, Buyer shall
establish or designate a defined contribution plan or plans (the 'Successor
Plan') and take any necessary action to qualify the Successor Plan under
the applicable provisions of the Code. Each of the Buyer and Seller shall
make all filings and submissions to appropriate governmental agencies
required of them in connection with a transfer of assets as described
below.
(iii) As soon as practicable following the Closing, Seller shall cause
the trustee of the Defined Contribution Plans to calculate, in accordance
with the spin-off provisions set forth under Section 414(1) of the Code and
the specifications described below, the amount of assets and liabilities
held in the Defined Contribution Plans representing the account balances of
all Employees as of the Closing (including, as applicable, all
contributions and all earnings attributable to such contributions) (the
'D.C. Transfer Amount'). As soon as practicable, upon receipt of evidence
reasonably acceptable to the Buyer with respect to the Defined Contribution
Plans and to the Seller with respect to the Successor Plan, that each such
plan is qualified under the Code, Seller shall cause the respective
trustees of the Defined Contribution Plans to transfer in cash, or, with
respect to account balances invested in Seller's stock, Seller's stock, to
the trustee of the Successor Plan, the Transfer Amount, which shall (i)
have been credited with appropriate earnings attributable to the period
from the appropriate valuation date to the day immediately preceding the
date of the transfer described herein, and (ii) reduced by any benefit or
withdrawal
38
<PAGE>
payments in respect of Employees occurring during the period from the
Closing to the day immediately preceding the date of transfer described
herein. Each of the parties hereto shall pay its own expenses in connection
with such transfer. On and after the Closing, subject to the transfer
provided for herein, each participant in the Defined Contribution Plans
shall be entitled to credit under the Successor Plan for all purposes for
all years of service for which credit was granted under the Defined
Contribution Plans.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
Seller hereby represents, warrants and covenants to Buyer that:
5.1 Organization and Corporate Power. Each of Seller, F.B. Canada, F.B.
Properties, and P.T. Systems is a corporation, duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation, has
all requisite power and authority to own the assets being sold hereunder and is
duly qualified and in good standing in each jurisdiction in which its assets
used or held for use in the business or operations of the Businesses are located
and in each jurisdiction where the nature of the business or operations of the
Businesses requires such qualification. Seller has full corporate power and
authority to enter into and perform this Agreement and each of the Ancillary
Agreements to be entered into by it. Seller, F.B. Canada, F.B. Properties and
P.T. Systems each has full corporate power and authority to carry on its
business as it is now being conducted and to own or lease and operate the
properties and assets now used, owned or leased and operated by it as the same
relate to the business or operations of the Businesses.
39
<PAGE>
5.2 Due Authorization; No Breach. The execution, delivery and performance
by each of Seller, F.B. Canada, F.B. Properties and P.T. Systems of this
Agreement and each of the Ancillary Agreements to which any such entity is a
party, and the transactions contemplated hereby and thereby, have been approved
by the respective Boards of Directors of Seller, F.B. Canada, F.B. Properties
and P.T. Systems and by Seller as the sole shareholder of P.T. Systems and no
further corporate action is required to be taken by Seller, F.B. Canada, F.B.
Properties or P.T. Systems in order to execute, deliver and perform this
Agreement and the Ancillary Agreements to which any such entity is a party and
to transfer the Assets to Buyer. This Agreement is a valid and legally binding
obligation of Seller, and each agreement or instrument contemplated by this
Agreement (including the Ancillary Agreements), when executed and delivered by
Seller or any of its affiliates in accordance with the provisions hereof, will
be a valid and legally binding obligation of each of Seller and any affiliate of
Seller which is a party thereto, enforceable against each of Seller and any such
affiliate in accordance with its terms. All persons who have executed this
Agreement on behalf of Seller, or who will execute on behalf of Seller, F.B.
Canada, F.B. Properties and P.T. Systems any agreement or instrument
contemplated by this Agreement (including the Ancillary Agreements), have been
duly authorized to do so by all necessary corporate action. Neither the
execution and delivery of this Agreement, the Ancillary Agreements and the other
agreements and documents to be executed or delivered pursuant hereto, nor the
consummation of the transactions contemplated hereby and thereby, will (i)
violate, or conflict with, any provision of the certificate of incorporation or
by-laws (or other governing documents) of any of Seller,
40
<PAGE>
F.B. Canada, F.B. Properties and P.T. Systems, (ii) except as set forth on
Schedule 5.2, violate, or conflict with, or result in a breach of any provision
of, or constitute a default under, or result in the termination (or grant a
right of termination) of, or accelerate (or grant the right to accelerate) the
performance required by, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets being sold
hereunder by Seller or any of its affiliates under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
agreement, lease or other instrument to which Seller or any of its affiliates is
a party or by which it or any of its affiliates or any of their respective
properties is bound or (iii) violate, or conflict with, any order, writ,
injunction, arbitration award, judgment or decree of any court, governmental
body or arbitrator applicable to Seller or any of its affiliates or, to Seller's
Knowledge, any statute, law, rule or regulation. For the purposes of this
Agreement, 'Seller's Knowledge' shall mean any fact or set of circumstances of
which Seller or any of its affiliates or any of their respective employees have
actual knowledge or would have actual knowledge had due inquiry been made. The
sale of the Businesses is subject to the consent under certain financing
agreements entered into by Seller and identified on Schedule 5.2A attached
hereto. Seller and its affiliates shall before or at Closing obtain all
necessary consents, approvals and authorizations required by the agreements set
forth on Schedule 5.2A.
5.3 Real Property. (a) Schedules 1.1(ii)(a) and (b) attached hereto set
forth all of the real property and interests in real property owned, used or
occupied by Seller or any of its affiliates which is necessary to operate the
Businesses as currently
41
<PAGE>
operated, including all land, easements or rights of way granted to Seller or
any of its affiliates, and all improvements located thereon but excluding (i)
all office and research and development facilities; (ii) all manufacturing
facilities for products included in the Businesses other than automotive
antifreeze; and (iii) all real estate to be used by Seller in performing
services as contemplated by the Ancillary Agreements. Seller has good, valid and
marketable title in fee simple to each parcel of such real property identified
on Schedule 1.1(ii)(a) as being owned by Seller or any of its affiliates (the
'Owned Real Property') or holds by valid, existing and enforceable lease or
license for each parcel of such real property (x) identified on
Schedule1.1(ii)(b) as being leased by Seller or any of its affiliates (the
'Leased Real Property') or (y) identified on Schedule 1.1(ii)(c) as consisting
of roadway and other ancillary rights (the 'Ancillary Real Property'), in each
case free and clear of all pledges, security interests, mortgages, liens,
encumbrances, equities, claims, reservations, third party rights or obligations
(including without limitation third party leases or subleases, easements, rights
of way and other commercial or governmental use restrictions) (collectively,
'Encumbrances') except as set forth on Schedule 1.1 (ii)(a) or (b). The Owned
Real Property, the Leased Real Property and the Ancillary Real Property are
hereinafter collectively referred to as the 'Real Property.'
(b) There are adequate roadway easements assuring access to the Real
Property. Seller or its affiliates have obtained all easements and rights of way
required from all governmental jurisdictions or from private parties for the
normal use and operation of the Businesses on the Real Property.
(c) All improvements on any Owned Real Property are wholly within
42
<PAGE>
the lot limits of such Owned Real Property and do not encroach on any adjoining
premises and there are no encroachments on any Owned Real Property by any
improvements on any adjoining premises. All parcels of the Owned Real Property
are legally subdivided lots and are separate tax lots.
(d) The Seller and its affiliates have delivered to the Buyer a true and
complete copy of each lease covering the Leased Real Property (individually, a
'Lease', collectively, the 'Leases'), together with all amendments and
modifications thereto. Neither the Seller nor any of its affiliates is in
default under any of the Leases and, to Seller's Knowledge, no other party
thereto is in default under any such Lease, and no event has occurred which
(whether with or without notice, lapse of time or both) would constitute a
default thereunder except in either instance for defaults which, individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
5.4 Personal Property. Except as disclosed or provided for in this
Agreement, the Ancillary Agreements or any Exhibit or Schedule attached hereto,
and except for dispositions of assets after the date hereof and prior to Closing
in the ordinary course of business, consistent with past practice and consistent
with the terms of this Agreement and the Ancillary Agreements, to Seller's
Knowledge, all of the fixtures, plants, buildings, improvements, machinery,
equipment, vehicles, construction in progress and other tangible personal
property described in Articles 1.1 (ii) and 1.1 (iii) hereof which are not
Excluded Assets (collectively, the 'Fixed Assets and Equipment') are located on
the Real Property, except for certain capital equipment (primarily motor
vehicles) while in use off the Real Property. Except for
43
<PAGE>
goods in transit and as disclosed or provided for in this Agreement, the
Ancillary Agreements or any Exhibit or Schedule attached hereto, to Seller's
Knowledge, all of the Inventory is located on the Real Property or in those
warehouses listed in Schedule 5.4 attached hereto, except for immaterial
quantities of Inventory which may be located elsewhere.
5.5 Title and Condition of Assets; Entire Business.
(a) Except as otherwise disclosed in Schedule 5.5 attached hereto, Seller
or one of its affiliates has good and marketable title to, or holds by valid and
existing lease or license, all of the Assets and will or will cause one of its
affiliates to transfer same to Buyer at Closing. The Assets are free and clear
of all Encumbrances, except:
(i) those reflected or reserved against in the Unaudited Financial
Statements for the fiscal year ended June 30, 1993 attached hereto as
Schedule 5.16 or as will be reflected or reserved against in the Audited
Financial Statements for the fiscal year ended June 30, 1993;
(ii) taxes and general and special assessments not in default and
payable without penalty or interest; and
(iii) Encumbrances which, individually or in the aggregate, do not and
will not materially detract from the value of the Assets or result in or
have a material adverse effect on the condition (financial or other),
results of operations, assets, properties, business or prospects of the
Businesses or have an adverse effect on the ability of Seller or any of its
affiliates to perform its obligations hereunder or any other agreement
44
<PAGE>
contemplated hereby (each of such effects is herein called a 'Material
Adverse Effect').
(b) At Closing, Seller will or will cause one of its affiliates to transfer
to Buyer all of the Assets free and clear of all Encumbrances other than (i)
mechanics', materialmen's, and similar liens and (ii) liens for taxes not yet
due and payable.
(c) The Assets, together with the rights of Buyer under the Ancillary
Agreements, are sufficient to allow Buyer to conduct the Businesses in the same
manner and to the same extent (subject to changes in the conduct of the
Businesses contemplated by the Ancillary Agreements) as heretofore conducted by
Seller and its affiliates.
5.6 Consents. Except for the expiration of the applicable waiting periods
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder (the 'HSR Act'), consent under
New Jersey Industrial Site Recovery Act ('ISRA'), and except as set forth on
Schedule 5.6, no action, approval, permit, consent or authorization, including
but not limited to any action, approval, consent or authorization by any third
party, financial institution, governmental or quasi-governmental agency,
commission, board, bureau, or instrumentality, is required to be obtained by
Seller or any of Seller's affiliates in order to consummate the transactions
contemplated hereby.
5.7 Compliance With Laws. Except as disclosed in Schedules 5.9, 5.10 and
5.12 attached hereto, neither Seller nor Seller's affiliates is, with respect to
the operation of the business or properties of the Businesses, in default under
or in
45
<PAGE>
violation of any federal, state or local statute, law, ordinance, regulation,
rule, judgment, order or decree, except for such defaults or violations, if any,
that in the aggregate do not and will not result in a Material Adverse Effect.
5.8 Permits and Licenses. Schedule 5.8 attached hereto sets forth all
governmental licenses, permits, franchises and other governmental authorizations
(collectively 'Permits') which are issued to, held or used by Seller or any of
Seller's affiliates, or for which Seller or any of Seller's affiliates has
applied, including the dates of issuance and expiration or of application as the
case may be and which are material to the current operation of the Businesses,
and there are no other governmental licenses, permits, franchises, or other
governmental authorizations which are material to the business or operations of
the Businesses. Within the past 18 months neither Seller nor any of Seller's
affiliates has received any written warning notice, written notice of violation
or probable violation, written notice of revocation or other written
communication from or on behalf of any governmental entity, which violation has
not been corrected or otherwise settled, alleging (i) any violation of any
material Permit, (ii) that Seller requires any material Permit required for the
operation of the Businesses not currently held by Seller or (iii) any current
material violation of any federal, state, county, local or foreign laws,
ordinances, regulations or orders.
5.9 Environmental Conditions. Schedule 5.9 attached hereto sets forth the
following:
(i) all treatment, storage and disposal facilities (as defined in the
Resource Conservation and Recovery Act of 1976, as amended, and the rules
and regulations promulgated thereunder ('RCRA')) which are
46
<PAGE>
currently owned or used by Seller and located on the Real Property; all
waste disposal sites on the Real Property which are or have been owned or
used by Seller in connection with the Assets or the Businesses; and all
underground storage tanks located on the Real Property which are or were
owned or used by Seller in connection with the Assets or the Businesses. As
to each such facility, site or underground storage tank, Schedule 5.9
describes the time period used and the type of waste treated, stored or
disposed of and, in the case of the underground storage tanks, the type of
material stored;
(ii) all sites located off the Real Property at which wastes from the
operation of the Businesses have been disposed and, as to each such site,
Schedule 5.9 hereto describes the time period used and the type of waste
disposed; and
(iii) all internal environmental audits conducted by Seller since
January 1, 1989 relating to the Businesses.
Except as disclosed on Schedule 5.9 in connection with, or in any way
related to, the Assets or the Businesses,
(i) Seller holds, and is in compliance with, all permits, licenses,
registrations or other authorizations required under applicable
Environmental Laws, as hereinafter defined, and is, and has been, otherwise
in compliance with all applicable Environmental Laws. To Seller's
Knowledge, there is no condition that could prevent or interfere
47
<PAGE>
with continued compliance with Environmental Laws. For purposes of this
Agreement, Environmental Laws shall mean any and all foreign, federal,
state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any governmental authority, or
requirements of law (including, without limitation, common law) relating in
any manner to contamination, pollution, or protection of human health or
the environment;
(ii) Seller has not received any written notice of any Environmental
Claim, as hereinafter defined, and Seller is not aware after reasonable
inquiry of any threatened Environmental Claim. For purposes of this
Agreement, Environmental Claim means any written notice, claim, demand,
action, suit, complaint, proceeding or other communication by any person
alleging liability or potential liability (including without limitation
liability or potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages, property damage,
personal injury, fines or penalties) arising out of, relating to, based on
or resulting from (i) the presence, discharge, emission, release or
threatened release of any Hazardous Materials, as hereinafter defined, at
any location, or (ii) circumstances forming the basis of any violation or
alleged violation by Seller of any Environmental Laws, including, but not
limited to, any violations or alleged violations by Seller of any permit,
license, registration or other authorization required under applicable
Environmental Laws. For purposes of this Agreement,
48
<PAGE>
Hazardous Materials means any and all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any
fraction thereof) and petroleum products, asbestos and asbestos-containing
materials, pollutants, contaminants, ethylene glycol, diethylene glycol,
polychlorinated biphenyls and any and all other materials and substances
regulated pursuant to any Environmental Laws or that could result in the
imposition of liability under any Environmental Laws;
(iii) Seller has not entered into, has not agreed to, and is not
subject to any judgment, decree, order or other similar requirement of any
governmental authority under any Environmental Laws, including without
limitation relating to compliance or to investigation, cleanup, remediation
or removal of Hazardous Materials;
(iv) Hazardous Materials have not been generated, transported,
treated, stored, disposed of, released or threatened to be released at, on,
from or under any of the Assets in violation of, or in a manner or to a
location that could give rise to liability under, any Environmental Laws;
(v) There are no past or present actions, activities, events,
conditions or circumstances, including without limitation the presence,
release, threatened release, emission, discharge, generation, treatment,
storage or disposal of Hazardous Materials at any location, that are
reasonably likely to give rise to liability under any Environmental Laws or
any contract or agreement.
Seller shall apply to NJDEPE (as hereinafter defined) promptly after
49
<PAGE>
execution of this Agreement for the letter, exemption, declaration, workplan,
approval, remediation agreement or administrative consent order under ISRA (as
hereinafter defined) and shall make all submissions required under ISRA on or
before the dates specified by ISRA.
5.10 Health and Safety Conditions. Schedule 5.10 attached hereto sets forth
the following:
(i) all Material Safety Data Sheets relating to the current products
of the Businesses;
(ii) all product labels for the current products of the Businesses;
(iii)all internal health and safety audits of the Businesses from
January 1, 1990;
(iv) a summary of all epidemiological data related to the Businesses
since January 1, 1990;
(v) a summary of all toxicological studies related to the Businesses
since January 1, 1990;
(vi) all industrial hygiene surveys related to the Businesses or
Assets for the year 1993;
(vii) a summary of all personnel safety statistics related to the
Businesses for each year since January 1, 1990; and
(viii) all annual summaries of workers' compensation liabilities
prepared by the Kemper Group related to the Businesses from January 1, 1990
through January 1, 1994, and the preliminary report prepared by
50
<PAGE>
the Kemper Group of such workers' compensation liabilities for the period
January 1, 1993 through December 31, 1993.
To Seller's Knowledge, the information contained in the documents listed in
this Article 5.10 is true and correct in all material respects. To Seller's
Knowledge, except for the facts set forth on Schedule 5.10 attached hereto, each
of Seller and its affiliates is, with respect to its operation of the
Businesses, in compliance in all material respects with the requirements of the
Occupational Safety and Health Act and all other material federal, state and
local occupational health and safety laws, rules and regulations.
5.11 Employee Relations. Neither Seller nor any of its affiliates has any
agreements with labor unions or associations representing the Employees. Except
as set forth in Schedule 5.11 attached hereto, there is neither pending nor, to
Seller's Knowledge, threatened any strike, slowdown, picketing, work stoppage or
labor trouble or other occurrence, event or condition of a similar character in
which the Employees who are employed in connection with the Businesses are
participating or have threatened to participate and which has had or might have
a Material Adverse Effect. To Seller's Knowledge, no union activities, work
stoppages or other labor trouble with respect to the employees of any of the
Businesses' principal suppliers or customers are pending or threatened which
might have a Material Adverse Effect. Except as set forth on Schedule 5.11
attached hereto, neither Seller nor any of its affiliates has any written
consultant agreements or written contracts of employment in connection with the
Businesses and, except for annualized increases of less than 5% in the aggregate
and for budgeted increases of more than 5% which have been provided to Buyer,
from
51
<PAGE>
March 31, 1994 to the date hereof neither Seller nor any of its affiliates has
made any commitment or agreement to increase the wages or to materially modify
the conditions or terms of employment of any of its Employees. From March 31,
1994 to the date hereof neither Seller nor any of its affiliates has increased
the compensation of any Employee who is an officer of Seller by more than 5%.
5.12 Litigation, Claims and Proceedings. Except as set forth in Schedule
5.12 attached hereto, there are no judgments, orders, writs or injunctions of
any federal, state or local court or governmental authority presently pending
or, to Seller's Knowledge, threatened against any of Seller and its affiliates
or by which any of them or any of their respective assets are bound, and which
are related to the Businesses, and no lawsuits, actions, arbitrations, claims,
governmental proceedings or notices of violation, presently pending or, to
Seller's Knowledge, threatened which relate to the Businesses and to which any
of Seller and its affiliates is a party (as plaintiff, defendant or otherwise)
or which relate to the Businesses and arise under or relate to any federal,
state or local statute, regulation, rule or other governmental authority
(including without limitation Environmental Laws and the laws, rules and
regulations referred to in Articles 5.9 and 5.10 hereof), except for routine
litigation, claims or proceedings (including without limitation, product
liability and warranty claims or litigation, and workers compensation claims) in
which the amount in controversy does not exceed $50,000 for any individual
matter or $150,000 in the aggregate for any related matters. To Seller's
Knowledge, there are no facts which could reasonably be expected to give rise to
any action, suit, proceeding, inquiry or investigation which could, if adversely
decided, have a Material Adverse Effect.
52
<PAGE>
5.13 Intellectual Property.
(a) Schedule 5.13(a) attached hereto lists by reference number all United
States and foreign patents (the 'Patents') and patent applications owned by or
assignable to Seller or any affiliate of Seller, and active unfiled dockets
pertaining to disclosures of inventions made by an employee or employees of
Seller or any affiliate of Seller and assignable to Seller or any affiliate of
Seller and all patent licenses, in each case used in connection with the
Businesses or the Assets (collectively, the 'Patents and Technology'). There are
no other United States or foreign patents or patent applications owned by or
assignable to or used by Seller or any affiliate of Seller, the failure to own
or have the right to use prevents or would prevent Buyer from operating the
Businesses as currently operated; and the Patents and Technology (including any
patent licenses) constitute all of those necessary to the conduct of the
Businesses as currently operated. Seller or one of its affiliates is the sole
and exclusive owner or licensee, except as set forth in Schedule 5.13(a)
attached hereto, of the Patents and Technology and the holder of the full record
title to the registrations for the Patents. The Patents and Technology are free
and clear of any Encumbrances, except as set forth in Schedule 5.13(a). Except
as set forth in Schedule 5.13(a), there are no asserted claims or demands of any
other person, firm or corporation pertaining to the Patents and Technology, no
proceedings have been instituted, are pending, or, to Seller's Knowledge, are
threatened which challenge Seller's rights in respect thereto. Except as set
forth in Schedule 5.13(a), Patent Nos. 4,664,833 (1987) and 4,439,561 (1984) do
not violate the rights of others and, to Seller's Knowledge, are not being
infringed by others and, to Seller's Knowledge, the
53
<PAGE>
remaining Patents and Technology do not violate the rights of others and are not
being infringed by others. The Patents and Technology are not subject to any
outstanding order, decree, judgment or stipulation.
(b) Except for the trademarks and/or trade names 'FIRST BRANDS', the 'FB
Logo' and 'STP,' Schedule 5.13(b) attached hereto sets forth by mark, goods or
services, country and, where applicable, registration or application number all
of Seller's Trademarks and licensed trademark rights (collectively 'Licensed
Trademarks') owned and/or used by Seller or its affiliates in connection with
the Businesses, and such Trademarks and Licensed Trademarks constitute all those
necessary to operate the Businesses as currently operated. Except as otherwise
indicated in Schedule 5.13(b), the Trademarks and Licensed Trademarks have been
duly registered or applications to register are pending in the United States and
in the countries indicated therein, and in the case of Licensed Trademarks,
Seller or its affiliates has been duly recorded as a Registered User or the
license agreement has been recorded, as required by local law. Seller is the
sole and exclusive owner or licensee, to the extent shown in Schedule 5.13(b),
of such Trademarks or Licensed Trademarks and the holder of the full record
title to the registrations for such Trademarks, and the Trademarks and, to
Seller's Knowledge, the Licensed Trademarks are free and clear of any
Encumbrances, except as set forth in Schedule 5.13(b), and except where the
failure of Seller or one of its affiliates to be the sole and exclusive owner or
licensee and the holder of full record title does not and will not have a
Material Adverse Effect provided that, with respect to the liens set forth in
Schedule 5.13(b), Part 3, A, I, Seller will take all necessary steps, prior to
Closing, to
54
<PAGE>
file with the United States Patent and Trademark Office, all documents necessary
to record the release of said liens against said registrations. Except as
disclosed on Schedule 5.13(b), none of Seller and its affiliates has been
notified of any claims or demands of any other person, firm or corporation
pertaining to such Trademarks or Licensed Trademarks, no proceedings have been
instituted, are pending, or, to Seller's Knowledge, are threatened which
challenge Seller's rights in respect thereto and, except as disclosed on
Schedule 5.13(b), to Seller's Knowledge, such Trademarks and Licensed Trademarks
do not infringe upon or otherwise violate the rights of others and are not being
infringed by others. Seller specifically warrants and represents that the
trademark PRESTONE in the United States and Canada for automotive antifreezes,
cooling system flushing products and cooling system stop-leak products and the
registrations therefor set forth on Schedule 5.13(b) are valid and subsisting,
and do not infringe upon or otherwise violate the rights of others and, to
Seller's Knowledge, are not being infringed by others. The Trademarks and
Licensed Trademarks are not subject to any outstanding order, judgment or
stipulation.
(c) Seller specifically warrants that the Assets, together with information
known to the Employees, contain all of Seller's material trade secrets and
confidential technology, proprietary designs, know-how and processes
(collectively 'Trade Secrets') owned and/or used by Seller or its affiliates in
connection with the Businesses, and that such Trade Secrets constitute all those
necessary to operate the Businesses as currently operated. Except as set forth
on Schedule 5.13(c), Seller or its affiliates are the owners of the Trade
Secrets, and where Seller or its affiliates are not the owner of any such Trade
Secret, it is the licensee thereof and all applicable
55
<PAGE>
license agreements are in force and are assignable to Buyer. Seller and its
affiliates have taken all appropriate measures to maintain the confidentiality
of the Trade Secrets, and to Seller's Knowledge, such confidentiality has been
maintained. Except as set forth on Schedule 5.13(c), to Seller's Knowledge, the
use or other exploitation of such Trade Secrets by Seller or any of its
affiliates does not violate the rights of others and are not being infringed by
others. The Trade Secrets are not subject to any outstanding order, decree,
judgment or stipulation.
(d) It is the policy of Seller and its affiliates to place the required
copyright notice on all labels, packaging, advertising and promotional materials
for its products. No copyright registrations have been obtained in the U.S.
Copyright Office for the aforesaid materials.
5.14 Contracts. Schedule 5.14 attached hereto lists as of the date hereof
all written contracts, agreements, commitments and personal property leases
which relate to the Businesses and which meet the criteria specified in the
paragraphs below:
(a) involve future expenditures or receipts or other performance with
respect to goods or services having a total value in excess of $100,000; or
(b) involve a lease, sublease, installment purchase or similar
arrangement for the use of personal property which involves a total
consideration in excess of $100,000; or
(c) contain any severance pay obligations; or payments to employees
due as a result of the consummation of the transactions contemplated
hereby; or
(d) compel the employment of any person in the status of 'employee';
or
56
<PAGE>
(e) involve a consulting relationship which involve total
consideration in excess of $50,000 during the term of such agreement; or
(f) involves the handling, treatment, storage, transportation,
recycling, reclamation or disposal of wastes or substances generated by the
Businesses or the Assets; or
(g) contain commitments of suretyship, guaranty or indemnification
(except for guarantees, warranties and indemnities provided by Seller in
respect of its products in the ordinary course of business); or
(h) relate to the disposition or acquisition of the assets or stock
of, or any interest in, any business enterprise; or
(i) are material to the Businesses and are terminable or may be
accelerated by the other party thereto upon an assignment thereof to Buyer;
or
(j) contain an indenture, mortgage, pledge, credit (other than credit
terms offered to customers in the ordinary course of business), or other
financing commitment for the borrowing or lending of funds from or to any
person.
Except as otherwise indicated in any Schedule or Exhibit attached hereto,
to Seller's Knowledge, no party (including Seller) to any of the contracts
described above is in default of any material obligation thereunder and there
does not exist under any provision thereof, to Seller's Knowledge, any event
that, with the giving of notice of the lapse of time or both, would constitute a
material default thereunder.
5.15 Benefit Plans. (a) Schedule 5.15 sets forth a list of all 'employee
benefit plans' within the meaning of Section 3(3) of ERISA for Employees
(including, without
57
<PAGE>
limitation, stock purchase, stock option severance, employment,
change-in-control, fringe benefit, collective bargaining, bonus, incentive,
deferred compensation and all other employee benefit plans, agreements,
programs, policies or other arrangements, whether or not subject to ERISA,
whether formal or informal, oral or written, legally binding or not under which
any Employee has any present or future right to benefits (collectively referred
to herein as the 'Seller's Plans').
(b) With respect to each of the Seller's Plans, Seller has made available
to Buyer a current, accurate and complete copy (or, to the extent no such copy
exists, an accurate description) thereof (including all existing amendments
thereto that shall become effective at a later date) and, to the extent
applicable, (i) any related trust agreement, annuity contract or other funding
instrument; and (ii) any summary plan description.
(c) (i) Each of Seller's Plans has been established and administered in
substantial compliance with the applicable provisions of ERISA and the Code;
(ii) each of Seller's Plans which is intended to be qualified within the mean of
Section 401(a) of the Code has received a favorable determination letter as to
its qualification; (iii) as of the date of this Agreement no 'reportable event'
(as such term is used in section 4975 of the code or section 406 of ERISA) or
'accumulated funding deficiency' (as such term is used in section 412 or 4971 of
the Code) has heretofore occurred with respect to any of Seller's Plans; and
(iv) no material litigation or administrative or other proceedings involving the
Seller's Plans have occurred or are threatened.
(d) Neither the Seller nor any of its subsidiaries maintains or contributes
to any 'multiemployer plan' as such term is defined in section 3(37) of
58
<PAGE>
ERISA.
(e) With respect to any Seller's Plan which is not a multiemployer plan but
is subject to Title IV of ERISA, as of the Closing, the assets of each such plan
are at least equal in value to the present value of the accrued benefits (vested
and unvested) of the participants in such plans on a termination basis, based on
the actuarial methods and assumptions indicated in the most recent actuarial
valuation reports.
5.16 Financial Statements
(a) Attached hereto as Schedule 5.16 are the unaudited combined and
combining statements of income of the Businesses for the fiscal years ended June
30, 1992 and 1993 and for the nine months ended March 31, 1994 and the unaudited
combined and combining balance sheets of the Businesses as of June 30, 1992 and
1993 and March 31, 1994 (the 'Unaudited Financial Statements'). Also attached as
part of Schedule 5.16 are schedules calculating EBITDAG (as defined in Article
9.1(f)) for the fiscal years ended June 30, 1992 and 1993, as derived from the
Unaudited Financial Statements for such years. The Unaudited Financial
Statements present fairly the financial position and results of operations of
the Businesses as of the date or for the periods set forth therein, except as
set forth in Schedule 5.16 and, in the case of Unaudited Financial Statements as
of and for the nine months ended March 31, 1994, subject to normal year-end
adjustments, were prepared in accordance with U.S. generally accepted accounting
principles ('U.S. GAAP') consistently applied during the periods set forth
therein except as noted on Schedule 5.16; provided, however, that no breach of
this Article 5.16(a) shall give rise to any
59
<PAGE>
claim against Seller for money damages.
(b) Except as specifically disclosed herein or in the Schedules hereto, and
except as reflected, reserved against or otherwise expressly disclosed in the
Unaudited Financial Statements and except for liabilities and obligations or
changes in assets incurred in the ordinary course of business of the Businesses
consistent with past practice, since June 30, 1993 in the case of liabilities or
obligations, and March 31, 1994 in the case of assets, none of the Businesses
will have as of the Closing Date any change in assets, liabilities or
obligations that would be required to be reflected on a balance sheet for the
Businesses prepared in accordance with U.S. GAAP consistently applied during the
period set forth therein. With respect to liabilities as of March 31, 1994 it is
understood that certain of these amounts were estimated by pro-rating total
corporate liabilities based on Seller's reasonable estimate of the Businesses'
share of total liabilities of Seller and its affiliates. Because such
liabilities cannot be specifically identified as liabilities of the Businesses,
no representation is being made with respect to such liabilities reflected on
the balance sheet as of March 31, 1994 included in the Unaudited Financial
Statements.
(c) Seller shall prepare, and shall cause KPMG Peat Marwick to audit, the
combined balance sheet of the Businesses as of June 30, 1994 and the combined
statements of income and cash flows and a statement or footnote as to a change
in net assets of the Businesses for the fiscal year ended June 30, 1994,
together with the notes thereto, and shall cause KPMG Peat Marwick to audit the
combined Unaudited Financial Statements as of and for the fiscal years ended
June 30, 1992 and 1993 (collectively, the 'Audited Financial Statements'). The
Audited Financial
60
<PAGE>
Statements shall present fairly the financial position and results of operations
of the Businesses as of the dates or for the periods set forth therein and shall
be prepared in accordance with U.S. GAAP consistently applied during the periods
set forth therein and in accordance with the requirements of the Securities and
Exchange Commission (the 'SEC') as to form and content. The Audited Financial
Statements shall be delivered to Buyer and Seller's and KPMG Peat Marwick's work
papers relating thereto shall be made available for review by Buyer upon
completion of the respective audits thereof, which shall be completed no later
than July 20, 1994 in the case of the Audited Financial Statements as of and for
the fiscal years ended June 30, 1992 and 1993 and August 31, 1994 in the case of
the Audited Financial Statements as of and for the fiscal year ended June 30,
1994. The reports of KPMG Peat Marwick on the respective Audited Financial
Statements shall be unqualified and shall be delivered to Buyer no later than
July 27, 1994 with respect to the periods ended June 30, 1992 and 1993 and
September 15, 1994 with respect to the period ended June 30, 1994. Such reports
for the Audited Financial Statements as of and for the fiscal years ended June
30, 1992 and 1993 shall be accompanied by schedules audited by KPMG Peat Marwick
calculating EBITDAG for each such fiscal year as derived from the Audited
Financial Statements for such years.
(d) Subject to an allowance for bad debts, customer claims and sales
returns not in excess of 2% plus $250,000, the accounts and notes receivable of
the Businesses as of the Closing Date will represent valid claims, incurred in
the ordinary course of business and consistent with past practice, and no
counterclaims or offsetting claims with respect to such receivables shall be
pending or threatened as of
61
<PAGE>
the Closing Date.
5.17 Absence of Certain Changes or Events. Since June 30, 1993, the
Businesses have been conducted only in the ordinary course consistent with past
practice. Except as set forth in Schedule 5.17, since June 30, 1993, there has
not been:
(a) any material adverse change in the condition (financial or other),
results of operations, assets, properties, business or prospects of the
Businesses;
(b) any damage, destruction or casualty loss, whether or not covered
by insurance, resulting in a Material Adverse Effect;
(c) any disposition by Seller or any of its affiliates of any assets
relating to the Businesses other than in the ordinary course of business
consistent with past practice;
(d) except in the ordinary course of business consistent with past
practice, any increase in, or commitment or plan adopted to increase, the
wages, salaries, compensation, pension or other benefits or payments to
Employees;
(e) individual capital expenditure relating to the Businesses in
excess of $50,000;
(f) any change in accounting methods, principles or practices of
Seller or any of its affiliates relating to the Businesses except for
Seller's adoption of FAS No. 106; or
(g) the agreement of Seller or any of its affiliates to do any of the
foregoing.
5.18 Insurance Schedule 5.18 contains a list of insurance maintained by
Seller or any of its affiliates on the properties and assets used in connection
with the
62
<PAGE>
Businesses and with respect to the employees and representatives engaged in
connection with the Businesses. In the reasonable judgment of Seller, such
policies cover risks customarily insured by businesses similar to the
Businesses. Such policies are in full force and effect, the premiums due thereon
have been paid and each of Seller and its affiliates have complied with the
provisions of such policies except for failures to be in full force and effect,
to pay premiums and to comply which, individually or in the aggregate, would not
have a Material Adverse Effect.
5.19 Affiliate Transactions Except for the agreements set forth in Article
1.3 hereof, Schedule 5.19 lists all contracts, agreements or other arrangements
relating to the Businesses and in existence on the date hereof with Seller (to
the extent it involves divisions of Seller which are not conducting the
Businesses or where assets are shared with such divisions) and any of its
affiliates where the amount involved exceeds $25,000.
5.20 Insurance; Risk of Loss. (a) Effective as of Closing: (i) Seller will
terminate all coverage relating to the Businesses under the general corporate
policies of insurance and cancelable surety bonds, as listed in Schedule 5.18,
except for claims -- made liability policies which shall not be terminated prior
to the first anniversary of Closing as to losses from events involving the
Businesses prior to Closing; provided however, that no such termination of
occurrence liability policies shall be effected so as to prevent Seller or Buyer
from recovering under such policies for losses from events occurring prior to
Closing, and (ii) Buyer shall become solely responsible for all insurance
coverage and related risk of loss based on events occurring on and after Closing
with respect to the Businesses. Commencing as of
63
<PAGE>
Closing, Buyer shall also be solely responsible for, and shall indemnify Seller
from, all losses, liabilities, claims, damages and expenses relating to the
Businesses within the self-insured retention amounts of the policies listed in
Schedule 5.18 (after taking into account the effect of any prior claim payments
under the terms of such policies), or which are otherwise not covered by such
policies which relate to or arise out of occurrences prior to Closing.
(b) Notwithstanding the foregoing, to the extent that (i) any insurance
policies controlled by Seller ('Seller's Insurance Policies') cover any loss,
liability, claim, damage or expense relating to the Businesses relating to or
arising out of occurrences prior to Closing (except to the extent they relate to
Excluded Assets or Excluded Liabilities) (the 'Business Liabilities') and (ii)
Seller's Insurance Policies continue after Closing to permit claims to be made
thereunder with respect to the Business Liabilities relating to or arising out
of occurrences prior to Closing ('Business Claims'), Seller shall (A) use all
reasonable efforts so that Buyer shall have the right, power and authority,
subject to any required consent of the carriers under Seller's Insurance
Policies, in the name of Seller, to make directly any Business Claims under
Seller's Insurance Policies and to receive directly recoveries thereunder, (B)
cooperate with Buyer in submitting the Business Claims (or pursuing the Business
Claims previously made) on behalf of Buyer under Seller's Insurance Policies,
(C) execute any and all agreements and other documents, including limited powers
of attorney on behalf of Buyer, which are reasonably necessary or appropriate in
connection with the foregoing, including an assignment to Buyer of any right to
receive payments for Business Claims under such policies in the event consent to
such assignment can be
64
<PAGE>
or is obtained from any insurer and (D) pay promptly over to Buyer any and all
amounts received by Seller under such policies with respect to such Business
Claims; provided that Seller shall be under no obligation to commence or
maintain litigation to enforce any of the Business Claims. In the event that any
legal action, arbitration, negotiation or other proceedings are required for
Buyer to assert coverage against any insurer to perfect a Business Claim (i)
Buyer shall, to the extent possible, do so at its own expense or (ii) if Buyer
is not permitted to assert coverage or perfect a Business Claim, Seller shall do
so, and, in either event, Buyer shall pay to Seller in advance and hold Seller
harmless and indemnify Seller for costs and expenses actually incurred or
expected to be incurred by Seller as a result of such action.
5.21 Pre-Closing Covenants. From date hereof until Closing, or termination
of this Agreement in accordance with Article IX hereof, Seller and its
affiliates:
(i) will operate the Businesses only in the usual and ordinary course
of business consistent with past practice;
(ii) will make payments on trade payables relating to the Businesses
either (x) by their initial due date or (y) by such later date as is
customary for such account as evidenced by the internal written records of
Seller, copies of which will be made available to Buyer on Buyer's
reasonable request, and otherwise in a manner consistent with past
practice;
(iii) will use reasonable efforts to retain the Employees and preserve
the business relationships of Seller and its affiliates with respect to the
Businesses;
65
<PAGE>
(iv) will refrain from entering into any contract or renewing any
lease relating to the Businesses which (x) calls for payments exceeding
$100,000 or (y) does not expire within one year or is not cancelable by
Buyer within one year without penalty, without the prior approval of Buyer;
(v) will refrain from taking any action which reasonably could be
expected to render any representation or warranty or covenant contained in
this Article V untrue or incorrect in any material respect (except to the
extent a representation or warranty or covenant is qualified by materiality
in which case Seller and its affiliates will refrain from taking any action
which would render such representation or warranty or covenant untrue or
incorrect) as of Closing;
(vi) will furnish to Buyer such additional financial and operating
data and other information relating to the Businesses as may be readily
available and reasonably requested and reasonable access to personnel of
Seller and its affiliates during normal business hours upon reasonable
notice, to the extent that such access and disclosure would not violate the
terms of any agreement to which Seller is bound or any applicable law or
regulation, and will make (and has made) available to Buyer for inspection
and review all documents, or copies thereof, listed in the Schedules
attached hereto and all files, records and papers of any and all
proceedings and matters listed in the Schedules attached hereto;
(vii) will comply in all material regards with all applicable laws,
66
<PAGE>
including, but not limited to, Environmental Law;
(viii) will not enter into agreements with any Employees who are not
Employees on the date hereof calling for an annual compensation in excess
of $40,000;
(ix) will not provide for any general increase in the wages, salaries,
compensation, pension or other benefits payable by any of the Businesses to
their employees, in each case without the prior consent of Buyer; provided
however, this clause shall not prohibit increases to individual employees
to the extent budgeted for and disclosed in writing to Buyer prior to the
date hereof;
(x) will refrain from making any disposition of any assets relating to
the Businesses other than in the ordinary course of business consistent
with past practice;
(xi) will refrain from making any commitment for capital expenditures
relating to the Businesses in excess of $150,000 without the prior consent
of Buyer;
(xii) will refrain from making any change in accounting methods,
principles or practices relating to the Businesses; and
(xiii) will refrain from agreeing to do any of the foregoing.
5.22 Disclosure. No representation or warranty made by Seller contained in
this Agreement and no statement made by Seller contained in any Schedule or
Exhibit attached hereto contains nor will contain any untrue statement made by
Seller of a material fact or omits nor will omit to state a material fact
necessary to make the
67
<PAGE>
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading. Seller has not knowingly failed to
disclose to Buyer any facts material to the assets, liabilities, earnings or
prospects of the Businesses.
5.23 Survival of Representations, Warranties and Covenants.
All of the representations and warranties made by Seller contained in
Article IV hereof and in this Article V shall survive until the first
anniversary of Closing except as provided otherwise below, the representations
and warranties contained in Articles 5.9 and 5.15 shall survive until the third
anniversary of Closing, and the representations and warranties contained in
Article 5.22 hereof shall terminate on Closing. Seller's obligation and
liability for any and all breaches of the representations, warranties,
agreements and covenants contained herein is limited as set forth in Article
3.1(c) hereof.
5.24 Updating of Schedules. Except as otherwise provided in Article 4.1
with respect to Schedule 4.1, for a period of ten business days after the
execution and delivery of this Agreement, Seller shall have the right to amend
or modify any of the Schedules hereto provided that no modification or amendment
may be made after delivery by Seller of a certificate stating that Seller will
make no further amendments or modifications to the Schedules (except as provided
for in Article 5.16 hereof). If Seller modifies or amends any Schedule hereto,
Buyer may elect to terminate this Agreement pursuant to Article IX hereof. In
the event Buyer does not elect to terminate this Agreement pursuant to Article
IX hereof, the Schedules as amended or modified shall become the Schedules to
this Agreement for all purposes of this Agreement. Seller hereby represents and
warrants that the employees and agents of
68
<PAGE>
Seller involved in the preparation of the Schedules hereto (at the time of the
execution and delivery of this Agreement) have not intentionally omitted any
information which is likely to require any amendment or modification of the
Schedules contemplated hereby, except for Schedule 4.1 to the extent that Buyer
and Seller have not agreed with respect to the individuals to be listed on such
Schedule.
5.25 Canadian Agreements. Within ten business days after the execution and
delivery of this Agreement, Seller shall deliver true and complete copies of all
written agreements related to the Businesses in Canada and listed on any
Schedule hereto (the 'Canadian Agreements'). Buyer may elect to terminate this
Agreement after reviewing the Canadian Agreements pursuant to Article IX hereof.
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
Buyer hereby represents, warrants and covenants to Seller that:
6.1 Organization and Power. Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware and is or
will be duly qualified and in good standing in every jurisdiction where the
Businesses require. Buyer has full corporate power and authority to enter into
and perform this Agreement.
6.2 Buyer Financing/Solvency.
(a) Buyer has delivered to Seller commitment letters from commercial banks
indicating their willingness to provide debt financing to Buyer and its
subsidiaries. Buyer has received a commitment from Guarantor for a contribution
of equity in an amount sufficient (when added to the proceeds of the debt
financing
69
<PAGE>
contemplated above) to enable Buyer to pay the Purchase Price to Buyer. From the
date hereof through Closing, Buyer will provide Seller with such information as
it may from time to time reasonably request concerning its arrangements for
financing the transactions contemplated hereby.
(b) At Closing, Buyer will provide Seller with a copy of any certificate or
other written assurance as to the solvency of Buyer and its subsidiaries that is
delivered at or prior to Closing by Buyer to its bank lenders, which shall be
addressed to Buyer or accompanied by a validly executed letter from the provider
of such certificate or other assurance stating that Seller shall be entitled to
rely thereon.
6.3 Due Authorization; No Breach. The execution and performance by Buyer of
this Agreement, the Ancillary Agreements and each of the other agreements
contemplated hereby, and the transactions contemplated hereby and thereby has
been approved by Buyer's Board of Directors, and no further corporate action is
required to be taken by Buyer in order to execute, deliver and perform this
Agreement. Each of this Agreement and the Ancillary Agreements is a valid and
legally binding obligation of Buyer, and each agreement or instrument
contemplated by this Agreement, when executed and delivered by Buyer in
accordance with the provisions hereof, will be a valid and legally binding
obligation of Buyer enforceable against Buyer in accordance with its terms. All
persons who have executed this Agreement on behalf of Buyer, or who will execute
on behalf of Buyer any agreement or instrument contemplated by this Agreement,
have been duly authorized to do so by all necessary corporate action. Neither
the execution and delivery of this Agreement, the Ancillary Agreements and all
other agreements and documents to be executed or
70
<PAGE>
delivered hereunder, nor the performance and fulfillment by Buyer of all its
representations, warranties, covenants and obligations hereunder, will (i)
violate, or conflict with, any provision of Buyer's certificate of incorporation
or by-laws, (ii) violate, or conflict with, or result in a breach of any
provisions of, or constitute a default under, or result in the termination of,
or accelerate the performance required by, or result in the creation of any
Encumbrance upon any of the properties or assets of Buyer under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, agreement, lease or other instrument to which Buyer is a party
or by which it is bound, or (iii) violate, or conflict with, any order, writ,
injunction, arbitration award, judgment or decree of any court, governmental
body or arbitrator applicable to Buyer or, to the best of Buyer's knowledge, any
statute, law, rule or regulation.
6.4 Consents. Except for those permits, consents and approvals required for
the transfer of the Assets, permits of the type described in Article 5.8 and
actions and approvals by entities providing the financing for the transactions
contemplated by this Agreement, and except for the expiration of the applicable
waiting periods under the HSR Act and consents under ISRA, no action, approval,
consent or authorization, including but not limited to, any action, approval,
permit, consent or authorization by any third party, financial institution,
governmental or quasi-governmental agency, commission, board, bureau or
instrumentality, is required to be obtained by Buyer in order to consummate the
transactions contemplated hereby.
6.5 Survival of Representation, Warranties, and Covenants. All of the
representations and warranties made by Buyer contained in this Article VI shall
be true
71
<PAGE>
and correct in all material respects as of the date hereof and as of Closing and
shall survive for one (1) year from Closing.
ARTICLE VII
SELLER'S CONDITIONS OF CLOSING
The obligations of Seller to consummate the transactions contemplated by
this Agreement are, unless waived by Seller, subject to the fulfillment on or
before Closing, of each of the following conditions:
(a) No injunction or restraining order shall be in effect to forbid or
enjoin the consummation of the transactions contemplated by this Agreement;
(b) The transactions contemplated by this Agreement to be completed
before Closing shall have been consummated upon the terms and subject to
the conditions set forth therein;
(c) Seller shall have received all certificates, instruments,
agreements and other documents to be delivered by Buyer at or before
Closing as provided in this Agreement;
(d) All covenants of Buyer under this Agreement to be performed prior
to Closing shall have been performed in all material respects, and the
representations and warranties of Buyer contained in this Agreement shall
be true and correct on and as of Closing in all material respects with the
same effect as though such representations and warranties had been made on
and as of such date (except to the extent qualified by materiality in which
event such representations and warranties shall be true and correct),
except to the extent attributable to actions permitted or
72
<PAGE>
consented to by Seller in writing;
(e) All approvals, consents or authorizations or filings required by
any third party, financial institution, governmental or quasi-governmental
agency, commission, board, bureau or instrumentality to consummate the
transactions contemplated hereby shall have been obtained except approvals,
consents and authorizations the failure to obtain, individually or in the
aggregate, will not result in a Material Adverse Effect, and all waiting
periods under the HSR Act shall have expired or been terminated;
(f) Buyer shall have executed and delivered each of the Ancillary
Agreements in a form satisfactory to Seller;
(g) Buyer shall have complied with Article 6.2 hereof;
(h) Seller shall have received one of the items set forth in
paragraphs (a) through (d) below from or entered into one of the agreements
set forth in paragraphs (e) and (f) below with the Industrial Site
Evaluation Element, of the New Jersey Department of Environmental
Protection and Energy or its successor ('NJDEPE'): (a) a non-applicability
letter; (b) a de minimus quantity exemption; (c) approval of Seller's
negative declaration; (d) approval of a remedial action workplan; (e) a
remediation agreement; or (f) an administrative consent order issued
pursuant to the Industrial Site Responsibility Act, N.J.S.A. 13:1K-6 et
seq., the regulations promulgated thereunder and any successor legislation
and regulations ('ISRA').
73
<PAGE>
ARTICLE VIII
BUYER'S CONDITIONS OF CLOSING
The obligations of Buyer to consummate the transactions contemplated by
this Agreement are, unless waived by Buyer, subject to the fulfillment, on or
before Closing, of each of the following conditions:
(a) No injunction or restraining order shall be in effect to forbid or
enjoin the consummation of the transactions contemplated by this Agreement;
(b) Buyer shall have received all certificates, instruments,
agreements, and other documents to be delivered by Seller at or before
Closing as provided in this Agreement;
(c) All covenants of Seller under this Agreement to be performed prior
to Closing shall have been performed in all material respects, and the
representations and warranties of Seller contained in this Agreement shall
be true and correct on and as of Closing in all material respects with the
same effect as though such representations and warranties had been made on
and as of such date (except to the extent qualified by materiality in which
event such representations and warranties shall be true and correct),
except to the extent attributable to actions permitted or consented to by
Buyer in writing;
(d) Buyer and/or its subsidiaries shall have received the proceeds of
financing in amounts necessary to consummate the transactions contemplated
hereby and to finance the Businesses' working capital requirements, which
financing shall be on terms reasonably satisfactory to Buyer;
(e) All approvals, consents or authorizations or filings required by
any
74
<PAGE>
third party, financial institution, governmental or quasi-governmental
agency, commission, board, bureau or instrumentality to consummate the
transactions contemplated hereby shall have been obtained except approvals,
consents and authorizations the failure to obtain, individually or in the
aggregate, will not result in a Material Adverse Effect, and all waiting
periods under the HSR Act shall have expired or been terminated;
(f) Seller shall have furnished to Buyer the Audited Financial
Statements and the reports thereon of KPMG Peat Marwick (other than the
statements for the fiscal year ended June 30, 1994 and the report thereon
of KPMG Peat Marwick) referred to in Section 5.16 at least three business
days prior to Closing;
(g) Seller shall each have executed and delivered each of the
Ancillary Agreements in a form satisfactory to Buyer;
(h) Seller shall have received one of the items set forth in
paragraphs (a) through (d) below from or entered into one of the agreements
set forth in paragraphs (e) and (f) below with the Industrial Site
Evaluation Element of the NJDEPE, and made copies thereof available to
Buyer: (a) a non-applicability letter; (b) a de minimus quantity exemption;
(c) approval of Seller's negative declaration; (d) approval of a remedial
action workplan; (e) a remediation agreement; or (f) an administrative
consent order issued pursuant to ISRA.
75
<PAGE>
ARTICLE IX
TERMINATION; SURVIVAL
9.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement and any Ancillary Agreement may be terminated
and the transactions contemplated hereby and thereby abandoned at any time prior
to or at Closing by:
(a) mutual written consent of Seller and Buyer upon express approval
of their respective Boards of Directors; or
(b) Seller, by written notice to Buyer, if any of the conditions set
forth in Article VII hereof shall not have been satified or shall not have
been waived by Seller as of Closing; or
(c) Buyer, by written notice to Seller, if any of the conditions set
forth in Article VIII hereof shall not have been satisfied or shall not
have been waived by Buyer as of Closing; or
(d) Seller or Buyer, by written notice to the other, if the
transactions contemplated hereby are not consummated on or before September
15, 1994, and if the failure to consummate such transactions on or before
such date did not result from a breach of any representation, warranty or
covenant of the party seeking such termination prior to or at Closing; or
(e) Seller or Buyer, by written notice to the other, if a court of
competent jurisdiction or governmental, regulatory or administrative agency
or commission shall have issued an order, decree or ruling or taken any
other action, in each case permanently restraining, enjoining or otherwise
prohibiting the Acquisition
76
<PAGE>
and such order, decree, ruling or other action shall have become final and
nonappealable; or
(f) Buyer, by written notice to Seller given within three business
days after Buyer's receipt of KPMG Peat Marwick's reports on the Audited
Financial Statements as of and for the fiscal years ended June 30, 1992 and
1993, if the earnings before interest, taxes, depreciation, amortization
and general administrative expenses (other than bad debt expense)
('EBITDAG') of the Businesses as derived from either the June 30, 1992 or
June 30, 1993 Audited Financial Statements is $1,000,000 less than the
EBITDAG of the Businesses derived from the Unaudited Financial Statements
as of and for the corresponding fiscal year. For calculation purposes,
EBITDAG can also be identically derived as follows: gross profit (exclusive
of depreciation and amortization) less selling expenses, research and
development and bad debt expense.
(g) Buyer, by written notice to Seller, if Seller modifies or amends
any Schedule hereto in accordance with Article 5.24 hereof, provided such
notice is delivered to Seller on or prior to the earlier of (i) the tenth
business day after the date Seller delivers to Buyer a certificate stating
that no further amendment or modification will be made to any Schedule
hereto, or (ii) the twentieth business day after the date of this
Agreement. Upon such termination neither Buyer nor Seller shall have any
further liability or obligation to the other hereunder except as provided
in Articles 13.1 and 13.2 hereof. In the event Buyer does not elect to
terminate this Agreement pursuant hereto, the Schedules as amended or
modified shall become the Schedules to this Agreement for all purposes of
this Agreement.
77
<PAGE>
(h) Seller by written notice to Buyer in accordance with Article 7(h)
hereof, or Buyer by written notice to Seller in accordance with Article
8(h) hereof.
(i) Buyer, after review of the Canadian Agreements, by written notice
to Seller, provided such notice is delivered to Seller on or prior to the
earlier of (i) the tenth business day after the date Seller delivers to
Buyer copies of all Canadian Agreements, or (ii) the twentieth business day
after the date of this Agreement. Upon such termination neither Buyer nor
Seller shall have any further liability or obligation to the other
hereunder except as provided in Article 13.1 and 13.2 hereof.
9.2 Survival. If this Agreement is terminated pursuant to Article 9.1
hereof, this Agreement shall become void and of no further force and effect,
except for the provisions of Article 13.1 and 13.2 hereof (which shall terminate
two years after any termination pursuant to Article 9.1 hereof); provided that
such termination shall not relieve any party for liability for damages resulting
from its breach of this Agreement. Promptly following termination of this
Agreement each party will destroy or return to the other parties all documents
received from such parties in connection with the contemplated transaction,
except documents which have been publicly distributed.
ARTICLE X
CLOSING
10.1 Closing. The closing of the transactions contemplated under this
Agreement (the 'Closing') shall take place at the offices of Simpson Thacher &
Bartlett, 425 Lexington Avenue, New York, New York as soon as practicable after
all the conditions to Closing set forth in Articles VII and VIII hereof shall be
satisfied or duly waived) or at such other time and place as Buyer and Seller
may mutually agree
78
<PAGE>
in writing (the 'Closing'), and shall be deemed effective as of 12:01 a.m. on
the date of the Closing.
10.2 Seller's Obligations and Closing Deliveries. At Closing, Seller shall
deliver to Buyer or an affiliate designated by Buyer:
(a) One executed and acknowledged Limited Warranty Deed, in a form
reasonably acceptable to Buyer and Seller, for each parcel of Owned Real
Property;
(b) One executed Assignment and Assumption Agreement, in a form
reasonably acceptable to Buyer and Seller, with respect to each parcel of
Ancillary Real Property;
(c) One executed Assignment and Assumption Agreement, in a form
reasonably acceptable to Buyer and Seller, with respect to each parcel of
Leased Real Property;
(d) One executed Bill of Sale, in a form reasonably acceptable to
Buyer and Seller, for the Fixed Assets and Equipment and the Inventory;
(e) One executed and acknowledged Assignment, in a form reasonably
acceptable to Buyer and Seller, and recordable in the United States Patent
Office, with respect to those patents owned by Seller or Seller's
affiliates in the United States and identified as such in Schedule 5.13(a)
attached hereto;
(f) One executed and acknowledged Assignment, in a form reasonably
acceptable to Buyer and Seller, with respect to those foreign patents and
foreign patent applications owned by Seller or Seller's affiliates and
identified as such in Schedule 5.13(a) attached hereto;
79
<PAGE>
(g) One executed and acknowledged Assignment, in a form reasonably
acceptable to Buyer and Seller, with respect to the technology, know-how,
processes, trade secrets and other intellectual property owned by Seller
and Seller's affiliates and described in Article 1.1(ix) hereof;
(h) One executed copy of each Assignment and Assumption Agreement, in
a form reasonably acceptable to Buyer and Seller, for those patent and
technology licenses granted to Seller or any of Seller's affiliates by
third parties and granted to third parties by Seller or any of Seller's
affiliates and identified as such in Schedule 5.13(a) attached hereto;
(i) One executed and acknowledged Assignment, in recordable form, for
those trademarks owned by Seller or its affiliates in the United States and
identified as such in Schedule 5.13(b) attached hereto;
(j) One executed and acknowledged Assignment, in a form reasonably
acceptable to Buyer and Seller, with respect to other foreign trademarks
owned by Seller and identified as such in Schedule 5.13(b) attached hereto;
(k) One executed and acknowledged Assignment, in a form reasonably
acceptable to Buyer and Seller sufficient to transfer such right, title and
interest as Seller and its affiliates may have, for the other trademarks,
tradenames, assumed names, logos and service marks, if any, whether owned
by Seller or its affiliates in the United States or elsewhere, referred to
in Article 1.1(ix) hereof;
(l) One executed copy of each Assignment and Assumption Agreement, in
a form reasonably acceptable to Buyer and Seller, for those trademark
licenses and registered user agreements granted by Seller or its affiliates
to third
80
<PAGE>
parties and identified as such in Schedule 5.13(b) attached hereto;
(m) One executed and acknowledged Assignment, in a form reasonably
acceptable to Buyer and Seller, and recordable in the United States Patent
Office, covering all patent applications owned by Seller or Seller's
affiliates or assignable to Seller or Seller's affiliates in the United
States and identified as such in Schedule 5.13(a) attached hereto;
(n) One executed and acknowledged Assignment, in a form reasonably
acceptable to Buyer and Seller, with respect to the copyrights owned by
Seller or Seller's affiliates and described in Article 1.1(ix) hereof;
(o) One executed and acknowledged Assignment, in recordable form, for
those trademarks owned by Seller or its affiliates in Canada and identified
as such in Schedule 5.13(b) attached hereto;
(p) One executed Contract Assignment and Assumption Agreement, in a
form reasonably acceptable to Buyer and Seller, covering the contracts,
leases, commitments, sales orders, purchase orders, invoices and other
agreements referred to in Article 1.1(vii) hereof;
(q) One executed document of assignment or transfer required of Seller
with respect to each of the permits and licenses of Seller to be assigned
or transferred at Closing as provided in Article 1.5 hereof and any other
Assets not otherwise subject to a separate Assignment and Assumption
Agreement;
(r) One certified copy of the resolutions of Seller's Board of
Directors evidencing the authorizations set forth in Article 5.2 hereof;
(s) One executed copy of each of the Ancillary Agreements;
81
<PAGE>
(t) A written receipt of payment of the Purchase Price executed by
Seller;
(u) A certificate of the Chief Financial Officer of Seller that the
conditions set forth in Article 8(c) hereof have been satisfied; and
(v) Opinion of counsel to Seller with respect to customary legal
matters related to the representations and warranties made by Seller in
Articles 5.1 and 5.2 hereof and such other customary legal matters which
Buyer may reasonably request.
(w) Assignment and assumption agreements for assets to be sold by
Prestone Technology Systems, Inc., First Brands (Canada) Corporation and
First Brands Properties, Inc.
(x) A Certification of Nonforeign Status in accordance with Internal
Revenue Code Section 897.1445.
10.3 Buyer's Obligations and Closing Deliveries. At Closing, Buyer shall
deliver, or cause to be delivered, to Seller:
(a) The Purchase Price;
(b) One fully executed copy of each Assignment and Assignment and
Assumption Agreement with respect to the Assets previously delivered by
Seller;
(c) One executed copy of each document of transfer required of Buyer
with respect to the permits and licenses described in Article 10.2(n)
hereof;
(d) One certified copy of the resolutions of Buyer's Board of
Directors evidencing the authorization set forth in Article 6.3 hereof;
(e) One executed copy of each of the Ancillary Agreements;
82
<PAGE>
(f) A certificate of an officer of Buyer to the effect that the
conditions set forth in Article 7(d) have been satisfied;
(g) Section 6377 Manufacturers Exemption Certificate to Seller that
the transfer of manufacturing equipment in Torrance, CA is exempt from
California State sales tax;
(h) Opinion of counsel to Buyer with respect to customary legal
matters related to the representations and warranties made by Buyer in
Articles 6.1 and 6.2 hereof and such other customary legal matters which
Seller may reasonably request; and
(i) Any document required to be delivered by Buyer pursuant to Article
6.2 hereof.
10.4 Recording of Documents. Within 120 days after Closing, Seller shall,
at Seller's expense, prepare and deliver to Buyer executed and acknowledged
Assignments, in form recordable in each appropriate jurisdiction, for those
foreign patents and patent applications and foreign trademark registrations and
applications owned by Seller or its affiliates and identified as such in
Schedule 5.13(b) attached hereto.
10.5 Further Actions. Subject to the terms and conditions hereof, Seller
and Buyer agree to use all of their reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement, including using their reasonable efforts: (i) to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and
83
<PAGE>
parties to contracts, leases, licenses or agreements with Seller as are
necessary for the consummation of the transactions contemplated hereby; (ii) to
effect all necessary registrations and filings; and (iii) to defend any lawsuits
or other legal proceedings, whether judicial or administrative, whether brought
derivatively or on behalf of third parties (including governmental agencies or
officials), challenging this Agreement or the consummation of the transactions
contemplated hereby. Seller shall cooperate with Buyer prior to Closing in
establishing corporate offices of the Businesses effective as of the Closing and
otherwise in preparing for the administration of the conduct of the Businesses
as of the Closing by Buyer and its subsidiaries, such as establishing office
space with furniture and telephone services as of the Closing.
ARTICLE XI
EXPENSES AND POST CLOSING OBLIGATIONS
11.1 Taxes and Other Expenses.
(a) Seller shall be responsible for and shall pay any ad valorem real
property taxes and general and special assessments, including any interest or
penalties thereon, which are attributable to the operation and ownership of the
Businesses for periods and events prior to Closing. Buyer will be responsible
for real property taxes and special assessments, including any interest or
penalties thereon, attributable to all periods and events on or following
Closing.
(b) Buyer is responsible for and shall pay any ad valorem personal property
taxes, rents, street surfacing and other municipal charges, and fuel, water,
sewer, electrical and other utility charges ('Taxes and Other Charges'),
including any interest or penalties thereon, which are attributable to the
operation and ownership of
84
<PAGE>
the Businesses for periods and events prior to Closing but not yet due and
payable as of Closing. Buyer will also be responsible for Taxes and Other
Charges attributable to periods and events on or following Closing.
(c) Regardless of whether or not the transactions contemplated hereby are
consummated, each party to this Agreement shall pay all expenses incurred by it
or on its behalf in connection with the preparation, authorization, execution
and performance of this Agreement and the transactions contemplated hereby,
including, but not limited to, all fees and expenses of agents, representatives,
counsel and accountants engaged by it, except that: (i) Buyer shall pay the
costs and expenses incurred in connection with obtaining all governmental
permits and licenses required by Buyer to operate the Businesses as currently
operated; (ii) Buyer and Seller shall share equally the costs of obtaining title
insurance for the Real Property and all recording taxes or fees relating to the
Real Property; (iii) Buyer and Seller shall share equally any sales, use,
transfer and similar taxes and all recording and similar fees applicable to the
transactions contemplated by this Agreement except that in no event shall the
amount paid by Seller with respect to California state or local sales and use
taxes exceed $75,000; (iv) Buyer and Seller shall share equally the fees and
expenses incurred by KPMG Peat Marwick in performing an audit of and issuing the
Audited Financial Statements; (v) Buyer shall pay the fees and expenses of KPMG
Peat Marwick in performing the audit of and issuing the Closing Date Audited
Financial Statements (as defined in Article 11.9); (vi) Buyer shall pay the
costs of making any filing under the HSR Act required to consummate the
transactions contemplated hereby; (vii) Seller shall pay the costs of making any
filings under ISRA and
85
<PAGE>
compliance therewith; and (viii) Buyer shall pay all costs of the ENSR Phase I
environmental assessments with respect to the Businesses or the Assets
undertaken pursuant to ENSR's May 21, 1994 letter proposal and any other
assessments requested by Buyer.
(d) Buyer shall provide Seller with appropriate exemption certificates or
direct pay certificates where possible, or shall promptly pay and discharge any
amounts to be paid by Buyer in accordance with this Section.
(e) Seller and Buyer shall cooperate regarding the filing of any tax
returns that cover a period which includes the date of Closing. Property tax
returns will be filed by the party which owns the property subject to the return
on the assessment date for the property tax.
(f) Seller, at its option, shall have sole control over any contest
(including claims for refund or challenges of tax assessments) which relates to
liability for taxes during periods prior to the date of Closing, subject to
approval of Buyer relating to any going-forward liability reasonably likely to
be imposed on Buyer or the Businesses thereafter for taxes other than income
taxes. In any event, any refunds of taxes which become available on or after
Closing but which relate to periods prior to Closing shall belong to Seller
provided that Seller and its affiliates paid the taxes giving rise to the
refund.
(g) Seller and Buyer shall each be responsible for paying the fees and
expenses of all consultants, brokers, attorneys, investment bankers or other
parties retained by such party.
11.2 Restriction.
86
<PAGE>
(a) From the date of Closing until the 10th anniversary of Closing, except
as otherwise provided for in this Agreement, Seller shall not, except in the
Republic of the Philippines, directly or indirectly, and shall not permit any of
its affiliates to engage, directly or indirectly, in the manufacture, sale,
marketing, supply or other distribution of automotive antifreezes; cooling
system service tools; cooling system chemicals for cleaning and sealing leaks in
automotive cooling systems; cooling system stop-leak products; or ice fighting
products (excluding water removers); or license or permit any person or entity
to use technology or Trade Secrets hereby transferred by Seller to Buyer;
provided, however, that if, prior to the expiration of the covenant set forth in
this Article 11.2, Buyer (subject to the next sentence) shall cease to sell such
products for a consecutive twelve month period, then Seller's obligations under
this Article 11.2 shall cease with respect to those particular products as of
the date Buyer shall cease to sell such products. If Buyer transfers any of such
product lines or portions thereof to a third party, Seller's agreements in this
Article 11.2 shall continue with respect to such third party transferee with
respect to the product lines or portions thereof transferred for the remaining
period. Notwithstanding the foregoing, Seller at any time may acquire a going
business which manufactures, sells, markets, supplies or distributes cooling
system service tools, cooling system chemicals for cleaning and sealing leaks in
automotive cooling systems and/or ice fighting products (excluding water
removers) (collectively 'Seller Prohibited Products'), but only if (i) the gross
revenues of such acquired business derived from the manufacture, sale or
distribution of Seller Prohibited Products during the two most recent fiscal
years represented less than 20% of the total gross revenues of the acquired
business for
87
<PAGE>
such periods, and (ii) Seller sells, liquidates or otherwise disposes of the
portion of the acquired business relating to the Seller Prohibited Products
within twelve months of the date such business is acquired; and Seller at any
time after the third anniversary of Closing may acquire a going business which
manufactures, sells, markets, supplies or distributes Seller Prohibited
Products; provided, however, that prior to the tenth anniversary of Closing
Seller shall not utilize the STP, Son of a Gun or Simonize trademarks or
tradenames in connection with the sale, manufacture, marketing, supply or
distribution of any of the Seller Prohibited Products. The parties agree that
the remedy at law for any breach of any obligation under this Article 11.2 will
be inadequate and that in addition to any other rights and remedies to which it
may be entitled hereunder, at law or in equity, Buyer shall be entitled to
injunctive relief and reimbursement for all reasonable attorney's fees and other
expenses incurred in connection with the enforcement hereof. In the event Buyer
violates the provisions of paragraph (b) of this Article 11.2, Seller's
obligations under this paragraph (a) shall immediately terminate.
(b) Subject to the next two sentences, from the date of Closing until the
fifth anniversary of Closing, except as expressly contemplated otherwise by the
Ancillary Agreements, Buyer shall not, directly or indirectly (a) engage in the
manufacture, sale, marketing, supply or other distribution of engine and oil
additives, fuel additives, fuel injection and carburetor cleaners and vinyl and
tire protectants (the 'Prohibited Products') or (b) provide or make available to
Guarantor or any entity owned or controlled by Guarantor any technology, trade
secrets or consulting services relating to the Prohibited Products and Guarantor
agrees that it will not, nor will it
88
<PAGE>
permit any entity owned or controlled by it (other than Buyer) to, hire any of
the Employees (other than Employees who have ceased to be employees of Buyer for
at least six months); provided, however, that if, prior to the expiration of the
covenant set forth in this Article 11.2, Seller (subject to the next sentence)
shall cease to sell any Prohibited Products for a consecutive twelve month
period, then Buyer's obligations under this Article 11.2 shall cease with
respect to those particular Prohibited Products as of the date Seller shall
cease to sell such Prohibited Products. If Seller transfers any of such
Prohibited Product lines or portions thereof to a third party, Buyer's
agreements in this Article 11.2 shall continue with respect to such third party
transferee with respect to the Prohibited Product lines or portions thereof
transferred for the remaining period. Notwithstanding the foregoing, Buyer at
any time may acquire a going business which manufactures, sells, markets,
supplies or distributes Prohibited Products, but only if (i) the gross revenues
of such acquired business derived from the manufacture, sale or distribution of
Prohibited Products during the two most recent fiscal years represented less
than 20% of the total gross revenues of the acquired business for such periods,
and (ii) Buyer sells, liquidates or otherwise disposes of the portion of the
acquired business relating to the Prohibited Products within twelve months of
the date such business is acquired; and Buyer at any time after the third
anniversary of Closing may acquire a going business which manufactures, sells,
markets, supplies or distributes Prohibited Products; provided, however, that
prior to the fifth anniversary of Closing Buyer shall not utilize the Prestone
trademark or tradename in connection with the sale, manufacture, marketing,
supply or distribution of any Prohibited Products. The parties agree that the
remedy at
89
<PAGE>
law for any breach of any obligation under this Article 11.2 will be inadequate
and that in addition to any other rights and remedies to which it may be
entitled hereunder, at law or in equity, Buyer shall be entitled to injunctive
relief and reimbursement for all reasonable attorney's fees and other expenses
incurred in connection with the enforcement hereof.
11.3 Insurance Data. To the extent that, after Closing, either Buyer or
Seller requires any information regarding claim data, payroll or other
information in order to make filings with insurance carriers relating to any of
the Businesses, Seller shall promptly supply such information to Buyer and Buyer
shall promptly supply such information to Seller.
11.4 Interpretation. In the event Article 11.2 hereof is held to be in any
respect an unreasonable restriction upon Seller or any of its affiliates, or
Buyer or any of its affiliates as the case may be, by any court having competent
jurisdiction, the court so holding may reduce the territory to which Article
11.2 hereof pertains and/or the period of time for which Article 11.2 hereof
operates, or effect any change to the extent necessary to render Article 11.2
hereof enforceable by such court. As so modified Article 11.2 hereof will
continue in full force and effect. Such decision by a court of competent
jurisdiction shall not invalidate this Agreement, but this Agreement shall be
interpreted, construed and enforced as not containing such invalidated
provision.
11.5 Further Assurances. At any time after Closing, the parties agree to
cooperate with each other to execute and deliver such other documents,
instruments of transfer or assignment, files, books and records and do all such
further acts and
90
<PAGE>
things as may be reasonably required to carry out the transactions contemplated
hereunder.
11.6 Access to Books, Records and Facilities. Seller agrees that prior to
Closing it will permit, and will cause its affiliates to permit, Buyer and its
representatives full access during normal business hours to all of its and their
respective plants, properties, books, contracts, records and employees used in
or relating to the business or operation of the Businesses and will furnish, and
will cause its affiliates to furnish, Buyer and its representatives during such
period with all such information concerning its business, operations and assets
as it relates to the Businesses as Buyer or its representatives may reasonably
request. Seller agrees that on and after Closing it will permit, and will cause
its affiliates to permit, Buyer and its representatives, during normal business
hours and upon reasonable advance notice, to have access to and to examine and
make copies of all books and records of Seller and its affiliates (except books
and records protected by attorney-client or other privilege which Seller or its
affiliates may be entitled to assert against Buyer or its affiliates in any
pending or threatened proceeding, suit or action) which relate to the Businesses
to the extent that the events reflected therein relate to transactions or events
occurring prior to Closing or to transactions or events occurring subsequent to
Closing which arise out of transactions or events occurring prior to Closing.
All books and records of Seller relating to the Businesses will be preserved by
Seller and its affiliates in accordance with Seller's records retention policy,
but in no event for a period of less than six years following Closing. Prior to
any destruction or disposition by Seller of any books and records relating to
the Businesses, Seller will notify Buyer
91
<PAGE>
in writing and Buyer shall have the right to receive and retain such books and
records at its expense. Buyer agrees that, after Closing, it will permit, and
will cause its subsidiaries to permit, Seller and its representatives full
access during normal business hours and upon reasonable advance notice to all of
its and their respective properties, plants and facilities used in connection
with the Businesses, and to have access to the books and records (except records
protected by attorney-client or other privilege which Buyer or its affiliates
may be entitled to against Seller or its affiliates in any pending or threatened
proceeding, action or suit) of the Businesses, to the extent that any of the
foregoing relates to periods prior to Closing, and is reasonably necessary in
connection with any then pending or threatened litigation, claim, liability, or
judicial or administrative matters in which Seller or any of its affiliates is
involved and which involves or arises out of the ownership or operation of the
Businesses by Seller or its affiliates.
11.7 Transitional Use of Trademarks. (a) Seller recognizes that certain
inventory and labels and containers therefor, as well as promotional material
relating to such inventory, being assigned to Buyer under this Agreement will
bear the trademarks 'FIRST BRANDS' and the 'FB Logo' which are not being
assigned or licensed to Buyer. Seller agrees that Buyer will be permitted to
sell such inventory and use such labels, containers and promotional material on
a royalty free basis for a period not exceeding six months after Closing. Buyer
will use all reasonable efforts during such six months period to over stamp
Seller's name and untransferred trademarks and to otherwise use Buyer's name
and/or trademark in their place. Furthermore, Buyer will use Seller's name and
untransferred trademarks pursuant to
92
<PAGE>
this Article 11.7 only to the extent necessary to make an orderly transfer of
the goodwill of the Businesses. In the event such six month period is inadequate
to exhaust existing supplies of product inventory, a short-term extension of
Buyer's rights under this Article 11.7 will not be unreasonably denied by
Seller, but in no event shall such extension extend to the use of Seller's name
and trademarks in advertising such inventory nor shall it exceed a period of
twelve months after Closing.
(b) Buyer recognizes that certain inventory existing at Closing of Seller's
water removal products, waxes and silicone spray products which are not part of
the Businesses, and labels and containers therefor, as well as promotional
material relating to such inventory, will bear the trademark 'Prestone' and the
'Prestone Logo' which are being sold to Buyer. Buyer agrees that Seller and its
affiliates will be permitted to sell such inventory and use such labels,
containers and promotional material on a royalty free basis for a period not
exceeding six months after Closing. In the event such six month period is
inadequate to exhaust supplies of product inventory existing at Closing, a
short-term extension of Seller's rights under this Article 11.7 will not be
unreasonably denied by Buyer, but in no event shall such extension exceed a
period of twelve months after Closing.
11.8 Software Licenses. At Closing, Seller shall grant to Buyer a paid-up,
perpetual royalty-free, non-exclusive license to use the software which has been
internally developed by Seller and has been used in connection with the
Businesses, but only to the extent Seller owns or has the right to use and
permit others to use such software royalty free.
11.9 Unassigned Intellectual Property.
93
<PAGE>
(a) Among the assets of Seller and its affiliates located in the Republic
of the Philippines and excluded under Section 1.2(xvii) are the trademarks,
trade names, assumed names, service marks and logos owned by Seller and its
affiliates in the Republic of the Philippines relating to the Businesses,
including the PRESTONE mark, any Philippine patents and patent applications, any
unfiled dockets pertaining to disclosures of inventions made by any employee or
agent of Seller or any of its affiliates in the Republic of the Philippines, and
any copyrights, technology, know-how, processes, trade secrets and any other
intellectual property owned by Seller or any of its affiliates in the Republic
of the Philippines, in each case relating to the Businesses (collectively
'Unassigned Intellectual Property').
(b) Buyer recognizes Seller's exclusive rights in the trademark PRESTONE in
the Republic of the Philippines. Except under written license from Seller, or
its successors or assigns, Buyer shall not use, sell, offer for sale, advertise
or promote any products, nor offer services of any kind, either directly or
indirectly, under the trademark PRESTONE or any mark confusingly similar to the
PRESTONE mark in the Republic of the Philippines.
(c) Seller and its affiliates recognize Buyer's exclusive rights in the
trademark PRESTONE and in the Trademarks listed on Schedule 5.13(b) Part 1, in
the United States, its territories and possessions.
(d) With regard to the rest of the world, Seller recognizes Buyer's
exclusive right in the trademarks listed on Schedule 5.13(b) Part 2, and except
under written license from Buyer, or its successors and assigns and pursuant to
this Agreement, neither Seller nor any of its affiliates shall use, sell, offer
for sale, advertise or promote
94
<PAGE>
any products, nor offer services of any kind, either directly or indirectly,
under the trademark PRESTONE, the Trademarks or any mark confusingly similar to
the PRESTONE mark.
(e) If any of the Trade Secrets listed on Schedule 5.13(c) are included in
the Unassigned Intellectual Property, Seller and its affiliates shall maintain
such Trade Secrets as trade secrets, and shall not reveal such Trade Secrets
except under strict confidentiality provisions and under the circumstances set
forth in the second, third and fourth sentences of Article 13.2 hereof, and only
in connection with the manufacture and sale of Seller's products in the Republic
of the Philippines.
(f) Neither Seller nor any of its affiliates shall use, sell or offer for
sale, either directly or indirectly, under any trademark, any product or service
outside the Republic of the Philippines which utilizes the Unassigned
Intellectual Property unless such Unassigned Intellectual Property is shared
technology under Section 1.2 (xvi).
(g) If at any time after the date of this Agreement, Seller desires to sell
any or all of the Unassigned Intellectual Property or to sell, transfer or
assign any or all of the Unassigned Intellectual Property, directly or
indirectly, in connection with a sale of the business or assets then conducted
or utilized in the Philippines by Seller or any of its affiliates or any of
their respective successors, assigns or transferees (the 'Philippines Business')
or otherwise, Seller shall notify Buyer in writing (the 'Offer') of such desire,
specifying the cash price and all other material terms and conditions at and on
which Seller desires to effect said sale (the 'Offer Terms'). Seller's notice
shall contain an irrevocable offer to sell such Unassigned Intellectual Property
or Philippines Business, as the case may be, to Buyer (in the manner set forth
below) on
95
<PAGE>
the Offer Terms. At any time within 30 days after the date of the receipt by
Buyer of Seller's notice, Buyer shall have the right and option to accept the
Offer on the Offer Terms. If Buyer accepts the Offer, Seller and Buyer shall
prepare and negotiate in good faith and execute and deliver a purchase and sale
agreement not inconsistent with the Offer Terms and not containing any material
terms and conditions not included in the Offer Terms as soon as practicable.
Buyer shall deliver to Seller a certified bank check or checks, or wire transfer
immediately available funds, in the appropriate amount at the principal office
of Buyer at a closing of such purchase to be held by the later to occur of (x)
30 days after the execution and delivery of the aforesaid purchase and sale
agreement, (y) 90 days after Buyer's receipt of the Offer, and (z) the
satisfaction of all governmental and regulatory approvals and other requirements
and all other conditions to closing contained in the purchase and sale
agreement. If at the end of the 30 day period in the second preceding sentence
Buyer has not accepted the Offer in the manner set forth in the second preceding
sentence Seller may during the succeeding 180 day period consummate a sale of
the Unassigned Intellectual Property to any third party at a price not less than
ninety percent (90%) of the price included in the Offer Terms, provided that if
said third party sale includes any consideration other than cash, said ninety
percent (90%) shall be applied to the all cash equivalent thereof to be
determined in good faith by mutual agreement of Buyer and Seller, or, if they
cannot agree within 10 days after receipt of the third party's offer, as
determined by an investment banking firm mutually agreeable to Buyer and Seller,
and otherwise on terms no less favorable to Seller than the Offer Terms (which
shall be the only material terms and conditions applicable to such third
96
<PAGE>
party sale). No sale may be made to any such third party unless such third party
agrees in a writing with Buyer reasonably satisfactory in form and substance to
Buyer to be bound by all of the provisions of this Article 11.9 other than this
Article 11.9(g), including but not limited to in connection with any direct or
indirect resale of Unassigned Intellectual Property by such third party.
Promptly after any third party sale, Seller shall notify Buyer of the
consummation thereof and shall furnish such evidence of the completion and time
of completion of such sale and of the terms thereof as may reasonably be
requested by Buyer. At the expiration of the aforesaid 180 day period, all the
restrictions on sale, transfer or assignment contained in this Agreement shall
again be in effect.
11.10 Closing Date Audited Financial Statements. Seller shall prepare, and
shall cause KPMG Peat Marwick to audit, the combined balance sheet of the
Businesses as of the Closing Date and the combined statements of income and cash
flows and a statement or footnote as to a change in net assets of the Businesses
for the period commencing on July 1, 1994 and ended on the Closing Date,
together with the notes thereto (collectively the 'Closing Date Audited
Financial Statements'). The Closing Date Audited Financial Statements shall
present fairly the financial position and results of operations of the
Businesses as of the date or for the period set forth therein and shall be
prepared in accordance with U.S. GAAP consistently applied during the period set
forth therein, consistent with the preparation of the Audited Financial
Statements and in accordance with the requirements of the SEC as to form and
content. The Closing Date Audited Financial Statements shall be delivered to
Buyer and Seller's and KPMG Peat Marwick's work papers relating thereto shall be
97
<PAGE>
made available for review by Buyer upon completion of the audit thereof, which
shall be completed no later than the 45th day following Closing. The report of
KPMG Peat Marwick on the Closing Date Audited Financial Statements shall be
unqualified and shall be delivered to Buyer no later than the 60th day following
Closing.
ARTICLE XII
BULK SALES LAW
Buyer hereby waives compliance by Seller with any bulk sales law which may
be applicable.
ARTICLE XIII
PUBLICITY, CONFIDENTIALITY
13.1 Publicity. The parties agree that no publicity, release or
announcement concerning the execution of this Agreement, any of the provisions
of this Agreement or the transactions contemplated hereby shall be issued
without the advance written approval of the form and content of the same by the
parties; provided, however, that no such consent shall be required when such
disclosure is required by applicable law or the rules or regulations of a United
States or foreign securities exchange.
13.2 Confidentiality. Whether or not the transactions contemplated hereby
are consummated, each party agrees to refrain from using in any manner, other
than for the purpose of the transactions contemplated hereby and to use its best
efforts to keep confidential (and to cause its directors, officers, employees,
representatives and advisors to keep confidential), any and all information and
data concerning the business and affairs of the other party or its affiliates
which it has received as a result of this Agreement or any investigation made in
connection herewith, except to the
98
<PAGE>
extent that such party can demonstrate that the information or data (i) is
generally available to the public through no act or failure to act of it, (ii)
was already known to it on a non-confidential basis (except with respect to
trade secrets and confidential information of Seller and its affiliates
transferred to Buyer or its affiliates pursuant to this Agreement) on the date
of receipt, or (iii) is disclosed to it on a non-confidential basis by a third
party not having a confidential relationship with such other party with respect
to such information; or (iv) has been independently acquired or developed
without violating any of its obligations under this provision. Notwithstanding
the foregoing, each of the parties shall be free to disclose any such
information or data to the extent and only to the extent (i) required by
applicable law or by a government in a duly authorized investigation (by
deposition, interrogatory, request for documents, subpoena, civil investigative
demand or similar process) or (ii) necessary in order to establish such party's
position in any litigation or any arbitration or other proceeding based upon or
in connection with the subject matter of this Agreement, including, without
limitation, the failure of the transactions contemplated hereby to be
consummated. Prior to any disclosure pursuant to the preceding sentence, the
disclosing party shall give reasonable prior notice to the other party of such
intended disclosure so that such other party may seek a protective order or
similar protection. Additionally, Buyer shall be free to disclose any such
information or data to the extent and only to the extent necessary to comply
with any applicable rule, regulation or policy of a governmental entity or a
securities exchange in connection with any offering or sale of the securities of
Buyer or its affiliates acquiring the Businesses.
13.3 Negotiations with Third Parties. Seller will not, directly or
indirectly,
99
<PAGE>
through any officer, director, representative, affiliate or agent, (i) solicit,
initiate, encourage or assist in the submission of inquiries, proposals or
offers from any corporation, partnership, person, other entity or group (as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended)
(other than Buyer, its associates and affiliates and officers, partners,
employees and other authorized representatives of Buyer or such affiliates or
associates) (collectively, 'Persons') relating to any acquisition or purchase of
assets of, or any equity interest in, the Businesses or any form of
recapitalization transaction involving the Businesses or any merger,
consolidation, business combination, spin-off, liquidation or similar
transaction involving the Businesses (each, an 'Acquisition Proposal'), (ii)
participate in any discussions or negotiations regarding an Acquisition Proposal
or furnish to any Person any information concerning the Businesses or the
Acquisition or (iii) otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any other
person to make or enter into an Acquisition Proposal. Should Seller receive any
inquiry, proposal or offer to enter into any transaction of the type referred to
in clauses (i), (ii) or (iii) above, Seller will promptly inform Buyer.
ARTICLE XIV
NOTICES
Any notices or communications permitted or required hereunder shall be
deemed sufficiently given if hand-delivered, or sent (i) by postage prepaid,
registered or certified mail return receipt requested or (ii) by telex, telecopy
or telefax or other electronic transmission service (to the extent receipt is
confirmed) to the parties at their respective addresses set forth below, or to
such other address of which any party
100
<PAGE>
may notify the other party in writing.
If to Seller, to
First Brands Corporation
83 Wooster Heights Road
Danbury, Connecticut 06813-1911
Attention: Donald A. DeSantis
Senior Vice President and Chief Financial Officer
Telephone: (203) 731-2306
Fax: (203) 731-2570
with a copy to:
Gibney, Anthony & Flaherty
665 Fifth Avenue
New York, NY 10022
Attention: Frederick W. Anthony, Esq.
Telephone: (212) 688-5151
Fax: (212) 688-8315
If to Buyer, to
Vestar Equity Partners, L.P.
245 Park Avenue
New York, New York 10167
Attention: Robert L. Rosner
Telephone: (212) 949-6500
Fax: (212) 808-4922
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Peter J. Gordon, Esq.
Telephone: (212) 455-2000
Fax: (212) 455-2502
101
<PAGE>
ARTICLE XV
CONSULTANT FEES
15.1 Brokers. Each of the parties represents and warrants to the other
that, except for Seller's retention of Bear, Stearns & Co. Inc. for its own
account and the retention of Vestar Capital Partners, a New York general
partnership, by Buyer for its own account, no broker or finder has acted on its
behalf in connection with the transactions contemplated by this Agreement. Each
of the parties agrees to indemnify, defend and hold the other party harmless
from any claim or demand for any commission, compensation or other payment by
any other broker, finder or similar agent claiming to have been or that was in
fact employed by or on behalf of it.
ARTICLE XVI
MISCELLANEOUS
16.1 Binding Effect; Assignment. This Agreement shall be binding upon, and
inure to the benefit of, all the parties and their respective successors, legal
representatives and assigns permitted in accordance with this Article 16.1.
Except as expressly provided herein, nothing herein shall create or be deemed to
create any third party beneficiary rights in any person or entity not a party
hereto. No assignment of this Agreement or of any rights or obligations
hereunder may be made by any party (by operation of law or otherwise) without
the prior written consent of the other party, and any attempted assignment
without the required consents shall be void; provided, however, that no such
consent shall be required for Buyer to assign part or all of its rights under
this Agreement prior to Closing to one or more corporations owned or controlled
by Buyer, or after Closing to a third party, but no such assignment by Buyer
102
<PAGE>
of its rights hereunder shall relieve Buyer of its obligations under this
Agreement to Seller.
16.2 Exhibits and Schedules. All Exhibits and Schedules attached hereto and
the documents and agreements referred to herein to be delivered and the acts to
be performed at or subsequent to Closing (collectively, the 'Items') are
incorporated herein and expressly made a part of this Agreement as fully as
though completely set forth herein.
16.3 Specific Performance. Seller acknowledges that Buyer will have no
adequate remedy at law if Seller fails to perform any of its obligations under
this Agreement. In such event, Buyer shall have the right, in addition to any
other rights it may have, to specific performance of this Agreement.
16.4 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all, of the parties.
In pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one such counterpart.
16.5 Headings; Interpretation.
(a) The headings contained in this Agreement are inserted for convenience
of reference only and shall not otherwise affect the meaning or interpretation
or be deemed a substantive part of this Agreement.
(b) Except to the extent that the context otherwise requires 'include,'
'includes' and 'including' are deemed to be followed by 'without limitation'
whether or
103
<PAGE>
not they are in fact followed by such words or words of like import.
16.6 Waiver. The failure of any party at any time or times to enforce or
require performance of any provision hereof shall in no way operate as a waiver
or affect the right of such party at a later time to enforce the same. No waiver
by any party of any condition or the breach of any term, covenant,
representation or warranty contained in this Agreement, in any one or more
instances, shall be deemed to be or construed as a further or continuing waiver
of any such condition or breach, or a waiver of any other condition or of any
term, covenant, representation or warranty contained in this Agreement. Any
agreement on the part of a party hereto to a waiver shall be valid only if set
forth in an instrument in writing signed by such party.
16.7 Severability. If any provision of this Agreement shall hereafter be
held to be invalid or unenforceable for any reason, that provision shall be
reformed to the maximum extent permitted to preserve the parties' original
intent, failing which, it shall be severed from this Agreement with the balance
of this Agreement continuing in full force and effect. Such occurrence shall not
have the effect of rendering the provision in question invalid in any other
jurisdiction or in any other case or circumstances, or of rendering invalid any
other provisions contained herein to the extent that such other provisions are
not themselves actually in conflict with any applicable law.
16.8 Governing Law and Forum. This Agreement, and the Ancillary Agreements
shall be governed by and construed in all respect under the laws of the State of
New York, United States of America, without reference to its conflicts of laws,
rules or principles. Any action to enforce, which arises out of or in any way
relates to, any of the provisions of this Agreement and the Ancillary Agreements
may be brought
104
<PAGE>
and prosecuted in such court or courts located within the State of Connecticut
or New York as provided by law; and the parties consent to the jurisdiction of
such court or courts located within the State of Connecticut and State of New
York and to service of process by registered mail, return receipt requested, or
by any other manner provided by Connecticut or New York law.
16.9 Entire Agreement; Amendments. This Agreement and the Ancillary
Agreements hereto and the other documents executed in connection herewith, all
of the Exhibits and Schedules attached hereto and thereto, and all other
documents and certificates referred to herein or therein and delivered hereunder
or thereunder, constitute the entire understanding of the parties concerning the
sale and purchase of the Assets and operation thereof, and cancel and supersede
all previous agreements and understandings, oral or written, between the parties
with respect to the subject matter hereof. If there is a conflict between the
provisions of this Agreement, any Ancillary Agreement or any other such
documents, the provisions of this Agreement shall govern. No modification or
amendment of this Agreement or waiver of the terms, conditions, warranties,
representations and rights hereunder will be binding upon any party unless
signed in writing by an authorized representative of such party.
16.10 Materiality. The dollar thresholds set forth in this Agreement have
been negotiated for the special purposes of the specific provisions in which
they appear, and are not to be taken as evidence of the level of 'materiality'
for purposes of any other provision or statutory or common law which may be
applicable to the transactions contemplated by this Agreement under which a
level of materiality might be an issue.
105
<PAGE>
ARTICLE XVII
VESTAR EQUITY PARTNERS, L.P. GUARANTEE
(a) Vestar Equity Partners, L. P. hereby unconditionally and irrevocably
guarantees to Seller and its affiliates the full observation and performance of
all obligations, representations, warranties, covenants, agreements and
commitments of any kind or nature whatever contained in this Agreement, any
Ancillary Agreements or in any other agreement ancillary hereto which are
assumed or made by Buyer hereunder provided, however, that such guarantee shall
terminate at Closing and Vestar Equity Partners, L. P. shall thereafter have no
further liability to Seller, its affiliates or any third party under this
Agreement, any Ancillary Agreement or any other agreement and provided further
that the aggregate obligation of Vestar Equity Partners, L.P. under such
guarantee shall in no event exceed $1,000,000.
(b) Vestar Equity Partners, L.P. represents and warrants that the execution
and performance of its guarantee hereunder have been duly authorized and no
further action is required in order for it to execute, deliver and perform the
Agreement.
106
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first above
written.
FIRST BRANDS CORPORATION
By /s/ Donald A. DeSantis
...............
Title Senior Vice President & CFO
....................
VESTAR/FREEZE HOLDINGS CORPORATION
By /s/ Robert L. Rosner
.............
Title Vice President, Secretary
...............
& Treasurer
.............
VESTAR EQUITY PARTNERS, L.P.,
By /s/ Robert L. Rosner
.............
Vestar Associates, L.P.,
its General Partner
By: Vestar Associates Corporation,
its General Partner
By: /s/ Robert L. Rosner
............
Name: Robert L. Rosner
Title: Managing Director
Title
..................................
107
<PAGE>
CONFORMED COPY
PURCHASE AND SALE AGREEMENT
DATED JUNE 30, 1994
Between FIRST BRANDS CORPORATION
and
VESTAR/FREEZE HOLDINGS CORPORATION
and
VESTAR EQUITY PARTNERS, L.P.
<PAGE>
OMITTED SCHEDULES
PURCHASE AND SALE AGREEMENT DATED JUNE 30, 1994
Between FIRST BRANDS CORPORATION
and
VESTAR/FREEZE HOLDINGS CORPORATION
and
VESTAR EQUITY PARTNERS, L.P.
<TABLE>
<CAPTION>
Schedule Subject
<S> <C>
1.1(ii) (a) Owned Real Property; (b) Leased Real Property; (c) Ancillary Real Property
1.2(viii) Assets Owned, Used, Possessed, Shared with Affiliates
1.2(x) Certain Excluded Assets
4.1 Employees to be Transferred
5.2 Conflicts Caused by Execution of Agreement
5.2A Financing Agreement Consents Required by Seller
5.4 Location of Inventory Not on Premises
5.5(a) Mortgages, Pledges, Encumbrances, Security Interests and Liens Affecting Assets
5.6 Required Government Consents
5.8 Permits & Licenses
Part 1: Environmental Permits
Part 2: Business Permits and Licenses
5.9 Environmental Conditions
(i) On Site Conditions
(ii) Off-site Waste Disposal Locations
(iii) internal Environmental Audits Since 1/1/89
(iv) Other
</TABLE>
109
<PAGE>
OMITTED SCHEDULES, cont.
<TABLE>
<CAPTION>
Schedule Subject
5.10 Health and Safety Conditions
<S> <C> <C>
(i) Material Safety Data Sheets
(ii) Product Labels
(iii) Internal Health and Safety Audits from January 1, 1990
(iv) Summary of Epidemiological Data
(v) Summary of Toxicological Studies
(vi) Industrial Hygiene Studies (1993)
(vii) Summary of Personnel Safety Statistics
(viii) Kemper Group Annual Summaries, Worker's Compensation Liabilities
5.11 Labor Conditions
Part 1: Threatened Actions
Part 2: Written Consultant Agreements
5.12 Litigation, Claims, Proceedings
Part 1: General Litigation
Part 2: Environmental
Part 3: Labor
Part 4: Occupational Safety and Health
Part 5: Real Property
Part 6: Patents and Trademarks
5.13(a) Patents & Technology
5.13(b) Trademarks
Part 1: Trademarks
A. United States
B. Foreign
Part 2: Trademark Licenses
A. United States
B. Foreign
Part 3: Liens, Proceedings
5.13(c) Trade Secrets
</TABLE>
110
<PAGE>
OMITTED SCHEDULES, cont.
<TABLE>
<CAPTION>
Schedule Subject
5.14 Contracts
<S> <C> <C>
Part 1: Purchase and Sale Agreements
Part 2: Personal Property Agreements
Part 3: Employment and Consulting Agreements
Part 4: Waste Disposal Contracts
5.15 Employee Benefit Plans
Part 1: United States
Part 2: Canada
5.16 Internal Unaudited Income Statements and Unaudited Balance Sheet of the Businesses
5.17 Certain Changes in Business or Events Since June 30, 1993
5.18 Seller's Insurance Policies
5.19 Affiliate Transactions
</TABLE>
The Registrant agrees to furnish supplementally a copy of any omitted schedule
to the Commission upon request.
111
<PAGE>
EXHIBIT 2(b)
AMENDMENT TO PURCHASE AND SALE AGREEMENT
AMENDMENT dated as of August 25, 1994, among First Brands Corporation, a
Delaware corporation ('First Brands'), Prestone Holdings Inc., a Delaware
corporation formerly named Vestar/Freeze Holdings Corporation ('Holdings'), and
Vestar Equity Partners, L.P., a Delaware limited partnership ('Vestar').
WITNESSETH:
WHEREAS a Purchase and Sale Agreement, dated as of June 30, 1994 (the
'Purchase and Sale Agreement'; capitalized terms used herein and not defined
shall have the meanings given to them in the Purchase and Sale Agreement), has
been entered into by and among First Brands, Holdings and Vestar, providing for,
among other matters, the sale by First Brands and its affiliates to Holdings and
its assignees of the Assets and the assumption by Holdings of the Assumed
Liabilities;
WHEREAS the Purchase and Sale Agreement provides that, effective as of the
Closing, Holdings shall assume and be solely liable and responsible for any and
all Assumed Liabilities;
WHEREAS the Purchase and Sale Agreement further provides that Holdings may
assign all or part of its rights under the Purchase and Sale Agreement to one or
more corporations owned or controlled by Holdings;
WHEREAS Holdings, as of the date hereof, has assigned to its indirect
wholly owned subsidiary, Prestone Products (Canada) Limited, an Ontario
corporation ('Prestone Canada'), its right to acquire certain of the Assets
being transferred by First Brands (Canada) Corporation, an Ontario corporation
('FB Canada'), and has assigned its right to acquire all of the remaining Assets
(except those other Assets listed on Exhibit A hereto ('Exhibit A Assets')), to
its wholly owned subsidiary, Prestone Products Corporation, a Delaware
corporation ('Prestone Products'); and
WHEREAS the Purchase and Sale Agreement provides that the parties thereto
may amend such agreement by written agreement of each party thereto;
NOW, THEREFORE, the parties hereto agree to amend the Purchase and Sale
Agreement as follows:
1. The first sentence of Article 3.1 of the Purchase and Sale
Agreement is hereby deleted in its entirety and the following sentence is
inserted in lieu thereof:
'Subject to the provisions of Article 3.1(b) hereof and except as
otherwise provided in this Agreement, effective as of the Closing, without
any further responsibility or liability of or recourse to Seller or its
affiliates or any of Seller's or such affiliates' directors, shareholders,
officers, employees, agents, consultants, representatives, successors,
transferees or assigns (hereinafter sometimes referred to as 'Seller
Indemnified Parties'), (i) each of Prestone
<PAGE>
Canada and Prestone Products shall absolutely and irrevocably assume and be
jointly and severally liable and responsible for any and all Assumed
Liabilities (as defined in this Article 3.1(a)) relating to or arising out
of the Assets acquired by Prestone Canada and (ii) Prestone Products shall
absolutely and irrevocably assume and be solely liable and responsible for
any and all other Assumed Liabilities.'
2. The fourth sentence of Article 3.1 of the Purchase and Sale
Agreement is hereby amended by adding, 'Prestone Products and Prestone
Canada' after the reference therein to 'Buyer.'
3. The fifth sentence of Article 3.1 of the Purchase and Sale
Agreement is hereby deleted in its entirety and the following sentence is
inserted in lieu thereof:
'(i) Prestone Products and Prestone Canada shall jointly and
severally indemnify and hold the Seller Indemnified Parties harmless
from and against any and all Assumed Liabilities (including, without
limitation, reasonable attorneys' fees and expenses of counsel) of
whatever kind and nature relating to or arising out of the Assets
acquired by Prestone Canada and Prestone Products shall indemnify and
hold the Seller Indemnified Parties harmless from and against any and
all other Assumed Liabilities (including, without limitation, reasonable
attorneys' fees and expenses of counsel) of whatever kind and nature and
(ii) Buyer shall indemnify and hold the Seller Indemnified Parties
harmless from and against any damage, liability, loss, cost or expense
(including any penalties, fines, reasonable attorneys' fees and other
costs incident to proceedings or investigations or the prosecution or
defense of any claim) (collectively, 'Damages') which are caused by or
arise out of (a) the failure by Buyer to perform or fulfill any
agreement or covenant to be performed or fulfilled by it under this
Agreement or (b) any breach of any representation or warranty of Buyer.
4. Article 1.3 of the Purchase and Sale Agreement is hereby amended as
follows:
a. 'Research and Development Sharing Agreement' shall mean the
Still River Services Agreement between Seller and Prestone Products in
the form mutually agreed upon by such parties.
b. 'Trademark License' shall mean (i) the Trademark License
Agreement between First Brands Properties, Inc. and Prestone Products
and (ii) the Trademark License Agreement between First Brands (Canada)
Corporation and Prestone Products, each in the form mutually agreed upon
by such parties.
c. 'Contract Packaging Agreements' shall mean the Contract
Packaging Agreement -- Automotive Products between Seller and Prestone
Products in the form mutually agreed upon by such parties.
d. 'Bridging Agreement' shall mean the Bridging Agreement --
Corporate Services between Seller and Prestone Products in the form
mutually agreed upon by such parties.
e. 'Distributor Agreements' shall mean the Distributor Agreement
between Seller and Prestone Products in the form mutually agreed upon by
such parties.
f. 'STP Bridging Agreement' shall mean the Contract Packaging
Agreement -- 'STP' Packaging and Plastic Straws between Seller and
Prestone Products in the form mutually agreed upon by such parties.
g. 'Contingent Rights Instrument' shall have the meaning ascribed
<PAGE>
to it in the Purchase and Sale Agreement.
h. 'Canadian Bridging Agreement' shall mean the 'Bridging
Agreement -- Corporate Services -- Canada' between FB Canada and
Prestone Canada in the form mutually agreed upon by such parties.
i. 'Quality Assurance Agreement' shall mean the 'Bridging
Agreement -- East Hartford Services' between Seller and Prestone
Products in the form mutually agreed upon by such parties.
j. The last sentence of Article 1.3 is hereby amended by adding
'and the letter agreement between Seller and Buyer obligating each of
them and their respective subsidiaries not to employ each other's
employees prior to the third anniversary of the Closing in the form
mutually agreed upon by such parties' after the reference therein to
'Article 1.3.'
5. The third sentence of Article 16.1 of the Purchase and Sale
Agreement is hereby amended by adding '(i)' after the first reference to
'Buyer' in the proviso contained in such sentence and by adding after the
reference to 'third party,' in such proviso the following: 'or (ii) Buyer
to grant a security interest in all of its right, title and interest to, in
and under this Agreement to Chemical Bank, as Collateral Agent (in such
capacity, the 'Collateral Agent') pursuant to that certain Collateral
Assignment, dated as of the Closing Date, from Buyer and each subsidiary of
Buyer party thereto to the Collateral Agent'.
IN WITNESS WHEREOF, the parties have cause this Amendment to be executed by
their duly authorized representatives as of the date first written above.
FIRST BRANDS CORPORATION
By: /s/ Donald A. DeSantis
Name: Donald A. DeSantis
Title: Senior Vice President
PRESTONE HOLDINGS INC.
By: /s/ Robert L. Rosner
Name: Robert L. Rosner
Title: Vice President,
Secretary & Treasurer
VESTAR EQUITY PARTNERS, L.P.
By: /s/ Robert L. Rosner
Name: Robert L. Rosner
Vestar Associates, L.P.,
its General Partner
By: Vestar Associates Corporation,
its General Partner
By: /s/ Robert L. Rosner
Name: Robert L. Rosner
Title: Managing Director
